A Perfect Storm

There's more bad news about the newspaper industry, this time from The Wall Street Journal, which notes that total ad revenue was down 4.8 percent in the first quarter. The Journal quotes longtime industry analyst Edward Atorino predicting a whopping 4.3 percent drop in ad revenue this year, hitting pretty much across the board. (Alan Mutter has predicted that the annual decline could be as much as 4.6 percent.) "Right now, you've got a perfect storm," Atorino says.

Yep, and it's a real blower. I'd rate it as a Force 10, heading pretty quickly toward a Force 12, which the Beaufort Scale warns can cause "considerable and widespread damage to structures." The day is rapidly drawing nearer when those structures are going to start to collapse.

But all the newspaper industry seems to be doing, still, is battening down. Layoffs, cutbacks, a secondary newspaper closing or two--those aren't going to get the Good Ship Newspaper out of the perfect storm.

What's needed is some radical thinking--a new course, to further torture the nautical metaphor. Merely slapping ads on front pages and section fronts just ain't gonna cut it. Nor will raising prices or launching interesting but timid new products.

All the links here are from just a day or two of Romenesko postings--a real indicator of the fear gripping the industry and, unfortunately, the unimaginative responses to it. As analyst Atorino says in another recent story, newspaper companies now "get it. They are all trying to play catch-up."

Getting it (finally!) is good. But catch-up is not enough, not anymore. What's needed is some real vision and leadership. I've ranted about this previously, but there still doesn't seem to be much progress. With a couple of small exceptions, everybody in the newspaper business still seems to be working off the same playbook. And the ship keeps getting battered by the perfect storm, taking on water, and in danger of sinking.

Where's the innovation? Where are the bold steps? Where's the industry leadership? Are senior newspaper managers--as some insiders and many outsiders whisper--too conservative, too scared, too naive, too hellbent on clinging to their fancy lifestyles and within-grasp pensions to really cut loose and take chances to save the news business for the people who will come after them? The future may not be in print, but that doesn't mean today's newspaper companies can't emerge as leaders in new media--if they move quickly and aggressively.

Take some chances! Try something new! Don't keep recycling the same tired ideas and tiny steps.

Here are a half dozen radical suggestions for change (with a few more here):

* Truly accept that the Web and mobile devices are your primary publishing platform, not the printing press. Stop paying lip service to that concept and do it. Leadership on this has to come from the very top, and it requires significant reorganization and reengineering of the newsroom and business side--not just designating an editor or reporter or two to write Web updates. And the Web is not just about words anymore. Make a solid commitment to telling stories (and selling ads) through video, audio and other multimedia.

* Get local. Very local. Does every paper really need to have the AP story on Iraq or Bush or Paris Hilton on Page One? That news is available all over the place. Bring your readers something they absolutely can't get anywhere else--news about what they care most about.

* Embrace user-generated content and bring readers into the conversation. They know an awful lot about what's going on in the world they live in, and want to share it. Tap into that knowledge. Embrace it. They won't bite. You've got bloggers in your community covering your community and local subjects better and more interestingly than your own reporters. (Oh yes they are.) Bring them into the tent, give them a wider forum, share with them a little revenue they can't get on their own.

* Understand that your readers are a community and give them social networking tools to help that community interact and flourish, under your banner. A little learning exercise: If you're not a member of Facebook, get there now, get some friends (and some widgets), and learn about the power of social media to connect people and to get them to do your marketing for you.

* Find ways to make your company essential to your advertisers' businesses by providing them with non-advertising services--inventory tracking, price searching, new connections to customers--that create new forms of revenue. Leverage your sales force by having them sell ads for other media. The old advertising-based business model is increasingly broken. Get to work replacing it.

* Stop printing the newspaper altogether and move entirely to the Web (Jon Fine of BusinessWeek has a good rant on this). What does your business model look like without presses, trucks and production workers? Or at least cut the newspaper to a minimal product for the aging audience that still wants print edition and make a true commitment to publishing online. (Outsourcing printing's not a bad start.)

Again: This is a perfect storm. Considerable and widespread damage to structures is at hand. Don't hunker down and hope to ride it out--there is no riding out this one. Get behind the wheel and steer a course to open, clear water and a new future. Or else you're going down with the ship.

Comments

[Christopher]

While I admire your vision, I find a number of these suggestions counter-intuitive and even dangerous--I think the simple fact is that the paper is a dying medium, period, and that nothing is going to save most regionals as their consumers discover that they can get more relevant and interesting local and national news elsewhere.

In other words, no institution as hidebound as a newspaper can possibly have the agility of the nascent startups that are going to replace them. Believe me, I speak from experience--the barriers to changing the internal cultures of print organizations are so high that it's often better to start from zero than to try to re-structure already-existing organizations that are wrapped around such fundamentally anti-web business models.

The best thing most papers can do right now is to take whatever spare capital they have and start buying up whatever web-based media are already covering what is ostensibly their beat... regional blogs and message boards that might not look like much now are a real bargain compared to how important they will be some day.

Anyway keep it up, love the blog!

[Metaprinter]

My report on the 2007 NAA Mid-Year Media Review shows how grim the outlook is for this gigantic industry. I heard no ingenious ideas, and it was all pretty much cut costs, make a better website blah blah blah. Bottom line is, no one has time to read a broadsheet. People would rather just come across news articles while shopping online, reading email, social networking, blogging, or searching the nebulous ether of the internet.

The few companies which are growing circulation are the NY Post, Daily News, USA Today, and Wall Street Journal. These are niche papers which fill a very specific need. Papers with no niche, no need fulfillment will be lost to the internet.

[Paul Gillin]

Mark: You're right on the money with your observations and your prescriptions. I just fear it's too late. Perhaps five years ago the moves you're suggesting would have saved some dailies, but now the wheels are coming off and it's too late to do anything but sell out or prepare for the worst.

For newspapers to compete with the emerging online business models, they must cut their costs by a minimum of 80%. Almost none can or will do that. We've seen this scenario play out in technology time and again. Businesses that are victims of structural shifts in their markets first deny the problem, then try half-heartedly to adapt to the new reality, then trim fat at the edges for a while and ultimately collapse with stunning speed. There's nothing newspapers can do to prevent the inevitable.

Excellent commentary. Thanks.

[Mark]

Great post, though I feel there is more to it than the suggestions you make. We must not allow creativity to be stifled by the fear of failure.