Tuesday, December 2, 2008

Does Anything Get To Fail Anymore?

In CT, reading newspapers is so important that some state legislators want to use your tax money to support newspapers you don't read or care about right now.

Do we bail out every business that's having trouble? Do we stop when we run out of money?

That's my reaction to a request by some CT lawmakers for a local newspaper bailout.
Seven legislators from the area served by The Bristol Press and The Herald in New Britain today wrote to the state Department of Economic and Community Development to ask for its help in preventing the closure of the newspapers.
There actually are newspapers that are making money these days. McClatchy just reported a 3rd quarter profit. But instead of saying to these local businesses: "Get used to lower margins, innovate, adapt," the reponse is to scream for government money.

Why is handing over taxpayer money to these businesses is a good idea? Its a rotten time to publish a newspaper. The New York Times just had its bonds downgraded to junk status by Moody's. Ad revenue is down. Readership is down.

People increasingly don't get their news from newspapers, and some of them don't get it at all. An ignorant populace is definitely a bad thing, but handing out money to newspapers is not the way to fix the problem.

Historian Rick Shenckman proposes in his book "Just How Stupid Are We?" that the government subsidize newspaper subscriptions, revealing himself to be spectacularly uninformed about economics and human motivation.

What makes you think people who aren't reading the news now, would read it if it was free?

You cannot force people to be informed.

You cannot force them to be moral.

And you sure as hell can't force them to be smart.

2 comments:

Anonymous said...

Nobody's asking for a bailout. Those pushing for state help are simply seeking the state's assistance to find a new owner and to make sure the new owner knows about any programs that would help. That's the same thing Connecticut would do for any business.

Porcus said...

http://www.portfolio.com/executives/features/2008/11/24/Sam-Zell-Talks-with-Joanne-Lipman?TID=email/news/careers

Here's one response that stood out to me

JOANNE: So what is the new model? Have you figured that out yet, or are you cutting your way to…?

SAM: I think the answer is we are testing and testing and changing. We've reformatted all eight newspapers. Among other things, we shrunk the size of the newspapers by an inch. And then we responded to our customers. Our customers have an enormous interest in our newspaper on Sunday; have almost no interest on Monday, Tuesday, Wednesday; Thursday and Friday, they're more interested; and Saturday might as well be in the desert. So we did something that was really extraordinary. It kind of came out of Econ 101. We looked at demand and we said, "Gee, we ought to reduce supply when demand is weak"—a very shocking concept, particularly for the newspaper industry. So, we've now done that across all of our newspapers.

We did not have a single salesperson on commission. In other words, every single newspaper had a cadre of salaried salesman. Now, you know, I'm just a businessman, but I've never seen any kind of a sales force that was effective if, in fact, they had no incentives. Now, part of the reason is that historically, because it was a monopoly, newspapers heavily depended, and still do, on national advertising, where the salesman is an order taker. When the guy from Macy's calls and says, "We want six pages," you don't say to him, "Well, how about nine." You just say, "Yes, sir. Send me the check and we're on." But, among other things, what that led to was a massive abdication of potential advertisers within the local markets using zones, so that, in effect, the zone belongs to the salesman. Nobody else can go in there. Even if nobody has bought anything in that zone for 20 years, it's still his territory.

I mean, this is nutty stuff. And, in effect, what we're trying to do is address the newspaper business like a business.

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