Why newspapers will continue to milk their current business until they die

This struck me as the smartest of a bunch of smart observations by former Dallas Morning News (and still syndicated) personal finance columnist Scott Burns in a Q&A with Talking Business News (via Romenesko):

As much as I love newspapers, they are hamstrung by their attachment to a business model that no longer works. The longer management views them as “properties” — rather than collections of talent awaiting redeployment — the greater the danger career journalists face.

The classic case of redeploying talent in the modern business world is probably that of Intel in the mid-1980s, when it completely shifted its resources from the hypercompetitive memory chip business into what Andy Grove called "the relatively new field of microprocessors."

Clearly, newspapers need to be redeploying talent onto the Internet--and probably doing so in a way that's consonant with the open, link-driven architecture of the Web--if they hope to still be around two or three decades from now. But for metropolitan dailies like the Dallas Morning News it's almost impossible to imagine how they'll ever make anywhere near as much money online as they do as the monopoly purveyor of printed information into local homes. Which makes me think that most of them will stick to their current doomed but still moneymaking ways until it's too late.

This is less the case for newspapers with national or global reach, which were never monopolies in the same way that the metro dailies were, and can realistically hope to someday replicate some significant portion of their paper revenues online. (And I like to think--perhaps delusionally--that magazines will survive and thrive on paper much longer than newspapers do.)

But the owners of the metro dailies are stuck with a really difficult choice: They can gamble current profits on a redeployment of talent that may pay off with smaller but sustainable profits down the road, or they can milk their current business for all it's worth until they simply can't anymore. From the perspective of society in general and my friends in the newspaper business in particular, it would be far better if they took the former route. For the owners of newspaper companies, though, it's not so cut-and-dried.

Obviously one can also do a little of both, which is the strategy most metro newspapers are trying to follow. But if Felix Salmon's dispiriting report of a panel on "The Future of Print Media" at the Milken Institute conference yesterday is any indication, many of them are handling the transition to the Internet so unwillingly and ineptly that they've effectively chosen the second, milk-the-business-until-it-dies path whether they intend to or not. Which means it will be up to somebody else to redeploy all that talent.