Monday, September 08, 2008

Business-Modeling Newspapers: Still 1955

Met socially with one of the in-law-in-laws yesterday. He works for a newspaper biz which is national and which has operations in Northern Wisconsin. The Company is expected to dump twenty percent of its employees around October 1. That will be 2,000 people, more or less.

Not good news.

Separately, over the last several months, I've had conversations with friends of mine who work for the JS. Well--SOME of them work for the JS. Some were laid off, or took retirement.

The newspaper biz is grim.

I will propose that it is grim because the Boards and executives of most (not all) newspaper companies are working with an outdated, 50-year-old business model. And that they are stubbornly wrong-headed in their modeling--which means that they are stubbornly going banko.

Talk about Stuck on Stupid!

For as long as I can remember, the JS (and its two predecessors) sold newspapers for 25 cents/day and $1.00 on Sundays.

(Actually, they used to sell them for a lot less than that, and the Post Office also sold first-class stamps for 3 cents, and delivered mail twice a day even in the suburbs. My memory is long, folks.)

The model was simple. Reportorial content was discounted to almost zero because advertising revenues were the Big Dog. In effect, reporters provided filler for pages of 4-color furniture, automobile, food-coupon, and housing advertisers. Employers spent thousands on "2x4" weekly ads for professional and managerial talent.

It was nice while it lasted.

Then some damn fool invented the Internet. Newspapers jumped in, putting reportorial content on the 'net, and selling ads which danced, wiggled, and generally interfered with reading the stuff provided by ink-stained wretches.

But by 2005 (or so) the Internet also was inflicting heavy damage on newspaper Big Dog advertisers, specifically autos and real estate, and help-wanted. Advertisers did not have to purchase newspaper space to advertise; they could do it with their own websites, or with 'net-centric help-wanted ads, or with CraigsList--or by empahsizing television over print, or a combination thereof.

What did the newspapers NOT do (with one or two exceptions)?

THEY REFUSED TO CHARGE FOR CONTENT!! Newspaper Boards and execs were so molded into the 1955 business model that they simply could not (or would not) change.

It's particularly ironic in a one-newspaper town. The JS is pretty much the only source of local news, and certainly the only source of "more-than-one-paragraph" local news. Forget seeing the MPS reporting from Channel 4, or 6, or 12, or 58. Forget the County Board series. Forget the pre-election biographies and debate coverages. Television will NOT do it. Never.

Why don't the newspapers charge $250.00/year (or $100.00, or $50.00) for password-required access to their news-site?

(Don't you think it's ironic that most newspapers copyright their stories, but do not charge to read them on-line? Are they really worth copyrighting if they're free?)

The newspapers simply will not monetize the reportorial asset.

There is one very notable exception: the Wall Street Journal. Their philosophy is simple: "Pay for the reportorial content. Period. On-line or in print, you will pay to read this information. You can choose not to pay. Then you won't have the information. Go ahead. Make our day. Live without it!"

People paid the WSJ--at least, the people who think that the content is worth paying for.

As to the rest of the newspapers? Maybe you can figure it out. I can't. All I know is that first-class postage is now $0.42 and rising.


Disgruntled Car Salesman said...

I have been waiting for a General Honore quote on this blog for awhile. Kudos. Nice.

Anonymous said...

I'm in that national newspaper territory. I buy the Chic. Trib. on Sunday. $3.00 v. $1.25 for the Gannett rag. Worth every penny.

I agree with you on one of the options. The other option would be to just make the paper basically free, disconnect the AP wire, reduce content, and become an advertiser. Local news and sport. A cranky editorial every now and then and letters to the editor. Up here we have a biweekly advertiser that is basically a copy (localwise) of the Gannett rag.

The JS should just jack rates. Sunday-only for $100/yr. Daily: $250/yr. Daily rate: $1.00 Sunday: $3.50