Newspapers aren’t dying because of how they get paid, but because people no longer find value in paying for information that they can obtain somewhere else. In a way, the web is a very efficient P2P network exchange for information, and it undermines distributors of information just in the same way that P2P networks undermine music distributors.

Newspapermen are admen. It’s that simple. Magazine and newspaper readers have never paid even the full cost of printing and distribution. In the case of newspapers, the paper has traditionally been priced so cheaply as to be competitive with paper towel and similar products. When one speaks of paper-training a puppy, one does not mean teaching him to read. The editorial staff have always lived on the advertising revenue. This means that, economically speaking, they are admen, and when they get into financial difficulties, the difficulties grow out of their position as admen. I have noted that when a magazine is due for collapse, its advertisements “go dull”– they run out of things to say. Instead of actually saying something about the product, the advertiser fills up space with pictures of pretty girls. The real explanation for the newspaper’s decline is to be found in its relationship to the kinds of businesses which advertise in newspapers.

The Internet did not just come out of nowhere. It was preceded by a “paper internet,” that is, people doing internet-type-things by paper means, with limited use of computers. Most importantly, newspapers were losing circulation to magazines. Magazines were of course sent through the mails at a substantial discount over newsstand prices. Magazine publishers used computers to to print address labels in presorted order so as to be eligible for various volume postage discounts. The Post Office was itself computerizing, going from 5-digit ZIP codes to 9-digit ZIP codes, and offering correspondingly deeper discounts to those able to take advantage of them. There were some national daily postal newspapers (the highly regarded Christian Science Monitor comes to mind; it was the archetypal “highbrow” newspaper). Furthermore, magazine publishers conducted an elaborate traffic in mailing lists. A magazine would often have a “customer service card.” The reader could detach this card, stamp it a couple of times with his rubber address stamp, and go through the magazine circling reply numbers corresponding to those printed in the various advertisements and articles. Having done this, he dropped the card in the mailbox, and in due course, various brochures, pamphlets, and catalogs would arrive. The system was not as fast as clicking links, but it was just about as effortless. In advertising, there were various “shopper” publications, focused around various kinds of purchases. If one was in the market for a particular purchase, one bought the appropriate “shopper,” and dived into the advertisements. More recently, “shoppers” have become free, left in boxes at convenient locations. Similarly, there is Direct Mail Advertising, which can be geographically targeted in a precise way, and there are local “advertising newspapers,” distributed for free by mail. The electronic internet is only the final straw.

Similarly, in the related field of merchandising, one can talk about a continuum from discount stores and mail-order vendors to Amazon. The better mail-order vendors were using computers to get their order-processing time down, and the discount stores were adopting barcodes. Grocery stores were getting bigger, and carrying a wider range of incidental goods. Over the whole period, all kinds of consumer goods manufacturing was being outsourced, and then offshored, first to Alabama, then to Mexico, and finally, to China. Department stores were often being remodeled as shopping malls. The merchandise was no longer at the center of the customer experience. The name of the game was not to bring people in for merchandise sales, but to get them in the habit of coming in every day for lunch and window-shopping. These kinds of changes affected newspapers indirectly by injuring the kinds of firms which were likely to use newspaper advertising. Looking at a 1995 issue of a big city newspaper (Philadelphia Inquirer) which I happened to have hung onto for some reason, I note that the prime advertisements were placed by traditional department stores (eg. Macys), offering temporary discounts on upscale clothing, housewares, electronics, etc. In the end, the discount store triumphed. More than that, the mentality of the discount store triumphed, that is the assumption that nearly all merchandise is presumed to have been bought at a discount store, or else, by mail order. Discount stores spend very little on advertising. Their basic method is to make things cheap enough that the shopper buys on impulse. Mail-order retailers spend their money obtaining or building mailing lists. These firms will continue to look for ways to move more of their production offshore, employing the smallest feasible number of high-wage Americans, and to lower their prices accordingly. The end result will probably be somewhere between vending machines and mail orders processed in China.

The advertiser does not really need to be plugged into the daily news. Shop floors simply are not stocked with merchandise at that speed. It is convenient for the advertiser to run his promotional offers on a weekly or monthly basis, and put together a conveniently big advertising package to get the best postal rates. Add to this, the fact that a newspaper audience, being undifferentiated, is not very profitable to advertise to. A direct-mail postcard linking to a local news/shopping website will probably produce surprisingly good results, at a one-time cost of twenty or thirty cents per household. That is enough to get it into the bookmark files of, say, ten percent of household, and they can propagate the URL to their friends. The money released by merchandise discounting has been going into services, and services, being people-based, are extremely local. Even so standardized an operation as McDonald’s varies substantially, according to the kind and quality of people McDonald’s is able to recruit as counter help in any given locality. The local shopping newspapers serve such businesses better than a city newspaper could. A neighborhood restaurant does not benefit much from advertising to people who are too far away to drop in conveniently.

The basic economic problem of newspapers is that they have stayed the same while the rest of the world moved on. In the case of big city newspapers, there is a further complication. The newspaper naturally reports on its city, and such identity as the city possesses is usually focused around the slum at the center of the city. The business of a big-city mayor is first and foremost to deal with poverty. Suburbia is about rejecting the city, and the rejection is becoming more complete over time, with the rise of what Joel Garreau called “edge city,” the exurban city of the ring road, yet another precursor of the internet. The Philadelphia Inquirer is a great newspaper, and its greatness consists very largely in telling tragic stories about the slums. When you juxtapose the local headlines with the advertisements, the effect is that of a grimly comic “Tale of Two Cities… it was the best of times and it was the worst of times…” One can see that an advertiser would not want to pay for being portrayed as a kind of buffoon if there were any alternative. With Direct Mail, there is an alternative. The newspaper cannot put the clock back. It cannot restore a lost monopoly. Nor can it restore department stores with high markups. If the city’s principal industry has become poverty, the newspaper cannot change that in any simple way.

What you may be able to do is to set up a neighborhood operation of some kind, centered around the local mini-mall or shopping street. Your starting point is what businesses are actually there, on the ground. Talk with the proprietors, get a sense of what their problems are, and proceed from there. Maybe a local website, maybe organize a street fair, maybe hire kids to leave gift baskets on people’s doorsteps. It all depends. Of course, if something really newsworthy happens on your beat, you can write about it. A lot of nominally local newspapers have office-chair-itis, meaning that the editor and publisher want to sit in their offices and be executives. This means that if you are willing to spend a lot more time going door-to-door, preferably on foot, than they are, you may be able to undercut them.