Monday, May 18, 2009

Newspapers Await Genius

If you haven't formulated your revolutionary and brilliant solution to publishers earning online, you're too late. It seems millions have realized this is the new perpetual-motion machine of economic opportunity, with the exception that this one is surely possible.

The waddling, ponderous publishers — papers, maggies and books alike — are too hidebound to figure this out themselves. They've had two decades of head start and are still looking at their cuticles while they stand still.

Unfortunately publishing has had a too long tradition of ensuring mediocrity through business, hiring and management. As a group, they are nepotistic as any. They are similarly prone to the stereotypical managers' trait of hiring friends, alumni from their schools and others without rational qualification. Who can know how many worthier reporters, editors, authors and columnists have been driven away by such blundering?

Less defensible, publishers have mired in business incompetence. Consider books, where the norm is to page huge royalties for a few famous or infamous authors. Otherwise, it's churn out tons of me-too novels and non-fiction with hopes that a few will become the messianic blockbuster profit source.

Then newspapers have been kind-of manufacturing, but without the complexities of storing expiring products, shipping basically on consignment, and waiting months for payment. They have been relative cash rich with wide profit margins contrasted to most manufacturers. Rather than use the cash flow for investments in efficiencies and insightful planning for future markets and customers, paper owners have sat on the cash, paid themselves huge packages, and piddled it away on sports teams or other diversions of the simple-minded rich.

Shocked. They are Shocked.

The most recent few decades have been far crueler and more exacting than many previous ones to publishers though. You would have to suspend reality to imagine that should have been surprised by changing technologies and times. That pesky radio was followed shortly by TV, each competing for readers or former readers — and the related copy purchases and advertising dollars.

Publishers had less than a century to acclimate to those when computers, the internet and the WWW crept up on them over a 40 year period. What a shock that has been! How could they ever have know these were coming?

Here and now in the 21st Century, publishers want the unified or even partial fix to:
  • Two new generations who are not interested in reading newspapers and books
  • Overpriced and barely legible geegaws like Kindle readers cutting into sales of tangible books
  • Ad revenues bled by TV, radio, cable TV, commercial internet sites and even blogs
  • Dwindling readership
  • Dual pressures to cut staff/expenses and need to add new and attractive content
The failure of publishers to anticipate or even react well to such problems (what sales sorts call opportunities) is not surprising. As an industry, they are not alone in letting the comfortable advantages they know so well blind them to relentless changes.

Having been a newspaper reporter and editor (and at comparable spots in magazines), I am more surprised that they seem incapable of reasoning and experimenting out of their troubles. Like herd animals, they head pell-mell in one direction. This time, the stampede is in the nebulous direction of profiting from a switch from paper to online.

Were it that simple. Consider a few efforts so far:
  • The New York Times sold its Select program to non-subscribers, granting full access to the contents, including archives. Subscribers got that thrown in with the cost of the delivery of paper. That failed when they didn't get enough takes to justify the trouble.
  • Various dailies have tried and failed or are failing at charging for online access to anything older than a week or so.
  • The Financial Times gives limited access to a few articles and then requires free registration. For full access, you must subscribe to the print edition or the electronic one. Its content is both entertaining and an aid to investing, so they are doing OK with this model.
  • Some newspapers are weighing breaking down their online offerings and charging for the most wanted sections, such as sports.
  • The Kindle reading (and speaking) system allows downloading of new books, and the newer version is big enough to work with the new choices of periodicals including newspapers. These are vastly overpriced gadgets for trendy sorts who are willing to, in effect, rent a book for $9.99. This is not the mass market that will save any level of publishing. In fact, authors and book publishers already scream it could just undercut profits.

Mega-Hope for Micro-Pay

Now the talk has become micro-payments from everyone. Various publications, including the NYT are plotting their version of pay per article or by time period. They don't know how much is too much to charge and what would be too little. They don't know the choke point of different target customers. They are lost in the digitized sea of Gen-Y folk and younger, but they are positive they somehow must get these non-readers to need to read their stuff.

All levels of publisher also don't know how hard the micro-payment technology will be to create and manage. What they really seem to want is for a few of their number to figure it out, implement a profitable system, and let them copy it. Again, this is embarrassing for someone who used to be in the business. Where are leadership and decisive action?

Meanwhile, newspapers and some magazines are amputating their own limbs. From a recent rant here, I see that we paper and online readers share a big problem as the publishers buy out or simply fire their reporters and editors. What the publishers say is necessary cost cutting to survive means they have less and less news and opinion to attract advertisers and readers. At the same time, there is less and less for links, search engine results, and stealing by cable, magazines and blogs.

Newspaper heads talk about ad revenue and circulation as though their product would remain vital with a quarter of the news staff. This is taking most of the chocolate chips out of the cookies and saying they are the same as ever.

Even if micro-payments or other new-money solutions work, the big problem remains of how to attract enough readers to justify advertising rates as well as earning from the delivery system. Particularly for the under 30 groups, the content has to be better than the free material out there, a lot better.

In a great report on converting to paid, A want to break free, by Andrew Edgecliffe-Johnson, the Financial Times burrows right down into what has to be done. They've been struggling and experimenting with this for seven years.

The FT piece cites a PricewaterhouseCoopers LLP report on the subject. The report author, David Lancefield, bluntly said there are limits to trying to break out and sell subsets of a paper's content. That content "can’t be just repackaged and repurposed. To tip people into the fee-paying world, it will have to be distinctive and new."

Look at today's newspapers to see how well they do distinctive and new. Typically, a paper's editors and owners think that means adding color to the comics or having the staff churn out their boring blog-like objects. That approach won't do it.

Part two of this will cover a bit of what publishers are hoping and looking for in terms of salvation.

Tags: , , , , ,

No comments: