Newspapers are in deep trouble. You don’t read much about it, perhaps because newspapers aren’t keen to report on their own demise. The Boston Globe, my local newspaper, lost $50M last year and is projected to lose $85M this year. The New York Times, owner of the Boston Globe, has threatened to shut down the newspaper unless labor unions agree to $20M in cuts. Three of the four unions agreed, however the Boston Newspaper Guild rejected the deal last night.
PaperCuts, a website that covers the U.S. newspaper industry, says over 100 newspapers have shut down completely, and over 26,000 jobs have been cut in the last 18 months. Sun-Times Media, owner of 58 newspapers including the Chicago Sun Times is in bankruptcy. So is the Los Angeles Times, and many others.
What went wrong? A perfect storm; classified ads devastated by Monster.com and craigslist, steadily declining subscription sales, and an economic recession that has reduced all forms of advertising. This perfect storm has been building for years, but the indicators were rationalized away as one time events, a normal business cycle, or, at worst, a manageable problem. This is a sadly common reaction. We have seen US auto makers, the music industry, and the home mortgage industry, all fail to react to fairly obvious warning signs.
Dinosaurs didn’t die because they were too big, they died because they were too slow to adapt. Businesses in distress usually cut expenses and headcount in an attempt to save themselves. It is usually too little, too late. They become smaller versions of their former selves…but with the same fundamental problems. They think they have made the tough decisions that will allow them to move forward and regain their former success. But, all they did was buy themselves a little more time. The inconvenient truth is that the world changed, they didn’t adapt quickly enough, and now the required changes are so severe they can’t bear to implement them. What follows is a slow death spiral, lots of finger pointing and blame, but very little introspection and learning.
Top executives of the major American newspapers had a secret meeting in Chicago last week to map out a strategy for preserving the newspaper industry. The meeting focused on two major issues; how to enforce copyrights to protect their content, and how to extract revenue from web sites, their own and others. The basic idea was to erect pay walls around newspaper content, file lawsuits against any web site that “used” their content, and demand a percentage of revenue from sites like Google News and others.
Will this work? Probably not, and it is probably illegal. That is why newspapers are lobbying congress to change the copyright laws, and trying to get antitrust exemptions for themselves. The reality is that getting 100% of newspapers to agree on and implement any strategy is impossible. The other reality is that consumers have so many other choices for free news…pay walls will not be successful.
Is there any hope for newspapers? Probably not for the Boston Globe, but for others, yes, absolutely. But, they must be strong enough to survive the transformation, and courageous enough to implement it. Every newspaper is different, but they all have some common problems and opportunities. What can they do?
- Cut costs. Adapt to the new reality and cost structure. Classified advertising dollars are never coming back. Get used to it. Adjust the cost structure. This doesn’t solve the problem, but it does buy time to implement the solution.
- Focus on local news. Things like schools, businesses, events, and local people. Local news is unique. National news is a commodity available from hundreds of sources for free. Local news matters to local people and isn’t available anywhere else. People will buy subscriptions, and advertisers will pay to get access to them.
- Expand online presence. Go deep with local news. Include lots of stories that aren’t popular enough to “print” in the paper but are of interest to people in the community. The long tail.
- Use social media. Allow local bloggers, school students, and business leaders to post stories, pictures, and comments to the newspaper web site. Provide a space where local people can build a community. Newspapers should be at the hub of that community.
- Create new revenue sources. Sell premium content online, such as in-depth reports on sports teams, how-to reports for spring gardening, premium wine reviews for Spring varietals, etc.
Journalism is more important and valued than ever before. We get more news from more sources now so that reliance on newspapers is a thing of the past. If newspapers don’t adapt quickly, they too will join the dinosaurs as a thing of the past.
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