Insomniactive

In the “It’s always darkest just before it’s pitch-f*&^ing black” category, the latest and most indiscriminate round of cuts at the NYT-owned Boston Globe:

The Boston Globe, grappling with the economic downturn and financial pressures affecting the newspaper industry, yesterday said it plans to cut its newsroom payroll by as many as 50 full-time jobs, a reduction of nearly 12 percent in the company’s news and editorial staff.

All of the company’s 379 full-time news employees, including those at the Boston.com website, will be offered buyouts in coming weeks. If the company can’t meet its target through voluntary departures, it said it would resort to layoffs of union and management employees.

This will be the fifth newsroom staff reduction since 2001, as the Globe, like newspapers everywhere, struggles with the migration of advertisers and readers to the Internet, consolidation of the retail industry, and a recession forecast to be the deepest in decades.

The latest buyout program differs from previous ones in several ways. It’s the first newsroom-only buyout in recent memory. It covers 350 newsroom and editorial employees and 29 news employees of Boston.com, who were exempt in the past. And, all news and editorial employees — even those with fewer than five years at the company — will be eligible to apply.

The news operation also has 54 full-time equivalent jobs held by part-timers, who aren’t eligible for the buyout but could be included in layoffs. At its peak in 2000, the Globe newsroom had 552 full-time jobs. That didn’t include Boston.com, which then was operated separately.

Remember the bit in Monty Python and the Holy Grail when:

“in the frozen lands of Nador, they were forced to eat Sir Robin’s minstrels-and there was much rejoicing (yaaay!)?”

I felt a similar, vaguely queasy reaction to last week’s Pew Center announcement-not without its own Arthurian fanfare- that the internet had surpassed newspapers as the primary source of the polity’s news. TV still leads the pack, but not for long.

Why the stomach rumblies? Shouldn’t this be great news for enthusiasts awaiting the online channel to return newspapers to their rightful if historically unique place as a doers of great good and printers of bounteous cash-eesh? Weren’t we all just waiting for online readership to “catch up” with print, so that the dollars could follow and newspaper journalists could retake their rightful and authoritative place near the top of the news heap? Aren’t newspapers the rightful inheritors of a brave, new, pixellated world of journalism?

Not so fast, brave Sir Robin. Anyone who is looking to make a business out of online news should shudder at the Pew Center announcement. Think about it. In 2007, advertisers spent roughly $42 billion with newspapers. Circulation revs make it a nearly $55 billion industry.

So now that the online channel has surpassed the lump in the driveway in terms of reach and presumably influence, how looks the picture on the revenue side? Well, no one has asserted that online accounts for more than a single digit percentage of total newspaper ad revs. For the sake of argument, then, let’s say the reported score is 39-3, $billions that is, in favor of print. Subtract from the $3 billion in putative “online” newspaper revenue the accounting benefit the channel gets from the typical “wrap and roll” approach to selling print and online as a bundle. What is the size of that overstatement? 10%? 20% . Let’s say the “true” online number for newspapers is $2.5b.

(With the help of Lauren Fine at ContentNext, my cumulative revenue estimate for “all other” news sites rolls up to about the same size, even though they have twice the number of uniques. But that’s not important for this analysis).

*****

So, here we stand, lords and ladies of the online newspaper business. This is our big day! We are now more important to our readers than print! We should rejoice! Let a quadrillion pixels bloom! You, there, lad: procure for me a capon leg! (Or was that Henry VIII……?)

But, hark, or as they would have said in the quaint old days: STOP THE PRESSES! What? Our advertisers only want to fork over 4% as much cash as they did for the print product! Even though we’re more influential?! And they want us to…..measure results? And what’s that you say…. OUR READERS DON’T WANT TO PAY ANYTHING AT ALL? Why, that’s preposterous! And…you can’t really mean it…online revenue is down this year? It was supposed to grow in double digits at least until Jessica and Tony’s kids got their first cell phones?!

Four percent. Perhaps rather than rejoicing, we should consider up-chucking in the nearest trash can.

You see, the online news outlets of the future are shaping up to be-and it grieves me to say this-a bunch of grubby, cruddy, marginally profitable little businesses. Entry costs are essentially zero, technology and inventory abundance is shifting power to the advertiser at lightning speed, and there’s less than no correlation between quality journalism and quality of earnings. Sorry, Philip Meyer, it was a nice idea. It just happens to be dead wrong at a time in which the assets that were the newspaper’s biggest strategic advantage are now the albatross around its rapidly drowning neck.

Can some of these things make a little money? Sure, why not? It’ll be sort of like a Mad Maxmovie, or Cormac McCarthy’s The Road-after the nuclear holocaust, plenty of assorted post-armageddon, beady eyed-sole proprietors with shopping carts and automatic weapons will do just fine-cockroach-like, and speaking in the broadest of relative terms.

In a college town, for instance one could (and I just may) put up a site that has no content which strays far from eating, drinking, going to class, getting free stuff, getting laid-oh, and sports, and certainly not in that order-and earn a fine living for a handful of intrepid entrepreneurs. But would they call anyone among them a journalist? Duuuude! Who the f- wants to be a journalist? Toxic Tank’s Pub & Grub wants to sponsor Barely Legal Cheerleader Mud Wrestlingagain on our site! Riiiiiighteous!! Pulitzer?! Fur sure, we had a whole case of that around here somewhere! Their lite beer rocks! Piiiiiizza maaaan!!!! WHOOOOOOOOOO!!!!!

Ok, there. I’m better. A little. But I think I may have puked up my Elitist Card-I was forced to eat it by a ruffian band of entertainment bloggers when TMZ’s November uniques number hit the wire.

Honestly. Is there any hope that a brave new online model-driven entirely by market forces- could bring forth the resources necessary to actually improve the quality of newspaper journalism, after easily of generation of decline? Sorry. I just don’t see it. And as long as we’re on the topic of serious newspaper journalism, another Monty Python line comes to mind:

”I’m not dead—yet.”

While we’re very interested in business and very interested in journalism, we have concluded that serious journalism is a lousy business and that business principles are lousy for serious journalism. Clergymen are fond of saying that when you mix politics and religion you get politics. The mix of serious journalism and business is even worse: it yields businesses that aren’t worth investing in. Accordingly, the woes of newspaper industry remind us of the great Woody Allen line: “it’s not that your problems aren’t serious; it’s just that they’re not very interesting.”

We’re extremely fond of markets. But having poked around in both the for-profit and non-profit aspects of the journalism world for the last two years or so, we’ve adopted a very strong point of view. Serious-minded, public service journalism is a public good. By definition, we can’t expect markets to provide public goods in sufficient quantities. Said differently, the sad and declining state of public interest journalism today represents a market failure.

Alan Mutter reports that the 14 largest newspaper stocks fell by an average of 83.3% in 2008, with 8 falling by 90% or more. For comparison, the S&P was down 38.5%.

Of course, most of this dismal stock performance reflects an industry which levered up at precisely the wrong time. But anyone who argues-as do McClatchy and Gatehouse apologists, especially-that this was a one-time whiff is whistling past the graveyard. 2009 will find many of the lucky journalists who still have jobs suddenly working for the workout departments of banks which were known neither for their sense of humor nor civic mindedness before they had to borrow several billion dollars from Uncle Sam to stay alive.

No doubt, 2008 was annus horribilis, unlike none ever experienced before in the newspaper industry. But with the exception of a couple dozen properties, 2009 may well be annus ultimus-the year that the newspaper industry as we currently recognizes it ceases to exist, much as 2008 was the year Wall Street became no more. Certainly, if there were a futures contract on newsprint, I’d be back-up-the-truck short.

Wait….maybe there is…..if I could just find my truck keys…..

Remember Henry Blodget? Back in the day, he was one of the chief internet stock pimps for Merrill Lynch. In what might have been the biggest favor anyone ever did for him, the SEC took a dim view of some of his practices and granted him a non-optional, lifetime furlough from the stock research trade.

Blodget is now a freelance writer. The byline of his I read most recently was a terrifically long and shallow analysis (complete with entirely irrelevant biographical insertions) of the Wall Street meltdown in The Atlantic a couple of weeks ago.

Anyhow, Blodget most recently showed up on Silicon Alley Insider, offering sage advice to the NYTimes Co. management that they should cut 40% of their newsroom costs. No friends, that’s not a misprint.

The problem is, Blodget is likely right-in approximately the way General Gradenko was “right” when he cut off his own arm in the sixth season of “24′”. (Ironically, the General drowned rather than bleeding to death; the latter presumbably would have taken too long). The Times has probably already squeezed all it can from its production and distribution costs, at least all they can without emulating the Detroit Free Press by placing their print paper in what is effectively orderly liquidation. No, the Times newsroom-which has suffered cuts already-is almost certainly due for another round, with or without the advice of Mr. Blodget.

But back to Blodget nonetheless. If you didn’t like my tv metaphor, how ’bout one from dance? Blodget is much like a pro bono management consultant who walks into NY City Ballet and says, “you make a lot of money on Swan Lake and The Nutcracker-you should only run those. I never could follow those Balanchine things anyway-where’s the plot, for chrissake? There, that was easy; what time is lunch?” (Stuff like this actually happens in real life; ask any executive director whose board chairman has asked McKinsey to come over and help, “as a favor.”)

An open plea to the Sulzbergers: although the NYT is an indispensable public institution, it’s a shitty business that will get nothing but shittier. The fact that it used to be a great business with plenty of shekels left to go around for doing the public good-that, not the destruction of your advertising and subscriber bases by the interent-was a historical anomoly. As I’ve been whining for some time or, in this space at least, since this morning, the NYTimes needs to be a non-profit 501c3, run exclusively for the public good. And it’s not as far-fetched as it sounds.