When You Don't Understand the Business You're in, You're Screwed (Good-Bye Newspapers)

My father taught at Harvard Business School a long time ago, and one thing he never ceased to marvel at was businesses that didn't understand the business they were in. A simple case of confusing tactics with strategy. He started a long list of historical examples and since his passing, I have added a few.

His top two were the railroad companies at the turn of the last century, depending on who does the rating, between six or eight of the ten largest companies in America in 1900 were railroad companies. But he believed they were in the people transportation business and, as such, or if they had defined themselves as such, the largest airline in America would have been the spawn of a railroad company.

He also thought it was a shame that American Express hadn't viewed themselves in being in the cash dispensation business versus the traveler check business. He never understood why all the ATMs in the world weren't owned by American Express.

Today, I look at the end of the newspaper industry with a touch of nostaglia but also with the same sense of bewilderment. For the better part of the past 20 years, newspapers have been focused in the paper and not the news. "All the news that's fit to print" is fine, when printing was the only option available. "All the news" is really the core issue.

The Rocky Mountain News's road ends today. The San Francisco Chronicle, Seattle Post Intelligencer and many more are not far behind. Ironically, delivering news through new media is cheap, fast and easy. Readers made the transition, it's just too bad so many newspapers, with so many good people, never did.

Comments

[torsienj]

People stopped reading newspapers, when newspapers stopped printing the news people needed to read. That happened when Wall Street steam rolled into the news business and decided profits were king and the peoples right to know...not so much. Staff was cut and coverage suffered. Readers who were used to picking up Tuesdays paper to find out what their governing body did at Monday night's town meeting were %^%^ out of luck. Reporters who used to cover seven municipalities now had about 27 to cover and they couldn't do it as well....big surprise. People got tired of reading recycled press releases and stopped buying newspapers. it all seems so simple to those of us who used to work in the newsrooms.

The interent didn't kill newspapers, corporate greed and management stupidity did.

[hmargret]

I worked in the newspaper industry for decades as an advertising rep. Over and over, I saw the higher ups ignore innovation or quality development. They took their business for granted. They took their newsstaff for granted. We ad reps were considered "the dark side" of the business. So if advertising was the dark side, what does that say about this schizophrenic industry?

on one side, they reside in ivory towers about their content, but then disdain the readers and their own advertizers.

Oh, and don't forget the glass ceiling....take a look at the white male management­......mayb­e that's the real problem: they can't relate to our diverse and two gender population.

[zukervati]

I recall a Colonel that I used to support at the headshed. He had a buggy-whip mounted on the wall, right behind him at almost eye-level. The caption was, reinvention or death! His point was, that you either reinvent yourself with new technology, process, doctrine or face extinction. Model-T was the last nail in the coffin of buggy and buggy-whips. Companies that reinvented themselves (i.e., brand-name leather good manufacturers) survive quite successfully to this day.

These major newspaper conglomerates have been staring at the Internet technology since the dot-bomb days, that's over a decade now. They chose to bury their head in the sand and now they're paying the price. The ultimate success story of the "tubes on the internets ..." journalism is the HufPo. It's time to put away the buggy-whip and get online.

[texastrixie]

You may think you will kill off newspapers, but I bet they'll be back.

I read parts of the NYT online, as well as WSJ and HuffPost. But when I didn't take the local paper, I never bothered to read it online. I'd catch the first five minutes of the local news and let it go at that. But I also don't buy a lot of stuff, and if I don't have printed ads to look at, I'll buy even less.

I can't imagine checking on local store ads on the internet. And the grocery stores would surely be out of luck. Plus, if you really wanted to check out an ad, you'd have to print it out, and that would cost you plenty in the long run. Even printing coupons out from the internet is problematic - somehow the stores don't seem to believe its a valid coupon and you have to hold everybody up while the manager looks the coupon over.

If enough stores go under during this recession, there may not be enough advertising to support any local papers, but without papers, many retailers will find it much harder to sell things.

As much as I hate Walmart, I'd probably just end up getting everything there. Its not great stuff, but its usually as cheap as anywhere else, and its passable overall.

[wietog]

It's pretty simple. People go where they have the most freedom to define themselves.

It used to feel that way when you opened up your big Sunday paper and perused the sections important to you. Now, we are more sophisticated and realize that there are THOUSANDS upon THOUSANDS of stories and perspectives available to us daily, and we can focus on what's important to us very easily on the net.

Who among us is not interested in another opinion? The value of comments sections is like reading the paper at a vast, rotating roundtable.

You can find all you want in seconds online. No ulterior corporate motives. No black fingers or treekiller guilt, either.

When placing an ad, do you want to throw stuff up on a narrow section of one wall, or would you rather target your audience by posting your business' virtues all over their stomping grounds? The methods for defining and wrangling a target audience are much more robust online.

And guess what? Site traffic pays the bills via those ads.

Subscriptions will not work, but pay as you go might. There could be an InterTicket system - like at a carnival. You purchase a few hundred "tickets" and then redeem them as you pull up content online - you can pay for media like photos, music, etc. It would be like Paypal except on a more granular scale and it would be instant.

[GrahamInCanada]

Postulating that news delivery has been two sided since the printing press, squared. By which I mean postulating that news delivery has attempted to deliver the news as a public service, charging the public for the hard and not the soft content (the paper and delivery, not the news), attempting to gather eyeballs that can be sold to advertisers to pay for the news.

This news as a public service part of the newspaper has always existed, in my life, I have never had to pay for a newspaper to read the newspaper, although it was always more convenient to pay.

I could always go to the library, or to the newspaper itself, or to one of many agencies, to read the newspaper. I could borrow newspapers through inter library loan, for free, and I did. I could look at microfiche archives for free, and I did. I could borrow microfiche archives through inter-library loan, and I did.

The broken part in this puzzle is the selling of the eyeballs to the advertisers. Newspapers know their hard copy readership like the back of their hand, which makes their eyeballs easy to sell. Newspapers have no idea who is reading their soft copy on-line, and this is not such an easy sell to advertisers...

[GrahamInCanada]

So, the answer might not be in reader payments at all, but in gathering information that would make eyeballs knowable.

So, as everybody seems to be discussing a newspaper cabal that will charge micro payments or subscription to view multiple news sources, instead a newspaper cabal that will ensure it knows and can sell to advertisers the eyeballs?

How about this, a cabal (if this is really necessary, which I don't at all think it is), that sends your password by snail mail (including everybody, private, corporate, public, libraries, etc..) All they need is your zip code, and no more information about you to be able to sell your web eyeballs to advertisers.

No privacy invasion, beyond the traditional we deliver to you at your location nature of the news.

People can still go to libraries to sign in, they still know where the library is.

Or some whiz kid can figure out how to do away with the slow but very practical snail mail part.

Of course, as a cabal, they'd need to be regulated, and forced to send out that snail mail to all requestors...

[magen]

Newspapers and TV news organizations seem to think that they're in the business of selling advertising space instead of information.

This is one of the root causes of everything that's gone wrong in this country----lack of REAL CREDIBLE information and spreading of outright lies.

[tompoe]

Newspaper industry is an oxymoron. A newspaper exists, not for shareholders, but to inform its readership. A nonprofit organization model allows a newspaper to participate in community activities without focusing how it might extract profits from those who rely on the newspaper to inform them. Bush/Reagan economics have wreaked havoc on our society. There's no better example than the private equity takeover of newspapers, and the criminal pillaging of our print media in the name of shifting wealth from the poor to the rich.

Goodby newspaper industry, hello community news.

[InnocentBystander]

No question that the internet is accelerating the demise of the paper based newspaper. The concern I have is how to pay for the gathering of news? I suspect that we will soon transition from 'free' websites to something like subscription based. I won't mind paying for content I want to read, but I hope that someone develops an internet based payment distribution system where I can make a single monthly payment and assign a % of that to every site that I want to support.

[RoseMerry]

Good article. Let the fishwrap die and save some trees. Now, speaking of people who do not understand their business, have you ever about web sites that expect people to pay a subscription to read the news? HA! Like that will work!!!

[OtayPanky]

Radio. Network TV. Cable. Internet.

All undermine the need for people to spend a nickel (or a buck) to get the news of the day...and their clothes dirty.

Daily news on a piece of ink-smudged paper is a buggy whip business.

[Konnie]

i agree with an addition.

this is largely a generational shift. us old folks relish sitting someplace with a cup of coffee
reading a newspaper.­.........t­hen we had kids and the world changed.
they didn't have time to sit........they got their coffee to go............and their kids never got the
message of savoring the coffee or the paper.....­.......the­ir noses are firmly glued to their crackberry device of choice. that's where they get their news - from breaking news interruptions, from weatherbug alerts....­.......jus­t the headlines. they will read the whole story later, if it EFFECTS THEM DIRECTLY.
that's all they have time for or care about, or more importantly if one of their on line friends makes a reference to it in a text, tweet or message to them. oops better catch up..........

have no fear tho, journalism students - its all going on line, and the subscriptions will
be purchased - there just won't be any paper to wrap the garbage in anymore...­..........­.
it will just take awhile for the old folks to get on board. maybe there will be an option
to print out the newspaper at home......­..........

[taitafalcon]

I'm a new start up in SoCal. It's hard enough now to get started - turning to the local newspapers didn't help. All I wanted was to run a simple 1 inch square ad in a regional paper, no pictures, for week. This publication was one of a dozen papers owned by the same mother company. I was informed that the initial ad would run into the hundreds of dollars only if I agreed to open a contract for 90 days. In addition they had to have either an open-ended credit card to bill at intervals, or a debit account number to tap into my bank account 'to cover expenses' as needed. All the advertising in the world won't change the fact that the household breadwinner just got laid off. I turned to local small business resources. I'm online for about $8 per month with pictures, I can change my copy to what I want every 2 days instead of being misspelled in print for a week. Some listings are free of charge. Exposure is smaller but instead of advertising to about 95% of the readers having no interest and shouldn't, I'm advertising to industry decision makers who'd have reason to buy. I'll never forget how the young rep from the paper spoke to me as if I lost my mind by not accepting her company's terms. After all, in an area of about 3 million people they could reach as many as 80,000 people a month... hmmm

[Ken Volok]

The Santa Barbara Independent is a FREE print news weekly that has beautifully and efficiently transitioned to the web. Their site is a good model for other news publications. They have up to the minute updates, for instance during the recent fires they updated all thru the course of the disaster 24/7. They also have national and int'l news as well.
I think one biz model for print journalism is to be free and sell advertising. True in this economy its tougfh to sell ads. But overall, if you have a worthy publication, (smart) businesses will advertise in a free publication because people pick them up with ease instead of having to pay.

[truthglow]

My own home newspaper, the Newark Star-Ledger is rapidly deteriorating. I fear that there will soon be nothing left of it to read. I will have to make a decision on whether or not to renew in a few months, and I'm not sure I will do so. Too much has been evicerated already. I'm not certain it is still worth the money. It's such a shame, because I have always loved to read my newspaper. I think I many switch to the New York Times instead, although even that may be in jeapordy. It's so difficult to remain flexible as one grows older, but that's what's involved here.

[rmabelis]

The problem with newspapers seeing themselves as delivers of news is the question of value for value exchange. When people had to buy a newspaper to get the news they had to give someone money for the paper. That exchange provided the newspaper with a "business model." When people get their news on the internet the only people getting money are the people who own the internet connection. I suppose if newspapers had really seen themselves as being in the news delivery business they would have bought cable companies and phone companies so they would have owned the means of distributing news over the internet.

[NoPCZone]

Content is king and the old king- the newspaper- has no clothes.

By the time it is printed it is history in this day and time. On the net the news is updated as often as is needed. With a paper if you bought the early edition and updates come up you are SOL- not so online.

As the author of the essay points out, the business is not selling advertising or subscriptions- it's gathering news, opinion and data of value. The last 20 years have seen most newspapers become little more than a locally branded AP paper with little in the way of original content.

I will gladly pay for original content and support The Nation, Mother Jones and other operations that go the extra mile and give an original take on the issues of the day, thoughtfully written by people who are in it for more than a paycheck.

[Shaddup]

True enough. Remember when newspapers where run by newspaperguys. Unfortunately it seems every business in America has fallen prey to "the Harvard Business Model."

[mediaman]

Successful businesses fail when they stop doing the things that made them successful. Newspapers are no longer run by rews people with a burning desire to report the news. They are run by sales people who are more interested in selling advertising.

[Shaddup]

You are correct, sir. This goes for all forms of publishing, media, furniture making, whatever. It says something when 1/4th of all the jobs out there are in marketing--and it's not a good thing.

[AnnfromCA]

You clearly don't have a habit of reading the newspaper.

The very texture of a paper is part of the experience.

[logicalrabbit]

Much like toilet paper, I guess.
Here is the point:
I will occasionally pick up a copy of a local paper. The news is usually at least a day old, and usually printed directly off the wire. What little original content there is tends to reside on the op-ed page, and most of it is hopelessly biased. I feel guilty every time I succumb to the temptation of the Sunday edition. Some innocent tree had to die so I can see that our local fundies are holding another anti something rally, or that the local House-O-Bait is having a huge sale on worms.
The technology of dead tree media is hopelessly outdated.

[truthglow]

They use recycled paper in my newspaper, I believe. That technology is available.