Sunday, The New York Times asked, "How Did Newspapers Land in This Mess?" Specifically, the title was referring to the effect of Wall Street on newspapers and the ways in which the two publics newspapers are trying to serve--the readers and the stockholders--often end up in conflict with one another.
In a post here blog yesterday, I wrote about a recent panel we had here at MIT in the Will Newspapers Survive? series. I wrote about "a lack of communication that I think exists throughout the journalism industry, in a period of great flux. How do you adapt new technologies in organic and meaningful ways? How do you keep reader interest and profit flowing into the newspaper? These are questions that journalists like Foley are trying to answer while also getting out a new paper everyday and trying to turn a profit for stockholders."
The problem is that, in a period with no substantial changes, newspapers with publicly traded stock is not a problem, as papers turn a regular profit with a rather sizable profit margin, and the stock trade gives papers a steady collection of extra capital. When the industry enters into a less sure-footed period, however, when innovative thinking and risk-taking becomes more important, the stockholders become the enemy.
Because of the nature of short-term investments, no one wants these companies to undertake great experiments or to cut their profit margins under their watch. And so many newspapers are losing their chances to gain relevance, letting smaller businesses with a tighter focus on the Web and elsewhere chip away at the credibility these print institutions have built up over a number of years.
With the cultural cache most local newspapers have built up in their communities, they could easily be the site of community discussion, of the local craigslist, of the chatrooms and message boards and blogs and everything else. However, the more lethargic these institutions are at embracing new modes of communication, the more danger they are in long-term.
Throughout the industry, there may be journalists on the ground who know what they are doing and who try to be as innovative as they can within the restraints of corporate America, but they have to admit that trying to serve "two publics," as this Times piece emphasizes, will not work in the long-term.
Richard Siklos, the author of the piece, compares Scott N. Flanders' position at Freedom Communications to Dennis J. FitzSimons, chief executive of the Tribune Company, who is suffering from various financial troubles.
Siklos writes, "The underlying theme in Tribune's unraveling is that in a time of technological transition, the two publics are served by many of the nation's newspapers are no longer getting along so well. One is the public market--that is, Wall Street--which cares only about an attractive return on its investment. The other is the so-called public good that newspapers serve by professionally gathering and reporting news for their communities."
The thing about Wall Street is that investors are not afraid to jump ship when a company begins to fall, so that many are beginning to believe that the only way out is to switch to private investment by private investors not afraid to take risks to build these companies back up, with the possibility of going public again in the future.
Whatever the case, the article's emphasis is most important--that these questions of convergence and change in journalism will be answered as much in the boardroom as in the newsroom, and a new business model and corporate structure may be what's needed to improve journalism. There's only so much you can do on the ground level.