As the American newspaper seeks to reinvent itself, it faces problems unimaginable just few years ago: the internet, falling circulation and advertising, shrinking profits and rising costs.

Yet the biggest challenges facing the American newspaper are within, say industry analysts. They are of their own making, the sad result of the monopolistic cultures that defined newspapers for so many decades.

Even with all their problems, newspapers are still incredibly powerful institutions, and they would seem to have everything going for them as they attempt to adapt to the internet age. They're still hugely profitable, and they still dominate their local ad markets. And if they've lost readers, they still have far more than they've lost.

Yet even with these advantages some believe a number of newspapers simply won't make the transition. They will whither.

The reason: They will struggle and fail at reinvention as the old cultures will prove too powerful to overcome. 

The three problems facing newspapers, say industry analysts, are: resistance to change, denial and arrogance.

Resistance to change.
When you approach an American newspaper, walking across the parking lot, what most captures your eye is the building housing the printing presses. They are enormous, and sadly they define much of the thinking of newspaper people.

“It’s not in newspapers' DNA if it doesn’t have ink,” observes Miles Groves, an industry consultant who works for MG Strategic Research in Washington and the former chief economist for the Newspaper Association of America. Newspaper publishers persist in seeing themselves as manufacturers, not as providers of information.

They see their job as getting the paper off the presses and onto trucks each day, not undertaking change, or even responding to change.

As Groves makes clear, that reflects an inbred risk-aversion. "Newspapers are afraid of failure," says Groves. "It’s out of that fear of failure that a lot of innovation doesn’t happen. They don’t take risks.”

All the news these days is of newspapers making deals with various internet providers, as in classified advertising. These are concessions of defeat, in areas where newspapers were once dominant. They lost by not being there first. By failing to invent, newspapers opened the way for Monster and Craigslist, among others.

It's not that they didn't see it coming, either.

Years ago, the now-extinct Knight Ridder chain was developing Viewtron, a home-information service that anticipated the internet. One of the people working on it was Philip Meyer, now teaching journalism at the University of North Carolina. He's the author of “The Vanishing Newspaper.”

“We saw early on that the most profitable applications initially would be for business use,” he recalls. Knight Ridder saw the potential but Bloomberg jumped ahead with a dedicated terminal for business users, the Bloomberg box. The fight was over. Bloomberg won.

But even if Knight Ridder had come up with the idea first, Meyer doubts it would have pushed ahead. It would have been too risky. Says he: "Innovation requires a different culture. That’s why the most successful newspaper internet operations were developed outside the newsroom.”

Risk-aversion, along with the manufacturing mind set, has also kept newspapers from building deeper roots among advertisers, says Groves.

“If you talk to the average ad guy, journalist or bean counter, they don’t understand how advertising works,” he says. “They don’t understand that they need to invest in serious marketing and utility so that they can really understand who their readers are."

Denial
Denial in the newspaper industry takes many forms, and one is simply refusing to see the potential challenges the internet would represent. Even today, most newspapers struggle with the idea that their web sites ought to offer much more than headlines from that day's paper.

They do a poor job of integrating, both in their news operating on the ad side. Says Groves: "Integrating print subscribers with an online database could enrich products and translate what print readers want to the other side, but newspapers won’t do that.”

Arrogance
Closely tied to denial is an arrogance that still haunts the newspaper industry, even as it's facing increasing turmoil. It manifests itself most pointedly in newsrooms, which still behave as if they were the single most important voice in the market, rather than one of many.

“The belief among some newspaper people is that they would tell citizens what was important and what they should know,” says Margaret Duffy, chair of strategic communication at the Missouri School of Journalism.

“When people had few media choices, that (process) was more successful. Now people prefer to participate in the process.”

Instead of turning to their newspapers, readers turn to the internet, to sites like MySpace, where participation is fully part of the experience.

For Groves, it all may be too late, even as many papers struggle to adopt a more participatory approach to their readers.

“The DNA is just not there to do what needs to be done. If a newspaper doesn’t already have a strong information strategy and can’t already tell you who its readers are and what they like, if they haven’t already tied online and print together, I have no optimism they can turn it around and make it different. It’s too late. I have no hope for some.”