Rieder: The embattled newspaper business

Wednesday brought the news that The New York Times, the nation's pre-eminent news outlet, was shrinking its newsroom staff by 100 positions through buyouts and, if necessary, layoffs.

Last week, Freedom Communications, which had brought excitement to the struggling newspaper business with its audacious expansion plans, shuttered its five-month-old Los Angeles Register and carried out yet another round of layoffs at its flagship Orange County Register.

On Sept. 3, USA TODAY, the nation's largest-circulation newspaper, announced it was eliminating 60 to 70 jobs, about half of them in the newsroom.

The drumbeat of bad news, coming in the wake of decisions by major companies — including USA TODAY parent Gannett — to spin off their print operations from their more profitable holdings, can certainly give the impression that the sky over the thoroughly disrupted newspaper industry is falling.

It's not.

That the newspaper business faces enormous challenges in the digital age is unarguable. That the steady decline in the size of news staffs is both painful for those losing their jobs and costly to communities seeing diminished coverage is obvious.

But it's important to keep in mind that many newspapers remain profitable — the Times said it needed to make the latest cuts to protect that profitability — and the industry, despite its highly publicized woes, remains a $35 billion business. That's not nothing.

As Rick Edmonds, who keeps tabs on media economics for the Poynter Institute, says, "There's a big difference between diminished and dead."

Another top analyst, Ken Doctor of research firm Outsell, says that too often people seem to think the world is made up of two kinds of businesses: those that are thriving and those that are going under. But there is a lot of in-between.

Businesses do reach a peak, as newspapers did in the much-missed days of skyrocketing profits, whopping staffs and generous newsholes, and then they decline. But that doesn't mean that they then immediately go away.

Doctor describes the current state of newspapers as "continuing grimness, but manageable grimness."

But that storyline just isn't "sexy," he says. "The story that is told is that they are going out of business, and people have been telling that story for years."

Edmonds thinks the "newspapers are dying" meme is fueled by the confluence of two very different outlooks.

On the one hand, there are what he calls the "digital triumphalists" who seize upon any shred of bad news to proclaim "that the old order will collapse in six weeks." On the other are what he calls the "nostalgists," who go into mourning over every lost job. "Each layoff is not an indication that the end is at hand," Edmonds says.

That said, there's no question that the industry faces a daunting challenge as it tries to retool for the digital future. Print advertising continues to fall faster than digital advertising and new revenue streams rise to make up the difference. Until that changes, the outlook will continue to call for smaller newsrooms.

Doctor says according to the "new calculus," things will improve significantly should the combination of digital ads and reader revenue become 50% of the revenue mix.

The New York Times'story on its cutbacks shed some intriguing light on what is happening in its newsroom and in others as well. While the paper has carried out significant cuts in recent years, its staff grew back to 1,330, approaching its high-water mark. This is due in part to the addition of digital staffers such as Web producers and video journalists. So what is taking place is a reshaping of the newsroom as well.

Similarly, under the ownership of Amazon.com CEO Jeff Bezos, The Washington Post has added scores of journalists to its roster. But these have largely been digital hires rather than additional reporting firepower.

Which makes sense. If they are to make it in the long run, newspapers will have to heighten their digital footprints and find new ways to attract digital audiences (not to mention digital dollars). That's why the Times' announcement Wednesday that it was mothballing NYT Opinion, a new mobile app, wasn't necessarily terrible news. It reflected the Silicon Valley mantra, "Fail fast, fail often."

If newspapers are going to endure, they'll need a lot of bold experimenting to make it happen.