A major media organization is struggling with dismal financial results, expecting new rounds of layoffs, and it’s future is highly uncertain:
Yahoo!
Oh, did you think I was referring to The Boston Globe? Well, them, too.
Obviously, the newspaper business is going through hard times, which I take personally. One of my prior employers, the Rocky Mountain News in Denver just folded. My sense of regret there being compounded by my view that its owner, E.W. Scripps, has left a trail of dead newspapers in its wake for years – starting long before the Internet ever became a threat to traditional media.
The fact of the matter is that it is tough to make a buck selling content. Intellectual property is ephemeral and as a result companies tend to focus on some kind of tangible deliverable as their “product.” So it is the physical newspaper that newspaper companies sell rather than the words on the paper. Along comes the Internet and suddenly customers can get the words without buying the paper. Similarly, Yahoo! peddled its visible web presence rather than its mix of search results, portal (home page) content, and advertising. Along came Google, which blended those components more effectively and kept adding new products into the mix, and Yahoo! became an also-ran.
Different products. Same result.
We are so accustomed these days to think about how technology drives social and economic changes that we forget that the reverse is even more important: social and economic changes create a niche that new products and services will fill.
To stick with newspapers, my career dates back to 1969 when I started an evening shift general assignment reporter with The Patriot Ledger. While the Internet has been one factor in what has happened to the Ledger since then, it isn’t the only factor or even necessarily the most important one.
In 1969, the Quincy shipyards were still open (albeit troubled) and Massachusetts was still a manufacturing center. There were local department stores and local food stores. Auto dealers had one or two stores, not mammoth chains. The Ledger was an evening newspaper the delivery of which was based on the traditional sequence of delivery boys and girls getting out of school just in time to get the papers to the homes of workers, from the shipyards and elsewhere, who were coming off the day shift. Local merchants were the core of the paper’s advertising base. The story was much the same for The Eagle-Tribune in Lawrence and for thousands of other newspapers.
Then the world changed faster than the papers could keep up.
The traditional manufacturing industries went into decline while local businesses were bought up or failed. An increasingly white-collar audience preferred morning delivery to evening. Suburban papers had to fight more intensely with metropolitan papers for ad dollars. People’s lifestyles became fast-paced and they found it hard to make time for such things as long newspaper articles.
Technology for a time was actually the newspaper business’s friend as computerization eliminated many skilled jobs and generally cut costs. It also enhanced the product. The Eagle-Tribune, for example, led the region in the introduction of color printing for the daily paper – doing so long before USA Today was even created.
Now technology is seen as the enemy: a way to get newspaper content without paying for it. But, in truth, all the Internet really has done is make obsolete a business model that dates back to the 19th century: a product printed on paper that is financed primarily by advertising, with some share paid by the subscribers. Nothing says that this mix has to be immutable. Perhaps subscribers should pay more. Or advertisers should. Maybe cost structures should be based on using electrons instead of dead trees. Or maybe even a formula based on the special characteristics of the new medium.
In my last column I wrote about the tradeoffs between privacy and using the Internet as a data repository. Walter Bender, the former head of the MIT Media Lab, has theorized that tradeoff could itself be the basis of a new business model for the news industry. People pay more for content if they want anonymity. Or they can pay less but share personal information so that advertisers can more profitably target their ads.
Therein may lie MSM’s (“mainstream media”) last, best hope. Google has pretty much locked up the invade-your-privacy-so-we-can-target-advertising-at-you market. “Pay to play” (subscription only) has been a failure. The tradeoff approach is one that has yet to be tested.
And it’s not as if the newspaper business has any better idea to try.
