I had lunch with Chris Tolles, CEO of Topix, yesterday. Among the many topics we discussed was the future of the newspaper industry. Tolles, whose company is essentially owned by newspapers, is ambivalent about the print side of the business. He’s quite opinionated and has some clear views on where the industry ought to go.
Separate from Tolles’ views, I think that I’ve seen the future of the industry and it’s not that pretty. Print usage will continue to decline and will at some point hit a bottom (not exactly clear when). However, in an ongoing effort to cut costs content creation will be severely curtailed (editors and reporters let go) and papers will do things like outsource core functions (bad idea).
There will be increasing emphasis on online content. Putting aside diversification efforts, such as Gannett’s move into mommy sites, etc., the newspaper sites will become a mix of wire service content (Reuters, AP), third party content (feeds/listings) and user-generated content. Original local reporting will be, as they say in the law, de minimis. Things like UI and features/functionality will become more critical as content becomes more “generic,” unless the UGC piece really takes off.
What will differentiate such sites from online-only competitors? And how will these sites generate revenue vs. competitors with a national-local footprint? The only answer for them will be ad networks (Yahoo, quadrantOne) and maybe some in-house ad sales for high-profile local advertisers (e.g., car dealers, restaurants). They will also increasingly adopt the “agency” role that YPs and others are playing vis-a-vis SMB advertisers (through partnership with companies such as WebVisible).
A smart version of all this with the right cost structure could work. But a bland or poorly executed version of this will just dig a deeper hole.
Other thoughts? Anyone materially disagree?
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Related: The Wall Street Journal reports on increasing in-fighting among newspapers on how to deal with AP (a coop) and the digital future:
With readers and advertisers migrating away from news on printed paper and toward cable TV and the Web, the AP is devoting more of its resources to producing content for other news outlets. These include the very Web portals that pose the greatest competition for newspapers, such as Yahoo and Google, which are now among the AP’s biggest customers.
For some editors, the AP’s strategy, coupled with its high prices, amounts to a betrayal at a time when the industry is under threat. In recent months such frustrations have sparked a bitter war of words.
June 26, 2008 at 4:41 pm
I find it interesting that most of the debate seems to focus on the medium rather than content. I think that newspapers need to define themselves as local content companies above all else. If they provide unique and compelling local content, then they will have an audience in any medium.
I’ve heard (someone correct me if I’m wrong) that community newspapers are holding up much better than the metros wrt circulation. My guess is because community newspapers tend to have much more unique local content and much less regurgitated national/international content.
Producing unique and compelling content, and distributing it broadly online via both destination sites and RSS feeds, is where they need to go imo. At this point, particularly in larger metro markets, print should probably become a by-product of the web vs the other way round.
June 26, 2008 at 6:18 pm
Re community newspapers; that’s my understanding as well. Agree that online newspapers need to broaden, but they need to have something unique (read: content) to offer or they’ll fail to be able to differentiate themselves and they won’t have anything to distribute.
June 26, 2008 at 6:45 pm
Yes, unique content, or at least a unique perspective, is key. Newspaper have lost their monopoly over distribution. Now it’s a level playing field for all content producers as evidenced by this remarkable chart: http://siteanalytics.compete.com/huffingtonpost.com+washingtonpost.com/?metric=uv
June 26, 2008 at 7:11 pm
To get to the point you are describing the newspaper would have to know specifically what makes them unique (casinos in AC, etc) and then do something they have a hard time doing- Audience Development and Consumer Awareness.
I believe the model of the future will look something like this-
- Strategic FREE Distribution
- A web focus that make the site a destination with heavy focus on RSS and SEO so they can deliver content anywhere the user wants and be found easily in search results.
- Luxury priced Home Delivery for those who really want it.
For community newspapers the ad networks will only be a drop in the bucket unless they can figure out a way to get more page views or deeper targeting (to drive up the cpm)
The agency approach along with a Machiavellian approach to ‘Self Service’ where you provide the local business with options to advertise with you, your competitor, or any medium that can deliver results. In this scenario the newspaper becomes the Hyperlocal agency and makes money off the placement, etc.
June 27, 2008 at 12:19 am
Hi Stan,
Not sure what you mean by unique = casinos in AC.
By unique, I mean either:
1) Coverage of hyperlocal news/events that other publisher’s wouldn’t bother cobering; or
2) A unique perspective on current news/events (eg Walt Mossberg’s coverage of new consumer tech products, or Kara Swisher’s coverage of Silicon Valley.)
In either case, there will be an audience that will seek out this unique content regardless of medium.
June 27, 2008 at 12:22 am
Columnists/unique voices will mitigate the loss of a large editorial staff to some degree, consistent with your “unique content” observation.
June 27, 2008 at 7:45 am
Malcolm,
I agree with you on the hyperlocal news and events.
What I meant by unique = Casinos in AC is that the newspaper needs to understand what makes them different or the reduced staffing without focus will lead to even larger issues
Columnists,bloggers, community publishers, and local subject matter experts will help bring new content and perspectives.
June 27, 2008 at 3:54 pm
Where does AP and other wire content come from? Newspaper reporters. If Google/Yahoo etc. continue to get AP content and not share in the cost of collecting that content, then newspapers will continue to fail and they will lose their content source. It’s a broken model that won’t get fixed as long as the AP gives away its content for virtually nothing.
June 27, 2008 at 4:02 pm
Google and others pay AP but that doesn’t address your larger point. Eric Schmidt has said:
“It’s a huge moral imperative to help here,” Schmidt said during a question-and-answer session at an event hosted in San Francisco by Syracuse University’s Newhouse School of Public Communications.
Google and Yahoo are both working to boost newspapers in different ways. But, unfortunately, many newspapers have effectively lost control of their destinies — and now must rely on third party help — by not acting quickly enough.
June 27, 2008 at 5:36 pm
Greg - Why haven’t we seen more M&A between directories and newspapers? Or investment in directories by newspapers? Hearst and Gannett own both, but not much beyond that. I’ve always thought newspapers are in the ideal position to sell local yellow page advertisers. Yellow page publishers, on the other hand, could not produce the content to publish a newspaper. Will we also see newspapers running ads on a performance basis?
June 27, 2008 at 6:27 pm
It’s very hard to say (beyond historic rivalries and different industries) why there hasn’t been more M&A. I would suspect that economic conditions may drive some of that activity in the future, especially as many YP publishers are stand-alone companies divorced from their telco parents. But neither the YPs nor newspapers have tons of extra money right now.
Re performance-based newspaper ads. I think the answer in selected cases is yes.
June 27, 2008 at 9:02 pm
Rich,
I agree that M&A between newspapers and directories in common markets makes sense. But I think the bigger problem is aggregation across markets rather than mediums.
The problem for newspapers is that they have regional footprints while Google et al have national/global reach. As an advertisers, I can buy my category across every market in the country through Google. Not so with the New York Times or the LA Times.
It’s been said many times that the newspapers need to merge their ad networks and provide advertisers (nationals + SMBs) with a single buy that reaches all newspaper websites nationwide. Their strength is in their aggregated reach. Until they aggregate, they’ll be playing defense to Google etc.
Has anyone ever done the math on the combined traffic across say the top 100 newspaper websites? By definition, the majority of those pageviews would convert well with local ads. Move down the list to the top 100-500 and almost every pageview is probably being generated by someone local to the newspapers market.
I know it’s easier said than done, but we all know that failure to crack this nut means a bleak future for the newspaper industry.
June 28, 2008 at 1:18 pm
Here’s the newspaper engagement and traffic data at a high level:
http://www.naa.org/PressCenter/SearchPressReleases/2008/NEWSPAPER-WEB-SITES-ATTRACT-RECORD-AUDIENCES-IN-FIRST-QUARTER.aspx
June 28, 2008 at 5:57 pm
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July 8, 2008 at 2:47 pm
I think a big factor in growth is that the format must be compatible and safe and viewable. Not having popups lets viewers feel welcomed. Not requiring people to register allows viewers to visit without the terror of exposing their email, birthday, physical address, bank account, credit cards, social security or other vulnerabilities. Simple text html and images are much easier to view than videos that require codecs or other special crap that contaminates computers. Simple pages without javascript load quickly. For advertisers, the ads should be in the simple html, jpg or gifs that display quickly so they will be seen right along with the content, never being left blank or causing the content transfer to stall only for the viewer to see a blank page if they bother to wait.