Note: these are just thoughts I had after a meeting, described below — they are neither particularly structured, nor necessarily well-researched and informed, but rather the result of spending a bit of time thinking about a real-world problem I came across.
My friend Leah Garchik of the San Francisco Chronicle just gave me a photocopy (ironically so, read on) of a Time article titled How to Save Your Newspaper by Walter Isaacson. The travails of print media in all its forms have been a pretty prominent theme in business news over the last 10-15 years; Carlos Slim’s massive cash injection into the New York Times is the latest attempt to rescue a big name newspaper. When I visited Leah in one of the Chronicle’s offices, the phenomenon was driven home by the large numbers of empty desks, attesting to a lot of people who’ve gotten the boot, with the economic implosion turning an already terrible business environment into the perfect shitstorm for papers.
So, knowing nothing about the newspaper industry, and being innately inclined to spouting off about topics that interest me, I thought that this would make a fantastic business school case. A traditional industry under siege by a combination any number of technological innovations, changing expectations (after all, everyone wants content for free), competing media and other factors, and yet, possessed of a very strong set of assets (infrastructure, professional staff, good names, etc.), but seemingly no direction or concept on how to turn those assets into long-term sustainable profitability — how do you fix this?
Isaacson presents a few ideas, including charging small amounts for online content, and using micropayment mechanisms, such as Spare Change or Tipjoy, to let people pay for good content. Personally, I think this is too little too late — people have grown accustomed to free content, and even have hissyfits about registering for access to websites — at least I do — thanks to distrust towards overt collection of personal data (while being willing to fork over all kinds of identifying information to Apple via their iPhones, or, as Isaacson’s article astutely points out, paying up to 20 cents per SMS.)
Nonetheless, relying purely on ad revenue to support media financially always struck me as a highly goofy business model — while advertising can indubitably form a substantial part of any information medium’s revenues, it’s too cyclical and fickle a source of funding. I disagree with Isaacson’s invocation of Henry Luce in regards to all-advertising-supported newspapers becoming inevitably beholden to their customers; news reporting and other newspaper content is such a huge, diverse field that it’s unlikely you’ll ever see more than a bit of pandering to advertisers — acceptable, given that no paper is ever going to be 100% fair and neutral. Anyway, where’s the fun in that?
There are two parts to where newspapers stand at the moment: first, why are newspapers in a bad state, and second, what’s attractive about them? Then, maybe, maybe, a solution? Again, this is purely academic, not based on research or figures, and anyone reading this should draw their own confusions. First, the problems:
- Newspaper delivery requires a fair amount of fixed-cost infrastructure if you want to maintain a physical medium
- Readers want online editions
- Aggregators like Google News take visitors away from newspaper front pages; readers are much more able to create their own smorgasbord of the news they want from different providers
- 50 million+ blogs drain off eyeballs
- Most of these blogs stink (including this one.) Web 2.0 publishing technology allows anyone with an opinion and no clue what they’re talking about to crank out sensationalist, uninformed headlines (more on this later)
- Old-school papers have to compete with free newspapers, especially in places like commuter trains — these address the short attention spans of people without too much time
- Classified ad revenue has all gone to Craigslist — newspapers are slow, inefficient vectors for this product
- It is difficult to get people to subscribe for something they can get for free — plus, as Isaacson mentions, most micropayment technologies until recently have been awful and unusable
- Customers are pickier — they want to participate, are much more able to fact-check content (whether they do this or not is debatable), and will likely gravitate towards communities that reflect their own opinions and choices — so moving away from geographic focus to demographic focus
- Newsrooms cost a lot of money
The good things:
- Newspaper text articles beat radio or video clips because they allow a more structured reading experience — I can process text much better without being influenced by inflections or facial expressions of the presenter, it’s possible to include hyperlinks and embed secondary media much more easily, I can manipulate (copy & paste, highlight) text, and I can put down an article and continue at a later date much more conveniently than with a YouTube video.
- Print media are more convenient in certain situations — you can’t take a laptop to the bathroom, newspapers or magazines roll/fold up nicely, they’re better while standing up or in an airplane during takeoff or landing, you can give a paper to someone next to you, nobody will mug you if you take out a paper, etc. etc. etc.
- Newspapers have a name — that is, even a paper that’s doing badly will associate a local or national paper with a certain degree of quality in news — that quality doesn’t necessarily have to be great, but there’s some perception of solidity in news reporting that a collection of hysterical poo-throwers like Indymedia will never achieve (note, I’m not talking about actual solidity, although that may be the case, who knows, just the perception thereof. Plus, Indymedia’s articles are generally one-sided and their site makes my eyes bleed. Go draw your own conclusions.
- Newspapers rely on professionals with experience, who have overcome barriers to entry (in the form of job interviews and having to build a reputation in order to get published.) Scoop bloggers may have a lot going for them (more on that later) but there’s something to be said for having a Paul Krugman, a PJ O’Rourke or a Woodward & Bernstein on staff.
- Media companies have permanent presences, infrastructure and processes for international and local news gathering that informal contributors do not have access to, at least not in a concentrated form. More on this later
Personally, I like magazines — principally, Esquire, the Swiss Die Weltwoche, and The Economist. I don’t often read papers, because the format (big, folding pages) sucks, I prefer getting my day-to-day news online, and the writing style and quality in weekly or monthly magazine-format media fits in that space between short articles and books that lets me take my news and analysis in doses.
So, how to fix?
First, I would mercilessly re-evaluate whether the physical print part of a paper is making money. If so, keep it, if not, cut it. You’re not going to increase profits, as I assume most papers have already streamlined their operations as efficiently as they can (if not, there you go, easy first step.) There are good reasons to have print newspapers — is there a way to make this medium more attractive? Consider offering less-than-daily print editions in a more convenient format, complementing these with daily online editions. I would love to have, say, the weekly in-depth analysis and thoughtful prose of an Economist, coupled with daily local news; I can imagine the same for lifestyle, business,
Regarding micropayments, I would take Isaacson’s idea about iTunes a step further — and actually offer subscriptions _via_ iTunes. Since I believe that video and audio will not supplant text, let people stream or download newspaper content directly to their Kindles, iPods, phones, laptops, whatever, via RSS feeds or equivalent. Treat the text articles like podcasts; offer pre-defined packages of articles, so users can select from a template. Team up with other papers to bundle articles in subject groupings, splitting revenues by subscription statistics — thus allowing individuals to have access to topic-sorted article groups in easy formats; an example of this could be “all articles involving food from all major California cities.
A friend of mine recently pointed out Kachingle, a service that acts as a sort of voluntary “tip jar” for blogs you like. The problem with a paper is that, as a corporate for-profit entity (despite the fact that newspapers fulfill an important role as a common good for communities, if only for their ability to investigate and expose nastiness in business and politics) you can’t really rely on donations — plus, it’s not ever going to get you the kind of cash flow you need to support any kind of operating expense. Even worse, it could work against a paper by making it look as if a big bad corporation was taking money away from nice little blogs. Not good. So, why not, as this article suggests, use mobile phone billing? Isaacson already refers to the price insensitivity of phone users for SMS-based news — offer them something more, using billing consolidation logic. Partner with mobile phone operators to sell papers for iPhone, Blackberry, whatnot — you can even consider different billing models whereby users can buy subscriptions on the basis of single or multiple units (with volume discounts), or time periods. If part of what is keeping people from subscribing is the difficulty of paying for news, make it easy and cheap to pay.
Take money from any and every source you can; if you already maintain a printing and distribution network, would it incur significant variable costs to allow subscribers to customize their product, to set up a private print edition consisting of a single copy with only the content they want? It might bear investigation whether the saved costs of newsprint and paper in a massively customized, slimmed down Sunday edition outweigh the additional costs of making sure the entire printing-to-delivery process is individualized.
Offer value-added services that capitalize the assets and competences you already have, such as editorial know-how, publishing tools, distribution mechanisms, writing and research; provide these to companies and other organizations. Allow external parties to use these services, and offer outsourced publishing as a commoditized product to anyone who wants to create a neighborhood or corporate newspaper.
Sell cheap, unlimited institutional access to your archives. Make sure everything you have ever created is digitized and well-organized, and allow every university, law office, political party, or whoever is willing to pay a reasonable amount, total usage of your past articles. Let them re-print them on their own pages, and ignore those who copy them; I can’t envision anyone dumping and making available your entire database of scanned newspapers dating back to 188whatever. Why not allow other organizations to provide a search interface to your whole treasure trove of information? Just charge them a concordant (but still manageable) fee — $100, $200, $500 per year is still money.
Turn the web presence into an online “news community. Then, re-think the whole subscription model. As Isaacson proposes, it’d be interesting to start charging very small amounts (5, 10 cents) per paper. Why not sell “memberships” via the online website? Many communities do this; subscribed users or “supporters” are able to profit from additional services, like special avatars, the ability to post to the “supporters” forums, a little badge, whatnot — if the price is kept low enough ($5 -$15 per year) users will frequently jump at the chance to benefit from features that, at first glance, might seem silly.
Partner with external companies to provide relevant services — movie ticket ordering via Ticketmaster, book ordering, etc. — especially for-pay services that are web-based have an infinitesmal marginal cost for an additional subscriber, and might be willing to offer discounts to new distribution channels. Much as some magazines include free DVDs or books, a subscription could include access to external services.
The next challenge is to set the actual content and formatting apart from all the free media cutting into a newspaper’s subscriber base. First, get people hooked by expanding the participatory nature of discussions. Most contribution boards to articles are static and linear; sign-up mechanisms are clunky and intrusive. Consider introducing threaded discussions — slashdot.org has been doing this for years, with editor-posted articles. Why can’t newspapers stimulate real discussion, instead of just allowing people to post short comments? That is not particularly conducive to building a community — which is pretty much what we’d be aiming for. Maybe even piggy-back off existing online communities like reddit.com, introducing subordinate communities geared towards discussion of particular topics. This means that a paper can slice-and-dice its topics by demographic, geography, subject area, and any number of other taxonomic criteria, and as with the pre-packed article groups I mention above, provide access to various cross-sections of its content.
A paper will always want some kind of free content; you want to drive traffic to your content (attracting visitors to your site is kind of an archaic concept.) Embed ads in that free content; Google proved pretty conclusively that small, unobtrusive ads are just as, if not more, effective than large, cumbersome flash or popup ads, and will make users more likely to stick around the site. Even better, why not actually embed ads in text format with hyperlinks? Actually re-format the ad and content to include the original link included in the ad, but in a simplified, html-only form. Its a kludge, but one that would ensure that content reposted by scrapers and aggregators includes ad links.
This is an ad for my food & travel page.
Unobtrusive, no? Who knows, might be worth a try.
Outsource everything that is not core to a newspaper’s competences. I can’t think of a formula for this, but is there a need for staff movie critics? Focus on delivering news, analysis, and such content as the organization feels secure enough to be able to list as one of its major strengths — something it can display as a selling point because it is the authoritative source of publishing in that particular area.
Expanding on this, and most important to what papers can do to set themselves apart, why not leverage the assets of the newspaper and open them up to outside publishers? One of the reasons that most blogs are such crap is that (a) authors don’t have a clue what they’re talking about, (b) authors can’t write to save their lives, and (c) authors don’t have access to the sort of research, QA, or investigatory hardware, know-how and contacts that a classic newspaper does. Aside from the possibility of engaging high-profile non-syndicated columnists (thus creating a unique selling proposition) next to staff writers and syndicated contributors, wouldn’t it be an interesting idea to give some particularly talented people access to a paper’s abilities?
There is a whole Internet full of fairly intelligent, motivated people out there — the challenge for a lot of subscribers is to separate these from the chaff. Use the paper’s editorial experience to polish submissions from such people, to help them fact-check articles, and to report on local issues important to them in a saleable manner. In effect, provide a “professionalization” filter through which to pass some of the rough content that goes online and to give it the credibility of a major news organization. This way, the newspaper will instantly have access to a vast pool of writing talent and observational presence, along the lines of CNN’s iReport — with the bonus that content will bear the hallmarks, brand name and quality of a source trusted by readers.
Most importantly, though, sponsor someone to write a business school case for you. Having gone through the MBA experience recently, I can attest to the number of talented, innovative young people who would love to have a crack at this sort of convoluted problem, even if only in theory — and who knows, some fairly interesting ideas might even come out of the exercise.
As I mentioned frequently, these are only opinions, unfounded in experience, and some informal thinking about the problem and brainstorming ways of approaching a solution. I’d hate to see papers die, as they, if nothing else, provide a bit of stability in a sea of garbage, even if I don’t agree with what they’re saying.