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Death of legacy Media

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  • Death of legacy Media

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    Don't Blame Craigslist for the Decline of Newspapers
    It's fun to beat up on Craig Newmark for the end of classifieds, but papers were greedy, too.
    By JACK SHAFER December 13, 2016
    The journalistic world’s sniping at Craig Newmark, founder of Craigslist, recommenced yesterday after he announced on Twitter his $1 million donation to a Poynter Institute fund for ethics in journalism. Although the response to Newmark’s tweet was overwhelmingly positive, some chastised him by reprising the notion that journalism is in trouble precisely because Newmark’s Craigslist had pirated away its classified business and gutted its business model. “That’s nice but how about investing in the news organizations craigslist has undercut so devastatingly?” tweeted Philadelphia Inquirer writer Amy S. Rosenberg.

    Rosenberg’s sentiment has had distinguished company over the years. “Craig Newmark…has probably done more than anything to destroy newspapers’ income,” the Economist wrote in 2006. In 2013, Alec MacGillis ridiculed Newmark’s philanthropic investment in newspaper ethics while simultaneously usurping their classified revenues. “How Craigslist Killed the Newspapers’ Golden Goose,” is how the MinnPost put it in 2014.

    Story Continued Below

    We all lament the passing of the newspaper era, but hanging the blame on Newmark remains unfair as well as ahistorical. Newspapers themselves deserve a share of it. Where they gained monopoly power, which was most U.S. cities, daily newspapers gouged their classified customers pitilessly; they lobbied Congress heavily to block the early migration of classifieds to electronic forms. And the big newspaper chains helped destroy their own business by investing in national online classified advertising verticals, which they ultimately sold. Against this backdrop, Newmark was an inevitable force, but no villain.

    The closure of the Washington Star provides the best illustration of how newspapers put the screws to their classified customers. Just before the Star folded in August 1981, the Washington Post was charging $2.85 per line in the daily newspaper for one time display. It didn’t take the Post long to raise the rate. By January 1982, the line cost $3.15. By January 1984, it was $3.65. In 1996, as the commercial Web began its ascendancy, a line cost $7.93, considerably outpacing inflation. Keep in mind that the Post and other newspapers weren’t raising prices because they were struggling. At that point, newspapers were a 30-percent-margin business, flush with so much cash that they were opening regional and international bureaus with abandon, buying up other newspapers, investing in television stations and other businesses. They raised prices because they could.

    Newspaper executives did everything they could to protect this rent-collecting franchise. In 1980, when AT&T proposed the easing of regulations so it could create an “electronic yellow pages,” the newspaper publishers counterattacked. Katharine Graham of the Washington Post and other publishers met with senators about the proposal, and when one senator said what worried her is that an electronic yellow pages would erode her advertising base, she responded, “You’re damn right it is.”

    Charging monopoly prices has a way of placing a target on your back. As the Web expanded, the newspaper giants didn’t sit on their hands as new competitors like eBay, Monster and arrived. The newspaper companies partnered to create national advertising verticals in a variety of categories., which got started in 1998, was owned by Gannett, McClatchy, Knight Ridder, Tribune, Times Mirror, the Washington Post Co., Central Newspapers and A.H. Belo. The same outfit acquired in 1998. In 1999, the Cox newspaper chain created Knight Ridder and Tribune bought in 2000, and Gannet bought a one-third interest in 2002.

    In other words, the newspaper giants did the same thing as Craigslist—they sought to exploit the Web. But newspapers didn’t do the Web quite as well as Craigslist, a stripped-down bulletin board, which didn’t break out of its San Francisco base until 2000. More important, the newspaper giants didn’t produce as good a product as Craigslist, as anyone who has used the service to buy or sell can attest. According to one study, Craigslist, where ads are mostly free, saved classified-ad customers $5 billion during 2000-2007. There’s another way of looking at that number, of course—that Craigslist “took” $5 billion in revenue from newspapers. But that analysis makes sense only if you think newspapers had some divine right to collect monopoly rents from their classified customers forever.

    If you’re still sobbing for the newspaper companies, stop. The and investors did nicely when they decided to cash out. Gannett bought out its four remaining partners for $1.8 billion in 2014 and CoStar bought for $585 million the same year. It may be a small change compared with the profits conventional classifieds piled up in the old days, but it’s real money compared with today’s newspaper valuations. When the Graham family sold the Washington Post Co. to Jeff Bezos for $250 million, it retained its 16.5 percent share in, for which it later collected $408.5 million. Graham Holdings got $95 million for its share of

    The decline of the newspaper is a multigenerational, multicausal phenomenon. Newspapers have been declining since the arrival of radio in the 1920s, with a steady attrition of total titles and per capita consumption over the years. The remaining newspapers were profitable only as long as they could demand monopoly advertising rates, and as long as the kinds of retailers that benefit most from newspaper ads—namely department stores—remained healthy. But as department stores have faded and the arrival of new editorial and entertainment competition on the internet, the newspaper has been unable to dominate as it once did. When the demise of the newspaper business is written, Craig Newmark won’t be the whole book. He’ll be just a short chapter
    To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway

  • #2
    Christie's revenge: Kill the Press | Editorial
    Gov. Chris Christie and his buddy, Donald Trump, share a disdain for the press. Christie is now taking his revenge. (Justin Sullivan | Getty Images)

    ByStar-Ledger Editorial Board
    December 14, 2016

    You can tell when the old boys in Trenton are doing something dastardly, just by the timing. If it's awful, they move fast, before the stink can travel far.

    So it is with this week's attempt to kill jobs in the newspaper industry, on the bogus promise of saving money for local taxpayers.

    Gov. Chris Christie, a vindictive soul who has made no secret of his hatred for the free press, is pushing it hard. And Democratic leaders, always ready to make a deal, even a craven one, are going along with it.

    The purpose of this bill, when you cut through the clutter, is to weaken the press, to defang the watchdogs who expose their bad behavior.

    If you want to give state and local politicians free reign to do their dirty business in the dark, this bill is a Godsend. If you want to hasten the decline of the press in the era of Donald Trump, this one is for you. Be ready to rely more on fake news posted on Facebook.

    First, full disclosure: The bill would damage the Star-Ledger and its sister papers, likely forcing another round of layoffs. This time, we are in the crosshairs. Statewide, 200 to 300 journalists would lose their jobs, and some papers would no doubt fold. Factor that in as you see fit.

    But let's look at the merits, straight up.

    This bill is pitched as a way for local governments to save money by posting legal advertisements on their own web sites, and not in local newspapers. But it would force local governments to fortify their web sites against hacking, and hire staff to process, format and track all the ads, a job now done by the newspapers.

    So how much would it save, in the end? Probably nothing. The last time the boys in the back room tried to pull this stunt, in 2011, the Legislature's own research arm said it might not save a dime - and could even increase local costs. That may explain why no other state has done this.

    And what about the digital divide? Local governments are required to post legal ads because voters have a right to know when a public contract goes up for bid, or a local business seeks permission to expand, or a foreclosed property goes up for sale.

    Don't the elderly and the poor have that same right? Fresh data from the Pew Research Center shows a 33-point gap in internet use between young and old, a 35-point gap between college graduates and high schools dropouts, and a 21-point gap between the rich and poor. This bill, in effect, creates two classes of citizenship.

    And because this is New Jersey, let's carefully consider the weapon this bill would place in the hands of a sleazy politician. It's not just that they would be able to hire family members while no one is watching, or vote themselves a raise.

    It would give them new leverage to pressure the press. Under this bill, a mayor could threaten to pull the legal ads from the local paper preparing to print a damaging story.

    Imagine the pressure on the publisher of a local paper that is barely surviving in today's market. The temptation would be to yield, to protect the staff and their families. And if you don't think New Jersey pols would play that rough, you haven't been paying attention. It is a sure thing.

    That's the evil genius behind this bill. It would wipe out hundreds of watchdogs, and give the worst politicians a new way to fight those left standing. We are supposed to believe that would save taxpayers money?

    If it were really about savings, this push would have come from the League of Municipalities. But Mike Cerra, its assistant executive director, said that while the League welcomes the move it had nothing to do with this push. "I can't say really where the push is from," he says.

    We can. This is the work of a bruised governor who is reviled by most citizens of the state. He blames that on the press -- not on the scandals, the lies, and the undeniable failure of his leadership. This is his revenge.

    "Who else would dream this up but somebody with that kind of evil mind?" asks Sen. Loretta Weinberg (D-Teaneck).

    Hearings are set for Thursday. Don't bother calling the governor's office; he's lost. But if you want to stop him, please call your local legislator, along with Senate President Steve Sweeney (D-Gloucester) at (856) 251-9801, and Assembly Speaker Vincent Prieto (D-Hudson) at (201) 770-1303.

    This one is headed for approval unless people stand up and object. We have just a few days left.
    To sit down with these men and deal with them as the representatives of an enlightened and civilized people is to deride ones own dignity and to invite the disaster of their treachery - General Matthew Ridgway