One of MaxPreps‘ key syndication partners is the newspaper, so I follow the industry pretty closely. But beyond my professional interest, I have a lot of personal respect for newspapers; from high school sports to local news coverage, newspapers have documented the lives and stories of people in their local communities for many, many years. My older sister used to work at our local newspaper and, when I was a senior, she created a scrap book of every story, picture, boxscore and interview of my high school football career. And in every story and every picture, I have a great memory that I can easily look back on.
Newspapers create these little snapshots of life…every day, in every community.
However, newspapers are obviously facing a very difficult challenge now. Over the past year, I’ve become desensitized to the news of decreasing revenue, layoffs/cuts, lowered circulation and restructurings; another earnings announcement showing year-over-year revenues down 15% no longer provides any shock value to me. The New York Times had an article earlier in the month (which Marc Andreessen so aptly linked to as “The Titanic reports on the iceberg”) that sums up the challenges facing newspapers:
In just the last few weeks, The San Diego Union-Tribune eliminated more than 100 jobs, one-tenth of its work force. The Chicago Sun-Times began a major round of newsroom layoffs, then put itself up for sale, and publishers in Minneapolis and Philadelphia warned that tough economics could force cuts there.
Not long ago, news like that would have drawn much commentary and hand-wringing in the newspaper business, but in the last few months, reductions have become so routine that they barely make a ripple outside each paper’s hometown. Since mid-2007, major downsizing — often coupled with grim financial reports — has been imposed at The San Francisco Chronicle, The Seattle Times, The San Jose Mercury News, USA Today and many others.
The talk of newspapers’ demise is older than some of the reporters who write about it, but what is happening now is something new, something more serious than anyone has experienced in generations. Last year started badly and ended worse, with shrinking profits and tumbling stock prices, and 2008 is shaping up as more of the same, prompting louder talk about a dark turning point.
The newspaper industry is no doubt at a turning point and is facing a dramatic shift in control, technology and user behavior.
In response to these shifts, newspapers have re-purposed their in-print stories online, they’ve added some “social” tools on their web sites, and have worked together to launch some competitive initiatives to new media (such as the recent ad network launched by four biggies in the industry). Certainly these joint efforts may help them gain some scale, cut some overhead and have some near-term press releases to comfort investors, but, as Andreessen points out, this has been tried in the past and failed.
The reality is the industry is in a bit of a catch-22. They have these strong brands that have been built up over the past 30-100+ years. And their core readers have developed a certain expectation of what those brands stand for. Plus, newspapers are still cash cows. Sure, the writing may be on the wall in the long-term, but how do you make any real, dramatic change to a strong brand, with a large core user base, that is making you a ton of money?
Going private is step #1. Right now, newspapers face quarterly (daily!) pressure from the public markets and are trying to come up with gimmicky near-term solutions to comfort their investors. In this situation, nothing is being done to create long term value. If a private company, a newspaper can continue to deliver its current, highly profitable product AND begin focusing on a long term strategy that will enable the newspapers to continue being a leading source for local news and information.
But what is the long-term solution for these established brands? I don’t think there is a single answer, but I’m a big fan of local hyper-local community building.
The newspaper has long been an important player in the local community. If I’m Gannett or McClatchy, I take my focus away from national news (people go to CNN for current events, ESPN for pro and college sports news, Digg for top stories per the users, and Google for immediate information access…not the local paper or its respective web site) and start spending my time figuring out inexpensive ways to better serve my local audience with local content.
I’d create (read as “buy”) a centralized platform/technology/database that I can aggregate/collect geo-tagged data from users, bloggers, and other sources. I then leverage my large network of leading local newspapers, which already has strong brands within the respective local communities, to drive users and credibility. This creates a much better cost structure for the “paper”, and actually helps them better serve their core audience: the local community.
Imagine if Hearst acquired Outside.in (or EveryBlock), Yelp and Fatdoor.* Suddenly you have geographically filtered news/blog aggregation and local reviews, both feeding geo-tagged news and information into a localized social network for actual, physical communities. In this scenario, the SF Chronicle (owned by Hearst) is now serving its local audience and connecting neighbors together (as it has done for nearly 150 years), but at a cost structure of a user-generated Internet company vs. a traditional news and publishing company.
While this is just one option, an option with many flaws I’m sure, what I really like about it is that, while it is a dramatic move with respect to a corp dev strategy, it is actually very in-line with the primary value newspapers have provided to their readers for many, many years: little snapshots of life…every day, in every community.
* These start-ups are all very early, they somewhat overlap, and I haven’t spent much time digging too deep into any of them…so please treat them as examples of a hyper-local community building strategy.
