One of my great frustrations in recent years has been that as news organizations have tried to cope with advertising declines, almost everyone — both readers and journalists — have seemed relatively ignorant about the revenue and cost structure of the typical newspaper. Readers and journalists complain that the more you cut, you make the paper less worth picking up, which is true, but at the same time if you raise the price they complain about that too. Often the companies’ woes are portrayed as the result of greedy bosses trying to pad profits, a stereotype that perhaps was closer to the truth in the ’80s, but in the current economy even nonprofit-owned newspapers are struggling. Given all that, why not tell readers exactly what it costs to put out the paper and what percentage of that they are actually paying? Finally, someone has: the publisher of the Arkansas Democrat-Gazette, in a letter explaining a doubling of the cost of buying a paper. That paper, unlike most large papers in the U.S., keeps all of its content behind a paywall to protect its paid circulation, which seems to have worked — but as the letter explains, since subscription payments do not cover much of the cost of producing the paper, that hasn’t insulated it from trouble:
“Despite all of these efforts, our advertising, like most newspapers, has continued to decline. Even though advertisers tell us they get good results from advertising with us, they have far more options on where to advertise today. With this loss in ad revenues, and by maintaining our circulation and news reporting, we have seen our profits dwindle to unsustainable levels. … In the future, we will have to rely more heavily on revenue from readers and subscribers.”
That kind of frank discussion of the business side is going to be vital going forward. People may understand that you get what you pay for, but since the news industry has for so long sold them subsidized products, people need a whole new education about what exactly they are paying for.