In an excellent long article on the future of the newspaper industry published in the London Review of Books, John Lanchester arrives at a fascinating conclusion: In order to survive newspapers have to disappear. At least in their “outlandishly expensive” print versions. The future? You guessed it: eNewspapers. If this trend pays out the way the author foresees, with millions of people running around with e-reader gizmos in their pockets, it will be a tremendous boon for ebooks, and by extension ebook writers and publishers.
Listen to Lanchester’s conclusions:
So, now what? Is that it, Game Over for print media? I don’t think so, not quite yet. Just as one of the industry’s biggest strengths, classified advertising, turned out to be a hidden weakness when that business simply upped and left, now there is a similar paradox, but the other way around: one of its greatest weaknesses may turn out to be a potential saviour. That weakness is simple: it is the cost of physically producing a newspaper. The production and distribution of newspapers is fantastically, outlandishly expensive. Everything about it, from the paper to the newsprint to the presses to the maintenance to the distribution infrastructure, costs a bomb. In OECD-speak: ‘On the cost side, costs unrelated to editorial work such as production, maintenance, administration, promotion and advertising and distribution dominate newspaper costs. These large fixed costs make newspaper organisations more vulnerable to the downturns and less agile in reacting to the online news environment.’
Why is that a good thing? Because the internet can make all those costs go away. If newspapers switched over to being all online, the cost base would be instantly and permanently transformed. The OECD report puts the cost of printing a typical paper at 28 per cent and the cost of sales and distribution at 24 per cent: so the physical being of the paper absorbs 52 per cent of all costs. (Administration costs another 8 per cent and advertising another 16.) That figure may well be conservative. A persuasive looking analysis in the Business Insider put the cost of printing and distributing the New York Times at $644 million, and then added this: ‘a source with knowledge of the real numbers tells us we’re so low in our estimate of the Times’s printing costs that we’re not even in the ballpark.’ Taking the lower figure, that means that New York Times, if it stopped printing a physical edition of the paper, could afford to give every subscriber a free Kindle. Not the bog-standard Kindle, but the one with free global data access. And not just one Kindle, but four Kindles. And not just once, but every year. And that’s using the low estimate for the costs of printing.
At some point, the economic logic of this is going to become irresistible. To my certain knowledge, some newspapers have been discussing moves along these lines. In the meantime, one crazy visionary is already giving it a go, by developing an iPad-only daily newspaper which employs more than a hundred journalists but (or maybe that should be ‘and’) has no print edition. The name of this fantasist, this dreamer, this desperado? Step forward again, Rupert Murdoch. His new online-only paper is going to be called the Daily. (There’s a rumour that they wanted to call it the Daily Planet, the paper that Superman worked for, but DC Comics said no.) The project is a joint venture with Apple, and is going to cost 99 cents a week. That is a very tempting price indeed, and when you compare it with the cost of a single day’s access to the Times – £1 – it makes the point about what you can do with the economics of the business once you stop printing papers.
So this, I think, is the future of newspapers. Their cost base will force them to junk their print editions.
This sounds like good news for everybody. Help comes from the most unlikely places. Thank you Mr. Murdoch.