A silver lining in the bad news about newspapersMarch 5, 2012: 2:28 PM ET
A Pew Research study finds that newspapers are struggling to resist the "inertia" that is keeping them from transitioning to the online world. The key to success? Culture.
FORTUNE -- Last week, the Eugene Register-Guard published an article online about David Imus, a local mapmaker who was buried in debt until the online magazine Slate praised his cartography gifts in January. Now he's selling maps like crazy, thanks in part to Slate linking to his site, Imus Geographics. The Register-Guard, however, did not provide a link to the site, and added links to Slate and other media outlets' stories only at the bottom of the article, almost as an afterthought. It was a case in point of sorts.
"Cultural inertia" is responsible in part for the fact that so few newspapers are succeeding online, according to a new study from the Pew Research Center's Project for Excellence in Journalism. Seemingly small things like linking to the sites that are the subjects of articles is but one manifestation of this inertia. The overall problem is that too many newspapers are still treating the Internet like the Register-Guard treats links -- as an afterthought. Which is not to single out the smallish Register-Guard. The New York Times, one of the best newspaper sites in the world, still often links certain phrases to its own "topic pages," which sometimes throws off people who are used to links taking them to another article or something that will actually explain precisely what the phrase is referring to. Often, that's not a topic page.
Cultural inertia, though, is just one problem. Economics lie at the heart of the continued shrinking of newspapers and other "old media" -- revenues from online ads just aren't making up for the loss of print-based ad revenues. The study says newspapers on average make up just $1 online for every $7 they lose on the print side as advertisers bolt and rates decline. The findings, while not precisely scientific, were gleaned from a survey of six companies that own a total of 121 newspapers. They shared the data on condition that they remain anonymous. The New York Times pronounced the findings "grim."
And so they are, but there are some rays of hope -- though they are dependent on newspaper companies casting off the inertia. Just 40% of the papers surveyed target and customize their ads based on reader behavior, for example. And the number of print-focused ad-sales people at the participating newspapers outnumbered digital-focused reps by about 3-to-1. The papers that are focusing more on digital tend to be doing better than those that are slow to make the transition.
The usual challenges of converting a "legacy" business to a new age are apparent. "One involves the difficulty of changing the behavior of people trained in the ways of a mature and monopolistic industry," Pew notes. "Still another is the unavoidable fact that the part of the newspaper industry that is growing, digital, continues to provide only a small part of the revenue, while the part that is shrinking, print, provides most of the money -- a paradox that is difficult to navigate and hard to resist. One pervasive feeling is that 15 years into the digital transition, executives still feel they are in the early stages of figuring out a how to proceed."