Web model not necessarily papers' savior

USA Today, better known as "television in print," upgraded its Web site last week.

USA Today, better known as "television in print," upgraded its Web site last week.

The site, with new news feeds, comments, most e-mailed lists, and journalist profiles, is designed to create "network journalism," which "connects readers to reporting" as they "chart alternative paths through the news."

So readers: USA Today invites you to "join the conversation!"

This type of chirpy Web-speak has become all-too common lately among the nation's newspapers. As print revenue declines, papers have scrambled toward the Internet as their new source of salvation. "If only we can get on top of this crazy Web 2.0 deal," the thinking goes, "maybe we can stop laying off all our reporters."

Or not. Wall Street remains pessimistic about the future of the industry. But as publicly held papers suffer financially, the core journalism community continues to believe that its future will be secured once the messy business of migrating from a print to a Web model is finished. Eventually, they hope, things will get back to normal.

Not so fast, says the best investor in the world. Warren Buffett, billionaire head of Berkshire Hathaway and overall guru of the markets, has some bad news for the newspaper industry: You'd better get used to the hard times. They'll only be getting worse.

In his annual letter to investors, released earlier this month, Buffett cautions that "fundamentals are definitely eroding in the newspaper industry, [and] the skid will almost certainly continue."

These words come not from a rapacious capitalist who cares little for the social mission of the industry.

"Buffett, of all people, has always understood the newspaper industry better than any other newspaper owner," notes Stephen Isaacs, a Columbia University journalism professor. "He's considered himself a journalist from the days that his little Nebraska newspaper, the Omaha Sun, exposed financial chicanery at Boys Town of America."

In his letter, Buffet notes that in days past, "the newspaper business was as easy a way to make huge returns as existed in America." As papers lost their natural monopolies on information to other, more efficient forms of media, though, the business model itself was exposed as a fossil.

"If cable and satellite broadcasting, as well as the Internet, had come along first," Buffett writes, "newspapers as we know them probably never would have existed."

But what about diversification? Newspaper companies' classic response to their quandary has been to beef up their Web sites and partner with TV and radio stations to spread their brands around.

Unfortunately for the believers in the simple migration of papers onto the Web, Buffett's own analysis strikes a terrifying chord to owners: "The economic potential of a newspaper Internet site - given the many alternative sources of information and entertainment that are free and only a click away, is at best a small fraction of that existing in the past for a print newspaper facing no competition."

This from a man who owns a large chunk of The Washington Post, arguably the best platform-diversified paper in America. Buffett goes on to reaffirm his belief in the civic importance of the industry, but his underlying message is one of fundamental doom-scented change for the ink-stained wretches.

It is a message that will not be embraced any time soon. Tony Barbieri, a University of Maryland journalism professor and former managing editor of The Baltimore Sun, says Buffett's analysis will prove correct only if the industry does not change, but he thinks things will.

"I think even newspaper executives are smart enough to see that we need a new revenue model in our industry," Barbieri says. "Obviously, no one has found it yet, but I really think it will be someone from another business, like Steve Jobs or the guy who invented Starbucks or the people who put together Google."

Or, he adds, "Maybe Buffett himself."

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