I've hesitated to post my thoughts about the Yahoo-newspaper deal announced this week, in part because I can't think of much to say about it other than that it would have been much more impressive if it had been announced in, say, 1998. Instead, it feels like the newspapers (and even Yahoo, which is falling farther and farther behind Google) are playing catch-up. It just has an air of desperation about it.
But it does raise a much more fundamental question: Why aren't newspaper companies more innovative?
Fifteen years ago, when I started exploring new media opportunities for The Washington Post, a wise editor named Steve Luxenberg pulled me aside and gave me a great piece of advice: "You have to realize," Lux said, "that you're doing this in an industry that has absolutely no history of research and development."
How true! You can count the significant innovations in the newspaper industry over the past couple of decades on one hand. Let's see: Color photos and weather maps (thanks to USA Today). Ink that doesn't rub off on your hands (well, as much). Selling ads on the plastic bags that newspapers are delivered in. Pasting the newspaper onto a web site. Sudoku. Not exactly Bell Labs or Xerox PARC stuff. Meantime, the papers are being smoked by upstarts like craigslist and Google and Monster and, yes, Yahoo.
But here's the irony: The news business is all about research and development. It's done every day, in every newsroom in America. Newsgathering is nothing less than R&D. Newspapers are known as the "Daily Miracle" because, unlike any other product, they are conceived, designed and produced virtually from scratch every single day. (We used to take executives and R&D people from computer companies through The Post's 18-hour daily production cycle, from initial story meetings to throwing papers off of trucks. They were invariably flabbergasted at how quickly we developed a fresh product each day. And multiple editions blew their minds.)
For some reason, newspapers haven't been able to transfer that culture from the newsroom to the rest of the enterprise. There's some sort of innate fear of change that disconnects the daily R&D of newsgathering from the bold thinking and innovation needed to make changes in the overall business of news. (Maybe newsrooms are much more conservative than the liberal-bias accusers think!) Many smart people have tried to be change agents in their news companies, but they've been frustrated and, in many cases, left to go elsewhere. That's created a brain-drain that's exacerbated the situation.
As a result, newspapers—and the news business generally—have evolved painfully slowly even while their world is changing rapidly around them. It's rather shocking to look at the landscape of the U.S. newspaper business and see everybody operating off essentially the same playbook, with precious few variations. There are some interesting experiments here and there, but come on—it's 2006, the Internet revolution is at least a decade old, and no newspaper company has taken anything like a leadership position in rethinking its business and trying to outsmart its growing number of competitors. Nobody's really broken the mold—shifted the bulk of their resources to producing their Web site, radically rethought the makeup of the print edition or paid any more than lip service to trying to attract new audiences rather than hanging on to their aging (and dwindling) existing audience.
They're going to teach this one in business schools for years, unfortunately.
Against that backdrop, sadly, the Yahoo announcement looks both like relatively forward thinking—and desperation. It's going to take much more than that to pull newspapers out of their tailspin. The innovation and R&D needed to do that is in their genes somewhere, as the Daily Miracle attests. Sometimes it feels like it's already too late. But some newspaper company needs to take some daring steps to do something very, very different, to develop something that leads, rather than follows competitive trends. Nothing less than survival is at stake.
(Alan Jacobson has an interesting take on this here.)
What established players do innovate?
Very few, and very rarely.
That's the whole Innovator's Dilema.
Even Google doesn't innovate much. They are much more likely to acquire. Yahoo! has always tried to acquire through acquistion. Unfortunately, few of their acquistions have actually done well, but at least they tried.
Newspaper companies have spend far too little on acquistion. Scripps, of course, with Shopzilla, has had the most success in this regard.
That doesn't mean we shouldn't be trying to innovate, but disruption is very hard and fraught with danger. Acquistion is a better bet.
And if you can't acquire, partner.
Posted by: Media Blog | November 22, 2006 at 01:55 AM