In the age of the Internet, newspapers are still big business

The sun-dappled waters of Puget Sound were calm and sparkling last week, but a few blocks inland, where editors of America's daily newspapers were gathered in annual conclave, it sounded like a perfect storm was besetting their profession.

It's been a tough year for the newspaper business. For many newspapers, readership is down and advertising is off. Some major newspapers have laid off staff. American reporters abroad have been killed or held hostage in Iraq, while at home, some have been threatened with jail for refusing to disclose their sources. A few journalists have demeaned the principles of their profession by plagiarizing the work of others or totally manufacturing interviews and events. When caught, they have been fired.

On top of all this is the fear that a multiplicity of new electronic toys and gadgets is encouraging a new generation to forsake the printed newspaper and gather its information via a keyboard and computer screen, or even a hand-held device prodded with a metal pointer.

Seattle is a center for the development of new technology, and so it was inevitable that much of this year's convention of the American Society of Newspaper Editors should be dominated by discussion of whether the newspaper is mortally threatened by the Web and other pending electronic developments.

Microsoft's Bill Gates was an invited speaker and cheerfully predicted that within five years there would be no textbooks in schools - they would all be replaced by computers. He also told of how he taunted his friend Warren Buffett, the stock-picking guru, for his ownership of an encyclopedia company. The only reason to have printed encyclopedias these days, said Mr. Gates, was because they looked nice on bookshelves and smelled good.

With the help of Arthur Sulzberger Jr., publisher of The New York Times, Gates did unveil a new and improved hand-held "e-paper" on which the content of the Times would be carried and which is undergoing tests. Earlier versions of such a portable pallet have been tried, but suggestions that they could eliminate a newspaper's printing and delivery costs have obviously so far proved invalid. The new device is small and portable, but Gates was a little vague about what its selling price would be. Also unclear is what an owner of the device would pay to call up the pages of the Times on it.

It would be folly for newspaper owners and publishers to ignore such new technology. But newspaper companies are still much in demand - witness the billions of dollars paid in recent days for the purchase of the Knight Ridder newspapers by the McClatchy and Media-News organizations.

While technology may change methods of delivery, as for example online, there is no content to deliver without a news organization to gather and edit it. In its annual report on the news media, the Project for Excellence in Journalism says the "evidence does not support the notion that newspapers have begun a sudden death spiral."

Internet-only sites like Slate and Salon that have tried to produce original content have struggled financially, says the report, while those thriving financially rely almost entirely on the work of others. Newspapers are the country's biggest news-gathering organizations in most towns and the Internet's primary suppliers.

The central economic question in journalism, the report concludes, continues to be how long it will take online journalism to become a major economic engine, and if it will ever be as big as print or television. "If the on-line revenues at newspapers continue to grow at the current rate - an improbable 33 percent a year - they won't reach levels equivalent with print until 2017 (assuming print grows just 3 percent a year). Realistically, even with the lower delivery costs, it will be years before the Internet rivals old media economics."

Two of the most forward-looking experts on the newspaper industry, Scott Anthony and Clark Gilbert, say that despite the sense of doom and gloom that pervades, there are signs of hope. Writing in Nieman Reports, the journal of the prestigious Nieman Foundation for journalists at Harvard, they say that while newspaper readership is declining, information consumption is increasing. "Almost every newspaper company has made the transition to the Web, with their properties attracting new audiences and new advertisers.

"The newspaper industry has the potential to do some very exciting things in the coming years. Most companies have good brand reputations, strong cash positions, and a deep well of content."

All this suggests that the newspaper is far from an endangered species.

• John Hughes, a former editor of the Monitor, is a past president of the American Society of Newspaper Editors.