Rick Wartzman is not some Twitter-happy newbie who naively pimps New Media and technology. He's the former Business Editor at the Los Angeles Times, and was the editor of the paper's West magazine, and before that a correspondent at the Wall Street Journal (which had cuts in L.A. today.) Now the director at the Drucker Institute, he writes in Business Week that the jig is up for print.
To stop the red ink, newspapers need to get rid of the ink altogether. It's high time for online-only operations.
"Every decision is like surgery," [Peter] Drucker wrote in The Effective Executive, his 1967 classic. "It is an intervention into a system and therefore carries with it the risk of shock. One does not make unnecessary decisions any more than a good surgeon does unnecessary surgery." And yet, despite the dangers, Drucker was quick to add that "one has to make a decision when a condition is likely to degenerate if nothing is done."
"This also applies with respect to opportunity," Drucker explained. "If the opportunity is important and is likely to vanish unless one acts with dispatch, one acts—and one makes a radical change."
This is precisely what newspapers must recognize: They have to grab the future that's right in front of them—and before it's too late. For long-established businesses, this can be terribly difficult....
As a guy who loves to go out and pick up the three newspapers that land on my front lawn every morning, I'm sorry to say it's inescapable: The Web needs to be embraced much more fully than most papers have done. This means no more tentative, halfway initiatives. Dead-tree editions must immediately yield to all-Internet operations. The presses need to stop forever, with the delivery trucks shunted off to the scrapyard.
How he thinks it could work at the L.A. Times follows after the jump, based on a talk he had with Times editor Russ Stanton. Hint: the paper would have to slash its journalist ranks alone by another 75%.
To get a sense, I called an old friend and colleague, Russ Stanton, who is now the editor of the Los Angeles Times, and asked him what the paper would look like if it were available strictly on the Web.
After a day or two of playing with the numbers, he came back to me with an interesting picture: Based on its current level of online ad revenue, he says, the L.A. Times could support a staff of about 275 people at their present salaries, and even offer a slight bump in benefits. This factors in office space, equipment, and all other major costs. And get this: The paper would be a solid moneymaker, boasting a profit margin of about 10%.
Of those 275 folks, Stanton figures, about 150 would work in the newsroom; the rest would sell ads, provide tech support, and handle various administrative duties.
This is far from a perfect solution, of course. Many older readers, in particular, are bound to balk at any arrangement that tries to force them online. What's more, cutting the news-gathering ranks to just 150 would sharply curtail what the Times could do, while causing a great amount of pain to those who've lost their livelihoods. The paper today has about 625 reporters and editors around the world (a stable that's down from the 1,000-plus when I was there just a couple of years ago).
But perfect isn't an option for the newspaper industry anymore. "In turbulent times," Drucker wrote, "the first task of management is to make sure of the institution's capacity for survival." And that's just it: With 150 journalists, a paper such as the L.A. Times could indeed survive—and still provide an indispensable service to the community....
Stanton and his team would have to make some very hard choices, and he stresses that the Times hasn't actually considered a Web-only model, in large part because it would entail walking away from more than $500 million in print-ad revenue.
But in chatting with him, it became clear that 150 troops could do a decent job of writing about (and videotaping, too) their own backyard. (How exactly you define "backyard" is another matter.) They could cover local sports, area business, and entertainment. Most significant, the paper could indeed maintain at least something of a watchdog function, holding L.A. politicians and institutions accountable.
I have no doubt that legions of customers would applaud this mission. After all, where else are they going to find reporting of such depth and distinction about their own city?
News outside these narrow confines, meanwhile, would have to be accessed by clicking elsewhere, conceivably through partnerships with other news organizations—an example of the "bewildering variety of alliances" that Drucker believed many enterprises would need to rely upon in the 21st century.
Yeah, it's the rosiest possible analysis. The Times only accomplishes those goals now in the thinnest of ways compared to even a few years ago. Reporting savvy and the smarts to outwit pols and CEOs would diminish, not increase — the talent to mash up Google maps and shoot video in the field is not what's missing in L.A. journalism. A web-only LAT would start out as the best online news source in the city by default, but a shell of itself both as a power to be reckoned with and as a consumer product. But as Wartzman says, they have to figure out something or "pretty soon, they won't be in business at all."
Stanton expands: Speaking this week at a Harvard function, Stanton clarifies that current online revenue could pay for a scaled-down payroll, but not the costs of gathering the news. He also says that the paper needs to hold on to its print revenue "as long as humanly possible because it is the lifeblood that finances everything else." Stanton was interviewed on video with his predecessor, Jim O'Shea. The interviewer didn't seem to know that a big new round of layoffs is already scheduled for later this month.