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. Those who are still in the business are licking their wounds and wondering how they are going to stay afloat. The future of print media looks extremely grim.
I have no doubt that print media executives and owners feel the same way. A new business model for print media is badly needed.
E-media equals instant news. Maybe it doesn’t mean in-depth news, but it certainly means current news. There’s nothing that print media can do to overcome this obvious obstacle. E-media also means open source media. Bloggers are contributing lots of content to e-media. They are on the scene with their video-equipped cell phones 24/7 and are ready to report, upload and send the latest news to the media of their choice. Kind of hard to beat!
E-media have also, to a large extent, figured out the advertising model that is bringing a steady stream of revenue to their companies via advertising income. This model is here to stay and is delivering constantly increasing revenue to e-media companies.
A Print Media Business Model
Now that we have seen some of the strengths of e-media, we have to figure out what print media can do to quickly change its business model in order to compete in this extremely trying environment. The operative phrase is “quickly change its business model,” because there is no time to waste.
First of all, we are all quite aware that print media are now publishing online versions of their papers and magazines. This obviously is a necessity. But I’ve been reading of late that they are now considering charging readers to view certain articles. I strongly believe that it’s too late for a publication that has already been offering free content to change to fee-based content. The horse is long out of the barn and won’t be back.
What print media has to do is to first study the business models of successful e-media companies like The Huffington Post. Such companies have found a way to survive and thrive in the very competitive e-media arena. Once print media comes up with a workable model, they then have to figure out what they are going to do with their print-media publications.
A New Path for Print Media
Besides being costly to produce (e.g., cost of paper, ink and delivery), print media is not current. This hurdle cannot be overcome, but it can be used to print media’s advantage. To substantially reduce costs, print media must seriously consider publishing on a weekly basis. The days of the morning newspaper are either gone, or they are going fast.
Publishing on a weekly basis can work because it has worked well for magazines like Newsweek, Time and others. Newspapers can get away with publishing weekly if they differentiate themselves from the weekly magazines. They could cover the “current” news in depth and in a different fashion from the weekly magazines. Such in-depth coverage is rarely seen in e-media.
With a weekly publication, venerable companies such as The New York Times could continue their award-winning coverage but “deliver” it differently — on a weekly basis with a totally different approach to the news. They could include in their weekly publications, the customary advertisements and could supplement them by a generous amount of inserts containing information on upcoming sales at retailers as well as all kinds of promotional offers, including coupons.
The New York Times would still have their online edition, but it would have an entirely different business model than the print edition. By taking such a path, the Times could survive both in print and in e-media form.
Theodore F. di Stefano is a founder and managing partner at Capital Source Partners, which provides a wide range of investment banking services to the small and medium-sized business. He is also a frequent speaker to business groups on financial and corporate governance matters. He can be contacted at [email protected].
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.
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
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.
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 AM ong 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.
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.