Investing in the Newsroom is Good for Business

The study, "Uphill or Downhill? Locating Your Firm on a Profit Function," will be published in the April issue of the Journal of Marketing.

TEXT OF INTERVIEW

SCOTT JAGOW: If you work at a newspaper . . . heck, if you read the newspaper, you know newspapers have been laying off people like crazy. A study out this week says, that's crazy. The University of Missouri found newspapers that spend more money on their newsrooms will make more money. One of the researchers, Esther Thorson, says newspapers haven't been doing their research.

ESTHER THORSON: What happens when you don't do and R&D in financial management is that you mismanage. Newspapers do not understand the financial workings of their own systems and in order to maintain profit level — which they've insisted upon doing — and particularly in newsrooms. they are cutting more and more deeply

JAGOW: So what happens when there isn't money being spent on the newsroom?

THORSON: What happens when you reduce newsroom personnel is you reduce the diversity of content. So things like culture reviews disappear, close investigation of how local government is operating disappears. The other thing that disappears is just pure amount of content. You know, newspapers are becoming smaller, they're becoming thinner and the actual pages are being shrunk. And so as a result of that underinvestment, it loses circulation. And we've seen this for the last 40 years, circulation's been dropping. It's currently plummeting.

JAGOW: How confident are you that the newspaper business will actually do something about this?

THORSON: Not confident at all. Newspaper management is a very interesting thing to study because it's very set in its ways. It was just too easy for too long to make revenue and profits. And so it does not have the tradition of investing in research or even understanding research that's done on it to incorporate it into its management system. So I don't suspect they'll pay attention to this either.

JAGOW: Well then why did you do it?

THORSON: Well as you and I both know, newspapers are the backbone of American democracy right? You know, I'm worried about the newspapers in all the little cities across the United States. They are our one depth instrument for allowing citizens to understand what's going on in their own communities. We're losing those just as fast as we're losing content and quality in any of our news sources.

JAGOW: Esther thank you so much.

THORSON: You're welcome.

JAGOW: Esther Thorson is a professor and associate dean at the University of Missouri's School of Journalism.