The travails of the newspaper industry aren’t anything new or surprising. For the past decade, the business model of America’s newspapers has been under incredible pressures. Among the major causes are these:
- The availability of up-to-the-minute, real-time news from alternative (online) sources
- the explosion of options people have available to find their news
- The ability to consume news free of charge using most of these alternative sources
- The decline of newspaper subscriptions and readership, leading to a steep decline in advertising revenues
Exacerbating these challenges is the fact that producing and disseminating a paper-based product is substantially more costly than electronic delivery of news. And with high fixed costs being spread over fewer readers, the problems become even more daunting.
But one relative bright spot in the newspaper segment — at least up until recently — has been local papers. In markets without local TV stations, such papers continued to be a way for the citizenry to read up on local news and events. It’s been the place where they could see their friends and neighbors written about and pictured. And let’s not forget high-school sports and local “human-interest” news items that generally couldn’t be found anywhere else.
Whatever online “community” presence there might be covering these smaller markets — towns ranging from 5,000 to 50,000 population — is all-too-often sub-standard — in some cases embarrassingly bad.
But now it seems that the same problems afflicting the newspaper segment in general have seeped into this last bastion of the business.
It’s particularly ominous in places where daily (or near-daily) newspapers are published, as compared to weekly pubs. A case in point is the local paper in Youngstown, Ohio — a town of 65,000 people. Its daily paper, The Vindicator, has just announced that it will be shutting its doors after 150 years in business.
The same family has owned The Vindicator for four generations (since 1887). It isn’t that the longstanding owners didn’t try mightily to keep the paper going. In a statement to its readers, the family outlined the paper’s recent struggles to come up with a stable business model, including working with employees and unions and investing in new, more efficient presses. Efforts to raise the price of the paper or drive revenue to the digital side of the operation failed to secure sufficient funds, either.
Quoting from management’s statement:
“In spite of our best efforts, advertising and circulation revenues have continued to decline and The Vindicator continues to operate at a loss.
Due to [these] great financial hardships, we spent the last year searching for a buyer to continue to operate The Vindicator and preserve as many jobs as possible, while maintaining the paper’s voice in the community. That search has been unsuccessful.”
As a result, the paper will cease publication by the end of the summer. With it the jobs of nearly 150 employees and ~250 paper carriers will disappear. But something else will be lost as well — the sense of community that these home-town newspapers are uncommonly able to foster and deliver.
For a city like Youngstown, which has seen its population decline with the loss of manufacturing jobs, it’s yet another whammy.
Because of the population loss dynamics, it might seem like local conditions are the cause of The Vindicator‘s situation, but some see a bigger story. One such observer is Nieman Journalism Lab’s Joshua Benton, who writes:
“I don’t think this is just a Youngstown story. I fear we’ll look back on this someday as the beginning of an important — and negative — shift in local news in America.”
What do you think? Is this the start of a new, even more dire phase for the newspaper industry? Is there the loss of a newspaper that has his your own community particularly hard? Please share your thoughts with other readers here.
Nones Notes 
I walk through San Francisco’s Union Square every day. At one time you’d see people reading the Chronicle and would run into discarded copies on the benches. It’s still available from street dispensers, but I have no idea who buys it.
Even the local SF Examiner, a free paper, has been cut down to three editions a week, and you don’t run into those on park benches, either. Lately, everyone has been pecking and scrolling on phones, but nobody is hawking, “Extra! Learn all about the earthquake!”
(I’m old enough to remember news kiosks. Those are gone, too.)
As media consumers, we tend to value the content more than the ads, but the publisher’s point of view is the exact opposite: news content is dead-weight and advertisements are the payload. Thus arose the term “news hole” which, according to the Great Book of Wikipedia, is “the remaining spaces after paid advertisements are filled.”
I have done a bit of research on the U.S. news hole percentage for newspapers over time, which indicates that the news hole percentage was quite small (30% or less) before 1860 but it jumped to over 80% by the end of the 19th century. The next century saw a consistent decline to about ~40%, followed by a very recent jump to ~75%.
In other words, the most profitable time to be a U.S. newspaper publisher was before the Civil War. After that, the next best time was the second half of the 20th Century.
Why was the news hole so small before 1860? I would argue that current news was a very scarce commodity before to the advent of telegraph communications. For example it was only in 1861 that the U.S. west coast was connected to the U.S. east coast by telegraph. This reduced the time required to transmit news across the country from weeks or days, to hours or minutes. Indeed, modern-day “wire services” such as Associated Press owe their very existence to telegraph technology.
The fact that all media of that time were printed on paper put severe constraints on a publisher’s maximum potential geographic reach, considering the cost and time required to print and deliver piles of papers to consumers. As a result, newspapers evolved into local monopolies which could easily sell advertising space despite offering a very limited amount of timely news.
Between 1850 and the end of the 19th century steam-powered printing technology made it economically feasible for a growing number of publishers to offer daily “penny press” tabloids (for e.g. the Baltimore Sun) serving primarily middle-class and working-class readers instead of elites. Convincing working-class people to buy a newspaper every day in the face of growing competition meant increasing the size of the news hole to cover gossip, crime and other sensationalist topics (i.e. “fake news” in today’s lexicon) in addition to hard news, but by 1900 the news hole had grown too large to profitably sustain.
The next century saw the gradual consolidation of print publications into local monopolies within rapidly expanding urban markets, allowing publishers to reduce the size of the news hole significantly through economies of scale and by focusing on local print advertising. Radio and TV emerged as “alternative” media but the scarcity of the broadcast spectrum under the Federal Communications Commission “Fairness Doctrine,” which wasn’t eliminated until 1987 (and was finally removed from the Federal Register in 2011), meant that radio and TV news programs never posed a serious competitive threat to newspapers because they occupied only a small percentage of air time. The news hole for national news programs averaged 73% after 1950, with the remaining air time devoted mostly to national instead of local advertising.
Everything changed with the dawn of the Internet age in the 1990s. The Internet’s first and most obvious impact was to eliminate the need to communicate timely news on paper, thereby driving the cost of producing and distributing news publications to near-zero. (For example, before my paper is delivered every morning, I’ve already read most of the national and international news it carries yesterday, on the Internet.) Just as important, though, was the impact of infinitely enlarging broadcast bandwidth, giving rise to 24/7 cable news channels, news and opinion websites (for example, The Daily Beast), blogs and all manner of “fake news” content funded by national advertising and the hidden-revenue business models of Google and Facebook. The latter give a vast number of publishers an easy way to monetize their content (however “good” or “bad” it may be) by offering businesses an extraordinarily efficient way to promote their products and services through hyper-targeted advertising.
By sharply diminishing demand for advertising payload, the Internet’s rise fully explains the economics behind the closure of local newspapers such as The Vindicator and countless others.
Personally. I do not think the newspaper industry of the 20th century will survive, beyond a handful of national publications like the New York Times and The Wall Street Journal which can entice enough elite readers through their paywalls to fund the filling of their ever-growing news holes.