The Air Being Let out of the Balloon

There has been so much written lately about the newspaper business and its impending death, however, I feel the need to add to the dialog and hopefully can do so without repetition. The decline has been so long in coming it’s like watching one of my kid’s helium-filled balloons. It loses helium over time until it’s flat. How did the newspaper execs let it get to this? Didn’t they see any of this coming?

So much of the difficulty has been self inflicted. Newspaper advertising sales teams have been “in-bound” focused order takers for so long that they are struggling to change to a world where they need to compete vigorously for shrinking ad dollars. Newspaper union leaders have negotiated 37 hour work weeks and lifetime guarantees for certain workers. Newspaper management fought interactive participatory, journalism. They fought the link economy, continuing to believe they were in the content economy (paraphrasing Jeff Jarvis). They fought blogs.

I thought that newspaper leaders might be starting to get it, but then I saw the following from Dean Singleton, CEO of Media news Group:

Him: We need to “tell our existing print readers that what they are buying has real value.”

My reaction: The consumer will tell you what has value and where and how they want to consume it.

Him: “To be clear, the brand value proposition to the consumer is that the newspaper is a product, whether in print or online, which must be paid for.”

My reaction: The consumer will decide what they will pay for and how they will pay for it. See Napster, iTunes, and the recorded music industry.

Him: “We have the advantage of being the trusted source of for news and information in our communities and have a large base of traffic to feed into Local.com. Local.com will leverage existing newspaper content and existing traffic, and we will add new content (such as Entertainment/Lifestyle) to target a younger audience.”

My reaction: You may not be the trusted source you think you are. Consumers have shown time and again that they trust each other for reviews of restaurants, travel, products, and events. Also, newspapers tried local “sites” a decade ago. It was called CitySearch.

In my city, we have the example of the Boston Globe, owned by The Times Company. Boston is a sports-crazed town, so much so that it is estimated that 25% of the traffic to Boston.com comes from out-of-market sports fans coming to read the Globe. Yet the Globe can’t, or won’t capitalize on this, embrace the web, the commentary, the blogs. I always wonder why Bill Simmons, aka The Sports Guy, ended up on ESPN rather than Boston.com. Probably because he’s a blogger, and therefore not a journalist.

One of the solutions being tossed around to solve newspaper woes is micro-payments. Micro-payments will lead to walled gardens of content and dialog, and they not going to solve the real problems. First, the revenue streams available from users paying for content are not sufficient to support the business. Subscription revenue for most newspapers is, and has been historically, around 20-25% of revenue. So if it wasn’t near enough in print, why would it be enough online to support the business in its current form. Second, micro-payments decrease the online readership, making it that much harder to make an online advertising model work. Sounds like a downward spiral to me.

So we watch the newspapers wither, and now ask for either (micro) payments or government relief. Don’t get me wrong, I think hard-hitting journalism is critical to a functioning democracy. I just have a hard time supporting this business model and these executives. Maybe I will change my mind when I see a news organization (nee newspaper) truly support the web and the innovation.

I’ll know the news organizations have turned the corner when we see one of them partner with Craigslist for classifieds, or even try to bring something radical to help to their recruiting (help wanted) customer like matching services from QuietAgent or JobFox. Or when we see one partner with Zillow or Redfin for real estate classifieds. Or when we see one partner with Yelp for restaurant reviews and listings.

Until then, we continue to watch the leak and listen to newspaper execs tell us what has value.

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