Cutting Off the Dog's Tail an Inch at a Time

I haven't been covering the day-to-day details of the mainstream media's collapse.  I originally spent quite a bit of time on the subject because I was the only one talking about it.  The newspaper management, bankers and Wall Street analysts were all claiming that the business model was still sound and the content was simply migrating to the web. 

Meanwhile I was pointing out that the web couldn't generate sufficient revenue to support the current cost structure and that reverse economies of scale meant that major papers weren't going to simply get smaller, they were going to reach a tipping point and then collapse. Now that my theory has prevailed, it seems like piling on to cover daily details. 

Gannett Blog has stepped in to cover the day-to-day machinations and for the last couple weeks, editor Jim Hopkins has been reporting that Gannett was going to send workers home for one week without pay.  Gannett has now confirmed this and the story has made it to the New York Times and Drudge.  People have been asking if I've seen it, so I thought I would link to it.

The Gannett Company, the nation’s largest newspaper publisher, said on Wednesday that it would force thousands of its employees to take a week off without pay in an effort to avoid layoffs.

Frankly, a furlough is a terrible idea; it devastates morale, humiliates employees by making them feel like they are pawns in a huge game and makes management look desperate.  It would be much better to lay off one person in 50 than to force everyone to take a week off without pay.  Couple this with the outrageous salaries that management is earning while driving the paper into the ground and you have a work force that has no loyalty to the company and is desperate to leave.  Soon, the only ones who remain are the ones who haven't been able to figure out where else to go.  This mirror immage of survival of the fittest--which I call remainder of the lamest--leads to a severly diluted employee gene pool. 

I understand what management is trying to do--spread the pain and delay the inevitable, however, Gannett is essentially cutting off the dog's tail an inch at a time.  There will have to be an ongoing series of cost-cutting moves as the paper constantly tries to align its cost structure with its falling revenue. 

Management is looking for a stable model--a size and configuration in which the cost structure generates enough revenue to support itself and still turn a profit.  In the very short run they may find it, but that's because they can operate at a loss but cover their variable costs and contribute to their fixed costs.  Airlines for example have done this for years, and it's why GM can lose a few thousand dollars on each car and still survive--in the short run.  

But in the long run, all costs are variable and Gannett will have to sign new contracts and invest in new equipment and presses.  Management will understand that these new commitments won't be covered by existing revenue and will either refuse to make the investment, or will be unable to get the financing.

At that point, the long wind down process will accelerate.  Meanwhile, you can read Gannett Blog and every few months, you will learn about the latest cost-cutting effort.  Eventually, those announcements will make it to the New York Times and Drudge--forcing them to ultimately be covered by Gannett itself. 

But you won't be reading about the day-to-day machinations in Espresso Pundit.  I've moved on.

Comments

[JaneAZ]

I think Seth Godin says it best here.:

http://sethgodin.typepad.com/seths_blog/2009/01/when-newspapers.html

I could really see news going not-for-profit. The for-profit model has been strangling serious news for decades.

I look at sites like OpenCongress.org, which are funded by foundations, and I see the future.

[Joe]

But non-profit-funded news outlets and individual bloggers won't provide the level of independent, unbiased, fact-checked, agenda-free reporting that the current mainstream media newspapers and cable news provide to their akj;afasdfasdkofj;ldakzmxvnnwqesajfdsafds

Sorry, I feel off my chair laughing and hit the keyboard on the way down.

[DSW]

Given today's technology and fairly easy access to information, it is no longer cost effective for traditional news agencies to gather, consolidate, control and promulgate information. Any Joe or Jane with a PC and access to the web can find what they want to know when they want or contact someone who does. We're in a paradigm shift when it comes to reporting news. These are horse and buggy days making way for the automobile.

[Marizco]

No DSW, any Jane or Joe with Web access can access information that's already on the Web. The world don't happen on Google. Myself, I can't believe people still think it does.

[ExUrbanKevin]

Just heard from a friend of mine at Hawaii.com, part of Gannett Pacific Publications, and while they are profitable (and are in fact one of the most profitable entities in all of Gannett), they're still getting hit with this "furlough".

Sucks mightily for them.

[P. Nut]

Covering the media helped bring your blog the attention it enjoys today, Greg. Besides, you don't have the willpower to stop yourself from this silly, arrogant "I'm better than them" theme that has been one of the hallmarks of this blog. You don't cover anything "day-to-day" because you're an unpaid blogger. You cover big stories after they happen, and we'll soon see another news media article from you.

[P. Nut]

Covering the media helped bring your blog the attention it enjoys today, Greg. Besides, you don't have the willpower to stop yourself from this silly, arrogant "I'm better than them" theme that has been one of the hallmarks of this blog. Besides, you don't cover anything "day-to-day" because you're an unpaid blogger. You cover big stories after they happen, and we'll soon see another news media article from you.

[P. Nut]

You proved me right at the speed of light, Greg. Enjoyed the Tucson Citizen machination.