Is your market soft, or has it shifted? - Newspaper failures
The Rocky Mountain News has folded up shop. After 150 years, no more newspaper in Denver, CO. (read article here). This is newsworthy because of the size of Denver, but the trend has been obvious. The newspaper's owner (Scripps) closed the Albuquerque Tribune and Cincinnati Post last year. And this is just the beginning. Hearst has already said it may well have to close the San Francisco Chronicle within weeks. Tribune Company, parent of The Chicago Tribune and Los Angeles Times has filed for bankruptcy, as has Philadelphia Newspapers which publishes the Philadelphia Inquirer and Philadelphia Daily Journal. The American Society of Newspaper Editors has cancelled its annual convention for 2009 (read article here.)
Just as I predicted in this blog months ago, when Sam Zell leveraged up Tribune in his buyout, the odds of any particular newspaper surviving is not very good. It was 3 years ago when I was talking to the CFO at the LATimes about the future of newspapers. He felt sure that cost cutting would get the company through "a tough stretch" and then things would get better. When I asked him if he was planning to increase spending in LATimes.com or other on-line media to make sure his projection was true - he asked me what the .com had to do with the paper. He felt the paper would soon recover. Even though there were no indicators that subscriptions would reverse trend and start growing, and even though advertisers were literally saying they never intended to return on-line ad spending back to newspapers, he felt sure the paper would succeed. When I asked why, he said "if we don't report the news, who will? Bloggers??????" and with that exasperation he reinforced in his own mind that there was no option to a successful city newspaper so no need for further discussion. He could not imagine a "democratized" newsworld without editors and publishers that controlled content and writers that were limited by that control.
February 6 I gave a speech in Chicago about growth strategies in this economy. One attendee asked me "what newspapers do you read?" As I formulated my answer, my discussion with the old LATimes CFO came to mind. "I don't read newspapers any more" I had to admit. Good thing I wasn't running for vice-president! But I realized that I'd quit reading newspapers and now picked up most of my alerts from bloggers! I am signed up to various web sites, including blogs, which send me ticklers all day long and aid my web searching for news. I get more information, faster today than ever before - and reading a newspaper seems like such a waste of time! And if that's my behavior, at age 50, I'm a joke compared to people under 30 who can use the web 10x faster than me with their better tool use.
The newspapers are going the way of magazines. That is clear. When we all started watching TV, LOOK, LIFE and The Saturday Evening Post lost meaning. Not all magazines disappeared, but the general purpose ones did. Now, even those have little value. In a connected, 24x7 world newspapers simply quit making sense a decade ago. It just took longer for everyone to realize it. While the newspapers would like to blame the recession for their failure, that's simply not true. The world shifted and they became obsolete - an anachronism. People today consume more news than at any time in history - including pre-recession years like 2007. The recession has not diminished the demand for news or journalism. And advertisers are reaching out for customers just like before. But neither readers nor advertisers are going to newspapers. The action is now all on the web - which continues growing pages at double digit rates every quarter!
So where will you get your news? If you read this blog, you likely already get most news from the web. And others will also do so. Increasingly, editors that have strong opinions (be they conservative or liberal) will have less influence on what is reported. Those who can find and report the news will themselves determine what's out there to be found - and they will capture that value themselves. To use 1990s language, Bloggers are "disintermediating" publishers. And with Google able to push ads to their sites (be they on computers or handhelds), these journalists will be able to capture the ad value themselves. If you want to see the new aggregator of the future, go to www.HuffingtonPost.com. Or www.Marketwatch.com for business info. By ignoring traditional printing and distribution, they can produce multiples of the news content of old aggregators, invest in technology to keep it updated in real time 24x7.
While people are bemoaning the decline of newspapers, take heart in the benefits. How much less newsprint will be created, reducing the demand for pulp from trees? How much less recycling of old newsprint will be required? What benefits to the ecology will come? How much more access will you have to find out all sides of various issues - rather than the point of view taken by the local newspaper publisher who mostly dictated what you used to hear about an issue? How much better educated will you be? Why, given the benefits of on-line news, would anyone want to go back to newspapers?
Bemoaning the loss of newspapers is like bemoaning the decline in rail travel - it may have romantic remembrances of a previous time, but who would ever want to give up their car and wait on trains again? As you look at YOUR business - do you blame the recession for troubles when in fact there's been a market shift? Have things "softened in the short-term," or have customers moved on to seeking new solutions that better fit their needs? It's easy to act like the LATimes CFO and project a return to old market conditions. But will that really happen? Or has the market you're in shifted, leaving you with a weak future? Will you act like Sam Zell and "double down" on a business that the market is shifting away from?
In today's economy, we can all too easily let hope for a return to the good old days keep us from using more realistic explanations. If so, we can end up like those who made kerosene for lamps (expecting electricity to be too hard to install), coal for heating, and passenger cars for trains. Be careful how easily you may think that tomorrow will look like yesterday - because most of the time it won't.