The Truth About Newspapers

With their high costs of printing and delivery, newspapers don't make sense when there's the Net. Advertisers are starting to realize that.
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So I am reading the


on the beach at


and it hits me -- I mean like it slams into my skull at about 90 miles an hour -- that the two biggest arguments for newspapers and against the Net may be bogus.

The twin rap in favor of newspapers, as I have heard over and over again, is that they are incredibly convenient, because they are delivered to your door, and that they are incredibly preferable to computers on the beach (or in the john for that matter.)

Both of these old saws, however, are about to change in favor of the Net.

When I was growing up my Mom used to love getting milk delivered. Heck, the guy dropped it off right at the front door -- I still have the old Abbott's milk box, now serving as a planter. What a great convenience! We used to get diapers, fresh, beautiful cloth diapers delivered, too. (No souvenirs or remembrances there, thank heavens!)

These were all fabulous conveniences, ones that people paid up for. You wanted to be sure that the milk was fresh and you had no alternative with diapers.

But it became too expensive for the dairies to support home delivery. They all started going broke from it. They developed ways to get it to the store, which was much cheaper. The only way you would even know about diaper delivery these days is to read

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, a tremendous book by the late Brian Moore (and amazing movie with the late Robert Shaw). Sure some tony environmentalists still pay to have cloth, but it is simply UNECONOMICAL to do so.

UNECONOMICAL. That's what killed these methods of delivery. Soon, it will be uneconomical to deliver the paper to your door. It will simply be too expensive to pay the labor to bundle the papers, and then unbundle the papers and then distribute them one by one. Sure, you want it. I still would want milk to be delivered. I would not have to run out like I did last night to buy milk if it were delivered. But it is not coming back.

Right now, through complicated arrangements between the subscription and circulation departments, the newspapers of this country basically pay you to read the darn thing. They subsidize the delivery because they promise advertisers that you will read it and the best way to promise is to say that people are paying for home delivery. But home delivery is a huge, huge loser. It can only be justified by the amount of classifieds and display ads that newspapers get because of home delivery.

But here I am listening to an


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conference call (I am long eBay) and I can't help but believe that eBay will simply end classified ads in this country once the web is more widely accepted. An eBay auction is a better, cheaper and more convenient way to sell anything than a newspaper classified. I don't think that can be any more disputed than cloth diapers versus


(purists might favor cloth, but not if you have ever had to diaper a baby, as I have.)

This advertising is going away. Period. Help wanteds? Same, cheaper, more targeted on the Net than in print and able to be changed at a moment's notice. Same with real estate. How many times do people pay for ads that run all day in the paper when they rent the moment the ad appears? You then get called all day for something that the ad already sold. What a drag.

I live in the 'burbs. I can't buy a paper and be told movie times because they aren't listed. Gotta live in Manhattan for those. That's why I go to the Web. It has MY movie times. I can't believe that the movie companies pay to run those ads in editions that go to the 'burbs. They are worthless to us. They won't eventually.

Sports? I want to read everything I can about my teams and my sports and nothing about the rest of the teams and the rest of the sports. I suspect that there are many like me. What the heck do I need all of that other stuff for then? Soon, I believe, the advertisers of America will wake up to that same fact and back away from advertising in those sections.

Living sections? Heck, if I like the stuff I just want to go buy it. That's why I would rather have it on the Net, where I can make the transaction fast. The advertising agencies don't get this yet, but I believe the clients themselves do, and that this business will also begin to go away.

Financial news? Need I go there? I don't think so. Win for the Net hands-down. You can read about companies and buy them or sell them. Try doing that from a newspaper that closed at 5 p.m. the day before. You can hit send all you want to on a paper, it ain't gonna do anything.

International and local news?

Ah-hah, there's something that's best covered by newspapers. I do not deny that. In fact, I would say that these are the strong points for newspapers. But, will there be enough advertising to support those sections? Maybe. Will there be enough to pay for the delivery to your home, to subsidize that antediluvian system?

I wouldn't bet on it -- not with the classifieds, movie ads, sports ads and living ads going away. The terrible bind is that many advertisers don't want to have their copy next to Columbine or Kosovo. They want it as far as possible from the real news. That's a fact of business.

So, I believe it will simply be UNECONOMIC to deliver the paper to your door. Newspapers will be forced to deliver it centrally, in the same way the milk companies had to deliver it centrally. We have a way to deliver it centrally right now: the Net. In fact, the Net is like an old milkbox that is in the refrigerator. It is right where you want it! Oh, but you can't read it on the beach. Oh please.

As I was reading my


on Friday I was struck by how easy it was to read a printout of stories on pages that I can bend and fold that don't blow around. The only thing I didn't like was that the stories were selected for me instead of me selecting them. Boom: that's the Net. I can select and print out my stories and put them on 8 1/2 by 11 pages and take them to the beach instantly.

When will all of this happen? Where you been? It is happening now. It is no longer a question of when. It is now only a question of penetration. How fast will the Net develop? How fast will the personal computers and printers come down in price? All I can say is that on my team are


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America Online





, and hundreds of other companies.

Who is on the newspapers' team? The people who grow and chop down trees, the people who make ink, the people who make $60 million printing presses and the drivers.

I like the odds.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Intel, Cisco, America Online, Yahoo! and eBay, although positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at