In a recent story in the Wall Street Journal (12/6-7, 2008), Martin Peers said that in two years the newspaper industry is going to look very different.
Not uniquely prescient, that’s surely true. But on a page filled with other tales of corporate woe (reading the WSJ nowadays is like reading a horror story), it really stuck out with its numbers. Peers reported that more than 20 percent of the newspaper industry (by circulation) is in “financial distress.”
The number that really jumped out at me was that in these parlous times, publicly traded newspaper companies reported an average profit margin of 11 percent. Now, numbers are only helpful if you compare them to other numbers, so let’s look at a few. In 2002, the average profit margin was more than 22 percent. In the first half of 2007, it was still nearly 16 percent.
Bad news, for sure. But, as I have written about before, the average profit margin of ALL companies is more like 7-8 percent. So newspapers ought to be doing well, it seems to me. Now I know nothing about making money (hey, I am a professor), but doesn’t it seem like newspapers ought to be in better shape? All those years of huge profit margins, and still above average, yet more than 20 percent of the industry is in financial distress?
I am reminded of a quote from newspaper industry analyst John Morton in an American Journalism Review last year: “…no industry can cut its way to future success. At some point, the business must improve.”
Design can be an important improvement if it is done to make the news easier to access and understand. Design won’t help if it is used as a cosmetic afterthought or as a way to plug empty space in the news pages because you have cut reporters and editors. I think most recent design changes in newspapers I am familiar with have not really been improvements. They have been fun and pretty bandages on a broken bone.
Most newspapers associations and think tanks have been useless in helping newspapers stanch the flow of red ink as well. I think that is a subject that has not been discussed enough. What are these groups really doing — besides collecting dues — to help newspapers, especially the smaller ones?
That’s what I am trying to do with News Design School.
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