Monday, December 29, 2008

Blablabla about Newspapers

When established institutions have to play by Google-Mart rules it generates lots of blablabla.

Take newspapers for example. The public discourse is all abuzz with "saving newspapers." Since the public discourse is mostly controlled by journalist types, the blabla focuses on the "news" and the threat to democracy if newspapers disappear.

Give me a break.

Most people never bought newspapers for the news. Even in the latest surveys, 70% of Americans say they get their "news" from TV. Most people bought newspapers for the sports or the classifieds or the weather or the cartoons or the ads from local stores. Every once in a while there were stories that masses of people cared about; national elections, wars or financial meltdowns. But mostly, most people are too busy living their lives to focus on "general news."

Pre Google-Mart, newspapers lived in protected markets and captured 20% gross profits. But then Craiglist took away the classifieds. That was 50% of the advertising revenue. Then came the internet. This year the internet overtook newspapers as the source of "news."

Meanwhile, newspapers are in the logistic business. The business model is aggregating "readers" and selling them to advertisers. Same business model as TV. Same business model as many websites. But that's not the business model for amazon, ebay or wall-mart. They were the three most visited websites this Christmas season. Those websites are in the logisitics business. They make it easier to buy stuff. The business model is to get people to buy more stuff.

Most of the blabla I've seen, heard and read is about doing better news so that a news organization can aggregate eyeballs. Nowadays, the talk is about well defined groups of eyeballs with special interests, that can be sold at higher CPMS to advertisers. The problem with this approach is that large brands are still having a hard time figuring out how to scale advertising to niche markets. The other problem is that there are many competing ways to speak to niche audiences.

So . . . instead of closing print plants and laying off printers, newspapers might be alot better off trying to figure out ways to outsource the finding and writing about the news and concentrate on their unique defensible advantage: printing and delivery. That's a business with high barriers of entry, a long manufacturing tail with every improving ways to print and deliver.

Consider that Rupert Murdoch is building a state of the art newspaper manufacturing facility in the U.K.

Here's one I found this morning. The link is in Dr. Druck's Shared Items in the side bar.
Parade added 71 new newspaper partners, with a circulation of 2.42 million, to its national distribution. The addition of scores of new newspapers--most of them local dailies serving small and mid-sized cities--brings Parade's total circulation to 33 million, with distribution via 470 newspapers nationwide. Parade claims to reach 73 million readers every week.

Doing a bit of competitive boasting, Parade noted that 53 of the 71 new newspaper partners had switched from USA Weekend, another leading newspaper-distributed magazine. Owned by Conde Nast, Parade added newspaper partners including the Connecticut Post, based in Bridgeport; the Journal Star of Lincoln, Nebraska; Iowa's Sioux City Journal; North Dakota's Bismarck Tribune; and the Napa Valley Register.

The scarcity of big-city papers in the list of new partners isn't a drawback--quite the opposite. Unlike most big metro and regional dailies, which have seen circulation and ad revenue plummet over the last couple of years, newspapers serving towns and smaller cities are faring surprisingly well in both arenas.

It seems that Parade and "newspapers serving towns and smaller cities" are still in the logistics business. They haven't drunk their own kool-aid about newspapers being the important source of news.

Journalists, on the other hand, are gathering around Cloud based functionalities to find and deliver "news." Consider, the Huffington Post, Open, the hundreds of local blogs and social media sites around the country. If newspapers learn how to outsource the journalism and focus on the core values, they will probably do just fine.

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