Gotta spend it to make it

Didn't see this anywhere... D_B, blah, blah, blah..

Anyway, this story talks about a study that says that U.S. newspapers that spend more money on their newsrooms turn a larger profit than those who simply cut spending. Says cutting is only a short term answer that hampers long-term stability.

Thoughts?

http://news.yahoo.com/s/nm/20070215/media_nm/newspapers_newsrooms_dc

 

Here's the "flaw" publishers with exploit:

The researchers developed a mathematical model that showed how newspapers could rearrange their spending on distribution and circulation, advertising and newsrooms to achieve a higher profit . . .

Here's one of the researchers:
Esther Thorson, an advertising professor and associate dean for graduate studies at the University of Missouri's School of Journalism.

Publishers will say that it's a study performed by newspaper people not business people. Therefore, they are wrong.

 

Publishers and robber-baron owners can further say:

"It's absolutely SHOCKING that a study about newspapers done at a prominent School of Journalism came up with the result that cuts are bad, and people like their graduates and future graduates should keep their jobs."

I do agree with this quote, of course:

"If you lower the amount of money spent in the newsroom, then pretty soon the news product becomes so bad that you begin to lose money," she said."

But it is too easy for the bean-counters to dismiss this study - regardless of what I think of its merit - because a J-school has a vested interest in the future of print journalism.

 

That was Jack Knight's philosophy with his newspapers, but usually he was pretty shrewd about which papers he bought. I think the only acquistition that didn't work out for him was Chicago.

I don't think we can make a blanket statement that this is true for all papers. Economists use the term "diminishing returns," meaning there is a point when increased investment doesn't work anymore. And I did work on a paper that cut about 30 percent of its newsroom and circulation went up.

There are a lot of factors at play, and it's a bit simplistic to decide that it's automatic, spend more money and make more money.

 

I think it also depends on what exactly they spend the money on ... at my former paper, during massive buyouts ... the publisher had his office remodeled.

 

As usual, Frank, you are on the money. At this point, I doubt any of the JRC rags that have taken deep hits would make more money, no matter how much you plowed back into the product.

At the same time, too many times, the business folks treat the symptoms, not the illness.

 

Daily News was a victim of one of the earlier waves of what is now popularly known as The Death of the Afternoon Paper. It was also far too socially liberal for the town.

 

This is a guess, of course, but I believe the JRC papers are exactly the ones that would grow in circulation from investment in the product. The question, though, is whether even a significant circulation growth would translate into more advertisers. My take on JRC has been that it will use those papers like a disposable lighter until the fluid is gone and then throw it away and then take the tax writeoff when they sell at a loss like they just did in Rhode Island; their perception is that economic growth in most of those markets isn't going to happen, so just suck every nickel out and throw it away.

Where I work, though, I am not sure adding 100 bodies would result in more than another 20K subscribers.

 

I love some of these sweeping statements you hear.

If you spend money wisely, then yes, it makes a difference. (See: New York Yankees, 1996-2001)

If you throw it around foolishly, it ain't gonna help a bit. (See: Baltimore Orioles under the watch of Peter Angelos).

 

That was precisely my concern the moment I saw the first quote.

The beancounters have the ammo they need to dismiss this story as the newsroom protecting its own.

I never worked for JRC or Thomson - thank goodness - but I did work for one paper where the publisher and general manager took the approach that the newsroom "was the only department not making money for the paper." Of course, those top people were ad types and don't know what they're doing with the paper they inherited from their father.

 

Here's the school's release on the study. It'll be published in the April issue of the Journal of Marketing for those who want to see more about it.

One thing that jumps out though is that the study only included papers with a circulation of 85,000 or less. Hard to say if it'd pan out for bigger papers too.

 

If newspapers would just pump some money into the computer equipment on an annual basis I think they would see an improvement in production. Everywhere I have been has a philosphy of getting all new every five years or so with a major capital outlay, then keeping it working with duct take and paper clips. I've wasted weeks of my life by now tinkering with a locked-up computer or waiting to reboot.