What newspaper history says about newspaper future.

Media criticism.
Jan. 28 2006 3:00 PM

Not Just Another Column About Blogging

What newspaper history says about newspaper future.

Illustration by Mark Alan Stamaty.

Six months ago, I stumbled upon a brilliant 16,241-word paper about press consolidation, and it didn't occur to me until this week, while attending yet another blogger conference, how to spin it into a column.

The whale was written by Elizabeth MacIver Neiva for the spring 1996 issue of Harvard Business School's Business History Review, and it's titled "Chain Building: The Consolidation of the American Newspaper Industry, 1953-1980." To the best of my knowledge it's never been cited in the popular press.

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The paper isn't online, but the speed-metal, five-page version is. To summarize Neiva's summary, she looks at the consolidation of the newspaper industry over the aforementioned 27-year period, when the number of dailies independently owned by families fell from 1,300 to 700. (There were 1,785 dailies in 1953.) She finds three entrepreneurs who capitalized on three of the external changes in the market that were responsible for the trend. They are Prescott Low of the Quincy, Mass., Patriot Ledger, whoseized on electronic typesetting; Lloyd Schermer of the Missoula, Mont., Missoulian, who broke labor union hegemony; and Paul Miller of Gannett, who exploited IRS-mandated changes in estate-tax appraisal.

According to Neiva, newspaper technology remained stable in the 70 years before the post-WWII era, with the "massive, noisy mechanical contraption called a Linotype machine" that had more than 10,000 moving parts and took as much skill to operate as a nuclear power plant (my hyperbole, not Neiva's) dominating newspaper production. Then postwar inflation and the end of wage freezes sent publishers searching for ways to cut costs.

In 1953, Low of the Patriot Ledger placed his bet on a newfangled photocomposition device—the Photon—that set type on film instead of lead, did it six times faster, and did it tons cheaper. By 1956, the Patriot Ledger had fully integrated the Photon into its operation. This allowed Low to replace skilled workers with the unskilled, who could set more type in less time at much less cost, eventually displacing "a method of production that newspapers had been using for nearly a hundred years."

Strong trade unions kept photocomposition machines out of many pressrooms, fearing correctly that they would destroy jobs. Schermer's only alternative to photocomposition machines was bankruptcy, so he outwitted the unions with a negotiation strategy that got the machines into his newspaper on his terms, not theirs. To simplify the story, other publishers imitated Schermer, and by the early 1980s many had routed the unions and become hugely profitable.

Family-owned newspapers celebrated their new profitability until the IRS started appraising newspapers by their soaring market values instead of their assets. In the 1960s and 1970s, gift and inheritance taxes stood at about 70 percent, Neiva writes, and under the new IRS rules most newspaper heirs didn't have the cash to pay the new tax bill. Paul Miller of Gannett helped aging owners and their heirs dodge the IRS by trading shares in Gannett for their papers, building the chain out to 79 papers by the time he retired in 1979. Other chains imitated Gannett, accelerating newspaper consolidation.

This is where blogs come in. The union-destroying technology Neiva describes continued to evolve, reducing newspaper costs. Ultimately, the technology trickled down to individual desktops in the form of affordable personal computers. When the Web arrived in the mid-1990s as an alternative publishing system, big media organizations and other well-funded entities were the only ones that could afford to build high-traffic, fancy Web sites.

As John Battelle points out, the prices of hardware, software, and bandwidth have fallen so dramatically in the last six years that the Web has experienced a "second coming," which he and others call "Web 2.0." Writing in the New York Times (Nov. 18, 2005), Battelle notes that one can "lease a platform that can handle millions of customers for less than $500 a month. In the 90's, such a platform would have run tens of thousands of dollars or more a month." Here's another astonishing marker: The price of one gigabyte of hard-disk storage has dropped from about $9 in October 2000 (nominal terms) to about 45 cents (retail) or less today. And it's not just a matter of falling prices but of who is catching the technology as it falls: individuals and institutions that couldn't afford the spiffy technologies only moneyed corporations could afford previously.

Battelle extols what a new business can accomplish with $200,000 that would have taken millions just six years ago. If you combine Neiva's findings with Battelle's argument, you can make the case that the next entrenched "guild" that technology is likely to bulldoze is the "newspaper guild." I'm not speaking of the union of the same name, but of those who work in the news business—reporters, editors, publishers, radio and TV broadcasters, etc.

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