It’s time to reinvent the newspaper industry

The Internet didn’t bring the newspaper industry down.

Debt didn’t bring the newspaper industry down.

Declining advertising rates didn’t bring the newspaper industry down.

Complacency did.

When an industry goes from so high to so slow, so fast, it’s ultimately because its leaders became complacent.

They never thought that the monster profit margins would end. They never thought that diversification was important. Instead, they gleefully doubled down on print in recent years with ill-advised acquisitions.

After all, why diversify away from newspapers when they make so much money?

When you look at industries that ultimately fail, it’s because their leaders never thought a new technology or a new way of producing a product could come along. They thought they would be able to do the same thing forever. That short-sighted thinking is ultimately doomed to fail.

After both radio and TV tried to supplant newspapers for news delivery, you would have thought news industry leaders would have been on notice. Radio news was always destined to be a supplement, not the main event, but it still changed how some people consumed news. TV news has permanently stolen eyeballs and advertisers from newspapers, and yet newspapers were caught flat-footed when the Web hit.

The irony is that the Internet and Web should have helped newspapers make even more money. They are both vastly superior information content dissemination vehicles than newspaper trucks. The cost of making a good Web site is a fraction of that of a newspaper and is falling over time, while the cost of printing and distributing a newspaper is rising.

Even when America was enthralled by America Online, it didn’t become apparent to enough in the newspaper industry that this was the future. Nimble, non-complacent industries would have loved that millions of homes were getting Internet. Here was a much cheaper and easier to scale venue for content distribution.

Right off the bat, executives should have seen that the Internet and Web could do a few things exponentially better. Classifieds are one of the first thing that comes to mind. Rather than make a searchable, easy-to-use classified system online, newspapers shoveled non-Web friendly newspaper classifieds onto the Web. These weren’t searchable, didn’t contain links and photos were an afterthought.

In fact, they were such shovelware that they even carried the same space restrictions over from print onto the Web. Space in print is limited. The whole print model was built around scarcity.

There is no scarcity on the Internet. There never will be.

So, when people started seeing ads on the Web advertising homes with a frpl, instead of fireplace, it’s not hard to see why when Craigslist hit, the gig was up. Craigslist is not a technological wonder, its UI isn’t very good and it feels quite dated.

But it at least didn’t have ridiculous print abbreviations. And it was searchable, it allowed for links, it had photos and it was easy to use. Years later, it still looks and feels much the same as it did back in the 1990s, and yet Craigslist is better than virtually any newspaper classified system on the Web.

Complacency gave away to defeatism. After Craigslist caught on, newspapers began to give up on classifieds, thinking that we’ll never get them back. But we can get them back.

Nothing is lost forever. That’s the whole point of technological change. The newspaper industry has to reinvent itself.

Apple went from the brink of bankruptcy to current darling. The Internet, and products that utilize the Internet, are a big part of what has allowed Apple to turn things around. Apple recognized that it had to change from a computer company into much more.

Even Apple’s name went from Apple Computers to just Apple. Executives at Apple realized that they were no longer just a computer company; they are so much more. They had to be so much more — it was the only way to survive.

Newspaper companies have to become so much more than newspaper companies. This means completely reinventing corporate culture, mission, products, etc. Yes, this means making products that don’t have anything to do with the paper part of newspapers.

Most newspaper products on the Web were an awful lot like newspaper products in print (classifieds anyone?). That’s the problem. If newspapers want to reinvent, it means a lot more than just finding new ways to disseminate old content.  Reinvention means thinking of completely new products that tap into separate markets.

That’s why a computer maker gets into the portable music space. That’s why a computer maker starts selling movies. That’s how a computer maker becomes a dominant player in the cell phone space.

If Apple executives insisted on only being a computer company, Apple would have gone bankrupt. Instead, when the chips were down, they decided to start taking major risks and those risk paid off. Newspaper companies have to start taking real risks, and they have to be captained by those willing to take risks.

Gazette Communications has decided to take real risksonline casino. They are separating content from products. That’s crazy right?

Sometimes crazy is what the doctor ordered. The Seattle Post-Intelligencer went online only. What’s an online-only newspaper anyway? It’s a newspaper that is reinventing itself. It’s a newspaper that wants to at least have a chance of being around in 10 years.

Defeatism must stop. The newspaper industry’s obituary has not be written. We can change the course of the future if we cast aside defeatism and complacency.

Even small steps — in the grand scheme of things — can make a big difference. Newspapers don’t have to concede the classified space. They can carve out their own niche and bring in revenue.

It just won’t be easy. To get classifieds back, we have to be non-complacent. We have to work hard — harder than Craigslist for sure. We have to build a system that is categorically superior to Craigslist.

Within a decade or two, I would be shocked if Craigslist was still the dominant online classified site. At this rate, I would also be shocked if a newspaper company overtook Craigslist. Rather, I’m sure, some non-complacent, nimble Web start-up will come along and reinvent classifieds, just as Craigslist had done decades before. Again, however, the future has not yet been written.

We cannot change the complacency of the past, but we can change the course of the future. We must make a pact never to be complacent again. New technologies will be rapidly forming and changing lives in the coming years.

If the remnants of the newspaper industry want to survive and ultimately thrive, we have embrace new technology and get out of front of trends, not behind them. We have to embrace change. And, yes, that means we have to employ people in all ranks who are not married to the past and are willing to be a part of a revolution.

And so, the newspaper industry eventually won’t have that much to do with paper. Like Apple with computers, newspapers will still have print products (and they should, after all there is a market for them), but newspapers will be so much more than papers. They’ll produce products that are wildly different from newspapers.

That’s the only path forward.

  • Matt

    I agree with most everything here. The thing that always frustrates me in talks about new business models for news organizations is that all the talk is purely about articles it seems. If we haven’t grasped that the Internet is much more than just articles, we are in whole lot of trouble. It’s another sign of old thinking in a new age.

  • http://toughloveforxerox.blogspot.com Michael J

    The thing to remember is that Apple has also kept a maniacal focus on selling product. They use the web to enhance the value of the iPhone. Meanwhile the purpose of iTunes was to increase the value of the iPod. The web is not a revenue source, it is a revenue enhancer for the physical product.

    In general, I think you’ve got it right. But i think you have a blind spot to the idea that the natural advantage of newspapers is print and deliver. On the web they compete with Google. In print they have the field pretty much to themselves.

    New products? Most definitely. But the money is to be made from new Print products. Use the web to aggregate the fans and to make it easy for them to buy stuff.

  • http://www.patrickyen.com/films/ Patrick Yen

    Was it complacency that brought the newspaper industry down,
    or is that really just a nicer, more politically correct way of saying
    that the stupidity, idiocy, arrogance, and hubris of newspaper executives
    is what brought the newspaper industry down?

    How many times do you have to prove yourself to newspaper executives
    before they start paying you to save their company from certain doom?

    Hey newspaper executives, hire people like me and Pat Thornton to save your companies. Now. Seriously. What are you waiting for?

    Death? Kamikaze suicide runs can’t last forever you know..

  • JQuimbly

    The story about newspapers is about free digital copies, and the disparity in ad rates btw print and web. The economics of web and print are completely askew.

    This has nothing to do with innovation, or “getting it.” – especially when it comes to quality of journalism. Here’s what really happened-

    Where once you, the reader of their content, had to pony up between a quarter and a buck to read their content, you’re now doing it online, for free. No, they don’t make much money from the paper sales, the point is that we readers are satisfying the urge for instant info gratification online now. That has reduced newspaper sales dramatically.

    Numbers, take NYT for example. Their physical paper has btw 800-900k subscribers, not including newsstand sales. The website has far higher numbers, tens of millions of monthly uniques. Yet at the same time, NYT’s grosses from web advertising are far lower than those of the printed paper. It’s a few hundred million vs a couple billion.

    Run those numbers again: the paper has under one million subscribers, and grosses a couple billion. The website has tens of millions of readers, and grosses a few hundred mil. And NYTimes.com is known to get *very high* CPM, relative to most other sites on the web.

    That’s partly because, when you buy or subscribe to the paper, the publisher gets to sell the print equivalent of a bundle of web ad impressions to advertisers. Big bucks compared with web rates. That has been good business for them, until the last decade, when the web started becoming the replacement news source for readers.

    Also, your idea that Twitter users will somehow replace trained journalists sharing the resources a newsroom has to offer is, well, ignoring the past. Yes, there will be more instances where news snippets arrive via twitter, just as they’ve also arrived by email, SMS, telephone, fax, horse courier and telegraph before.

    It’s not the medium, it’s the content. To have publish-worthy content, you’ve got to have journalism skills.

    Look at Indymedia/IMC for an earlier example of we-the-journalists at work. It suffered badly from credibility issues. Individual bloggers will have the same problems, unless they already have a reputation for their work.

  • http://toughloveforxerox.blogspot.com Michael J

    @JQuimbly,
    I have to disagree. Print ads are expensive because the real estate is limited. Web ads are cheap because the real estate is unlimited. As for content, once the web made it easy to compare and contrast, it became clear that most “news” were rewrites of AP stories.

    Web sites and most newspapers don’t have “readers”. They have scanners. If they find something interesting they might read the subhead maybe the lede, buy very few take the jump. I turns out that it’s much easier to scan a big print page, than it is to search a website.

    The cost of engagement is much lower.

    Re the internet and decline of news-on-paper. Newspaper circulation has been going down since the 70’s. I think it has a lot more to do with the two earner family and TV than the Internet.

  • marc hofer

    Well I think generally spoken, that the the mixture of the failures of the publishers AND the development of the internet is the newspapers demise.

    The point is, that creating news, costs money. Local news costs much less money than reporting international news. I work as a freelance journalist and covered conflicts in africa. The amount of money that is needed to do minimal coverage could never ever be retrieved by web-ads or internet business models as they exist today.

    Just thing about it, if you would charge people to read most of the articles at the NYT Website, hits would drop significantly. Just think about all the people around the world who visit this webpage and don’t have a possbility to do online payment. The whole idea of the internet as a business model is a very western oriented idea. Sure the internet is accessible throughout the world, but the second step, “uploading” money and therefore create revenue for the recipient is much harder to do.

    I really would like the idea of extending everything to the net AND print and therefore make more money to pay for more and better stories. But up to now, the internet fails to deliver. May it be because people just don’t know how to handle it, may it be thats the way the internet works. Maybe newspapers and other news media should make a decision first, what they want to be in the future. It seems that the whole business is a little bit shellshocked because they just can’t make up their mind in which direction they want to go.

  • http://toughloveforxerox.blogspot.com Michael J

    Actually I think “how will journalism work discussion” is coming to a close. Martin Langeveld put the pieces together to make it really clear.
    http://www.niemanlab.org/2009/04/managing-the-content-cascade/comment-page-1/#comment-11850

    The next piece is to refocus on news-on-paper to sell ads to make enough money to support the international news which has never been a very strong suit in American journalism.

  • http://twitter.com/teejeff trevorjeff

    I think that that Journalism is killer content in search of killer apps! Google News and basic internet portals are not enough. Could beatblogging be a killer app? Who knows. Your industry is reworking everything. Bob Lefsetz via twitter turned me on to this commentary – @Lefsetz-http://bit.ly/PnXc – that tells a good story about why disruptive technology doesn’t have to replace all or any aspects of the things they displace. It is not one thing, like a better craigslist/classified adverts to support coverage of the local news or foreign affairs. It may be a thousand little things, from which a handful of journalism distributors grow.

    What is happening requires rethinking the content and the distribution. Let a million flowers bloom in these experiments. It isn’t one thing, it is a million things. Try them all and even the best ideas that fail might be the fertilizer for the future of our watchdogs. I think journalism is vital to our functioning democracy. But now is not the time to adapt old models. What works for the WSJ might not work for the NYT or Dallas Morning News or the Miami Herald or the local stringer in rural iowa or central China. You kids should be taking the chances to build the future your elders were almost powerless to stop.

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  • http://sparkofaccident.blogspot.com/ Jon Anderson

    Thanks for this and your other posts. I hope you dont mind but I cited some of your points in order to develop the argument a bit further on my own blog, where I am proposing a new kind of online journalism. That article — very long, I warn you all — can be found at this URL:
    http://sparkofaccident.blogspot.com/2009/04/room-to-move-space-digital-technology.html

    I am really glad I came upon this blog.

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  • Chris

    I am willing to argue that complacency did not necessarily kill off — or will kill off — the newspaper industry.

    What if the question was reframed: You know what killed off the newspaper industry?

    What if the answer was: Payroll?

    The Internet doesn’t just deliver content faster and at low or no cost — it can do it without baggage.

    Media companies cannot. They have assets that can’t be valued down. You can’t give everyone Internet prices and still expect to pay your own costs, including and especially payroll.

    An amateur — in the original root of the word, pursuing something for the passion of the craft rather than professional gain — video blogger could shoot news with equipment and software for a couple thousand dollars. How it’s all paid for is the amateur’s problem.

    On the other hand, the VHF station has much more expensive equipment as well as the payroll liabilities of the people operating the equipment. They also have fixed assets like a newsvan and an office building.

    If the audience is perfectly happy with the amateur’s efforts, why should the VHF station invest so much in fixed assets when the amateur can get an audience without worrying about the capital sinks?

    The capital-intensive station has another problem: Slavery has been abolished. Fixed assets can be brokered and exchanged, humans cannot. The biggest change the economic conversion from chattel slavery to industrial capitalism created was move the humans from the assets ledger to the liabilities.

    The bad news for anyone pulling a paycheck is that if the company values a human as a liability, it can be deemed useless and thrown in the trash just like a piece of broken or obsolete equipment.

    At least the equipment doesn’t have the burden of sentience.

    If you think what I have written was dark, nasty or downright vile, keep in mind that this is just free information so that journalists should “know their enemy” — in this case the business folks who hold economic fates in their hands.

    I am one of the journalists, and I am not an advocate for the finance side. I want to make sure my professionals are ready in mind and spirit for the battle ahead.

    Sadly, affairs involving money are the true Dark Arts of human civilization. The business world, much like the military, nurtures sociopathic tendencies. People with sociopathic tendencies tend to gravitate toward the fields that nurture their habits. Finally, success and humanity are zero-sum games. Success by necessity comes at the expense of humanity. And humanity is the avenger of success.

  • http://toughloveforxerox.blogspot.com Michael J

    Chris,
    Well argued, but I have to disagree. Success and humanity are quickly becoming not zero sum games. A better model to describe what’s going on is an environmental sustainable strategy game. The game model is used by Dawkins in the Selfish Gene to give a game theory slant to evolution. It’s worth the read.

    The irony is that the single irreplaceable and scarce resource is the investment in human capital that lives in most newspapers. Technology are only tools for innovation and change. It’s only using experienced real people that create new value by using the best tools.

    Given the bubble wrapped thinking of most people at the top of most pyramids, they can’t see this. You have politicians who think you build a nation with airplanes and “busyness’ people who think you build a newspaper with websites. Both mind sets are quickly moving to the dustbin of history, as we used to say way back in the day.

    If they would concentrate alot more on business models that work by supporting the best parts of their human capital, they would get this all fixed a lot sooner with alot less collateral damage.

    Given the new approaches to employment with freelance, affiliated independents, journalists who make their big hit with the book and the book tour, I’m pretty sure that different approaches could be invented in different specific situations.

    As an aside, if the Obama Administration can get health care fixed so the fear of getting sick or of a family member getting sick is taken off the table and off the books of the newspaper companies, new solutions will have a lot more space to grow and scale.

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