There’s a notion among many newsroom people that, “Damn it, what we do is valuable and important and people should pay for it.” Of course, I’ve argued, free markets don’t work that way. If people don’t perceive the value, they won’t give you money just because you have a high opinion of yourself.

This morning, Scott Karp is suggesting that newspapers need to in fact throw themselves on the mercy of their readers and say, “Donate to the cause.”

Imagine that you decided to post your classified listing with your local newspaper rather than with Craigslist because you knew it would support the work of local journalists who help make your locality a better place. AND, imagine, you also chose the local newspaper listing because you knew knew that your listing would be more likely to reach civic-minded people like yourself. Imagine how much more (smugly) satisfying would be to conduct your personal commerce in such a community

My question is: Will people donate their paid classifieds to a business that maintains 20 percent profit margins? And then there is that whole love/hate thing people have with media. There is also the issue of declining readership, especially among young people.

Just who will the donors be? Probably the same people who already see the value of newspapers and because of that perceived value, buy ads now.

Besides, I’m not a big fan of newspaper companies begging for hand outs. Either we have to figure out how to better serve our communities and operate more effectively as digital businesses, or we don’t deserve the community’s support.

Much of Karp’s thesis though is based on a faulty premise: That craigslist is killing the newspaper classified business.

As I’ve written before, there are many efficiencies in digital distribution that are cutting into the newspaper classified business, but to declare victory for craigslist or any other classified competitor is a gross overstatement.

While Karp might be right that newspapers have not done a good job of marketing their value to the community, I think we’ve also done a poor job of explaining just how effective newspaper classifieds are, especially when those ads are also put online. In most communities — with the possible exception of San Francisco — a newspaper classified ad is still the most effective way to advertise a job opening, a house for rent or a car for sale.

Of course, newspaper classifieds are vulnerable to disruption because of the high price, but it’s also true that most of the ads going to competitors like craigslist are ads that traditional newspapers never would have gotten in the first place. Criagslist is much more of a threat to alt-weeklies than MSM dailies.

Newspaper classified revenue is dropping not because of craigslist, but because of the bevy of new choices. Not all of the online alternatives are free, but they are often less expensive. That hurts, but the main point is: Newspapers have lost their monopoly. That’s the biggest change brought on by digital, distributed media.

Newspapers have not necessarily been good at recognizing nor adopting to the new reality, but I agree with Karp that Phil Bronstein statement that “the news business ‘is broken, and no one knows how to fix it.’ (‘And if any other paper says they do, they’re lying.’)” shows a complete lack of imagination. I doubt any of my colleagues who have been toiling in newspaper new media departments for the past decade or so agree with that statement. I think the answers are all out there. It’s just that no one newspaper has yet put all the pieces together yet, and that’s largely the fault of companies that felt it more important to donate online profits to corporate bottom lines rather than reinvest that revenue in staff and products to grow the business.

We need to get our own house in order before we start asking for outside help.

UPDATE: From a somewhat different starting point, Howard Weaver makes relatively similar points. Rather than quote any part of it, just go read the whole thing.

UPDATE II: Also read Kyle Redinger on why newspapers are not dead.  More facts, less rhetoric.