Shifting Financial Landscape Undermines Newspaper Staffs

American journalism faces a major change in its landscape as newspaper grapple with falling revenue from advertising and subscriptions. Online ads may eventually make up the difference, but it may not happen before newsrooms are depleted of full reporting staffs.

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RENEE MONTAGNE, host:

When young people turn away from newspapers for news, one of the main places they're turning to is the Internet. That actually offers a ray of hope for the newspaper business in the form of the online advertising Scott just mentioned. While traditional ad revenue putters along in print editions, newspaper web sites are bringing in money at a faster and faster clip. The question, will it be fast enough to turn enough to turn around a struggling industry?

NPR's Frank Langfitt reports.

FRANK LANGFITT reporting:

A new study by the Project for Excellence in Journalism says that online ad revenues grew by 30 percent to 60 percent at publicly owned newspapers last year. Tom Rosenstiel, who oversees the project, says that growth is great for newspapers. But right now, it's not nearly enough to offset the slump in print advertising, or the steady loss in circulation.

Mr. TOM ROSENSTIEL (Chair, Project for Excellence in Journalism): We know that the audience of the future for news is going to be online. The question is, will online ever make enough money to subsidize journalism at the level that we've come to think of it as Americans--to cover the waterfront, to subsidize enough reporters to really understand what's going on in a community, at the city council, and everywhere else?

LANGFITT: By most accounts, it has a long way to go. While Internet revenue is growing, it's still just five percent of newspapers' overall ad revenue. Florida's Poynter Institute, a journalism think thank, says that online revenue will not surpass print revenue until the year 2018, and that's an optimistic view. By then, Rosenstiel says, newspapers may have cut too much staff to produce consistent, quality journalism.

Mr. ROSENSTIEL: The newsrooms that are providing the content, there already have shrunk so much that they'll never build back up.

LANGFITT: Rosenstiel says it's hard to build up earnings on the Internet, because advertising there is more targeted, and individual rates are much lower. Wall Street analysts say the web generates no more than 33 cents of ad revenue for every dollar that's lost in print.

But Gary Pruitt, the head of the McClatchy Newspaper Company, is more optimistic. He said this in a conference call yesterday, about his company's purchase of the newspaper chain, Knight Ridder.

Mr. PRUITT: Print will continue to be a strong piece, but online will be growing much more quickly, and it wouldn't surprise me that in five years, if online classified revenues come pretty darn close to the print classified revenues.

LANGFITT: Even as McClatchy and other newspaper companies grow online, they're certain to face more competition. In recent years, Craig's List, the no-frills, community-advertising site, has taken away many newspaper classified customers. Rafat Ali runs Paidcontent.org, which covers the business of Internet media.

Mr. RAFAT ALI (Executive Director, Paidcontent.org): The whole fact of the Internet is that you will get undercut by another low-cost, more niche competitor. And the media companies will probably have to learn to live with all the flux, and it's going to be crazy, but that's just how the world is.

LANGFITT: Ali says Internet advertising will never make up for the loss of revenue in print editions. He thinks newspapers will still be around in the coming years, but the companies that publish them will become much smaller.

Frank Langfitt, NPR News, Washington.

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MONTAGNE: This is MORNING EDITION, from NPR News. I'm Renee Montagne.

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