If wireless communications are what God wrought, the effects of digitizing a physical good may be the devil’s due.
The disintermediation engendered by the transformation of a physical good into a digital one is rendering asunder numerous industries that were structured to distribute a physical product. Starting with the music industry, but extending to any industry that distributes a product that can be so transformed once the infrastructure is in place to do so efficiently, each will be faced with the question of what they must do to remain viable. Wireless is at once both part of the problem (we distribute digital goods) and the solution (which the music industry is discovering) for these industries as their companies face the turmoil caused by a physical world in digital transition.
One industry especially near and dear to my heart that is suffering this fate is the newspaper industry. I started my career as a cub reporter, went on to run a local newspaper in a small, rural market, covered Capitol Hill as a business and economics reporter and functioned as a press spokesperson before discovering the Internet at its commercial emergence (a fortuitous event that led to my current position). Since joining the digital world, however, I have thought often about its affect on the newspaper business, which has been so vital to developing our democracy, and have even tried to help identify how wireless can help, which I will get to in a moment.
As anyone who has grown up getting his or her information from a newspaper can attest, there is no comparable method in the digital world to reading the daily newspaper for ingesting copious amounts of information in a short period of time, regardless of how much bandwidth your connection will ever have, the speed of your processor, or the number of inches of your display screen. I will hate to see this extremely efficient means of consuming information go, but go it will – hastened by digitization but buffeted by a variety of forces that cannot be accounted for by its business model. (I do not know the carbon footprint of delivering a newspaper to a doorstep each day, but I imagine it to be significant, from the CO2 processing loss from trees felled for newsprint to the step vans left idling while drivers empty and fill corner coin boxes, it is a venture that it cannot be sustained in a sustainable resources-conscious world.)
Wireless can offer newspapers a distribution platform that can provide a new source of revenue, as well as replace revenue loss from a readership transitioning from a physical to a digital product by providing enhanced value.
What can wireless do for you, Mr. and Ms. Newspaper Executive? Quite a bit, one can imagine, though the contours of all the contributions wireless distribution can make in helping news gathering/distributing companies (that were once in the newspaper business) solve their digitization problems are only just beginning to emerge. The moves that a number of large newspapers, like USA Today and the New York Times, have made in the last year to enable distribution to mobile devices is an important start. Both the capabilities of the preponderance of wireless devices in the marketplace and the user interfaces for them have improved significantly in recent years, vastly enhancing the reading experience. And smartphones, like the iPhone, which are increasingly supplanting less capable feature phones in the wireless customer base, will only improve the reader experience going forward. Additionally, as part of the new “Open” paradigm in wireless Internet services, more devices devoted to an enhanced and connected reading experience, like the Kindle, that don’t have any voice capabilities, will proliferate.
However, distributing news content via wireless networks and having customers consume it on mobile devices, even when supported by advertising, is likely to be little more than a stopgap for revenue losses in the traditional business rather than source of new revenue growth, akin the repurposing of existing content and ads online. Charging a la carte for the service might offset some of the development costs (though that is a dubious proposition, in my opinion); packaging the service as part of a new “enhanced” subscription offering will prove the far more effective marketing, I believe.
The outlines of what newspaper subscribers might pay extra for were discovered in some market research that CTIA co-sponsored with the Newspaper Association of America several years ago when the capabilities of wireless networks and mobile devices were not nearly as technologically sophisticated as they are today.
Not surprisingly, newspaper subscribers were not interested in paying extra to have sent to their mobile phones the news and features they thought they had already paid for when they bought the paper. (This was early evidentiary support for my hypothesis that, in the end, consumers will pay only one time (if that) for digital content, a hypothesis I am currently revising and extending…but that is another story.) In fact, whether it was the limited state of the technology at the time or the Internet culture that “information wants to be free,” or both, the primary finding of the research was that there was very little about wireless distribution of newspapers that newspaper subscribers would pay extra (again) for. But there was one thing, and in that one thing exists the elements of the solution to the problem posed by digitization. And wireless is integral.
Newspaper subscribers would pay extra to be pre-alerted to garage sales and classified ads featuring products of specific interest to them, especially if geographic proximity could be included in the response/alert. The use cases presented to the focus groups at the time were fairly rudimentary compared to what can actually be done today given sophisticated devices and smart, fast networks. However, based on the interests that the subscribers indicated, one can envisage a host of enhanced services that can be built around the information that newspapers collect as a part of their news gathering function and that they are also paid to distribute, such as classified ads, that can be facilitated by anytime, anywhere wireless connectivity. These services, not just the gathering and distribution of news, then become the basis for an enhanced subscription (plus advertising) business model in the digital “newspaper” business.
The winners will be those that build services on top of the information they gather such that I, the newspaper subscriber, can see higher value in the trade off of consuming the information less efficiently, but acting on that information more effectively.
While the rapid rate of technological development and the uncertainty of the availability of various capabilities make it difficult to predict exactly what will comprise the set of new services that newspaper subscribers will pay for, to bridge to this new world there seem to me to be a couple of things that newspapers must do that are tantamount: They must begin to build data bases of the information that they collect and sell each day that can be data mined in the development of these new services, and; they must think of wireless providers as they do their delivery infrastructure today, and be ready to assume for it the same level of cost, as well as offer a share of the enhanced value wireless can bring.
The newspaper business that I grew up with in my career, and that I love as a consumer of information, will not survive the forces of digital change and environmental challenge arrayed against it. The companies that comprise the industry will have to make radical changes to survive and most will not.