Newsroom cuts hurt economic health of newspapers

Interesting budget season reading (emphasis added is mine) from Editor and Publisher:

This summer, Esther Thorson, dean of graduate studies and research at the University of Missouri’s School of Journalism, as well as Shrihari Sridhar and Murali Mantrala from Missouri’s Trulaske College of Business, presented research taken from the extensive confidential financial data compiled in Inland Press Association’s annual Cost and Revenue Study.

They probed the spending on newsrooms, circulation and advertising sales and developed an econometric model to see how much revenue would be affected if the mix of spending was altered.

“Could they have distributed those dollars differently to make more money with good journalism?” Thorson asks. “And the answer is virtually always yes, very consistently across hundreds of newspapers. They under-spend in newsrooms by a pretty significant amount, and they overspend in circulation — though not nearly as much as they overspend in advertising.”

Specifically, their model suggests that “under-spending” in the newsroom isn’t just missing an opportunity for greater revenue — it actually damages the business. Cutting back investment in the newsroom just 1% is three times worse than the same percentage cut in circulation or distribution, and seven times worse than making that cut in ad salespeople. The deeper the newsroom cut, the worse the damage, this research contends.