Good news about newspapers


Has the newspaper business hit bottom?  Could be.

One encouraging sign came in April when a group of Philadelphia business leaders bought the Inquirer and Daily News for $55 million.  Just six years ago, the same two papers sold for $515 million.

Newspapers still make money – not as much as they did before the Internet started giving them competition for advertising, but enough to be attractive investments if the price is right.

And now Warren Buffett has entered the game on a large scale by acquiring 63 papers from Media General, including the Winston-Salem Journal and the Richmond Times-Dispatch.

In The Vanishing Newspaper (p. 43 of the second edition), I suggested that a newspaper earning a 6 or 7 percent operating margin could be just as socially useful as one earning the traditional 20-40 percent. The problem, I said, is that there is no smooth way to get from double-digit margins down to less than 10 percent. But now it’s happening.

There would be publishers willing to operate at that level, I predicted, if their investment is low enough. With the right price, they can get the same return on investment that previous owners enjoyed from much larger investments.

I illustrated the point with a parable about a goose that lays a golden egg every day. A buyer would pay a price for that goosed based on its production.

Now imagine a buyer who acquires such a goose only to find that its production drops to one golden egg per week. That person is going to be disappointed, but it’s still a pretty good goose. And this second owner can find a third person who will happily pay a much smaller price based on the lower production rate: a happy publisher with a normal retail-level margin.

Warren Buffet is that third owner. He has access to more data than I do, and it looks like he is betting that the slide in newspaper earning power has leveled out. The Internet has done all the damage it can, and papers still make money. His return on investment will enable him to cheerfully support product improvement and the public service functions of a good newspaper.  Let’s hope he’s right.

On self-publishing

(Remarks to a UNC J-School faculty reception, May 8, 2012)

The last decade of my academic career was spent worrying about the disruptive effects of new technology on the newspaper business.  The publication of this memoir has forced me to think about technology’s effects on academic publishing.

Like newspaper journalism, academic publishing was constrained by the economies of scale obtained through mass production. To pay for a journal or a book, you had to make a lot of copies. The gatekeepers in academic publishing had two concerns: enough interest in the topic to yield sales that would make the break-even point, and  the value of the work’s contribution to knowledge.

Now technology has undermined both forms of gatekeeping. There is at least one advantage: it saves a lot of time. When I wrote my first book, it took three years from completion to seeing it in print. (The series of rejections that I endured is documented in the memoir.) Precision journalism merged two fields, social science and journalism, and reviewers in neither field could see enough demand for it to create the necessary economy of scale. If on-demand printing technology had been available in 1970, I would have been well-advised to self-publish and get it to market much sooner.

There are now at least 50 book stores that provide on-demand publishing – from Harvard Square to the campus of North Carolina State University. They use a machine that lets students convert their honors theses or dissertations into perfect-bound hard-cover or paperback books at the same cost per copy and with the same production values as a mass-produced book.

You see what this does to the gatekeepers?  It gets them out of the way in favor of the direct effects of the marketplace. This can be good or bad, and therein are some interesting research questions for you.

Until those questions are answered, I choose to rely on the judgment of Peter Osnos, founding editor of a traditional publisher, PublicAffairs Books, and an old newspaperman himself. He describes the present situation in just eight words: “Good books. Any way you want them. Now.”

If he is right, it provides some freedom for us academics who have something to say, but it puts a burden on us. We have to become entrepreneurs. Self-publishing requires self-marketing. And the mere fact of publishing will count less in tenure decisions than acceptance of the work as measured by the reviews and the citations that it generates. Welcome to this brave new world.

Food: a parsimonious theory of everything

Looking at the New York Times Book Review for May 6, I found the kind of viewpoint that makes me sit up and say, “Why didn’t I think of that?”

Lizzie Collingham, in The Taste of War, argues that the events leading up to World War II were based on food shortages. Germany needed the fertile lands of Eastern Europe to feed its people, and Japan’s land area was too small to provide enough food for its population.

The technology advances sparked by the war led to the reverse problem in the USA by making food so plentiful that overeating, not hunger, became our main health problem.

This history would have made a great narrative theme for my memoir. I grew up in a midwestern farm economy, and the major events in my life could be linked to food and its production.  I mentioned the connection several times, but without the drama that more detail could have provided.

Collingham’s work provides a historical frame for the innovative work being done in Boston by Yaneer Bar-Yam and his New England Complex Systems Institute. Bar-Yam uses investor behavior to model worldwide food prices and relate them to social disruption.

“In 2008 and 2011, increases in global food prices triggered hunger, food riots and social unrest in North Africa, the Middle East, and elsewhere, at a cost to global stability which policy makers can no longer ignore,” he says in a press release.

Bar-Yam ‘s model predicts the next bubble in food prices in 2013, along with a high risk of major social disruption.

If I were still a working journalist, I would try to synthesize the precision of the Bar-Yam model and the drama of Collingham’s narrative.  Theory and narrative, working together, can illuminate the dizzying cloud of facts with which we are increasingly confronted.