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Friday, June 8, 2012

From struggling newspapers to Windows 8

Advance Publications, the publisher that owns the primary newspapers in New Orleans, Birmingham, and other cities, has announced that its flagship papers will drop from daily to thrice-weekly. There is gnashing of teeth, but couldn't we all see this coming? Advertising and circulation have both fallen.

Raleigh's growth in population has propped up the News & Observer. Nevertheless, its pagecount has fallen by more than half. Pagesize has shrunk, too. With a daily circulation of 200,000, the N&O barely has critical mass. I expect many newspapers below 200K and almost all below 100K -- including the now-woeful Montgomery Advertiser of my birthplace -- will reduce frequency.

Advertising makes the world go around, as noticed in AMC's Mad Men. It provides the financial basis for not only newspapers but also the Internet. Google is the most powerful and profitable advertising medium since Johannes Gutenberg. Watch out, however: technology is threatening the traditional websites served to a laptop and the ads that accompany them.

Smartphones, and to a lesser degree tablets, don't have the screen size to support lots of ads. Everyone in the business is worried about how to preserve the lucrative (and for newspapers, life-giving) revenue from websites as people shift from laptops to smartphones and tablets. If you don't believe such a shift is underway, consider what Microsoft is doing with Windows 8... an entirely new, revolutionary operating system designed for tablets. Microsoft is conducting a funeral for consumer laptops.

Uncertainty about ad revenue from smartphones is one reason why the Facebook IPO has laid an egg, as pointed out by my high school classmate Alan Rutherford. It's also one reason why every media outlet offers its own Android or iOS app; they want to ensure they can show ads.