While most publications seem willing to do just about anything to bridge the gap between their legacy print businesses and emerging internet models, it strikes me that there’s a contingent of publishers – mostly small to mid-size local and regional newspapers – who seem destined to ride their proverbial print horses into the sunset and disappear for good. For many, it’s a fate that may transpire despite best efforts to avoid it; the result of aging newsrooms, lack of resources, and inability to move quickly enough. But for a subset of these publications, it may be a conscious choice that reflects and unwillingness to upend a business model that’s served them well for a long time – in some cases, a century or more.

This week, Google issued a response to the FTC’s Discussion Draft on the future or journalism in no uncertain terms. Its language paints perhaps the most realistic view of the print publishing industry to date:

“The large profit margins newspapers enjoyed in the past were built on an artificial scarcity: Limited choice for advertisers as well as readers. With the Internet, that scarcity has been taken away and replaced by abundance. No policy proposal will be able to restore newspaper revenues to what they were before the emergence of online news. It is not a question of analog dollars versus digital dimes, but rather a realistic assessment of how to make money in a world of abundant competitors and consumer choice.”

This statement, which I believe to be wholly correct, is the truth that most of the news industry has been running from as their revenue graphs dive swiftly toward the x-axis. But it does shed some light on why some smaller publishers might be willing to stick by their businesses to the bitter end. As Google’s statement hints, what we are witnessing is not an incremental shift in the publishing industry but the emergence of an entirely new model for content creation and distribution. It’s not, as many publishers seem to think, a matter of turning the knobs and twisting the dials until the money starts pouring in the door again. It’s about fundamentally re-thinking the way readers and publishers interact in the digital world. In order for existing institutions to survive, they will have to undergo a metamorphosis on a massive scale. All aspects of the business – from newsroom makeup to management strategies to distribution channels to ad sales – need to be disrupted, re-organized, and cleaned out. Excess infrastructure needs to be dismantled and discarded. Ingrained policies and procedures need to be uprooted, new skills need to be acquired.

All of this represents an investment that can be daunting for many regional publications, especially when the outcome is largely an unknown. Even if the funds to manage the transition exist, it’s likely that the revenue picture will continue to get worse before it gets better, and there are a whole host of questions that need to be answered. When do abandon the print version? Who do we need to hire and where can we find them? How should we change our newsroom? Who should we let go? And most importantly, after we do all this, how will we make money? It’s a terrifying and crippling prospect for most small newspapers, even those with the support of larger media conglomerates like Gannet and McClatchy. And it makes it easier to see why some might just be willing to stick to their guns until the fighting overwhelms them.

At the end of the day, I see three main approaches for small to mid-sized regional newspapers:

• 

  Play It Down the Middle

  The Fairway Approach – Some small newspapers make a valiant attempt to move their products online. They shift resources toward web editors and designers, start producing small amounts multimedia content, and strive to maximize online ad revenue with standard techniques like pagination and SEO. They run into competition from independent local bloggers and local content conglomerates like Patch, Everyblock, Examiner.com and others. Print costs continue to increase. Print circulation, and consequentially ad revenue, continues to decrease. Online circulation increases for a period, then stagnates. Balance sheets tilt toward the red. The newsroom shrinks as long-time reporters are asked to take pay cuts and furloughs. Print revenue continues to decline, and eventually the presses are closed. Local blogs grow in popularity and start banding together to share content and resources. And then one day, probably a Friday, the publisher enters the newsroom and delivers the final blow. The paper is dead. This is the worst case scenario. It optimizes for nothing, and while being the least risky option certainly produces the least reward. The end result is a shutdown with the most possible collateral damage.

• 

  Stay and Fight

  The Alamo Strategy – Others of newspapers in the same category decide to stick to their guns. They maintain their focus on creating high-quality, investigative journalism for print publication. They maintain an online version of the paper but do little to improve it. They raise the subscription and newsstand price of the paper. They hire additional ad sales staff, perhaps at the expense of a newsroom position. Print revenue and circulation decline, but at a slow and steady rate. The publisher makes cost cuts, most likely reducing wages across the board and cutting all extraneous expenses. Eventually, subscription services like LexisNexis and Bloomberg are cancelled. Content quality suffers. Readership and circulation declines accelerate. Revenue follows. More staff cuts. More circulation declines. Local blogs gain more ground, and the downward spiral continues. And then one day, the publisher enters the newsroom and says, valiantly, ‘It’s over. This is bad, but it was expected. People are let go gracefully. Revenues decline smoothly, and the final blow dealt with more dignity.

• 

  Make Your Own Way

  The Trailblazer Method - A small minority reacts swiftly. The presses are shut, their assets sold. Sales people and editors are let go. Reporters are pressed into hard service, producing more content in shorter periods of time. Debt is taken on to manage the transition. New blood is recruited and installed. Web developers are brought in-house. Revenues drop alarmingly but stabilize quickly. Local blogs are approached, embraced, and where possible, brought into the fold. Social media is embraced as the new distribution stream. Additional revenue sources, including premium content subscriptions, memberships with extended benefits, and paid content placements are attempted. Revenues begin to climb. More blogs are brought into the fold. Video content becomes a staple. Revenues rise to cover costs, and then exceed them. Risks taken early pay off.

The third path is the toughest one to take and few seem really willing to commit. It’s risky. It might not work, and it requires an initial sacrifice that’s tough to swallow. But someone out there is doing these things, and these publications choose to ignore these entities at their own peril. As the Google document goes on to point out:

“The ultimate solutions that will result in a new online equilibrium for the news industry …must be driven by the industry itself, working with technology providers like Google and experimenting with its customers to develop new and innovative ways of delivering the news online.”

It’s a tough world out there for newspapers, and there are lots of important decisions that need to be made – quickly – if they’re going to survive.

Tags: innovation, news, newspapers

This entry was posted on Friday, July 23rd, 2010 at 5:18 pm and is filed under Publishers. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.