It's not raining on us – it's just raining

I wrote here the other day that, "The biggest 'destructive technology' change for newspapers is the fact that websites can be refreshed constantly while printed papers get updated once a day."

I think that's right (certainly defensible) when we're talking about delivering news to audiences. But I realized when rereading and thinking more about it that it's also a fairly narrow observation. I want to "amend and extend" my remarks, as legislators sometimes say.

Of equal magnitude for us is this: the web also wiped out our longstanding monopoly status and the exclusive advertising franchise (classifieds) that went along with it. This is huge, too – the primary reason that newspaper revenues are down and cost structures are under so much pressure. Since we won't ever enjoy that monopoly status (or pricing power) again, we have to find ways to perform more efficently to close the gap that's widening between expenses and revenues.

The most virulent (and high publicized) form of that "cost restructuring" comes in newsroom layoffs. This is what captures the attention of fellow journalists (a point worth discussing separately sometime) and also what most effects our core mission.

At McClatchy, we've mostly avoided this; there have been some voluntary buyouts, and losses from hiring freezes and attrition, but I believe newsroom populations at McClatchy have been effected less than other major newspaper companies. (Lots of news jobs have been reallocated to online efforts, too, which is essential, but that also puts pressure on traditional operations).

The pressure on expenses is far from over. Reported revenue at public companies continues to decline, and most reports from private companies are about the same (or worse). Newspapers don't have to make the same profits in the future they did in the past (and we're not), but the in a capitalist economy we do have to establish a stable path of growth.

We can, and we are.

I know it's selfish for an editorial guy to say so, but there's a lot of opportunity left for companies to cut costs without destroying newsrooms. I know layoffs in telemarketing are as painful for the individuals as those in newsrooms, but the cold fact is that they don't affect the mission in the same way. The fact that the Contra Costa Times has outsourced ad production to India doesn't speak to the newspaper's mission nearly as much as the newsroom cuts they've had there.

[I'm not suggesting newsrooms are immune to reforms and reductions; our editors know better, and are feeling the pressure every day. But know this: McClatchy understands newsrooms are at the heart of the enterprise, not an incidental "cost center."]

Newspaper companies evolved as clasically "vertically integrated" enterprises. Until very recently, we did everything, even at the smallest local papers: reporting, selling, producing, distributing. Each were creative companies and sales companies and manufacturing-distribution companies. They did their own accounting and procurement, their own IT, their own security and janitorial.

Other modern industries stopped that years ago; even behemoths like GM and Disney became "horozontially integrated" (out-souring to subsidiaries) and sectors like banking, telecommunications and information technologies became fully distributed. Where there once were integrated single entities, the companies now operated within an "ecosystem" of related, efficient separate businesses. (This same dynamic is emerging in advertising sales and news distribution, I believe; we'll explore that notion and its impact on us later).

Newspaper companies have embraced efficiencies sporadically, and some are farther along than others. Some have been relatively smart about it (though the best of us were slow), and some less so. Take that all into account: there's still a great deal of opportunity here for us, some so obvious that it qualifies as low-hanging fruit.

So don't freak out when you read about our "collapsing" revenue model. It's changing and getting smaller – but so can our costs.

We don't have infinite choice about changing. Remember, it's not raining on us; it's just raining. It's raining on Ford, and Sony and NBC. It's raining on travel agents and the guys who used to make prints out of Kodak film. Get over it.

The key test here will be how well we can stay mission-centered as we evolve. Do the changes we adopt optimize our ability to produce quality, public service journalism? Do they help us hold the government accountable, speak the truth to power, build community cohesion, give voice to the voiceless?

We will succeed or fail by those measures.