Paradigm Shift in Daily Newspapers

By: Prof. Shlomo Maital

Here is a headline from February 27: 

Personally, I hate headlines about a 150-year-old Colorado newspaper going bust and closing, throwing journalists and other workers into unemployment.

So, I am appointing myself Chief Copy Editor. Here is my new headline.

Now, how can I change reality to make the headline true?

Quite simple. 

In the sharp downturn, which saw the U.S. economy contract by 6.2% in the last quarter of 2008, advertising revenues have plummeted. Newspapers and magazines everywhere are losing fortunes, and some are closing their doors.

To keep Rocky Mountain News alive, we must slash its costs by half. Indeed, many businesses now face that same huge challenge.

How in the world can that be done?

By 'printing' a paperless paper. Deliver the paper every morning, at 4 a.m., to each subscriber, electronically, downloaded to an electronic book (say, Amazon's Kindle 2) provided free of charge by the newspaper, in return for a year's subscription. Every newspaper in the world that is printed on paper can instantly cut its costs in half, and save the world's forests, by becoming paperless and digital. Even when Kindle 2 is priced at $399, Rocky Mountain News could still make money if it gave them away in return for a multi-year subscription. A supplementary business could be selling downloaded books, music and movies. In time this business could grow far bigger than the newspaper.

Why, then, don't papers do it? 

They will. The global crisis may not always be the direct cause of paradigm shifts in industry, but it is always a force multiplier that accelerates the speed at which such shifts take place. The necessity to slash costs radically as revenues dive, will force newspapers to abandon paper. And in every single industry, there will be equally radical shifts in business designs. 

What is the paradigm shift for your industry? And what actions are you taking to prepare for, and implement it?

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Egilogue:

Subscribers to American newspapers fell from 60 million to 50 million in the past decade -- but subscribers to Internet editions rose from about zero to 75 million! The newspaper industry faces bankruptcy -- even though it has more clients, more subscribers! Why? Because like the music industry, it has failed to adapt to the changing times. It treated the Internet not as savior but as fierce foe. What a tragedy. And what a dumb mistake.

But a small handful of newspaper managers seem to see the light. Not far from Colorado, in the state of Washington is a newspaper that understands the paradigm shift. It is the Seattle Post-Intelligencer. Here is what the International Herald Tribune wrote on March 17:

                            Seattle newspaper drops the paper?
                            By William Yardley and Richard Pérez Peña
                               
Tuesday, March 17, 2009

SEATTLE: The Seattle Post-Intelligencer planned to produce its last printed edition Tuesday and become an Internet-only news source, Hearst Corp. said, making it by far the largest American newspaper to take that leap. But The P-I, as it is called, will resemble a local Huffington Post more than a traditional newspaper, with a news staff of about 20 people rather than the 165 it had, and a site with mostly commentary, advice and links to other news sites, along with some original reporting. Other newspapers have closed and many more are threatened. But the transition to an all-digital product for The P-I, announced Monday, will be especially closely watched in an industry that is fast losing revenue and is casting around for a new economic model.

And the way that The P-I is changing might hint at a path for future newspaper closings. To some extent, in shifting its business model, it will enter a new realm of competition. It will compete not just with the print-and-ink Times, but also with an established local news Web site, Crosscut.com, a much smaller nonprofit organization that focuses on the Northwest. The move shows how some newspapers, in the future, may not vanish but move the battle from print to the digital arena.

Had Hearst not made this decision, the survival of The Times was unlikely, said Jill Mackie, vice president for public affairs at The Times.

The P-I lost $14 million in 2008. Hearst announced in January that if it could not find a buyer, it would cease printing. Few people expected a buyer to emerge. Hearst hopes to capitalize on the healthy Web traffic The P-I already has about 1.8 million unique visitors a month, according to Nielsen Online.

It usually outranks the online readership of The Times, despite a smaller print circulation: 118,000 on weekdays last year, compared with 199,000 for The Times.