If you are reading this you have an interest in the future of the newspaper industry. This was written to document my experience and thoughts about a drastically changing industry and to hopefully stimulate serious discussion in finding solutions for our most trusted source of news. My entire career has been in the print media industry: from my first agency job working in yellow pages to my latest role as Associate Media Director managing the budget for a major newspaper advertiser. I have never worked for a newspaper, nor have I worked for a newspaper advertiser, however for over eight years I purchased over one billion dollars in newspaper media, from the largest major dailies to small market weeklies. I was caught between the excuses of declining circulation from publishers and frustration from the advertisers over a once stable media currently portrayed to be in chaos bestinau.
I witnessed newspapers caught off guard with the viral growth of online news consumption and their inability to take advantage of the phenomenon. I have been in some brutal multi-million dollar contract negotiations that rarely ended well for the newspaper.
While it was my job to secure the lowest possible rates while advertisers were slashing their print budgets, I knew the cuts and harsh negotiations were killing the industry that provided me with work. I was instructed to negotiate agreements that I felt truly benefited neither advertiser nor publisher. I have heard every publisher new idea from changing print design layouts to renting e-reader devices to sell content and I have yet to hear a game-changer.
While I am probably considered young to the newspaper industry, I do have traditional reading habits. I am a huge fan of fiction and read as much as time allows. The Kindle and other e-readers are brilliant devices offering brilliant distribution models, but I still do not own one. I love the feel of a book in my hands and truly enjoy shelving another completed edition to the collection. Will I eventually buy a Kindle? Probably. But I will hold out as long as I can. And magazines offer an experience that cannot be duplicated on a website. I only read a handful of magazines that fulfill my top interests; sports, science and current affairs.
A website cannot offer a sense of completion from flipping from cover to cover and I actually enjoy looking at print ads in magazines (however, I am an ad geek). When it comes to hard daily news I trust only one source…newspapers. But I don’t read them in print. I prefer consuming my news from discussion boards and reading headlines from newspaper websites across the nation. If I want to discuss the gubernatorial race in Illinois, I want to read about it from the local newspaper, not from a cable news show and not from an online blogger. But the only way to conveniently read this valuable source of content is from their website…for free. I am a prime target for newspapers and they are struggling to take advantage of charging me for their content and lose out on capturing my readership for their advertisers.
Is there a business model that holds the answer? Yes. Do I know what that is? I may. And this manuscript will explain how my experience, ideas of innovation and passion for trustworthy, reliable news has driven my vision for finding a solution.
What Went Wrong? A quick recap of the last decade
Caught Off Guard
The basic cause of the current struggles of the industry is pretty much agreed upon by the experts, so I will keep my experience to a quick snapshot. I recently heard a fantastic analogy for the newspaper industry from one of my closest friends who has worked in newspapers for almost 30 years. He compared newspaper publishing companies to the Ents from J.R.R Tolkien’s tree-like characters from his Lord of the Rings stories. They are old, powerful and made of wood (paper) and it takes them a long time to make a decision, but when they do, they do it with full force. And with that philosophy often results in a high-risk, high-reward scenario.
When I first started buying newspaper media, website advertising wasn’t even an option. Most newspapers were not enthusiastic about building a website, but they all eventually caved out of necessity.
Every reputable business had a website to showcase their product. Unfortunately, that product for newspapers was the content they put on their websites. And those that didn’t charge consumers to read (which was all of them except the Wall Street Journal), were in fact giving their product away for free.
They didn’t believe (or want to believe) that people would prefer to read their news on the internet over the printed version. They were correct…to a point. Most people do prefer to read newspaper and magazine print editions, however when given the choice of a free and convenient resource for the exact same content, the choice was simple for the consumer. There are basically two types of news readers; those who want it fed to them via links and news alerts (I’ll call them feeders) and those who browse. Most people prefer to browse.
And when the world of social networking rocket launched into the mainstream, the viral distribution of their free product actually hurt more than helped their business model. It also spurred the concept of free distribution such as Craig’s List, which is greatly to blame for the loss of classifieds revenue for the newspapers.
People seek out and consume news content more than ever before and newspaper website traffic is still increasing, but it still doesn’t matter.
The website cannot “save” the newspaper model. Reporting quality, reliable news content and publishing a daily newspaper is not cheap and the ad revenue from a website is not nearly enough to sustain the business model.
When newspapers first started selling their online product they would visit me with both a print and an online sales rep. Usually, the print rep was a newspaper veteran with very little knowledge of online and the online reps were young web guys with little to no newspaper or sales experience. Very few offered bundled ad packages with print and online, which would seem most logical and they often took turns talking, rarely discussing the other medium.
One major hurdle for newspaper sales teams was that the readership auditing for the print product was measured very differently from its younger online brother. Media buyers were not able to provide their clients with a trustworthy measurement if one attempted to combine the readership data. The only option was to separate the two medium as completely different ad vehicles. Not to mention ad costs were drastically lower for the website if compared to print media. An aggressive average CPM for a daily newspaper is around $50, while online website CPMs were closer to $5-10. But the disconnect did not only occur at the newspapers. Media agencies had problems categorizing the budget for newspaper website advertising. Should it come from the print budget or the online budget? This caused more problems for the newspapers than one might think.
In 2007, I convinced my client to allocate a small portion of the print budget for newspaper websites. After plenty debate we were finally given the green light to negotiate media for over 80 newspaper websites throughout the country. It was challenging, but it was awesome. My print buyers, including myself, had never negotiated or purchased online media before, so it was quite the learning experience. However, what we found out was that the newspapers seemed to have even less experience than we did.