CEO warns of changes in newspaper industry

Significant changes may be in the future for the newspaper industry. The days of staff writers acting on the assignments of their editors may give way to super-editors purchasing the news from teams of freelance writers.

Quite simply, newspapers, like many other industries, are downsizing. These changes, and why they are coming, were discussed Wednesday by John Schueler, president and chief operating officer of The Orange County Register.

Originally scheduled to take place in The Pyramid at Cal State Long Beach, Schueler's speech on the future of newspapers took place in the Chartroom of the University Student Union.

At a cost of $20 for students and $30 for general admission, the conference, which included dinner, ultimately attracted about 25 participants.

Schueler has been in the business of mass media for 25 years. Before coming to The Orange County Register four years ago, he worked at several newspapers, including The Miami Herald. He has spoken nationally and abroad, generally on topics related to workplace productivity.

"I think the information provider of the future will be made up of hunters and gatherers," Schueler said.

What this means is that media-outlet staffs will be smaller, relying more heavily upon freelance writers, he said. These hired guns will sell the news to a centralized provider, which will give the reader, or viewer as it may be, a product similar to what they interact with today.

This may not sound like a major change, as about the only thing the consumer will notice is that there will be fewer small papers, Schueler said.

But to the newspaper industry, the evolution from businesses that hunt and print the news to simply being the final disseminator of numerous news sources is potentially a major undertaking.

"You're trying to change 250 years of a paradigm that is very, very hard to shift," Schueler said.

So why bother if it is such a major change? There are several factors, the combination of which is financial strain, he said.

Problem No. 1 is that advertising is down. "We depend on retail advertising (at the Register) for 51 percent of our total revenues," Schueler said.

Unfortunately, as any business major knows, small business during this century has gradually given way to the chain store, the department store and other forms of business which can centralize expenses. These examples, particularly the department store, rely less and less upon newsprint advertising, Schueler said.

A second concern is operating costs. "Newsprint prices continue to go up," he said. "Newsprint represents almost 30 percent of the expenses that a newspaper has to encounter."

For The Orange County Register, this has meant a $50 million increase in expenses in 18 months, Schueler said. Add the gradual costs of insurance, benefits and salaries that all large business have to contend with, and newspapers have to start looking for ways to tighten their belts.

Then there are circulation concerns. "It's the lifeboat of any newspaper," Schueler said. "If you look between the 1960s and 1994, daily circulation is pretty much flat."

Although not a decrease, when looking at the tremendous population growth of this country, one can see a problem brewing, Schueler said. People are going elsewhere for news.

Schueler has developed his own theory as to why newspaper readership has not grown with the population. He classifies Americans in the second half of this century as one of three generations, the "G.I. generation," the "Vietnam generation" and the "Desert Storm generation."

"The G.I. generation was actually taught newspaper habits as a value within the family unit: That is what we do, it is who we are," he said.

The Vietnam generation, however, was never "taught" these values, they simply inherited them, Schueler said. These values were a product of their parents, and like many other such products, they were shed, he said.

The Desert Storm generation has had little or no direct contact with "newspaper values," Schueler said. Their news is abbreviated, visually direct and convenient.

He said the Desert Storm generation supposedly "sees newspapers as stodgy and boring, while television is alive and active."

Rapid growth of technology has helped to foster this view. This generation is also known as the MTV generation. News is TV. News is radio on the way to school or work. News may even be on a computer. Rarely is it sitting down to read a newspaper.

Newspapers are going the way of the department store, Schueler said. If an area costs more to deliver to than it makes in advertising dollars, that area is dropped from circulation, he said.

The Los Angeles Times has done that just this year, he said. Other papers are folding altogether. In the future, as costs continue to rise, advertisers continue to look elsewhere and circulation drops, very few small papers will remain, Schueler said.

The large, centralized paper, much like every other form of commerce, is likely to weather out the changeover and grow, he said.

After 250 years of business as usual, a transformation in how a newspaper gather news will not be welcomed with open arms, he said.

"You can understand why there's a fair amount of difficulty to get the newspaper industry to move away from its current model," Schueler said.