The Future of Newspapers Blog

World's Editors Weigh in On Future of Newspapers

2008-05-06T16:49:16-04:00

A survey conducted by Zogby International for the World Editors Forum and Reuters indicates that editors “remain confident about a mixed-media future and have quietly got on with the business of integrating their newsrooms," but this is "tempered by anxiety that newspapers are not investing enough in recruitment and training for the future," according to World Editors Forum president George Brock.

Some of the key findings from the Newspaper Barometer 2008 report:

· 86% believe integrated print and online newsrooms will become the norm, and 83% believe journalists will be expected to be able to produce content for all media within five years.

· A plurality - 44% - believe on-line will be the most common platform for reading news in the future, compared with 41% last year. Thirty-one cited print (down from 35% last year), 12% mobile and 7% e-paper. The rest were unsure.

· A majority of editors - 56%- believe news in the future will be free, up from 48% from last year's survey. Only one-third believe the news will remain paid for, while 11% were unsure.

· Two-thirds believe some editorial functions will be outsourced, despite frequent newsroom opposition to the practice.

Horizon Watching

2008-05-02T12:32:09-04:00

Over the past decade, NAA’s Horizon Watching Initiative has provided strategic recommendations to newspapers, based on the collective thinking of some of the top newspaper strategic thinkers. Here are links to some key resources:

Recent Reports

· Strategic Imperatives for a Shifting Media Market

· Achieving Strategic Alignment

· Building World-Class Sales and Marketing Capabilities

· Adopting a Multimedia Mindset

Original Reports

· Media Disintermediation: The Rise of Non-Traditional Media Forms

· Classified Evolution: A Web-Centric Solution to a Shifting Marketplace

· Innovation and New Product Development

· Building and Sustaining a High Performance Workforce

· Future Business Models: “The Metro Sun”

o Comparing Business Models: Typical Newspaper vs. Metro Sun

Future of Newspapers Refresher

2008-04-07T15:46:34-04:00

For those who are new to this blog, in November 2007 we posted commentaries on the future of newspapers from 23 different thought leaders. Those commentaries were complied into a PDF available here.

Since those original posts, we have been updating the blog with thoughts and perspectives from a diverse set of folks, mostly from opinions posted in other blogs. We will continue to aggregate visions for the future of newspapers on this blog.

Break Up the Newspapers

2008-04-07T13:55:00-04:00

Shawn Smith, senior news producer for Mlive.com, suggests on his New Media Bytes blog that newspapers should blow up the traditional print and online product into a variety of niche publications/sites, each able to go deeper into content areas than newspapers do today.

Shawn writes:

Break up newspapers into their related sections. Make the traditional paper into a strictly local front section, largely cutting down on wire copy, and then put out multiple niche publications for the different sections. New print publications can become aggregators of the best content on the wire and web. These niche publications can cover specific issues more in-depth and in interesting ways.

Next, think about breaking up the websites. Make sections into communities and even consider breaking them out into microsites. This is an idea that got floated at the Toronto ONA conference that I think some attendees failed to recognize how revolutionary it could be for them. If online marketers can cash in big with niche sites, why can’t news orgs?

You can read the full blog post here.

Maybe It's Time to Panic

2008-04-01T15:13:28-04:00

AJR Senior Editor Carl Sessions Stepp argues that the changes impacting the newspaper business is not in the nature of news but the role of the journalist. Stepp writes:

Today journalists stand not at the head of the pipeline but in the middle of a boundless web of interconnected media, messages, senders and receivers. This is the new, right-brain, digital world.

The journalist-in-the-middle is a ringmaster, a maker and a consumer, a grand impresario of a two-way information flow that has no beginning, end or fixed schedule.

Journalists no longer control content and format. Anyone with a computer can become a publisher. An independent blogger can scoop the pros. A kid with a cell phone can distribute the day's most compelling video.

Ultimately this interactivity may be the most influential change of all.

Stepp offers a variety of ideas and suggestions to re-invigorate the product and make it “astonishingly, irresistibly better,” focused on the newspaper enterprise as the organizer/aggregator/synthesizer of information important to consumers.

Read the full article here.

Chris Anderson's View of Newspapers

2008-04-01T11:51:00-04:00

“The Long Tail” author Chris Anderson, on his Long Tail blog, shows a Gawker chart on newspaper revenue trends over the past 25 years and ads some much needed perspective on the state of the industry (down 10% from the industry’s peak in 2005, but still very strong).

Chris writes:

The truth is that the newspaper business is still a huge industry and will be around in one form or another for the rest of my life. That is not to dismiss the declines, but only to note that there's still a lot of money there and what is required is strategic change, not giving up the ghost.

Read the full blog post here.

Ted Leonsis' Take on Newspapers

2008-03-24T10:42:00-04:00

The former AOL Vice Chairman and current owner of the NHL's Washington Capitals offers a ten-point plan for newspapers to re-invent themselves. Although most of his recipes for success have been covered here and elsewhere, his emphasis on new skill sets, syndication and local ad networks are worth noting.

For example, on networks, he writes:

Embrace and extend your reach locally by building a great digital sales force and then network and ingest local unique visitors, page views and engagement from third parties. Do locally what Advertising.com has done nationally, superset the region by creating a network of affiliates and build up massive scale of local sites. Promote them in your print-based property.

On new skill sets:

What is needed is a team of people that know how to work and create blog rolls and how to get the content up high into the algorithms so that when a consumer searches the newspaper's content it comes up high in the rankings. Knowing statistically what content gets the best click through across all media is a key deliverable. Newspapers need math majors running big swaths of the organization.

It is also interesting to note how digital pioneers like Ted Leonsis still care – and take the time to blog -- about the future of the newspaper franchise.

Read Ted's full blog post here.

Forget, Borrow and Learn

2008-03-14T14:06:00-04:00

NBC Universal and News Corp. this week formally launched their new joint venture Hulu.com, an online video service. Scott Anthony, president of innovation consulting and investing company Innosight, comments on a Harvard Business School blog about how two incumbent (i.e. traditional) media companies were able to “use the power of disruptive innovation to their advantage.”

He writes:

Amos Tuck Business Professor (and Innosight Senior Fellow) Vijay Govindarajan and Katzenbach Partners Senior Fellow Chris Trimble have a useful framework to describe how companies have to master what they call “strategic innovation.” Companies need to selectively “borrow” from the core business while “forgetting” old orthodoxies that might inhibit success and “learning” completely new ways to approach critical problems.

Hulu appears to have done a good job following this approach. The company has borrowed content, forgotten the way a television company would deliver that content, and learned how to emphasize simplicity.

In their Harvard Business Review article, Govindarajan and Trimble write:

Innovative ideas aren’t enough to fuel breakthrough growth in a new business. To thrive, new ventures must surmount three challenges:

· Forget some of what has made your core business successful—such as which skills to acquire and which customers to serve.

· Borrow only those assets from your core business—brands, sales relationships, manufacturing capacity—that provide a distinct competitive advantage.

· Learn quickly. The faster you resolve your venture’s inevitable unknowns, the sooner you’ll zero in on a winning business model.

Their perspectives validate perspectives from many of the commentators on this blog – newspapers have to forget current business models, find a way to leverage their core competencies and assets (connection to the community, content development and aggregation skills, significant sales forces, etc.) and create new, potentially disruptive ways to package, distribute and monetize their products.

That might include embracing content from sources other than our own newsrooms, re-thinking where “news” fits in a new product mix, distribution of content beyond our branded borders and expanding our revenue streams beyond traditional advertising functions.

OC Register Articulates Strategy

2008-02-20T16:28:00-04:00

Although more near-term focused than other entries in this blog, an article in the Orange Country Register describes that newspaper’s strategic direction as articulated by new publisher Terry Horne. The strategy acknowledges that the traditional print product is now a niche product serving a distinct segment and that the path to growth is through more targeted print and digital products. According to the article,

Terry Horne, the new publisher of The Orange County Register, is betting on free community newspapers, expanded Web offerings and a smaller Register newspaper to help the company weather falling ad revenue and declining circulation….

Horne believes the combination of offerings will fill gaps for both readers and advertisers. The subscription-based Register will include premium content targeted at a mostly older readership. Free community weeklies go to a broader base with a hyper-local focus. OCregister.com will provide free content to a younger audience. Local advertisers will have a similar choice to get their message out on any or all of these platforms….

Other changes on the horizon include:

A narrower paper, with the width of each page shrinking by 1 inch in late summer or fall.
Joining a consortium with other companies, to be announced soon, that will share advertising and news content.
Considering the expansion of the free Irvine World News/OC Post tabloid to five days a week from three and possibly rolling out the concept in other communities.
A new Web site, www.OrangeCounty.com, which will be a destination portal for people around the world planning to visit or move here.

To read the full article, click here.

Disaggregating Newspaper Functions

2007-12-20T17:38:00-04:00

Dave Morgan, former Tacoda chairman and now executive vice president of global advertising strategy at AOL, authored another in a series of thoughtful analyses and recommendations for the newspaper industry.

Dave argued, in his weekly column on Online Spin, that newspapers should disaggregate their businesses. He writes:

Most newspapers don’t have a core competency. They have several. They are much closer to vertical monopolies than they are to point solution providers. They are not just news gatherers and reporters and editors. They are printing companies. They are distribution companies. They are ad sales companies. They are direct marketing companies. They are digital media companies. Many are good at all of these functions. Digital competition and audience fragmentation are fracturing the business models that have built these great, vertically integrated companies. While they are clearly not sustainable as they are, they might be quite sustainable in horizontal pieces.

The full blog post is available here.

Future of Newspapers:

2007-11-21T10:50:10-04:00

All of the commentaries on this blog are now available in a pdf (a perfect gift for the holidays). You can access the PDF here.

Other Perspectives

2007-11-19T21:26:00-04:00

The 23 essays on this blog offer perspectives from "big thinkers" that we asked to contribute to this project. We thank them for sharing their insights and for their passion about the future of this medium.

We certainly hope this isn't the last word on this blog. We've received inquiries from others who would like to "officially" offer their thoughts and we welcome those perspectives. We also encourage you to add your comments and feedback to ideas and strategies proffered throughout these entries.

Or, if you've seen other commentariesor resources related to this topic, please let us know. Below are some we've come across lately that are particularly thoughtful. Other useful resources are available under the Strategy section of the NAA Web site.

Newspaper Next: The Transformation Project

From the American Press Institute

10 Reasons There’s a Bright Future for Journalism

How the Local Newsroom of the Future Might Operate

Serious Journalism Won’t Die as Newspapers Fade

By Mark Glaser, MediaShift

Newspapers in 2020

By Jeff Jarvis, BuzzMachine

Speech to American Association of Independent Newspaper Distributors

By Tim McGuire, McGuire on Media

The Newspaper of the Future

By Jack Shafer, Slate

A Model for the 21^st Century Newsroom: The News Diamond

By Paul Bradshaw, Online Journalism Blog

Chasing the Chasm

By Mark Potts, Recovering Journalist

What Have We Got? Paper, People and Place

2007-11-19T21:14:26-04:00

There’s often lots of loose talk about the “assets” newspapers bring to their fight for audience attention and advertiser dollars, but the experience of the past dozen years shows that we’ve overestimated our own capabilities and underestimated the speed with which great ideas can eclipse established products and trusted brands. Now, more than ever, we need to get serious about figuring out what we do well and how that can be adapted to what the marketplace really wants.

When I began managing an interactive business for a newspaper company in 1985, the question I got most frequently from print executives was “You’re not saying newspapers are going away, are you?” and I’ve heard the question in one form or another for the following 22 years. My answer always was – and continues to be – no. But the vague sense of smugness that usually accompanied the query years ago now often seems to have been replaced by a real sense of fear. The impossible now seems not so impossible – and our track record in the hyper-competitive online world isn’t flush with success. So the question of what “assets” we have that really matter has become more urgent.

As the newspaper industry goes through painful restructuring for the next few years, I think we’ll find—or perhaps more accurately, rediscover — a few key pillars to rebuild upon. They include the talent of professional journalists, the power of local presence and the potency of the print medium itself.

First, let’s talk print — and not with that hopeless “dead trees edition” attitude we interactive folks often affect, but with a genuine appreciation for the power of ink on paper. It has been 80 years since electronic media began to broadcast information quickly and with an emotional wallop that audiences and advertisers appreciate — and more than a decade since the ubiquitous Internet began adding the personalization, feedback mechanisms and measurability that make it a fantastic venue for consumers to spend their time and advertisers their money. Through all that, there’s not much indication that people don’t like print — even among many folks who don’t have much interest in the newspaper we’re printing.

If the daily newspaper had been invented after the Internet, we might be hailing it as the go-anywhere, read-it-the-way-you-want, visually rich, verbally-robust, supersized-format, community-building medium of the moment. But the fact that most newspapers don’t live up to that is a failure of our ability to exploit the medium to the fullest, not the medium itself. Instead of grousing that reading the newspaper is a habit that’s in decline (stupid audience!), let’s figure out how to exploit the unique attributes of ink on paper (and our unique capabilities to manufacture and deliver it) to produce print publications that are feasts for our LCD-glazed eyes and treats for our Facebook-addled brains.

Shrinking the same old coverage into fewer pages filled with the same dull ads, the same stale features and same bland layouts won’t cut it. This is a time for rejuvenation, not life support—and that should start with a newspaper that takes fullest advantage of the physical attributes of the printed page. For the broadsheet flagship, that probably means bigger and bolder, with more visuals and livelier text –as well as graphics, headlines and advertisements that treat the page like the big canvas that it is. It means accepting that most readers already know about the big stories from TV or the web, and uses the print page to complement that experience. It probably also means publishing differentiated print products for differentiated audiences, rather clinging solely to a homogenized daily broadsheet in a world that’s all about consumer choice.

One of the impressive things about the Internet is how it seemingly makes traditional geographic barriers disappear. We read information, share opinions, and instantly communicate in ways that appear to make geography no longer matter. But geography does matter offline — and our unique niche in the media world is to make it matter online too.

Maintaining a strong local presence that is truly in touch with its local people, local businesses, local institutions, local schools, local entertainers and local troublemakers is vital — and not easily accomplished. We start from a great base — no other news organization has as many eyes focused on the community as we do. But traditional newspaper content — with its emphasis on rote government meetings and shopworn local features that bore even their writers — isn’t enough.

Kudos to those reporters and interactive producers who are stimulating local online conversations about everything from politics to pizzerias, posting scads of digital photos of local people, and facilitating the discovery of local blogs and videos. Figuring out how to tap the passion and energy of user-generated-content in ways that add value from our smart, creative, well-informed newsroom is the key challenge and opportunity of the current moment of journalism.

Reinventing the role of the professional journalist for a multimedia era will be critical. The fact that we typically have the largest and best cadre of local journalists is a great starting point. It’s folly to expect that every good newsperson will be equally talented at writing for print, shooting for video and running an online discussion. But we can and must figure out how to use their subject matter expertise to produce content in a variety of formats and on schedules that aren’t predominantly tied to print deadlines or conventional notions of the typical newspaper article.

That doesn’t mean jumping on every new technology or abandoning rudimentary business analysis of new projects. Every beat doesn’t cry out for its own podcast — and, in fact, very few do. But the role of the reporter needs to adjust to recognize the primacy of the Web and the formats (like blogs) and techniques (like helpful links and search-optimized headlines) that are native to the Web. Newsrooms that are encouraging beat reporters to maintain newsy blogs and are viewing the print edition article as one byproduct of continuous beat coverage are probably onto a model for the future.

It’s important to remember that the entire media universe is shifting — not just newspapers. That means that opportunities may come our way that aren’t necessarily available now. That’s one of the reasons video experimentation at newspapers is so important — even in markets where there’s no shortage of video crews fielded by local TV stations. Particularly as video usage grows on mobile devices, having the largest and brightest group of versatile professional journalists in a local market may more valuable than having a large infrastructure designed primarily for producing traditional packaged-and-polished TV newscasts. Certainly, our local market competitors will be reinventing themselves, too — but when it comes to local news in new media formats, I’d bet on the local newspaper that understand which “assets” really matter.

Michael A. Silver held a variety of development, marketing and general management positions at Tribune Company’s publishing, interactive and broadcasting divisions from July 1985 until May 2007. Named an NAA digital pioneer in 2002, he recently hung out his consultancy shingle at www.SilverChicago.com and is now advising media companies and civic organizations on multimedia product development.

From Newspapers to Citizen Destinations

2007-11-18T21:34:00-04:00

Both regional and local newspapers have enjoyed a viable business model for at least several centuries. Today, digital media technologies combine the convenience of print with the richness of television, but, importantly shatter the very barriers which entrenched newspapers during those centuries. The reason is less about the technology and more about enabling interaction and participation by the community; in short, it is about an exchange. The winners of the changing media landscape will be those who understand the needs of the community and can leverage those needs to create new and exciting business models. Those business models will be less about news and print, and more about being a destination for the community.

Things Are Different

As a middle school student 15 years ago, my friends and I realized that the Internet was the quickest and most efficient way to entertain ourselves due to our control over personalized interaction and entertainment. Our parents did not quite understand the richness of the Internet medium—instant, free, interactive and open—and no one realized, at that point, that the Internet would grow into a tool which could effectively serve the needs of a community.

The Gap

I work in an interesting space. I spend half of my time with early stage digital media companies who have ideas they believe will revolutionize the media world; and I spend the other half of my time discussing with established media companies how acquiring these new ideas may prevent them from becoming the next Bell Labs.

Both new and traditional media companies have many concerns. Digital media technology faces rapid commoditization as well as declining prices and smaller barriers to entry. These companies leverage technology in innovative ways, but also use business models that build upon the social needs of the community they are trying to reach. I believe that as soon as newspapers realize that the technology is not a barrier to entry, they will make the digital media startup world a much more difficult place.

Tomorrow’s successful newspapers recognize the problem is a cultural one, not a technological one. They will also recognize readers of newspapers share their opinions in the offline world and, with today’s technologies, want to share those opinions in an online world as well.

Changing Models

In addition to a community that requires interaction, newspapers must recognize that any individual has the tools to be both a competitor and a contributor. The business model has to change in order to accept a diverse set of inputs. Newspapers sit on a tremendous amount of brand value. That brand has been driven by years of targeted reporting and a community that has used the newspaper as an exclusive provider of information, news and advertisement. Successful newspapers must use their established brands as a platform for all the voices of their community.

Empowering a community to generate content yields a double-edged sword. There are evolving issues of liability and a fear of losing control. Technology, combined with the power of the community, can solve these issues. An empowered community can only happen when a newspaper trusts its community. The more engaged a community becomes, the more a newspaper can learn about the people who compose that community. Imagine the ability to analyze opinions, conduct research, produce free content and, overall, take advantage of the voices outside of the editor’s office. This interactive relationship enables newspapers to benefit from the opinions and personalities of its readership, something that is difficult with the current print model.

Stomaching Risk

Today, many newspapers have strong balance sheets and strong operating margins. They can approach change from secure financial positions. Unfortunately, advertising dollars are not shifting quickly enough to support the decline from print advertising for many newspapers. Now is not the time to move slowly. Digital media competitors grow overnight and the longer newspapers let competition take digital market share, the more catch-up they will have to play. Facebook’s 35 million user base that literally happened in less than 4 years is an example of a new media landscape that took the world by surprise.

Successful newspaper will actively seek out digital media investments to diversify their expertise and revenue models. Companies need to allocate a significant amount of resources and capital to these types of investments (both early and late stage investments). Participating in these types of investments will help companies acquire operating expertise and the technical knowhow. Importantly, newspapers must look outside of their organization to acquire and develop a “digital media” culture. News Corp. did just that with their acquisition of MySpace.

Vision for a Post-Transition Newspaper Company

The newspaper landscape will look very different in a post-shakeup world. Successful newspapers will embrace a cultural change and use technology to benefit from these changes. Newspapers will realize that technology is not the barrier to succeeding in an increasingly digital world; rather, success will be driven by tailoring their brand to the expectations of the target audience.

The revenue model for a digital media newspaper will be very different. The ability to provide advertisers with a flexible platform with which they can target the most relevant consumers will drive success. If a newspaper can become the “go to” online space for a given target audience, they can harvest rich amount of data about that community. Analyzing this data and interacting with the community can lead to many interesting business models, from market research to polling to targeted advertising.

The possibilities are only limited by a newspaper’s ability to think creatively about their community, its needs and how they fit into that picture.

Citizen Destinations

Obviously, the vision for a post-transition newspaper company looks a whole lot different than the newspaper world of today. Some of my colleagues see a move to 100 percent digital content and increasing fragmentation of content. These trends exist and the evidence is everywhere. Importantly, newspapers must also struggle with their identities. Unfortunately, the identity change will be less about news and even less about paper, so we need to accept a change of identity. I propose that newspapers start thinking about their mission as “Citizen Destinations” because this title better reflects the needs newspapers can fill.

As a platform and brand behind the voice of the community, newspapers will expand their reach and presence in a community, while at the same time enabling interaction amongst their audiences. Newspapers will successfully become “Citizen Destinations” by building on established strengths and realizing the benefits of technology.

Kyle Redinger is managing director of DeParis Redinger, a firm he co-founded to bring merger and acquisition banking services to progressive middle market clients. DeParis Redinger is an affiliate of Cribb, Greene, an 84-year-old merger and acquisition advisory firm for publishing companies. Kyle combines an extensive financial analysis background with a passion for progressive industries. Kyle and his partner Francesco DeParis, both 24, were named as top 25 finalists in BusinessWeek’s Best Young Entrepreneurs 2007. He also hosts a blog called The Media Age.

Navigating Newspapers to a Brighter Future

2007-11-18T21:28:00-04:00

Publishers and owners must make one of two choices today that will determine what kind of future their newspapers will have.

One option involves maintaining a familiar course; essentially what's worked in the past: Manage print newspaper operations to maximize operating margins while introducing new digital and online applications. Your author believes that this option is wrong because newspapers' print revenues are declining more rapidly than digital and online revenues are growing. Furthermore, your author believes that newspapers are losing their ability to influence advertising pricing, which further erodes profitable print revenues.

Choosing the second option involves changing behavior: Manage print newspapers for absolute revenue and profit growth instead of for high operating margins. Your author believes that newspaper managers can no longer use declining denominators (circulation, revenue, linage, etc.) to improve their performance ratios – i.e., operating margins and yields, etc. This course requires managers to reinforce the value of newspapers, adopt newer, but proven ways to package, price and sell newspapers, and embrace a new business model that emphasizes winning for both online and print operations.

Transforming newspapers' business model is a behavioral as well as a strategic issue. Tomorrow's successful newspapers will require committed, persuasive leaders as well as the innovative practices that will create real print and online revenue growth.

(For the full text of this report, click here.)

Len Kubas (len@kubas.com) is President of Kubas Consultants, a firm specializing in newspaper pricing structures, revenue development, and publishing strategies. Len has worked in editorial, circulation, production, advertising, marketing and corporate planning for newspapers. Kubas Consultants helps international newspaper companies implement new publishing and revenue generation strategies. For more information, visit www.kubas.com.

The Future of Newspapers

2007-11-18T21:25:00-04:00

Three stark realities have placed newspaper companies in a no-win squeeze play.

News and advertising don’t go together anymore.
Local is indefensible online.
Investors who buy newspaper stocks don’t want newspaper companies to innovate.

Any vision of success for newspapers depends on coming to terms with the first two of these realities, and changing the third.

First, some background.

Newspapers are neophytes, thrust onto a dramatic technology innovation path that features ever-increasing connectivity speeds, mobility, search intuitiveness and computing power. The future promises more of the same.

Let’s make no mistake about it: These innovations have transformed the human experience. We are always on. In our various devices, we carry with us second brains, extending our memory, our contact with friends, our ability to know and understand. We have instant access to the world’s information. We are connected to broad virtual friendship networks via global platforms. The inevitable result: the rise of social authority and a steady decline of institutional authority (including local media). News, information and entertainment are ubiquitous, blinking a billion “look at me” messages like the lights on the Las Vegas Strip. We are multimedia multi-taskers flirting with information overload as we seek to take it all in.

Into this new world comes the daily thump of newspapers on doorsteps. The thump gets steadily softer: in the number of households getting thumped, in comparison to the digital din, and in absolute terms as advertising morphs into digital forms. Whereas once local newspapers were the fulcrum around which community spun, they are now just one analog voice in an increasingly digital cacophony.

Here’s the crux of the problem. The newspaper industry has been built on two key pillars: first, that news and advertising are inevitable cohabitants. And second, that “local” is the key source of competitive advantage. But both pillars have been knocked down by the Internet. On the Internet, news and advertising have been separated at birth. It just took us a decade or so to realize it. And “local” is indefensible online because success online requires a level of scale that is not achievable locally. This scale is necessary to spread the costs of advanced platform technology.

Online, news-reading is a task. And advertising is just an umbrella for a series of tasks: job-hunting, car-buying, banking, furniture-buying, travel-planning, stuff-buying, restaurant-hunting, and so forth. In the online ecosystem, task-specific platforms (CNN.com, cars.com, CareerBuilder, Travelocity, etc.) have emerged to fulfill consumers’ every need. The tasks that relate to a purchase intent (i.e., advertising tasks) can command high CPM’s. Consumer consumption of news, on the other hand, rarely reveals a purchase intent. The result? Low CPM’s. For local media, it’s a double whammy: not only are the C’s low, but so are the M’s.

To live online, local media must live on a technology platform. But it is prohibitively expensive to build a competitive Web platform in a single local market. Whereas newspapers are about text and graphics rendered in flat-form design, online is about multimedia content, complex interface design and database and algorithm driven functionality—requiring tools and skills that are best extended across a broad network, not limited to a local footprint. The power of the Web lies in the ability for great online concepts to scale into global platforms. That’s where the economic leverage is.

Local media don’t have that leverage. What’s worse, they are further disadvantaged by the fact that four gates sit between the consumer and their content: the device, the connectivity link, the browser and the search portal. At every gate, the gatekeeper is monetizing eyeballs, siphoning people away from local media content. Since the consumer’s connection to local media content is both fleeting and gated, a news marketplace that in the analog world was a magnet for advertising and readership is now too small to hold critical mass.

So newspaper companies are stuck with core franchises that face steady declines in ad revenues and circulation. They have Web sites that are essentially low-CPM news sites, sitting on platforms of poor to moderate technical virtuosity, with no benefits of scale. The key ad verticals have migrated to scaled online platforms, with some newspaper companies either partnering or buying their way into relationships with these players. But newspapers’ share of the revenue split from these partnerships in recruitment, auto, real estate and other categories does not come close to filling the hole left by the structural shift in the core.

All of this has played havoc with newspaper stocks, which are overwhelmingly owned by institutional or private equity investors. Institutional investors have until recently seen newspaper stocks as a relatively “safe” investment, characterized by predictable cash flows and low volatility. That, of course, has changed, which has led to the entry of private equity investors. This new group sees the opportunity to buy low, cut costs and exit five years later with a quick profit. Neither of these types of investors wants to see significant spending on innovation.

The problem is that neither of these investor profiles fits the current need. Newspaper companies do need to cut costs. They also need aggressive investments in both process and product innovation.

So where will the newspaper industry be in five years?

Here are my predictions.

The newspaper industry will be rolled up.

The nationally-branded newspapers (The New York Times, Washington Post, USA Today) will stand apart. But in the top 50 markets, one company (“BigMedia”) will leverage low stock prices to buy up at least one major newspaper in each market. The rest of the industry will also trend towards consolidation.

Leveraging this consolidation, BigMedia will radically redesign processes, imposing automation, standardization and regionalization onto its local franchises.

Common ad order entry systems. Common classified systems. Common classification numbers and definitions. Regional travel editors, covering multiple markets. Corporate food editors, providing copy for all markets. Common metrics, financial reporting, etc.

BigMedia will move all its newspaper Web sites onto one common platform. All other newspapers may migrate onto this platform as well, leveraging the skill and scale of a central platform and team.

This will mostly be an efficiency measure, but it will also enable the company to gain some leverage with the key gatekeepers (devices, connectivity points, browser players, search players). These sites will be recognized for what they are: local news sites, and not significant sources of ad revenue.

BigMedia will change its investment profile to reflect its increasing investment in digital assets,eventually attracting growth-oriented investors. With large sales staffs in every top-50 market, the company will cut favorable deals with online partners and buy digital companies in the key ad verticals (retail, auto, recruitment, real estate, etc.), as well as in the areas of mobility and search.

Increasingly, these partnerships will extend vertically deeper into marketplaces, solving problems for advertisers that go beyond the identification of prospects and into the effective management of those prospects in the advertiser’s sales funnel.

As the technology assets of BigMedia grow, it will recognize the need to retain an entrepreneurial culture in its digital subsidiaries and will reward leaders accordingly.

The balance of power will inexorably shift from the print to the digital side, and future leaders of the organization are likely to have deep digital credentials.

As a result of these changes, BigMedia and the other remaining companies will become less and less about news and newspapers, and more and more about advertising and digital.

Newspaper industry consolidation will so weaken the quality of news delivered by major metropolitan newspapers that the community will step in. Large metropolitan areas will come to see quality local news coverage as a public good, inadequately served by the local newspaper and therefore requiring public support.

Local leaders from the business and philanthropic communities will begin to see quality local journalism as a public asset to be cultivated in much the same way as vibrant theatre, museums, and the symphony. By this path, a whole new era of experimentation and innovation may occur in local news gathering and delivery, keeping faith with the public trust.

This idea is not as far-fetched as it may seem. Joel Kramer, former publisher of the Star Tribune, has initiated such an effort in the Twin Cities. He seeks to create a not-for-profit local news site characterized by top-quality journalism and paid for in large part by community sponsorship.

In this sense, I believe that the future of news will be increasingly separate from the future of newspapers. Quality journalism costs money. But content drives only limited monetization opportunity online. It is my hope that enlightened leading citizens in major cities across the country will recognize their responsibility to actively support credible experiments in a new kind of local online journalism.

As for newspaper companies, the only way to make them financially successful is to make them digitally successful in the key advertising verticals. In the online ecosystem, that doesn’t have anything to do with news.

Tom Mohr is president and CEO of LeadLogix, Inc., a start-up in the automotive online lead management space. He was president of Knight Ridder Digital from Jan 2005 until KR’s sale to McClatchy in June 2006. Prior to that, he was corporate head of KR’s $800 million classified franchise.

Making the Leap Beyond Newspaper Companies

2007-11-17T18:24:00-04:00

These days, everyone in the newspaper industry is trying to imagine the future of newspapers. Not the grim future that’s bearing down on us, but a different one in which our core values remain strong, everyone finds us indispensable again, and more and more businesses are flocking to us to use the great solutions we offer.

The American Press Institute’s Newspaper Next project has been working for the last two years to help newspaper companies create that brighter future.

In September 2006, we delivered a set of practical concepts, tools and processes that any newspaper company can use to build new audiences and serve new businesses. In the year since, I’ve taught that approach to more than 4,000 newspaper people and have worked with dozens of companies using it.

In that time, I’ve seen a lot of progress. Many newspaper companies are moving much faster today in developing new products and engaging new audiences.

But it’s not enough. The pace is still too slow, and most innovations are too close to the core and lean far too heavily on old revenue models. At this rate, we will still suffer many more years of painful shrinkage, and competitors will snatch away many great opportunities.

So we’re now developing a second-generation N2 report – due out after the first of the year – to offer additional strategic and practical guidance.

One of its key messages is this: It’s time to make the giant leap beyond newspaper companies.

The question is no longer, “What’s the future of newspapers/newspaper companies?” It’s “What does it take to meet the needs of the people, businesses and communities we want to serve?” Whatever that requires is what our companies must become.

And that leads to the most important question of all: “What will those people, businesses and communities want and expect in the coming years?”

Draw today’s trend lines forward, and we can see this picture in every local market:

· People will want – and will get from someone – exactly the information, solution, contact or connection they need or want, for whatever circumstance arises in their lives, any time they want it, wherever they happen to be at the time. They will use any convenient channel to get it. Some of it will be news, but the vast bulk of it will be on topics more directly pertinent to their own lives, work, interests, circumstances, families, communities.

· Businesses large and small will want – and will get from someone – the ability to reach precisely and measurably the kind of people they want to reach, with messages that will engage them, delivered in the most effective formats and channels, at prices that fit everyone’s ability to pay.

· Communities will want – and will get from someone – ways to interact, share knowledge, ask questions, give answers, debate issues, form networks and stay in touch. These will be not just geographic communities, but communities of shared interests.

To newspaper companies, this looks dire and threatening. Their core product is in decline because there are now substitutes that meet these needs better than a newspaper. Seeing these needs through the lens of its old model, a newspaper company instinctively protects and defends that model while cramming in a few new offerings around the edges.

But wait – these “new” wants and needs actually are not new at all. They’re as old as the human race. Our companies were created to meet them years or generations ago, and they used the best available technology, which happened to be a newspaper.

It’s time to wake up. We are not newspaper companies – we are “needs companies.” Our core purpose and business model is meeting the human needs for information, knowledge, solutions, connecting with others, choice-making, buying and selling that arise among people in a given locale. Whatever that takes, we need to do.

So today, just as eagerly as we adopted the printing press, we should be grabbing the new technologies and using them to create the products and services that local consumers, businesses and communities will want in a digital age. A “newspaper company” tries to tweak old solutions; a “needs company” makes new solutions out of whatever technologies, skill sets, sales models and access channels will work best for the user.

There’s no handy term for this kind of company – it is part local information and knowledge utility, part connection platform, part commerce enabler, part multi-media company. Its goal is to touch, connect and serve every consumer and every business. It may keep producing newspapers well into the future, but that’s not the center of its purpose – it’s just one way of many ways to fulfill it.

What, exactly, does this kind of company look like? No one can say definitively yet, because the needs that will shape them are still emerging. But the picture is becoming clearer by degrees.

The next N2 report, titled “The Next Step: Making the Leap Beyond Newspaper Companies,” will offer a sharpened strategic vision, more than 30 case studies of new products and organizational structures, and pragmatic “how-to” guidance on implementing today’s most lucrative local online monetization strategies.

Fortunately, it’s not too late. Lots of digital opportunities remain untapped in local markets. Our companies need to move fast, talking with consumers and businesses to learn what the opportunities are, and quickly developing smart, strategic solutions.

There’s tremendous opportunity ahead. In every community, market or region now served by a newspaper, there are thousands or millions of people who will welcome the next new thing that helps them live their lives or conduct their businesses there. The door is wide open for “the companies formerly known as newspapers,” and a bright future is ours for the making.

Steve Gray heads the American Press Institute’s Newspaper Next project, which delivered its report, “Blueprint for Transformation,” to the newspaper industry in Fall 2006. He is now helping newspaper companies learn and implement the N2 recommendations to expand and diversify through innovation. Previously he was managing publisher of The Christian Science Monitor in Boston for seven years, where he implemented numerous strategies to introduce the Monitor to millions of new readers, viewers and listeners.