Last Man Standing?

From Nicholas Carr at Rough Type:

The essential problem with the newspaper business today is that it is suffering from a huge imbalance between supply and demand. What the Internet has done is broken the geographical constraints on news distribution and flooded the market with stories, with product. Supply so far exceeds demand that the price of the news has dropped to zero. Substitutes are everywhere. To put it another way, the geographical constraints on the distribution of printed news required the fragmentation of production capacity, with large groups of reporters and editors being stationed in myriad local outlets. When the geographical constraints went away, thanks to the Net and the near-zero cost of distributing digital goods anywhere in the world, all that fragmented (and redundant) capacity suddenly merged together into (in effect) a single production pool serving (in effect) a single market. Needless to say, the combined production capacity now far, far exceeds the demand of the combined market. ...

Now here's what a lot of people seem to forget: Excess production capacity goes away, particularly when that capacity consists not of capital but of people. Supply and demand, eventually and often painfully, come back into some sort of balance. Newspapers have, with good reason, been pulling their hair out over the demand side of the business, where a lot of their product has, for the time being, lost its monetary value. But the solution to their dilemma actually lies on the production side: particularly, the radical consolidation and radical reduction of capacity. The number of U.S. newspapers is going to collapse (although we may have differently branded papers produced by the same production operation) and the number of reporters, editors, and other production side employees is going to continue to plummet. And syndication practices, geared to a world of geographic constraints on distribution, will be rethought and, in many cases, abandoned....

Newspapers are certainly guilty of not battening down the spending hatches early enough. But if you look at, say, the New York Times's emerging "last-man-standing" strategy, as laid out in its issue yesterday, you see a strategy that makes sense, and that actually is built on a rational view of the future. Make sure you have enough
cash to ride out the storm, trim your spending, defend your quality and your brand, expand into the new kinds of products and services that the web makes possible and that serve to expand your reader base. And then sit tight and wait for your weaker competitors to fail. As one analyst, looking toward the future, says in the Times story, "'there could be dramatically fewer newspapers,' leaving those that remain in a stronger position to compete for readers and ads. 'And then the New York Times should be a survivor.'"