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After 146 years of publication, the Seattle Post-Intelligencer print edition is no more. Seattle's oldest newspaper, which is owned by media giant Hearst, will continue as an online-only publication starting Wednesday, but with a much-reduced news staff.
"The P-I has a rich 146-year history of service to the people of the Northwest, which makes the decision to stop publishing the newspaper an extraordinarily difficult one," said Frank A. Bennack, vice chairman and chief executive officer of Hearst. "Our goal now is to turn seattlepi.com into the leading news and information portal in the region."
The P-I, originally founded as the Seattle Gazette, isn't the only Hearst property in trouble. In late February, Hearst slashed jobs at the San Francisco Chronicle in an attempt to rein in costs at the paper, which lost US$50 million in 2008. Hearst said it will be forced to sell or shutter the Chronicle unless costs can be brought under control.
The P-I and the Chronicle are just the latest newspapers to fall on hard times.
A few weeks ago, the Rocky Mountain News of Denver was closed for good. Other major metro newspapers are also in serious financial trouble, including the Seattle Times, Chicago Tribune, the Boston Globe, the Philadelphia Inquirer, the Hartford Courant, the San Antonio Express-News and the Detroit Free Press.
The P-I isn't the only major newspaper to adopt an online-only strategy 
. In October, the Christian Science Monitor ceased print publication of its daily edition in favor of a Web edition in an attempt to increase profitability.
P-I Lost Money ... Lots of It
The P-I was losing money for years before the decision by Hearst to make it a leaner online newspaper, but the recession accelerated its losses.
The publication lost $14 million in 2008, according to Hearst -- more than $1 million per month -- and deeper losses were expected this year if the paper had continued its print edition. Hearst put the P-I up for sale on Jan. 9, but no buyer emerged.
Now, the publication will embrace the Web in a host of new ways.
"The Web is first and foremost a community platform, so we'll be featuring new columns from prominent Seattle residents," said Steven Swartz, president of Hearst Newspapers. "More than 150 reader blogs, community databases and photo galleries. We'll also be linking to the great work of other Web sites and blogs in the community."
On the business side, the P-I is assembling a staff to form a local digital agency that will sell local businesses advertising on seattlepi.com as well as the digital advertising products of its partners, including Yahoo (Nasdaq: YHOO) for display advertising, Kaango for general marketplaces and Google (Nasdaq: GOOG), Yahoo, MSN and Ask.com for search engine marketing, Swartz said.
Most Newspapers Still Relatively Healthy
Despite the turmoil among many major metro dailies, the newspaper business remains a relatively profitable one, according to Randy Bennett, senior vice president of business development at the Newspaper Association of America in Arlington, Va.
"You have to keep this in perspective," Bennett told the E-Commerce Times. "There are less than a handful of newspapers that have shut down, and the P-I is the only one of the major metro dailies that has gone online only."
Over the first nine months of 2008, the average operating profit margin at newspapers was 10 to 11 percent, with some papers in medium to small markets showing even higher margins, he said.
One of the issues facing the P-I was the fact that it was competing with the Seattle Times for a share of the quickly shrinking pool of revenue associated with classified advertising. Other papers in two-newspaper towns such as Detroit, Boston, Philadelphia and Chicago face similar troubles.
"Typically, the smaller newspaper, in this case the P-I, has been the one that has suffered the most," Bennett said. "Advertisers are looking for a larger reach, so the smaller newspapers are having trouble sustaining revenues."
Double Whammy
Newspapers have also been hit with a double whammy: the 15-month long U.S. recession that has seen advertising dollars dry up and a movement of those ad dollars to the Internet.
"Newspapers are experimenting with all sorts of new revenue models whereby they can capture the revenue that is still out there," Bennett said. "What comes out is a different business model with different staffing requirements. Hopefully, it will support strong journalism along the way."
As a result of their smaller news staffs, newspapers will have to become much more focused and probably won't be able to cover everything they covered previously.
"What will likely happen is the staff they retain will focus on investigative and enterprise reporting to fulfill their watchdog mission," Bennett said. "Other kinds of content, given the development of Internet tools, will lead them to take on an aggregator role as well -- particularly on the softer news."
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