Bad News for Newspapers

The Associated Press (AP) wire service reported this evening that U.S. newspaper advertising sales revenue dropped 18% in the third quarter of 2008. A decline in print advertising has been a major factor in staff cuts at newspapers. Circulation numbers are down in most U.S. markets as more people read the news on the web. Internet ad revenues are a fraction of what papers used to receive for full-page spreads from department stores and automobile dealers.The AP is the world's largest news gathering operation, and is a cooperative owned by its member television, radio, and newspaper organizations. It serves approximately 1700 papers.

This week, the CNN News Summit in Atlanta will host 30 editors interested in learning more about CNN Wire, a new service looking to supplement, and possibly compete with the AP. They hope to convince cash-strapped newspapers that with AP subscription fees scheduled to rise in 2009, CNN's worldwide staff of 3,800 can provide news coverage at a lower cost.

Newspapers are facing a serious dilemma as they straddle the printing press and the rapidly moving world of Moore's Law. Distributing tons of paper is far more costly that moving electrons, but the savings realized by posting news on the internet is not enough to keep red ink off a paper's bottom line. They need a new business model, and until someone has a better idea, we need newspapers.