No, Virginia, There Never Was a Santa Claus

Hard on the news of plunging circulation numbers around the nation, Megan McCardle for The Atlantic says the party's over:

I think we're witnessing the end of the newspaper business, full stop, not the end of the newspaper business as we know it. The economics just aren't there. At some point, industries enter a death spiral: too few consumers raises their average costs, meaning they eventually have to pass price increases onto their customers. That drives more customers away. Rinse and repeat . . .

One commentator follows that with a provocative perspective that makes the imminent death of newspapers seem, in a way, less calamitous:

The average schmuck buys a paper and sees it as a product designed to inform him, the customer, about the world around him/her.

But in any financial transaction the customer is identified as the person who pays the money, and since newspapers only get 20% of revenue from subscribers this means the subscriber is not the “real” customer.

Newspapers get 80% of revenue from corporate advertisers, so they are the “real” customers. And since the corporate advertisers don’t take delivery of the newspapers it means the newspaper is not the real product.

The real product is the reader, and the newspaper is just a medium (like radio waves or tv signals) that is used to “deliver” the real product (our eyeballs) to the real customers (corporate advertisers). That’s why writing a letter to the editor is about as useful as shouting at the tv.

People are important in the newspaper financial model, just not in the way that they thought they were.

There is an undeniable strain of truth there, one most of us who love to read newspapers -- and a lot of journalists who like to write for them -- don't enjoy contemplating. It's somewhat analogous to telling a child, "There is not now, and never was, a Santa Clause" -- and then adding, "By the way, mom and dad can't afford to put presents under the tree, anymore. So, get your own or do without."