"It seems hopeless. How can the newspaper industry survive the Internet? On the one hand, newspapers are expected to supply their content free on the Web. On the other hand, their most profitable advertising--classifieds--is being lost to sites like Craigslist. And display advertising is close behind. Meanwhile, there is the blog terror: people are getting their understanding of the world from random lunatics riffing in their underwear, rather than professional journalists with standards and passports."For the record, I rarely riff in my underwear. What I want to concentrate on, though, is the economic situation newspapers find themselves in.
To me, the interesting thing here is that through historical accident and the nature of print distribution, the classified business and the news business became tied. There is no reason that they have to be, and - more to the point - no reason to think they ever will be again. The part of the newspaper that Kinsley wants to keep (the original reporting) has never paid for itself. It has always been supported by the fairly profitable business of classified advertising. This accidental relationship has allowed professionals in the business to delude themselves regarding what people were actually paying for.
Here's the truth that hurts: people don't apparently value the journalism that many papers produce as much as the journalists think that they should. This fact was able to be obscured for quite a while by the fact that people did value something else the newspaper provided (classified advertising) quite a bit, and tolerated the cross subsidization as a result. That subsidy relationship has now been broken, and how much most people are actually willing to pay for the news is becoming clear - not that much. That smarts if you are a reporter or editor, but then again I'm sure it also smarts if you work at GM and watch people not want to spend money on your product either. Complaining about the fact that it hurts, though, is not a strategy for future success.
Options? Assuming that the classified business is for all intents and purposes lost, one option would be to try to tie news reporting to something else that people value. Nothing likely to work comes to mind. They might also become trophy properties (as Kinsley alludes to), where rich people buy them for the ego boost and then proceed to subsidize them from their existing wealth (similar to many sports teams). Alternatively, they will have to "right-size" themselves to a level that can be supported by the people who want to read them.
On this last point, though, I am curious about what a completely "e-paper" might look like. There certainly is a market for "serious" news; the problem is that that market is a lot smaller than traditional newspapers have let themselves believe. The good news, though, is that those "serious news" consumers are a lot more technologically literate than the average population, and probably have higher average incomes as well (making them a potentially attractive online advertising demographic). Move completely online, and your eliminated costs include paper, printing plants, and a lot of the layout work. Would that be enough to support a smaller operation, but one more focused on the actual news? I don't know, but I do know that there are a lot of people around the country right now that better start thinking about it.
By the way, if you are interested in another take on Kinsley check out Ace of Spades, who has thoughts more from the journalistic aspects of the issue.