Tuesday, February 24, 2015

The Vegas future most of us never think about

Vegas visitors love to know what the latest development is at their favorite casinos.

Is there a new restaurant? Is there a new off-the-menu special at the 24-hour cafe? Is there a new show in the casino's theater? Is there a new club charging obscene amounts for the privilege of consuming alcohol while enjoying the thumping beats of an overpaid DJ?

And how do we find out most of this information when we live outside of Nevada? Thank you, Al Gore, for inventing the Internet.

My first trip to Vegas was in January 1997. I arrived in town 363 days before I would acquire my first cellphone. There was an Internet back then, but it was in its infancy. Most of us never dreamed we'd soon be perusing countless websites looking for the best Vegas deals and tips for our upcoming trip.

That was 18 years ago, which is not exactly a lifetime ago for most of us.

Back in 1997 it wasn't easy to access news and information about Vegas. Prior to my first trip, a co-worker brought back one or two of the tourist magazines from her trip. I don't remember two things about those magazines. I remember but one thing. An ad for a hair salon called "A Little Off the Top," promising haircuts from women in lingerie. No, I didn't go, but the concept struck me as hilarious. (It's long gone, I am certain, but this webpage would lead you to believe it still exists. Perhaps it has been reincarnated. A LITTLE OFF THE TOP. And yes, I'm aware a similar concept was tried inside the Plaza. I think it failed, too.)

We take for granted the fact that we can access all sorts of information, all the time, through an Internet connection. It wasn't always that easy.

Once upon a time we relied upon newspapers to deliver all sorts of information. My family never purchased TV Guide magazine, but the free TV guide in our Sunday newspaper found its way to the television every single week. Several years ago my Sunday paper stopped including the publication as part of your Sunday paper purchase, although it started selling a version of it, delivered with your Sunday paper. I can't tell you the last time I relied upon a newspaper for TV listings.

Newspapers have a harder time finding readers to pick up copies of their ink-stained pulp these days. My buddy commutes to work via the choo-choo train every weekday, and he reads a book. An old-fashioned book. Most people on the train opt for their cellphone or electronic tablet to occupy their time, he said. It's unusual to see somebody reading a newspaper, he noted.

The decline in readership of printed newspapers has had a chilling effect on our traditional news sources. That's not a secret. Newspapers don't make money off of the sale of single copies. That Sunday revenue is a nice drop in the bucket, but newspapers have long relied upon the advertising dollars to rake in the big bucks.

Twenty years ago my Sunday newspaper carried multiple sections of classified advertisements, and that was just the "help wanted" ads. There were many significant, colorful ads from car dealerships and real estate agencies, too. Today there's a fraction of those ads. That's millions, upon millions, of dollars that has been lost, and it's never coming back.

Newspapers serve the public good, but they're not government agencies or nonprofit organizations, for the most part. They're no different than the grocery stores, liquor stores, bars and casinos across Vegas. They exist to make money for those who invest in the infrastructure necessary to print them. As profits have fallen off the past 15 years, companies have tried to find ways to recapture the lost advertising revenue, and have reduced staffing in the non-revenue editorial department in order to hang onto an ounce of profitability.

Newspapers need to make a profit. Nobody invests millions of dollars into a newspaper operation in order to break even. And profitability is necessary in order to finance capital investments that ensure a newspaper's long-term viability.

I'm no financial wizard, but the recent news that the Las Vegas Review-Journal's parent company is being sold didn't exactly instill confidence in me that there's a long-term future for newspapers as we know them.

I've seen differing estimates of the population of the greater Vegas area, and I was disappointed to read in the sale of the Review-Journal that its Sunday circulation is 184,000. That seems low to me. Perhaps it's a decent Sunday circulation, but I would have bet the circulation was more than 200,000.

The article notes that the newspaper's Web site receives 10.5 million page views per month. That sounds like a lot, but one person could be responsible for 10 page views per day, multiple times per month. And plenty of those page views are going to be brief scans of headlines, and plenty of them will be by readers far from the Vegas strip. That's an important distinction.

Millions of monthly page views sounds impressive, but if the page views are free, you're not making money off of the newspaper's content. The solution is to sell advertising on the Web site, of course. As I noted, I'm no business genius, but I do know one thing, the revenue garnered by online ads is a drop in the bucket compared to the revenue generated by ads in the paper and inserts from local grocery and department stores in the Sunday paper.

There was a time when Blockbuster was a huge national chain, renting thousands of movies per day across the country. As DVDs became the dominant format for movies, Blockbuster adapted. Netflix came along and challenged Blockbuster, using a different business model. It worked, to a point, but Netflix didn't blow up until its streaming video service became a prominent part of its business model. Blockbuster never quite made the transition. The company attempted to diversify by offering a rental model similar to Netflix, and eventually it tried its hand at streaming video, but it was too little, too late. Consumers had moved on and Blockbuster ultimately went bankrupt. Today there's a few independent locations still in business across the country, reportedly, but the company is otherwise a footnote in retail history.

Just as there were video rental stores dotting the landscape of America 18 years ago, you could find pay phones in every bar, restaurant, movie theater and shopping mall. There are still pay phones, but they don't dot the urban landscape like they use to. A couple of years ago I was stunned to see a couple of them tucked away in an unusual location inside Mall of America. They use to be all over the mall.

Times change, and some industries are destined to die due to advances in technology or changing consumer preferences. Newspapers are not immune to that.

Several years ago it seemed like major newspapers were dropping like flies. The plague seemed to come to an end, but we've rapidly advanced as a society, to the point where many of us are carrying around micro-computers in our pockets. We no longer need a computer to read articles from the daily paper, we can do it on the city bus, and we don't need a wi-fi connection to do it.

The Review-Journal and it sister publications, seven other daily newspapers and 65 weekly publications in seven states, were sold for $102.5 million. I have no idea if the previous ownership was up to its eyeballs in debt or what kind of infrastructure is included in the sale. All I do know is that the sale price for all those publications seems extremely low. That suggests to me that most of them are not very profitable. And there's no reason to think their revenue is going to grow exponentially in the coming years.

Perhaps a bare bones version of the might newspaper will survive in major cities across the country. I'm skeptical. As profits dwindle there will be fewer buyers looking to invest in a dying industry. And the sale of the Review-Journal affirms my opinion.

And don't kid yourself, newspapers won't simply cease printing newspapers and switch to an online-only entity. If you want comprehensive crime, political, education and environmental reporting in a major metropolitan area, you need a substantial staff to produce it. Without a significant revenue stream to cover that cost, an online media outlet will provide a fraction of what daily newspapers are providing today.

Most Vegas tourists aren't concerned about the long-term viability of a daily newspaper in Vegas, and that's understandable. But newspapers have played an important role in their communities for generations. We'll survive without them, but our community won't be better without them.

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