Newsday et al: Too Little, Too Late

It’s with profound amusement that I read Newsday will attempt to “end the distribution of free web content.” (Next, Cablevision (CVC) will try to charge us for its deeply boring News12 that no one watches.)

But it’s with profound sadness, exhaustion, exasperation, and deja vu that I read Hearst’s memo about its attempts to update - a memo that could and should have been written and tried out 12 years ago (I’m sure people in this company and others did write versions of it; I know I did). If these actions had been taken back then, there still would have been time to make change and survive. But that time is over. Now the memo comes off only as desperation as the company threatens to close its papers in San Francisco - its onetime center of gravity - and Seattle. Now it is too little, too late.

The memo wishes to charge for online content. See above. It also fantasizes about charging more for the print product. “Our print subscribers don’t pay us enough today that we can say they are actually paying for content. Rather, we only ask readers to pay for a portion of the cost of printing the paper on newsprint and delivering it to the reader’s doorstep. We must gradually, but persistently, change this practice.” That’s put precisely 180 degrees from how it should be put: not what the public owes the paper for its expenses but what the journalism printed on that paper is worth. I was just in San Francisco and read the Chron there. I can’t imagine paying for the product I saw every day in any medium. As I travel across the country, I have to say that’s too tragically true of too many local newspapers, many far worse. They’ve cut themselves into irrelevance or just crappiness rather than concentrating their resources on what would make them truly valuable.

The memo speculates about creating an E-ink reader, seeking the mythical iPod moment for papers. I fear it’s a myth.

It says they need to find efficiencies and savings. That has been the case for years. It notes that “all newspapers look pretty much alike” and so they should be produced with shared services; I can’t believe that chains did not do that a decade ago. Why didn’t they share those expenses so they could concentrate resources on reporting - on value? Turf and ego, probably.

It says that papers must serve new populations of smaller advertisers with new sales methods: “…we cannot afford to do so by calling on every advertiser in person every other week and then having a team of artists build and rebuild their ads.” Let me dig my memos about that out of the file. Hearst’s memo says: “…we must fully make the leap from simply selling pages to selling audiences.” Yes, but that was the lesson and mantra about 10 years ago. Now, with a new population of marketers - smaller, more local - and with search and Google and maps and mobile changing the local economy utterly, the goal has shifted past “selling audiences” to helping local businesses enhance their services and relationships and using anything - even Google - to do that. Plain old advertising won’t cut it, no matter how you sell it.

It says that “we have a revenue and business model problem as opposed to an audience problem.” Well, yes and no. The audience online has grown. But engagement with newspaper sites is short and sporadic versus true community services. The question is whether, when papers disappear, the community will care or shrug because newspapers were not enough part of their communities, serving them as platforms instead of products.

At long last, the memo sees the need to get rid of printing costs. It says Hearst will use outside printers to get more color (presumably because they think they can charge higher rates for that). I’d say the way to get rid of printing is to get rid of paper and move to the future. But that’s still too radical.

It finally recognizes the opportunities to collaborate with the community: “We must do a far better job of reaching out to prominent citizens in our communities, those who already have a blog and those who don’t, and providing them a prominent platform to state their views. We must develop a rich network of correspondents to help us grow the deepest hyper-local community microsites in our markets.” That is the key revelation that should have come long ago, but I won’t grouse: It has come at last. See my other post about The New York Times (NYT) and hyperlocal.

At the end, the memo brags that they have a new marketing campaign on the way. That’s the last thing they need. A good platform serving the community will sell itself. A bad product can’t be sold no matter how much you advertise it.

Bottom line: Hearst says it will try to get 50 percent of revenue - to support a business 50 percent smaller, according to reports about San Francisco - from circulation and digital advertising. Good luck. I mean it: Good luck.

I’ve been saying recently that I realized I thought we’d have a peaceful passing on of power, like Jan. 20, from the print president to the digital president (and the metaphor ain’t far off). But more and more I see that there won’t be an orderly transition. There will be destruction. There will be voids. But out of that will grow new news.

Comments

[NP Refugee:]

Jeff, as usual, your insights are dead-on. The time to change was back when NPs were all in a state of denial and arrogance. So many problems--I don't know whether they can get out of their own way.

Here's my short list recommendations:

1. Kill the AP. It's outlived its usefulness and commoditizes the content of the member papers. While the AP does deals that make money for the AP with the likes of Google, the member newspapers don't understand why their papers aren't able to maximize their editorial content. Wake up, for heavens sake! The AP is, and has been a clear case of the tail wagging the dog.

2. Get rid of debt. Close papers, sell assets. Circle the wagons. Do whatever it takes. Those who continue to borrow money deserve whatever they get. Many of us saw this coming and pointed out the absolute stupidity. But then, they were in denial. Get whatever the market value is. It's not as though they're not taking write-downs on the impaired assets anyway.

3. Take the companies private. I know Tribune wanted to; they were on the right track; I hate that it's turned out the way it has. The only way NPs can reclaim market share is to operate on paper thin margins for which shareholders will have no stomach. The road to reclaim market share will mean cutting rates to rebuild circulation; then the advertising MIGHT have value to the limited number of advertisers who appreciate a mass audience in a world of behaviorally targeted media. Once private, establish ESOPs to retain talent--but keep it in the family. Props to the Newhouses of the world who cared enough to ignore the intoxication of public funding. Their products reflect the commitment as a result.

4. I don't know how much adversity will be necessary to force NPs to work together, but we'll likely find out in 2009. Screw Google and Yahoo! and create a news search engine owned by the NPs. Sell contextual ads for searches. Do it right. Create a whole new entity with its own profit goals. If only 20% of any NP's web traffic comes from search engines, it's really not that big of a sacrifice and will likely pay huge dividends. Over time, many of the searches will return anyway through a news search engine. Gannett has topix that would be the perfect vehicle. What in the world are they waiting for? Google has to be laughing at the money they've made on the backs of all the editorial depts in the country.

5. Take their responsibility seriously. There's a real credibility issue when 60% of readers do not trust the news they read in the local paper to be the truth and absent of bias. It grieves me that we may be witnessing the death of the 4th estate in this country--all due to a combination of laziness that has caused editorial departments to cease to be the watchdog for the common man, satisfied in regurgitating talking points that are fed to them--and blatant sychophantism, becoming fawning lapdogs who are more interested in getting praise from those they are charged in holding accountable than having an insatiable desire for truth. We have all entrusted them to safeguard democracy. They are failing miserably.

Even that, though, may just prolong the inevitable. I've heard it argued that one medium, when introduced, doesn't replace the previous medium. For example, radio didn't kill newspapers, and TV didn't replace radio. That's really limited thinking and is quite naive. Such a position fails to recognize a cumulative effect. Radio didn't kill newspapers--but perhaps radio, TV, cable, and the Internet WILL kill newspapers. Each new entrant erodes all previous media to some extent. The real question is, "how much new media does it take to bury an incumbent?" History shows it takes more than one, but in my thinking, "four" may be answer.

Feb 28 11:26 PM

[bored2tears:]

Thanks, Jeff, for a concise and incredibly relevant column. And NP Refugee, your points are excellent. I am in sad agreement with you that the strategies you propose may just prolong the inevitable, though.

Mar 01 08:18 AM

[exNewspaper:]

"The memo speculates about creating an E-ink reader, seeking the mythical iPod moment for papers. I fear it’s a myth."

I couldn't agree more. That bullet train left the station a long time ago yet newspapers are still trying to catch up to it with the same old steam engine chugging down the same old track.

Mar 01 08:19 AM

[Robert Osaz...:]

On my blog I comment that the people will only pay for the following kinds of content on the web; "business intel, games/music/entertainm... gambling, and porn". (locoforlocal.blogspot....)

"The memo speculates about creating an E-ink reader, seeking the mythical iPod moment for papers. I fear it’s a myth.", that is an oversimplification on your part. People are used to paying for content and apps on hand held devices. The promised land might be a long way off, but if we are to agree with you with what you said about publishing this memo ten years ago, then they should start making moves in this direction now.

Mar 01 03:10 PM

[Mike Maisel:]

The concept of paid content makes sense, but newspapers have already loused it up before they even try to get it off the ground. (And I would definitely take the UNDER on that succeeding.)

First, content has been free (mostly) for so long that it has become considered an entitlement. It is difficult to charge for what was once free. The airlines did it with drinks and snacks, but there are far fewer of them and they are used to moving collectlvely on things like pricing, etc. But, newspapers are still run like Mom and Pop shops (albeit with massive debt) and trying to get that industry together on ANYTHING is like herding cats. (If they had any industry cohesiveness, they would have been on the line for a bailout, like the auto and banking industries.)

Second, is the systematic dumbing and watering down of the core product. You cannot layoff journalists, share content, combine bureaus, make greater use of syndie material and expect to maintain high standards, or even interest. Chasing USA Today homogenizes newspapers and does NOT serve the public well. I observed years ago, that if you blindfolded me and dropped me in any enclosed shopping mall in the country, I would not be able to tell you what city I was in. Now, if you cover the masthead of any major market daily, I think the same challenge would face me.

Mar 02 08:05 AM

[David Gerard:]

Hey, giving up subtlety and going to blatant whoredom works for the tech press.

May 04 12:28 PM