New newspaper tycoons: It’s worse than we thought
New owners of newspapers — folks like Sam Zell, who made his fortune in real estate — are now saying the outlook for the papers they bought is worse than they expected.
David Carr writes:
These are all smart businesspeople, with significant success in other endeavors, who took a hard look at the wave-tossed publishing sector and appointed themselves as life savers. And very soon after jumping in, they too began foundering in the tall waves.
A lot of these deals were done in the last two years, when the economy was still good despite the troubles in the newspaper biz. With the economy headed downhill, the systemic problems with newspapers will get amplified.
However, what continues to be missing from this whole discussion about the business of newspapers is the lack of innovation in newspaper business models (not in newsrooms, which have been trying new things like crazy the last few years).
Chris O’Brien, who has worked for newspapers as a business reporter for years, gets it right:
I see tremendous energy going in to breaking new ground in gathering news, telling stories, and creating community. What I don’t see is an equivalent amount of innovation occurring around the business models that will support journalism going forward. What I tend to see, over and over, is people experimenting wildly on the content side, and then falling back on the same old business model: Selling ads.
This model is dying.
I don’t know that I agree that selling ads, per se, is a dying business model. It’s what Google is based on after all (however, unlike newspapers, Google has produced a number of innovations in advertising). But basically, that’s right. There is lots of experimentation going on in the nation’s shrinking newsrooms, not so much in the other departments.
herb Said,
March 24, 2008 @ 12:55 pm
One questions to ask about that biz model: How many newspapers have combined print and online sales and created packages around the two categories in order to get the advertiser more eyeballs?
A second question might be: Why are many of those advertising departments not retraining to be consultative sales professionals, selling solutions to real business problems and not just quarter-page ads or 300×250 pixel banners?
Paul Camp Said,
March 24, 2008 @ 6:30 pm
More newspapers than you might think are trying to leverage the power of print in combination with online. That said there is a long way to go before newspapers and local media in general have figured out how to best use and then best advise their advertiser customers on how to use the two media.
The problem all newspapers face is there are no proven best practices that seem to work for both generating increased online revenue to replace lost print revenue AND help advertisers generate local store traffic whether of the brick and mortar variety or to their virtual stores online. If such best practices were evident everyone would be doing it.
Still it is the major metros that current face the greatest challenges. And there are only 100 or so of them. For the 1450 small and medium sized dailies and 3000-plus communities newspapers in north America, the picture is not yet as bleak. Look for not only adoption, but adaption as best practices for local media online emerge and become clear. Don’t count newspapers down for the count yet. Innovation is everywhere and some of the ideas are bound to stick.
Mark Said,
March 24, 2008 @ 9:33 pm
@Herb: Good point about selling print and online ads in packages — and about having a sales staff that has the skills to help businesses come up with real marketing solutions. But I wonder if there’s any other solution than just ads. Chris O’Brien’s piece mentions a few — public broadcasting-style individual contributions, community funding of journalism, etc.
Newspapers have two challenges, I think. One, a lot of their costs are in the massive infrastructure they have for printing and distributing print newspapers — trucks, presses, tons of paper and ink, etc. How do they transition to leaner organizations where they can cut costs out of that very expensive infrastructure? Is that even possible without giving up what print ad and subscription dollars they now collect?
Second, where are the real innovations in making money. If you sell ads more efficiently, even package print and online ads together, that’s an incremental improvement, but I’m not sure it’s innovation. It’s certainly not the kind of game-changing innovation that Google and others have brought to the market with things like search-based ads and pay-per-click models. I think newspapers need something better than incremental improvements to their existing business models. But I admit I’m not sure what that innovation would look like.
@Paul: I agree that smaller publications aren’t facing the same challenges as their major metro brethren. But I think they will also start to feel the pressure as readers and advertisers move away from them and online. I hope they will be more innovative, and more quickly, than the big papers have.