Monday, January 12, 2009

That the world of traditional media is in crisis, nobody doubts. However the question raised by Michael Hirschorn of the Atlantic, is just how long the industry can continue in its current situation. He takes the example of the struggling New York Times and hypothesizes about the end coming sooner than anyone expects - May in fact. Whilst the NYT going out of business within months looks highly unlikely, its current financial status leaves this seemingly far-fetched theory every so slightly more plausible. The conundrum of the newspaper industry at large is that online readers massively outnumber print readers - but there is little benefit in having volumes of online readers when the profit that comes with them is minimal. The Internet is forcing newspapers to stop and evaluate how they communicate the news. Sites such as Google are offering everything to users, and are progressively edging traditional institutions out.

Interestingly, Google insists it does not want to overtake the printed press - in a recent interview Eric Schmidt, Google's CEO seemed keen to find a salvation for traditional newspapers and discover a way for the two to co-exist in harmony. He is however unsure of exactly what that solution is and is reluctant to buy a newspaper outright or simply provide them with a cash injection as 'it would help solidify the ownership structure, but it doesn't solve the underlying problem in the business'.

In his article, Hirschorn goes on to speculate about different methods of money saving for newspapers, and the NYT in particular. He mentions borrowing money against company buildings, selling assets or cutting dividends (a step the NYT has already taken), but somewhat pessimistically declares that these all precede the staff cuts that the New York Times has been so publicly keen to avoid.

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