Gotta spend it to make it

[Rusty Shackleford]

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

 

[SoSueMe]

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.

 

[Piotr Rasputin]

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.

 

[Frank_Ridgeway]

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.

 

[Write-brained]

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.

 

[wickedwritah]

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.

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.

 

[Ben_Hecht]

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.

 

[Frank_Ridgeway]

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.

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.

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.

 

[Montezuma's Revenge]

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).

 

[Sam Mills 51]

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 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.

 

[JRoyal]

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.

 

[Pi]

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.

 

[FishHack76]

I don't think the bean counters frankly care about this study, or anything else for that matter, because Wall Street wants more profits!

 

[FishHack76]

I think it makes sense. It's something I used to say all the time. If you want people to buy the paper, you have to make it seem like they're getting more for their money.
You take things away from your product and people notice. I call it the Skinny Cow. So say you're trying to sell this cow. The ribs are sticking out. You can see its spine. The eyes are sunken in. There are flies all around it.
You go up to someone, "You want to buy this cow?"
"NO!"
So you come back four months later, then cow looks even skinnier.
"You want to buy this cow?"
"Why the hell would I want to do that?"

My company once dispersed something like $400 million to shareholders. Some of that was long overdue, but they could have taken $10 of that and put it back in the newsroom and it would have been more than enough.
I don't think some of these companies realize what little it would take. Hey, here's a thought. Don't pay your CEO $50 million per year and don't remodel his office. Maybe then you'd have enough money to hire another photographer or another copy editor.

 

[SoSueMe]

Hey, here's a thought. Don't pay your CEO $50 million per year and don't remodel his office. Maybe then you'd have enough money to hire another photographer or another copy editor.

Reminds me of when one of the Big Three (I think Chrysler) was paying a former CEO some absurd amount of money in retirement. He was building an enormous mansion in Florida while assembly workers were being laid off by the hundreds.

 

[Claws for Concern]

Hey, here's a thought. Don't pay your CEO $50 million per year and don't remodel his office. Maybe then you'd have enough money to hire another photographer or another copy editor.

Reminds me of when one of the Big Three (I think Chrysler) was paying a former CEO some absurd amount of money in retirement. He was building an enormous mansion in Florida while assembly workers were being laid off by the hundreds.

He probably invited them over for a party with cake.

 

[wickedwritah]

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.

Five years? Try 10. We're still on OS 9.2932894376 or something like that.

 

[Ben_Hecht]

The self-reverential can't stand the thought of pumping serious loot into what they fear are repidly-diminishing assets.