Newspapers: Any Options Beyond Cutting, Selling or Closing?

Newspapers have been in a long decline over 25 years, first with competition from electronic media and then, for the past decade, with the commoditization of information via the Internet. Publishers and owners — once used to spending the rents provided by their local monopolies — have now been choosing between bad options: cutting, selling or even closing their long-time cash cows.

The industry has split into two factions: those who embrace the Internet and those that just want it to go away. The former are desperately seeking new electronic delivery modalities and products, or even abandoning print altogether (and relegating the term “ink-stained wretches” to the dustbin of history). The latter are continuing to focus on killing trees, sometimes in combination with shutting off the electronic redistribution of their content that is fueling commoditization of their industry. These are tough choices, because neither strategy seems particularly promising.

On Sunday, New York Times (NYT) media columnist David Carr highlighted a tiny newspaper in Asburk Park, NJ. For NYT readers, Asbury Park needs no introduction: a small town 60 miles away on the Jersey Shore. For the rest of us, Asbury Park is the site of Bruce Springsteen’s early career and the title of his debut album.

Carr notes that the TriCityNews website has “has a little boilerplate about the product and lists ad rates, but nothing more.” The paper’s owner is defiant:

“Why would I put anything on the Web?” asked Dan Jacobson, the publisher and owner of the newspaper. “I don’t understand how putting content on the Web would do anything but help destroy our paper. Why should we give our readers any incentive whatsoever to not look at our content along with our advertisements, a large number of which are beautiful and cheap full-page ads?”

Local (if not hyperlocal) content has always been the most strategically defensible response to national electronic competitors. The problem is that the economies of scale work against highly local papers: the more focused the content, the more daunting the economics of paying that content. One possible future is that what we have left will be low-cost (if not schlocky) community papers that complement the TV stations and Google (GOOG) (or Yahoo (YHOO)) News.

Every time there’s a recession, newspapers merge or go out of business: this time, the 2009-2010 trough of the business cycle will be the perfect storm. About the only saving grace is that the newspapers that remain are the survivors of two decades of Darwinian elimination.

Comments

[Moon Kil Woong:]

It is funny, if you pick out 3 random newspapers and then read 3 online news sites you will know why they are going out of business. For one thing 90% of the articles are ripped from the same source, usually the associated press. In this case, you get the news much faster online and the quality is 0% different.

For another thing the newspaper these days is about 20-40% trash advertisements and another 20-40% are articles only about 5% of the people would ever read and only when they are bored out of their gourd. Simply stated, they are not able to target users interest or needs the way we expect this day and age.

If you want to start being eco-friendly, cancel your newspaper service and print out any news item on your printer that you want as a hard copy. You'll lower the paper content from 110 large pages of trash to about 7 pages. Plus you'll also save those little green papers you stick in your wallet to buy stuff.

2008 Dec 23 03:00 AM

[bear_mkt:]

There are few papers I go out of the way to buy anymore. Sorry about your business model Mr Big Publisher, but when my 3-paper a day habit met your last price hike, I found I could get enough news on the web. (saving $4.50/day: The Journal, $2, the Times, $1.50, The Sun $1.00, In Memoriam - great Arts coverage and cave-man editorial politics.)

I read Tri-Ciy News everytime I go to the Shore. It's got bright and irreverent content and good "get you mad" investigative reporting. It's at its best at focusing on Asbury when the City is doing stupid things like suddenly installing weird parking meters in mid-Summer or wanting to tear down historic buildings to turn funky Asbury into a bland Sunbelt-type suburb.

While it is annoying that I can't read Tr-City on the internet, I sure do look for it when I head to the beach. I do read the ads, too, so I guess their business model is working.

I couldn't see TriCity's local-ad based free-paper model working for larger papers with big overhead for plant and equipment and the need to cover national and local stories and sports. Especially where national retailers like WalMart or Sears can move their ads out of the papers and onto their websites. High fixed costs, rigid union work rules, expensive newsprint and declining revenues from display ads or classifieds don't work.

I guess the other viable business model is out of the magazine area. The Economist charges relatively high subscription rates, discounts less than the competition and has a smaller staff than comparable publications. Don't know that it would work for daily newspapers, except the Wall Street Journal.

2008 Dec 23 03:26 AM

[bill melnic...:]

While your observation that publishers are choosing between digital only or in some cases abandoning digital altogether, there is a third choice that has yet to be explored or to my knowledge been given serious consideration. As you have stated, neither betting on the web nor cutting costs fast enough has any promise because both are self defeating for economic reasons as well as product viability reasons. The web as a business remains profitable only for e-commerce or search and cutting costs that support the content which is the only product that newspapers have to sell in favor of web overinvestment is leading to eventual extinction. Newspapers are running down a blind alley if they think the web will save them as they defund content. Its as if NBC decided to scale back on programming and start building TV sets that only get one channel as a solution to their problems. There is another solution if publishers can think boldly and strategically.

All successful marketers have three things in common regardless of industry:
1. They are consumer-centric. They offer products and services that are what consumers have demonstrated they will buy in the most efficent and consumer friendly distribution channels.
2. Their products are highly relevant and often predict where consumers are headed.
3. Their products are differentiated from everything else that's out there.
There is no demand or pricing power in parity products.

As we see it, publishers are either driven by their own business needs or are capitive of the editorial desires to be the next Woodward and Bernstein. Publishers need to good marketers first and therefore focus on the three principles laid out above.

For big city daily metros it means changing editorial mission, looking at circulation distribution differently and understanding how local advertisers source their customers. This can be achieved within the current circulation footprint with a reallocation of current editorial staff and a wholesale change in advertising sales practices and pricing structures.

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2008 Dec 23 10:44 AM

[Donald Johnson:]

On Dec. 6, I blogged:

ewspapers are tanking due to their loss of most of their classified advertising to eBay, craigslist.com and various jobs and auto sites on the Internet.

Classifieds historically have attracted almost as many readers as business news stories and the comics. Almost 39 years ago, a couple of bright young guys in Chicago started the Weekly Reader, which allowed anyone to publish classifieds FREE. They made a fortune, publishing one great feature a week along with a few fillers and hundreds of ads.

Even today, alternative weeklies are filled with ads and one or two interesting stories. I’m not sure they’re thriving. Indeed I think some are hurting.

But they present a business model that daily newspapers might adapt.

Print free classifieds for individuals. Charge affordable prices for commercial and job ads. Craigslist charges $15.

Since the Internet has a tough time beating local display ads published in newspapers, wrap the classifieds around the display ads.

Cut editorial costs to the bone while increasing readership of the paper and its related web site.

Publish one or two major investigative and trend pieces a day. You might also publish comics and puzzles that aren’t easily accessible on the net. Publish briefs on national, local, sports and business news with refers to the paper’s web site. Make sure all stories include tons of links to source materials and related stories. Keep it simple.

Invite all governmental agencies to submit their news releases and related propaganda. Group by town, county and school district. Publish the lede graphs in the paper. Publish the whole thing on the paper’s website. Open every item to comment by readers. They would provide the content that people would want to read.

Support this venture by selling affordable advertising to local merchants. Some would buy links to their web sites. Others would buy banner ads and text ads and others would buy display ads in the paper.

Automate ad sales, letting customers buy the ads on the web site. Advertisers would be responsible for writing, editing and submitting ads ready for publication on the web and/or in the paper. Payment would be by credit card, improving cash flow and collections as well as profitability.

More here:

www.businessword.com/i.../

Community papers have more captive markets, but even they are worried about the survivability of their bread and butter advertisers, including local Realtors®, auto dealers, accountants and retailers. Many of their ad contracts expire at the month, and then they will know how they'll do next year.

2008 Dec 23 11:20 PM