don-n-abq's blog

Back in May 2008 I blogged ("Newspaper Obituary") a little about the dying newspaper business.

Well, I want to revisit the topic and flush out a business model or two that just might let newspapers continue in business.

Here is what I think needs to happen:

1) The Printing Presses:

• A) Disconnect the content side of the business from the printing side of the business. Let's take one city for example: Albuquerque (how convenient for me). You separate the printing portion of the paper (AJPCo.) from the content portion of the paper (Albuquerque Journal). You have your content company contract to have their paper printed with an outside contract printer. This allows you to bid out the printing (if possible and your city can support it), to lower costs. You also separate the costs from the content side externally (which is done now internally). This allows the printing company to go out and get new business (see also my segment on "Distribution" in a minute).
  

• B) Small state-of-the art digital print-on-demand presses. In small outlying communities, like Farmington, Clovis, Roswell, Deming, and Las Vegas, New Mexico, you have small digital presses that only print has needed. Stop over printing and shipping them by truck around the state. For example in Clovis you need more papers, you just go to the local press and ask for 100 more copies, please.

2) Distribution:

• There is not doubt that fuel costs will go up again at some point in the future. Fuel costs are going to be right up there with employee salaries and heath care as huge fixed costs. So, change the distribution model:

• A) Now that we have AJPCo. set up, instead of flying in papers via FedEx, or UPS, or whomever. You print all of those national papers printed elsewhere here instead. The content is emailed to the local printing company and then printed by one (or two) local printers. The Wall Street Journal, The Washington Post, Los Angeles Times, Investor's Business Daily, USA Today, etc., all have their papers printed by the local printer, no flying papers around the country. This makes the printing company a viable self-sustaining enterprise on its own, not tied to the life (or death) on the writers/editors/and other people in the content business.
  

• B) From "The Printing Presses: B" above. (In small outlying communities, like Farmington, Clovis, Roswell, Deming, and Las Vegas, New Mexico, you have small digital presses that only print has needed. Stop over printing and shipping them by truck around the state. So, say in Clovis you need more papers, you just go to the local press and ask for 100 more copies, please.)

• C) In the local market, you get one distributor for multiple papers. You can't have four different cars driving around the same neighborhoods delivering four different papers. Let's say you take a one-square mile of area: you have the Albuquerque Journal, The Wall Street Journal, USA Today, Investor's Business Daily, all being delivered in the same one-square mile area by FOUR different gas-guzzling rat-traps. You MUST change this model. You get ONE guy who delivers all of those publications in that area. That lowers costs, and that guy can now afford to buy a new muffler.
  

• (I know, you think that these ideas are not going to work because those publications are competing against each other. NEWS FLASH: The competition is not other newspapers; it is television, radio, magazines, the Internet, and fuel costs. Those are your real competitors.)

3) Vertical market approach:

• A) You have a content company (Albuquerque Journal) that owns a newspaper, a website, a radio station, and maybe a television station (or partners with one). In large cities paper A can partner with, or own, station A; and paper B can..., and so on. You have a radio station and TV station "push" people to the paper. You get someone interested in a one minute sound-byte and then get him or her wanting to know more. Something for Madison Avenue to help you with. (By the way sex sells.) You might even buy a billboard company and drive eyeballs that way? (You can't own a TV station in another city, that does not work, if you are going to do that, you might as well have two separate companies. They assets have to be together. The future will be ONE newsroom with multiple distribution channels: paper, magazine, TV, radio, billboard, Internet, mobile device, whatever. You can't afford to have multiple newsrooms, sorry.)
  

• B) The website, three-tier approach: You give the reader a 50 to 100-word story for free. You then give them two options: A 500 to 1000-word story for a dime (that is right, I said a ten cents; PayPal might be the answer here). No charging stupid rates like $4.99 for an article of 1000 words, this is not going to fly. But, you give the reader a third option, a 5000 to 10,000 word story (or a bundle of stories) for a $1.00. (These amounts can be tinkered with, but $5, or $4, or even $3, is too much money, we have to drive costs down to compete with other outlets here folks. I can go buy a good book off of eBay for $5.00, or to the library for free, why do I want to pay $5 for a newspaper article. Oh, I don't!)
  

• The vertical market approach could also have a side benefit: TRUST. Who do you trust? Going forward there will be a trust issue that will need to be resolved. How can you trust what a guy like me, sitting in his house, is saying? Well, for one thing it depends on what is being said. I am not saying anything that would lead you to distrust my message. But, some stories will, and some bloggers will be found out for who they really are. (That is another thing that credible newspapers can help to flush out; find suspect bloggers and flush them from the bushes.) So, if you have local anchor (TV or radio) that you really trust, and they tell you to find out more by going to tomorrow's paper or the newspaper website, you are more likely to trust that source. Let's use an example on a national scale: Let's say Tom Brokaw was doing a news story and then concluded by saying 'I'll have an in depth story in tomorrow's Wall Street Journal', you are more likely to have a "trust" factor to read that story (if it is a topic that you also find interesting), and you'll seek it out with more vigor than you would otherwise.
  

4) Revenue Model:

• You can't rely on one single revenue stream to stay in the newspaper business. You can't be "all advertising" revenue; you can't be "all subscription" revenue. You have use a multi-approach.
  

• A) Try to breakup your revenue stream with all three, roughly four components each (1/4 print readers, 1/4 print advertising, 1/4 Internet advertising, and 1/4 Internet readers). Additionally, try to give the advertiser a multi-bundle deal. Let's say you get Wal-Mart to run an ad, you want to sell them advertising for 1) the print newspaper, 2) the radio station, 3) the Internet, and 4) the television station. (If you don't own the TV station, you sell the bundle to the customer and then go to your partner station and give them a portion of your fee received to run the ad.
  

• B) You match a story with an advertiser. Let's say you are running a story on the high cost of clothing. Next to that story (whether in the paper or on TV, radio, or Internet) you have a ad for a discount clothing store. Additionally, let us use this example, the story runs on the radio; "costs for clothing going up...." After that you follow with an ad for the discount store, and you say: "For a coupon pick up a copy of Thursday's paper or go the newspapers website." Newspaper must find a way to tie all of these elements together. The consumer sees the short story on TV or hears it on the radio, wanting to know more you instruct them to go to either the paper or the Internet, you "drive" their eyes to your content.
  

• Working with advertisers, a user profile could be setup (users at The Wall Street Journal and many other papers have already created their account), and then certain advertisers could send netmoney, say $1.00 each, to that user that is most likely to like that product or service. Let's say you are the Albuquerque Journal: You try to get users to go to your website, and then through your website to purchase books, music, DVDs, whatever. So via their site you went to Hastings Entertainment website and bought a Arturo Sandoval CD. Columbia Records now puts a dollar in your netpay account that you can use at the Albuquerque Journal's website to buy expanded, in-depth, stories. Hastings can chip in another 25-cents. If you are on the Journal's site and you click on an ad for Pepsi, Pepsi can put $0.50 in your account. Now the advertisers don't pay dollar-for-dollar, but can buy for a discount. (There is an opportunity here for a company like VeriSign to really come in and put this together.)
  

• Classifieds: Classifieds used to be a good little niche revenue stream to newspapers before Craiglist came along. The newspapers need to ban together to form a consortium to either buyout Craiglist, or replace them as the top online classified stop. Once this is done, the consortium can split revenues of online advertising geographically and clean up the problems with Craiglist (or their version of said same), and tie the classifieds back into the local newspaper site, the user and their profile, and their credits. Let's say a user looks at an ad in the (free to leave an ad) classifieds for a home stereo: Columbia Records once again steps in and credits the users Journal account for 25-cents. Plus, if a seller creates an classified for a bedroom suite, then you put an ad in that listing for something that compliments the suite, say for sheets and pillows. So Wal-Mart has an ad for sheets, and if the user clicks on it, 25-cents into their Journal account. Additionally, you could have an ad in the classified for a Journal story about furniture movers, or how to clean furniture, or whatever.
  

• LOGIN: Why do sites not make the user login? Does it discourage so many people that it is not worth it? If that is so, that is going to really stand in the way of charging for content. But, let us say that you do get a user to login. Now, the user is viewing the free 100-word article. And there is an ad for Coke on the right. The ads themselves have to get smarter. I ignore most ads. But, if I could click on an ad to get free credits in my netpay account, to view richer content then I would. Let's try this: On the ad on the right for Coke, there is box that says, "Enter UPC code here for free netpay credits." That tells the advertiser that you are already a customer (unless you shoplifted it like Walter Isaacson's friend Thomas did with the ice on there way to go fishing) of their product. And if they took it a step further, like have each individual bottler put an additional code on the can. You know how some retailers ask you for that little extra three or four digit code on your credit card when you call to place an order? It would be like that, take a can, have UPC, then stamp a local code on the can near the UPC. Now the retailer knows where the can was distributed. So, they know you drink Coke and they know you live in Albuquerque. Now they can tailor their pitch for a local retailer who sells that product. Now we are getting smarter, marrying the advertising closer to the end user.
  

• Are there any newspapers making money right now? If so, what is their business model? Are there certain items that should ALWAYS be free? Charging to view obituaries seems cheesy to me. Charging to view employment ads should be free? If a guy needs a job he can't afford much? Certain notices about health, product recalls, child safety, criminals on the lose. Once again, give the reader 50-to-100 word free story, then if they feel they need more, they can share the costs.
  

5) Exclusive Content:

• Newspapers must continue to have exclusive content. Television and for the most part radio, and even most sites on the Internet only give one minute, or at the most 1000 words to a story. You must have that Woodward and Bernstein on your paper that goes the extra mile. Heck, hire someone to follow around political figures for the heck of it. (I have a feeling about the local weatherman...)
  

6) Multi-Correspondent:

• You can't afford to hire a correspondent in some far off place, like Sydney, Australia, and in every other major city in the world. So, you get someone already there, doing one thing, to work for you a part-time, on-the-side, job. Not their entire livelihood. Let's say you are the Albuquerque Journal. You contact a television reporter in Sydney, and say, 'submit us local stories and get paid by the word.' If you are a reporter in Sydney, you get a newspaper in the U.S., another one in Canada, the U.K., South Africa, a magazine. Get the idea. The same story can be sold by one reporter to half-a-dozen different outlets around the world (as long as they don't overlap), low costs for the newspaper, decent revenue stream for the reporter. This can tie in to the television station model. For instance you have a television anchor or reporter, they do a 100 or 200 word story for the TV, then have them flush it out and do a 1000 to 2000 word story for the paper. "If you want to know more, see my extended story in tomorrow's Times."

7) New Platforms:

• The newspapers in this country, or maybe even around the world, just get together now and find, help develop, and endorse a new platform of distribution. Whether that be Amazon's Kindle or some other device, they need to pick one, form a consortium and get behind it. A good number of customers are going to make the switch for environmental and convenience reasons, so get out in front of them. Bill Gates is still kicking himself over the Internet business model developed at Microsoft in the mid 1990s (not that the Justice Department would have let him develop anything better). But, because the newspaper industry is so disparate, antitrust issues will not be a problem.
  

Now, that is not to say that some newspapers shouldn't be allowed to wither and die on the vine, they should. A market like Albuquerque lost the The Albuquerque Tribune, and probably can't support two major papers. So, some should go away, no doubt about it.

Now I personally don't take any newspapers, 1) I don't like the black ink, 2) it makes me sneeze, allergic, and 3) I hate the waste, the landfills, and all those trees. I just can't stand them to pile up. I personally can not see me subscribing to any newspaper in the future, unless I win the lottery.

That being said, I don't want the newspaper business to go away. There is something so Americana about the paper. I really liked movies like His Girl Friday, All the President's Men, Absence of Malice, Penny Serenade, etc. There is something that I have really identified with since I was a kid, with the newspaper and the newspaper business. I even really liked that TV show, Lou Grant, too. There is a romance to the newspaper business that radio and television just don't have (or maybe they have their own romance, but it is different). There is something about that tactile feel of having a newspaper or book in your hand that you will never get off of the Internet. Just carrying the newspaper (not necessarily reading it) gives you a certain sensation you'll find nowhere else.

I can remember one of my favorite movies as a kid, The Man Who Shot Liberty Valance, and one of the things that I liked most was Dutton Peabody, esquire, of The Shinbone Star. Newspapers in America in the 1800s helped shape the nation and how it grew. There was no television, radio, or Internet then. To a small town popping up out in the West, a newspaper was as essential as a mercantile, a feed store, a bank, and a jail.

Newspapers are part of the interwoven fabric that is America. I can still remember on trips long ago, going to the hotel room and getting a newspaper from a city I had never been to before, and just having it with me, just carrying it around, it altered how I perceived being in a new and strange place. It is like now, when you go to a new city and see a restaurant that you recognize, you feel a little at home (although I go out of my way to look for unique local haunts that I can't find at home). Newspapers can help make the traveler feel that way.

What about all those books, stories, and films that would not have happened without the newspaper business? We probably wouldn't have Marley & Me (just as one example) if John Grogan had not written a column that included the active Labrador for over ten years.

Just like those old dusty towns like Shinbone, if newspapers mis-manage or don't adapt, they will just be a legend. And you know how that goes; "when the legend becomes...." But, they won't print the legend, they'll have to beam it, transmit it, and blog it.

So, let’s not the let the newspapers die away. Let find a business model that works.

(But, be warned: I will not pay a lot for content. The price points will be critical.)

Labels: Business, Newspapers, The Newspaper Business