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ECT News Community   »   E-Commerce Times Talkback   »   Re: The Weekly: A New Business Model for Newspapers

Re: The Weekly: A New Business Model for Newspapers
Posted by: Theodore F. di Stefano 2009-03-27 05:02:23
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It's been clear for some time that print media has to adopt a new business model or basically face extinction. What wasn't so clear, even a few months ago, is how fast the industry would decline. Recent events are a dramatic illustration of what appears to be a tailspin. On March 16 of this month, the Seattle Post-Intelligencer stated that it was printing its last edition, ending a run that lasted 146 years. Other print media publications have gone the way of the Post-Intelligencer by either ceasing publication or filing for bankruptcy.

New Model Requires Investment
Posted by: Terry Garrett 2009-03-28 09:32:43 In reply to: Theodore F. di Stefano
For those of us in the media industry, the cry for urgency is old and repetitive (I'm guilty of this for 10 years now). The powers that be didn't believe the decline could accelerate as it is now. They failed to make the needed investment (among other legacy failures). The decline in newspapers and magazines began in the 1950s. As a relative share of GDP, newspapers and magazines have declined by 50% since then. Peter Drucker predicted their eventual irrelevance would happen by 2010 (he made that prediction in the 1970s).
They've clung to a romantic notion of their importance rather than an intelligent analysis of their market worthiness, and it's made all the difference in their predicament now.
They profit harvested instead of making long-term investment. Now the needed investment seems too large to make.
Huffington Post isn't a model that they can embrace, and realistically it hasn't proven to be successful on its own merit. It isn't self-sustaining based upon operating income despite its growth in audience. It has relied upon raising new capital to stay afloat.
There are other models emerging that don't rely on corporate largess in funding. We'll see how they do.
The ones that are closing shop are saying, we aren't willing to recreate because the investment is too great. Others will fill the void who are willing to invest.
I'm sure they were many naysayers in 1890 when Joseph Pulitzer created mass advertising in the New York World. It became the Google of the time. All the rest followed his model. Now, there isn't a model to look to for inspiration. It will eventually emerge. And it will require enormous investment and experimentation to get there.

Terry's post
Posted by: jcrglobalcaplaw 2009-03-29 01:51:52 In reply to: Terry Garrett
Terry, without being critical, I find it very interesting (and revealing) that, in dismissing the HuffPost you used EXACTLY the same argument that newspaper management used for decades about new initiatives (essentially "In the here-and-now, it is not financially sustainable."). They were probably right for many of those decades.

Apart from Google, there are NO digital media models that are sustainable in the present tense--at least none of which we are yet aware (though in hindsight in a few years we will all be able to pick them out). That something is not sustainable today says more about the metrics used than about the idea. For decades, new ventures (for example, by large multinationals) took 3-5 years to get to profitability and suddenly we demand it in a matter of a few quarters. How wise has that been?

I do not care about HuffPost one way or another but I was making the point that they (and their investors) are banking on one model that has worked more often than it has failed and that is: Building a brand.

In the digital media world, brands cut through the clutter, of which there is much. That was my point. I can put it another way: A broadly recognized brand is a necessary but not sufficient model for sustainability.

Difference between HuffPo and Local newspapers
Posted by: Terry Garrett 2009-03-29 14:46:32 In reply to: jcrglobalcaplaw
I absolutely agree that brand matters more and more as abundance of content accelerates. It can be argued that as brands go in news, local newspapers have established that favorably. My guess is that if you surveyed locals in any city in the US, brand awareness and loyalty for news organizations, the results would strongly favor local newspapers over HuffPo.

I also agree that newspapers have held to the not-invented-here attitude to their detriment.

Let me clarify what I mean about the HuffPo model and how it offers little guidance to local newspapers. HuffPo belongs to a class of news sites whose geo-scope is broad and either national or international. Print-related sites such as NYT, WashPo, IHT and WSJ, and electronic sites like CNN, BBC, and Reuters fit in that class.

Audience size matters because those sites are still dependent, almost exclusively, on ad sales to generate operating income.

HuffPo's distinction among that class is that they are also dependent upon linking to (aggregating) other sites that produce high quality journalism. The instructive element they've added to the mix is that they've managed to convince contributors to accept recognition and attention as compensation for their contribution. Newspapers need to do this too beyond what they've done.

Local newspapers (and their sites) have the unique problem of geo-constraint that has to be solved through income streams that are first local in nature, and will be most likely comprised of ad products and additional services they can create for consumers and local businesses.

A quick example contrasts HuffPo with SFGate in terms of audience size and specific geo-coverage. According to quantified stats from Quantcast, HuffPo on average reaches 11.6MM globally and 9.1MM domestically. SFGate reaches 7.1M and 5.9M respectively.

Since SFGate aims to cover the SF region, it's success depends on that achievement. Nearly SFGate 2.4M uniques (or 40% of domestic uniques) belong to that region. For local citizens and businesses SFGate matters and maybe they will exploit that opportunity beyond ad sales. HuffPo reaches 746k uniques in that region, which may be an adequate number for a large advertiser targeting US DMAs, but it doesn't suggest other income opportunities equal to SFGate's for the same region.

Lastly, your point about separating the idea from old metrics resonates with me and it is missing from the strategic thinking for most newspapers.

Weekly publication for newspapers
Posted by: jcrglobalcaplaw 2009-03-27 11:59:22 In reply to: Theodore F. di Stefano
Mr. di Stefano raises an interesting point but weekly publishing poses two problems. First, a newspaper cannot increase the ad rates to cover the loss of the other six days. This, of course, is the problem people perceive with on-line publishing: insufficient ad revenue to cover operating costs. Second, larger newspapers will cannibalize markets for their pre-existing magazine properties.

If there is a demand for in-depth reporting (and there is), then its weekly publication is not necessarily the business model--just publishing it is, BUT, the publisher must build (and sustain) a brand. People will go to the Washington Post or New York Times or WSJ because they are brands they like. Moreover, there is a demand for print editions. It will decline over time but there will continue to be people who like it.

The HuffPost represents a good but intrinsically different model. The content is decidedly canted and they syndicate in a great deal of other content. Both are used to inform but more than that to connect people and create communities. Their basic model: They are building a brand.

Weekly publication of newspapers
Posted by: Teddistefano 2009-03-28 05:50:46 In reply to: jcrglobalcaplaw
The above writer made some excellent points and I congratulate him. I'm not sure what's going to happen to print media. I read the Washington Post online, but read the New York Times paper-edition every day.

I did read, however, that one newspaper is going to publish 3-days per week, as opposed to 7 days. So, it seems to be going in the direction of fewer publication days.

Also, there is some belief that with so many newspapers either closing or about to close, the large newspapers like the New York Times will be picking up those customers.

I wrote the article in question because what's happening with print-media versus e-media fascinates me. It's great fun to see this all unfold. Ted di Stefano
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