Monday, March 10, 2008

The Thing About California

As we all know by now, the epicenter for the newspaper disaster is the San Francisco Bay area. The unprofitable Chron. The near-collapse of the Mercury News. (Some recent postings on that here and here.) The cutbacks in publication frequency in nearby Tracy and Gilroy.

And, because the Bay area is also the epicenter of what has happened in computing in the last 30 years, at least, the two are tied together. Craigslist. Mercury Center. Hot Coco. Cole Papers. People in San Francisco and San Jose were seeing the potential change brought about by the computer industry years before everyone else, because it was the center of the computer industry -- people at newspapers were writing about it, and newspaper people who were interested in computers were attracted to the area.

And that is all true. But it's too facile to simply say, one, therefore the other, simple explanation, cause, effect. There are other things to take into account.

California, particularly its major metro areas, is a costly place to do business. In 2005, California had the fourth highest cost of doing business in the country, and we can assume it hasn't gotten better. That's the whole state, and California has a huge variation between inland markets such as Bakersfield, Fresno and Redding -- even Sacramento -- and the coast. (New York state obviously has the same situation.) California has the highest gasoline costs in the country, and San Francisco has the highest gasoline costs of the nation's big cities.

And we all know about housing prices in the Bay area, particularly in San Jose-Palo Alto, which have been among the nation's most costly for years. This means as an employer that you have to pay people in a national job market enough to be competitive, and as a business that people have less money left over to spend on your products after spending a huge chunk on housing.

To be able to afford housing, many people have to live way far away from their jobs. I remember reading about the start of commuter rail service from Stockton to the Bay area. That takes two hours each way. Just planning to driving in from Tracy, a hour and a half by rail? Estimate it to take two hours. Now, people have long commutes in New York and L.A. also. People generally do not do this sort of thing in Detroit or St. Louis or Kansas City. The more time spent in commuting, the less time there is to read a paper, unless you're commuting by rail. (And that paper had better be there early.)

So these create a challenging market for a newspaper -- a lot more so than in Memphis or Tulsa. Now let's look at the physical nature of the market, and to do so let's go back before Dean Singleton ended up owning everything other than the Chron.

First off, there's always been a unity to the Bay market. In 1965, Macy's in San Francisco -- Macy's has been there long before the recent Macyization -- had branches in Santa Rosa, San Rafael, Santa Clara (San Jose). These were not stores in outlying towns in the way that Thalheimers in Richmond owned stores in Durham and Greensboro, N.C.; they were just suburban branches of the San Francisco store. The Bay area was an area, the same as Chicagoland or greater Philadelphia or metropolitan Atlanta. It was metropolitan San Francisco.

So let's ride around the Bay and count daily newspapers in, oh, the early 1980s. Start in San Francisco and drive south. You pass the posh suburbs of Burlingame and Hillsborough and it's 20 miles until you hit the first paper, the San Mateo Times. Then it's five miles to another daily, in Redwood City -- which at this point in the 1980s has just recently been merged with the Palo Alto daily seven miles away, in what proved to be a disastrous move by Tribune Co. From downtown Palo Alto it's 13 miles to San Jose.

Now let's go up the other side. San Jose to the Fremont Argus, 10 miles. Fremont to the Hayward Review, 10 more. (These are admittedly sister papers.) Hayward to downtown Oakland and the Tribune, 16 miles. Oh, and 12 miles to the east is Pleasanton, with a daily paper engaged in a newspaper war with a paper in Livermore, six or seven miles away.

From Oakland to Walnut Creek, home of the Contra Costa Times with more than 100,000 circulation, is 15 miles. Dailies are hanging on by the skin of their teeth in Alameda, Berkeley and Richmond, all within five to 10 miles from Oakland. (Soon all will be gone or be zone editions.) It's about 13 miles from Richmond to Vallejo, which has its own paper, and four miles from Vallejo to Benicia, which has another. And 10 miles from Richmond in a different direction we're in San Rafael and the Independent Journal.

So we've covered about 110 miles in a circle, and had a couple outsprouts of 10 miles, and in there we've gotten two San Francisco dailies, the Oakland Tribune and 13 other daily papers. (And there were still more suburban daily papers in metropolitan San Francisco. We just haven't come upon them yet.) OK, you say, from Philadelphia to Harrisburg on the turnpike I would go from Philadelphia to Norristown to near Phoenixville to north of West Chester to Lancaster to south of Lebanon to Harrisburg. There are some papers there. What's your point?

Well, first of all I would be in Harrisburg instead of back in San Francisco. But look at a map. The Bay area papers are all pinched between the bay and the mountains, or caught between mountain ranges. They had almost nowhere to go. They ended up fighting each other over the same territory, whereas the Harrisburg and Lancaster papers just snipe at each other at the edges of their markets. The only way they could compete in the Bay area was to try to out-local each other, which is very costly. So the Contra Costa Times did a separate nameplate in the growing, rich suburbs of Danville and San Ramon -- the latter about 10 miles from its main office. But it had to do so to compete with the Pleasanton paper, which is five miles from San Ramon.

Second, a lot of them are in the same county. When a buyer for Sears or Penney's looks at the market Kansas City market she sees the Kansas City Star offering, oh, 70 percent penetration of Johnson County. Here she sees this paper with 25 percent and this paper with 10 percent and this paper with 8 percent. If she's not locally rooted, she doesn't say, well, this paper has 100 percent of the market between X Road and Y Road. She buys the major metro and the one with 25 percent and the rest go begging.

In the 1980s everyone's competing for pieces of this oddball market. The Chron and the Examiner want to dominate it; the other papers want their little pieces. And San Jose, down at the far end, sees itself growing into a major city and its newspaper wants to be a big city's newspaper.

But San Jose can only grow so far before it runs into the bay, or the mountains, or people who think they're living in San Francisco, or the East Bay, or Santa Cruz, or Watsonville, or whatever. Why would they read a San Jose paper? And people commuting from Stockton are driving through the circulation areas of five other daily newspapers before they even get to San Jose.

Something had to give, which is how we got Alameda Newspaper Group, which then expanded into the Oakland Tribune, and now has wound up owning every newspaper in the area. (OK, Dan, nearly every.) If this had been Long Island, you would have had Newsday. Dean Singleton has taken the approach of trying to preserve local nameplates on increasingly identical products. Given how Tribune Co. threw away the Palo Alto market in the 1980s by thinking that one paper would appeal to Palo Alto and Redwood City, Dean's approach has a lot to recommend it. But to journalists who note five or six nameplates without five or six reporters at county commissioners' meetings, this is awful. To the reader in San Leandro or Milpitas who was only getting one paper anyway, it may not look as dire. (The absence of people covering San Leandro or Milpitas, of course, does.)

The San Jose Mercury News had a core area of Santa Clara County and a good bit of San Mateo County. It couldn't grow into rapidly expanding but largely vacant suburban areas like those around Omaha and Indianapolis; it kept running into other newspapers, or water, or mountains. Its suburban growth was largely in areas that were some other paper's market already or just its own county getting more and more built up.

Now, it wasn't all bad; the home county kept growing, too. But as Gary Pruitt noted when McClatchy bought Knight Ridder, it wasn't growing that fast. And it's really, really expensive to live there, which is partly why it wasn't growing that fast.

So the San Jose Mercury News was in a high-cost market with lesser possibilities for growth, hemmed in by geography and a full range of suburban competitors, with lengthy commutes and with the market effectively a sub-market of a larger city. Oh, and a big part of the market was reading a group of free newspapers based in Palo Alto.

Certainly Craigslist didn't help this situation. Knight Ridder's late-in-life disarray didn't help. Dean Singleton's debt burden is crushing. The Internet pulls away readers. The Mercury News may become simply a small suburban paper that had a brief moment of glory, the Brooklyn Eagle of our times. This would be a shame. I've known many wonderful people from the Merc. But perhaps San Jose really is just a bigger Fremont or Hayward, in the end just another town down the Bay. I have no idea.

But the San Francisco area is not identical to the situation faced by most American newspapers. And the reason is not just that people use the computer a lot in San Francisco. That's the standard view, as seen here. And it's not that that view is all wrong. But there's more to the story.

1 comment:

Daniel Hunt said...

David: I take offense! Dean doesn't own the Press Democrat. And it's fourth or fifth in circ in the greater Bay Area. ... Sorry, just being a pest.