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 Introduction to the Second Edition For some, the apocalypse came sooner than expected. The 2008–9 recession overlaid a cyclical downturn on top of the long, slow secular decline in readership that newspapers had been experiencing since the 1970s. Newspaper owners who had leveraged their acquisitions in the expectation of a steady-state revenue stream to service their debts were suddenly in trouble. In late 2008, the Tribune Co. filed to reorganize under Chapter 11 bankruptcy protection. A financial news service put two other major newspaper groups on its list of companies at risk for bankruptcy .1 Lee Enterprises owed a billion dollars from its purchase of the St. Louis Post Dispatch, and McClatchy Newspapers had two billion in debt resulting from its ownership of what was left of Knight Ridder. McClatchy made a deal to sell the Miami Herald’s magnificent bayfront property, but the buyer couldn’t find financing .2 Layoffs accelerated across the industry. Even Gannett’s relatively prosperous USA TODAY announced a 10 percent staff cut. Without the recession, the underlying secular trend was bad enough. Weekday circulation of daily newspapers in the USA fell in 2007 to 50.7 million, its lowest point since 1945. Sunday papers , to which advertisers had repaired for their bulky packages of slick-paper preprints, dropped to their 1972 level.3 1. 24/7 Wall St., LLC is a New York–based financial news and opinion service with content delivered over the Internet. http://www.247wallst.com/ 2. Reported in McClatchy’s fall 2008 10-Q report to the SEC. 3. Circulation history was obtained by the Newspaper Association of America from Editor & Publisher International Yearbook and posted at http://www. naa.org/TrendsandNumbers/Total-Paid-Circulation.aspx.  The Vanishing Newspaper There was more. The metric most relied on by advertisers was average daily readership, measured by the “read-yesterday” question in sample surveys. In 2006, it fell below 50 percent for the first time since its inception in 1964, and it dropped again in 2007 to 48.4 percent.4 And the number of daily newspapers continued to fall at a steady rate: an average net loss of twelve mastheads per year since 1971. None of these events changed the two basic theoretical justifications for the research reported in this book, but they did justify a shift in emphasis. The first justification was to convince the owners and managers of newspapers of the futility of cutting the quality of their products in an attempt to maintain monopoly profits after the monopoly was gone. It was an argument that might seem obvious to news-editorial people, but it was not so apparent to accountants and advertisers: that product quality is necessary for sustainable profitability. It might be apparent to them now, but that horse has left the barn. The selfdestruction of the traditional mass-market newspaper could be irreversible. The other reason for undertaking this study of the effect of news-editorial quality on profitability was to try to transfer awareness of the importance of information quality to whatever new media businesses will replace the traditional newspaper. The core of the argument is based on a theoretical model that I have come to think of as influence theory. It holds that advertisingsupported news media will succeed to the extent that they are influential in whatever communities they serve. The evidence comes from geography-based communities, but it should work in nongeographic markets as well. Influence is earned by trust, and the empirical evidence in this book shows that trust depends on quality. If the traditional public service functions of newspapers are to be served by strange new media forms, the creators of those forms will benefit by understanding those essential causal links: quality to trust to influence to sustainable profit. It is still possible for newspaper companies to be part of this action. They could transform themselves into business models based on public service and the facilitation of democracy. But to do that, they need to be thinking now about what the end product of that transformation would look like. As this is written, the accountants appear to be guiding the transformation without much thought about that end product. If they continue to slash and burn their existing businesses, all they will end up with are slashed, burned, 4. Based on the Scarborough Research Top 50 Market Report 1998–2007 as posted by NAA. From 1964 to 1997, industry-supported readership data were based on all U.S.A. adults...

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