One Hand Clapping and American Digest are discussing the problems and the future of newspapers. Circulation is dropping and advertising is stagnant.* Worst of all, young people are not reading papers and that suggests that these trends will continue.
Three quick points:
1. The journalistic side of the business is locked into an obsolete product. They try to get "news" out fast. But by the time the paper hits the porch, the news isn't new. The highlights were on cable the night before and dozens of stories have been on the internet for hours, maybe days.
2. Lifestyle changes work against reading a paper. There are fewer stay at home moms. Workdays and commutes are longer. People, especially middle class professionals, simply do not have schedules that are compatible with lingering over newsprint.
3. Despite the bad trends it is important to remember that capitalism grades on a curve. Newspapers might not be as good an advertising medium as they were in 1970, but that is not the relevant metric. All they have to be is better than the available alternatives. Readers might be going to the internet and cable channels, but these are not great outlets for many local advertisers. Hence, money still flows into newspapers.
It's just like prime time TV. Desperate Housewives has a small ratings share compared to past hits like Ed Sullivan or Bonanza. Nevertheless, DH gets big bucks for their commercial slots because they have a big audience relative to the competition.
* Speaking of dropping circulation, check out this blog.