What went wrong at the Mercury News?

An early online innovator. Great reporting by the likes of Gary Webb (before the Merc threw him under the bus). A booming market. Mediocre papers in San Francisco.

So, what went wrong? That's the theme of this in-depth piece by Columbia Journalism Review. (H/t to my friend Leo Lincourt.)

My reaction? It nails the main points of what went wrong not just at the Merc, but to some degree, the industry in general:

First. I didn't realize that the Merc had, at the start, "paywalled" its website, only to abandon it later. Related to that, as Leo notes, is its failure to find "niche" reporting worthy of being paywalled, or to realize what it had in Silicon Valley. Especially after Steve Jobs' return to Apple, the Merc, even with national media "discovering" Silicon Valley, could have had the angle on premium, paywalled content. The WSJ is partially paywalled even with the New York Times in its backyard, after all.


Second, specific to the Merc, Dean Singleton is an idiot, and certainly had a hand in the Merc's demise, as he has in the AP focusing first on news aggregators and many other things that have hurt the industry. The story doesn't at all look at him, but it's too bad it didn't. (That said, Deano's injuriousness to the industry, while being Example No. 1 of not "getting" the online newspaper world, could make a separate story of equal length all by itself.


Third per many other observers, we see the problems with newspapers trading on the NYSE and focusing on short-term profits. The stock-zooming 1990s has had its payback, with newspapers doubling down on new purchases while ignoring the destructiveness of the Net:

(General manager Dan) Finnigan explained that either they were going to cannibalize their own businesses or someone else would. 

This was at a meeting of Knight-Ridder publishers, where he tried to get them on board with investing in ...

CareerBuilder! (K-R/The Merc also took a whiff at buying into eBay.)

This was even as people were warning that newspapers should accept lower profit margins and maybe even initial losses for investments in some new technology, websites, etc.

In that way, newspapers (those publicly traded and especially those, like Knight-Ridder but unlike the NYT, with one-level stock structure) are emblematic of what's wrong with hypercapitalist America today.


The "cannibalization" is also another argument for paywalls. Especially at smaller, more regional papers, paywalls not only are a way to make more money off of online operations, but keep people from leaving hardcopy and its ads, which are still the largest revenue producer.

Related to that, how many industries bemoan making "only" a 9 percent profit? As noted, the Merc's margin had fallen to 9 percent by 2006. Even today, if you throw out debt service (mainly from the buying-up binges of 1995-2005) papers are still profitable; just not at 20-plus percent.

In the story, Tony Ridder comes off as a bean-counter, but one who honestly was doing so within "old newspaper" mentality.

Anyway, give the whole thing a read.

One complaint, though. The story throws Gary Webb and his well-known reporting on the Nicaraguan Contras-cocaine-CIA connection kind of, or more than kind of, under the bus, at least by implication. On the purely editorial side, I'd have to agree with one commenter that slicing and dicing Webb was far more egregious than any of the business/editorial/Internet inter-departmental screw-ups.

Google CEO Schmidt offers ideas to save papers

Gooogle CEO Eric Schmidt says he truly would bemoan the demise of the daily paper, then offers steps to prevent that.

Schmidt said Google is NOT looking at acquistions, investments or other financial help of its own.

To me, one of the most intriguing tools he did mention is going the nonprofit route. Schmidt mentions ProPublica. Britain's Guardian is an example across the pond.

Elsewhere and in response, Dan Froomkin goes Schmidt one better, suggesting Google form some sort of nonprofit umbrella structure. He also suggests that, even if Schmidt doesn't want to bail out for-profit newspapers, it consider investing in a nonprofit group like ProPublica.

That said, the problem is the Internet, not Google. Shouldn't we also be asking Ballmer what Microsoft should do? Or whomever winds up running Yahoo?

Local TV going the way of the newspaper?

It would seem so, given the ad drops, viewer drops and now, the job-slashing, that’s hitting local network affiliate stations.

Outside of Baltimore, CBS is seeing cuts at network-owned affiliate stations in New York, Boston, Chicago and San Francisco. The story says no order came out of HQ for this, but did note these were allegedly low-performing stations. CBS as a company lost 14.6 percent in the first quarter of this year.

Contrary to the newspaper article, though, it’s more than fragmenting of the market, or audience. And, yes, I agree that part of this is recession-driven.

It’s more than just the “traditional” Internet, of newspaper and TV station websites, supplemented by the Yahoos and Google News of the world.

Instead, just as blogging provided an outlet for some sort of “print” citizen journalism, now YouTube has done the same for video citizen journalism.

In other words, TV is facing the same future that hit newspapers a decade ago.

Newspapers have adapted, in many cities, by cutting staff writers and hiring more freelancers. In general assignment work, that’s OK. But, as The Dallas Morning News has shown here, when you have freelancers doing things like science journalism, it backfires.

Of course, TV does less in-depth stuff like that. You could keep staff reporters and videographers for investigative work, and start farming out the rest. The flip side of that is, TV stations could “bureau” their news by suburban areas, in the larger TV markets.

It’s coming, in some way, shape or form.

Beyond the world of local news, entertainment is not just going to cable channels. YouTube has more and more of that to offer, too.

And, if this story about Internet 3.0, Hypernet, or whatever you want to call it is true, we’ll see a lot more people leaving the traditional boob tube turned off.

How today’s Web journalism world still makes no financial sense

Ted Rall sis right as usual. Double of nothing (doubling your online visitors even as Internet ad rates stay near zero) doesn’t make sense.

And, it’s “liberal” blogs as well as “conservative” traditional media that aren’t getting it.

Wanna blog for Huffington Post? As Rall points out, they’ll pay you plenty of prestige, but zero dollars.

And, as long as you the publicity-hungry blogger make that sucker’s bet, Huff Post, including its charming Dragon First Lady, Ms. Arianna herself, will continue to double down on you. As Rall says, also, try using “prestige” to pay the mortgage or rent.

End result, says Rall:

Print media is dragging content providers into the abyss. First comes downsizing. Writers, cartoonists, and photographers are losing their jobs to peers willing to do the work for less or, in the case of readers invited to submit their comments and images for the thrill of appearing in the local rag, nothing. Then they squeeze those who remain for pay cuts. A cartoon that runs today in Time, Newsweek, USA Today, The New York Times or The Washington Post — the most prestigious and widely disseminated forums in the United States — brings its creator less than The Village Voice would have paid for it in the 1980s. Some print venues offer no payment at all.

What happens if we don’t do anything?

Unless something changes soon, deprofessionalization will further erode journalistic quality. The resulting dumbing down of our politics and culture will accelerate. We can’t get the toothpaste back into the tube. The Internet is here to stay. Unfortunately, the best way to make it more profitable — to stimulate all e-commerce, not just journalism--will require us to give up something dear to our rugged individualist American hearts: the illusion of Internet privacy.

Yes, it is an eye-opener, if disconcerting in a way, to hear Rall, an ardent civil libertarian, say that. But, between spyware that is logging keystrokes on infected computers to ISP providers being leaky sieves to the government even before 9/11, Net privacy, in many ways, went the way of the dodo long ago. Besides, your financial information went even more the way of the dodo even earlier, every time you zipped a debit card at the grocery store.

This is the first of a three-part series by Rall. I’m interested in hearing what he offers in the way of a solution.

Newspaper future not totally grim

The Web is hitting new marks in ad revenue:

According to a recent survey, for the first time, advertising revenue for local newspaper Web sites last month exceeded local TV advertising. One of the reasons for the improvement in Web ad dollars is the video now being produced for these sites. Video has a big advantage. It can be attached to video commercials.

In other words, the traditional newspaper is becoming more and more video-like.

Now, won’t this also lead to a push to increase broadband speeds in the U.S.? (By the way, average “broadband” speeds in the U.S. are dead last in the industrialized world.) If so, at what price? And, will more cities start offering Wi-Fi as a city amenity, putting more pressure on private providers?