Bankruptcy squandered

Tweet: Here’s what I think bankrupt newspaper companies should be doing.

The AP lists the status of six newspaper companies that have declared bankruptcy: Tribune, Freedom, Philadelphia, Sun-Times, Journal Register, Star-Tribune, representing 66 daily newspapers among them.

Mostly they are using bankruptcy merely to restructure the debt they shouldn’t have gotten themselves into in the first place — the debt that nearly killed them. Often they are leaving in place vestiges of the legacy management that made those bad decisions and did not make the brave strategic moves the digital age demanded. Tragically, none of them has used the great if difficult opportunity bankruptcy gives them to reinvent their businesses and themselves, as I suggest here:

Bankruptcy enables a newspaper company to shed its past. It can get out of contracts and leases for paper, printing plants, delivery, trucks. It can also get out of labor contracts, reducing severance costs. That is terribly painful but I fear it is as inevitable as the end of the ITU (the typesetters’ union). It offers a one-time chance to rethink, reinvent, and rebuild the company for the future. Is it better to stretch out the pain and never get anywhere? And if tough decisions and actions are not made, the likelihood that the company will die and all will be lost only increases.

This is another reason I say that the future of news is entrepreneurial. Given the opportunity of market leadership and 15 years since the introduction of the commercial web and then, failing that given the opportunity of bankruptcy to change, the legacy institutions can’t bring themselves to do it for any of many reasons: It’s too expensive to change and cut back; it’s too painful to corporate valuation and ego built on size over profitability to reduce the scale of the company; it’s too difficult to shift the culture (especially after much of the best talent left with buyouts); the strategic vision just isn’t there. Whatever, the tale is too often told.

Even so, it’s not too late for the legacy institutions. Perhaps foolishly, I refuse to give up on them. If these companies took just one or two papers each among their 66 to experiment with new models, to radically rethink and resize them and to learn instead of demolishing their old institutions brick by brick, they and their still-dying industry would be much better off; they might find a new way.

I consulted on my former employer, Advance’s, project to do that in Ann Arbor, killing the Ann Arbor News and starting a new, blog-based, community-based company and service, AnnArbor.com; the industry should be watching and learning from it. That’s one model, but my no means the only one. Our work at CUNY in new business models for news (funded by the Knight Foundation) presents another vision, also not the only one.

Before it is too late, I’d like to see these companies — especially companies still in or going into bankruptcy — try more models:
* staying in print but splitting up the functions of the company and outsourcing everything possible;
* investing in a widely distributed network of independent local and interest sites with the company adding value with curation and sales;
* creating a pure ad network;
* creating a very high quality product and — yes — charging a lot for it;
* creating a series of special-interest niche services and, in some cases, publications;
* creating the still mostly free but higher value craigslist with more curation for quality and more services;
* experimenting with new services for local merchants — especially those too small to ever have afforded big, inefficient newspapers — including helping them succeed through Google, Yelp, et al;
* creating citizen sales forces to scale while serving those small merchants;
* what else?

A few days ago, I had a related email discussion with John Paton, head of Impremedia, which rolled up a number of publications to become the largest Spanish-language publisher in the U.S. In the process, the company has made the difficult decisions to shrink by outsourcing and finding efficiencies and focusing and has changed its culture to put digital first. The industry should be watching these efforts as well. John asked why legacy companies are these days so often counted out in the discussion of the future of news. I recounted my views, above, and added that entrepreneurs have an easier time building from the ground up than big institutions do trying to rebuild from the top down. But I ended saying this: How can the legacy companies stay in the game? By acting like entrepreneurs, by bravely facing the new realities and by making bold moves to utterly transform themselves. It’s by all means possible. But it’s hard. And it’s rare.

There’s still a minute before midnight to try.

  • Robert Levine

    >>>I consulted on my former employer, Advance’s, project to do that in Ann Arbor, killing the Ann Arbor News and starting a new, blog-based, community-based company and service, AnnArbor.com; the industry should be watching and learning from it.

    Do you mean the project that resulted in lower salaries for all the journalists involved after they were forced to re-apply for their jobs? This will result in an worse product that is less able to compete with entrepreneurial blogs at a time when traditional media should be focused on doing just that. I give it a year at best.

    • Andy Freeman

      According to Levine, the Ann Arbor folk were guaranteed an offer, so the application and interview were mere formalities. Yet, he’s still ranting about how unreasonable they were.

      Are other journalists offended when someone offers them a job or is it just Levine?

      The terms of the new jobs were different. Since Levine thinks that talking to management about the new job is unreasonable, what’s an acceptable way for management and staff to discuss said changes?

      I’ll guess that Levine would have been offended if the changes had been communicated by memo with no meetings.

      Yes, they were offered less money. And, they’re always free to go somewhere else if they get a better offer.

      If Levine thinks that they’re entitled to the old biz at the old wages, there’s nothing stopping him from doing so himself, with his money.

      • Robert Levine

        My point isn’t that this is unjust, although it is. My point is that only a fool – or a consultant – would expect lower-paid workers to create a better product. And yet that seems to be what Jeff expects. Why?

        As for you, ‘Freeman,’ I never said that the Ann Arbor ‘folk’ were guaranteed offers – I don’t know that. And, yes, I’d be offended if an employer changed the terms of my employment with no negotiation. At the very least, I wouldn’t be very motivated! I can’t imagine that would improve a product.

        Now please tell us, ‘Freeman,’ what is it that you do for money? And do you regularly form new corporate structures as a way to change the compensation of your employees with little notice? We’re all curious – especially your potential employees!

      • Eric Gauvin

        @ Freeman,

        You seem to be an astute observer, yet, with all due respect, haven’t you also observed that your own style of communicating (only commenting on other people’s comments) and addressing everyone by their last name is a little strange? Why do you do that?

      • Andy Freeman

        > My point isn’t that this is unjust, although it is.

        Unjust? Does Levine really think that those folks were owed their same salary even though the biz went under? If so, by whom? Would it be more “just” to simply sack them all?

        > And, yes, I’d be offended if an employer changed the terms of my employment with no negotiation.

        Welcome to at-will employment – it’s how the majority of people work. If you don’t like the terms, you walk.

        If you don’t like at-will, you’re free to negotiate for something else, but the other side is typically free to pick someone who’s willing to do at-will, so ….

        Which reminds me – is Levine’s publication “at will”? If not, shouldn’t he be doing something about that “injustice”?

        As to being offended, what’s the point?

        It’s unclear why the sneer quotes are appropriate. Does Levine think that Freeman isn’t my name? Or is he suggesting that there’s something wrong with my name?

        As to my use of last names, we’re not familiars.

    • http://www.buzzmachine.com Jeff Jarvis

      Well, Rob, now that you are employed by a private equity firm, I’ll be curious to watch how you respond to their efforts to lower costs and salaries. When that happens, will you quit in protest or do your employers’ bidding? Will this result in a “worse product”? I see lots of products online that do a damned good job covering music. Will you beat them at a lower cost? Eager to see.

      • Robert Levine

        @ Jeff,
        Billboard has always been owned by pirate equity guys – these are just different ones. Since you asked, however, months ago, when my boss suggested that I assign reviews to unpaid volunteers, I said I’d quit first. He thought I was more valuable than the potential savings, so he backed off. It was a smart business decision: Billboard sells a premium product, and creating that costs money. (Incidentally, I just left my job at Billboard to write a book for reasons that have nothing to do with any of this.)

        Since you asked me how I practice what I preach, I’ll ask you the same: Will you be lowering your salary this year now that the City of New York will collect less of the tax revenue it uses to partly fund CUNY?

        @Freeman,
        -I put quotes around your last name because I find it unusual that you address me by mine.
        -While most employment is ‘at will,’ it’s unusual to see salaries fall across the board at once. This is bad for morale, which is bad for any product. It also drives away the best people, who have the kind of initiative and ambition to come up with the kind of ideas that can help a troubled business.
        -Since I’ve asked a few times now, please tell us what you do and how you treat your employees – I’m curious to know how you attract and retain top talent when you adjust employment conditions on the fly.

        • http://www.buzzmachine.com Jeff Jarvis

          Well, Rob, I took a huge paycut to come here to teach and I just refused revenue that could have come to me as a consultant but will go to the school, since you asked. But that’s not what I was talking about; it’s a deflection. The point is simply that business is business and you and I may want to employ every journalist at a princely salary for the rest of their lives but that’s not how industry works. I’m not your enemy here; reality is. And if you were still in management at Billboard, I’ll just bet that new owners trying to find new efficiencies will do new things as the business reality worsens and no amount of wishful thinking will change that. It’s business.

        • Robert Levine

          It’s admirable that you choose to teach – I think that’s great and the work you do at CUNY is fantastic. (I suspect I’d disagree with the advice you offer, but that certainly doesn’t mean I don’t respect you for giving it.) But that’s not the point. When the Ann Arbor News was in trouble, you recommended that employees take a pay cut – then said it would improve the product. If an organization you worked for was in the same situation, would you do the same? And if so, how would that affect your motivation?

          As for Billboard, I’ve heard that the new owners plan on investing in the business, and I hope that’s the case. (I don’t have any inside information.) If so, they will improve their competitive position in a way that will allow them to continue to collect subscription revenue at a time when advertising is in decline. If they make substantial cuts, I think they’ll weaken the product and have a harder time charging for subscriptions. That’s just my opinion, of course, and I wish everyone there the best whatever they do.

        • http://www.buzzmachine.com Jeff Jarvis

          Is it better that your former sister publication E&P died or that it should have reinvented itself, Rob?

        • Robert Levine

          Reinvented itself, of course, but I think we disagree on how to do that. Since their advertising was in decline, I would have invested to create a product I could have charged for. If the company had cut costs, as you seem to favor, I think they would have had a harder time competing with online publications in the same sector. I know it’s a strained comparison, but look how well the Economist does compared to Times and Newsweek.

        • http://www.buzzmachine.com Jeff Jarvis

          I think that in your calculation, the business wouldn’t work and everyone would end up unemployed.

        • Robert Levine

          Maybe, but wouldn’t it be worth trying? At this point, it’s obvious that advertising alone can’t support a serious news-gathering operation. So why are you continue to push that model? By now, even some of the businesses you consult for know your strategies won’t work; Burda, Springer and Holtzbrinck are all lobbying the German government for stronger copyright law enforcement, which you recommended against.

          Your suggestion that “the industry should be watching and learning from” your little experiment in Ann Arbor is as irresponsible as it is self-aggrandizing.

          @ Freeman, I’m ignoring you until you answer my question: What do you do? Please provide a business name so the U.S. Labor Dept can conduct an appropriate investigation. Looks like they finally got Jeff’s buddy Nick Denton to make some of his journalists full-time: http://www.mediabistro.com/mediajobsdaily/online/sheila_mcclear_takes_credit_for_gawkers_w2_offer_144664.asp

        • http://www.buzzmachine.com Jeff Jarvis

          Rob,
          Won’t you end your attacks even for Christmas.
          Get a life, please.
          I’ll say it once more: enough.

        • Eric Gauvin

          Jarvis caracterizes all his detractors’ criticisms as “attacks.”

          (then tries to act tough with condescending “get a life, please” meaningless response…)

        • http://www.buzzmachine.com Jeff Jarvis

          No, only to those who need one.

        • Robert Levine

          Jeff, I hardly see this as a personal attack, and I don’t dislike you. I just dislike your ideas – especially about labor. I think you’re a great teacher and a thoroughly decent guy and I wish you the best. But you believe the industry should be “watching and learning” from cutting journalists’ salaries and I have very strong (and, I suppose, biased) feelings in the opposite direction. That’s about the extent of our disagreement.

          Are you really that shocked to hear that journalists disagree vehemently with your feeling that they should work for less money?

        • Andy Freeman

          > But you believe the industry should be “watching and learning” from cutting journalists’ salaries

          Does Levine really believe that that is the only thing that Jarvis believes?

          Does he believe that “cut salaries” was only recommendation that Jarvis made to Ann Arbor?

          We get that Levine thinks that Ann Arbor should have done something different. Levine claims that they could have increased revenues by spending more money on journalism. (I’ll give him the benefit of the doubt and assume that he has more detail, even though he didn’t with Jarvis.)

          Maybe so.

          But we don’t see Levine putting his money behind that recommendation. Curious.

        • Robert Levine

          @Freeman,
          I’ve asked you what you do a few times. Tell me or stop talking.

          @Jeff,
          As I said, I really have nothing against you personally. But I also think it’s naive not to expect a certain amount of criticism when you tell a group of people that they should get paid less. And I think you’ll agree that anything I’ve said to you is nothing compared to the pain of losing a job in an economy like this one.

      • Andy Freeman

        > While most employment is ‘at will,’ it’s unusual to see salaries fall across the board at once.

        Bankruptcy is also unusual.

        > This is bad for morale, which is bad for any product. It also drives away the best people, who have the kind of initiative and ambition to come up with the kind of ideas that can help a troubled business.

        All that’s true, but it’s a long way from “unjust”. And, we’ve yet to see that Ann Arbor had an alternative.

        Levine first said that salary reductions were “unjust”. Now we find that they’re acceptable in some circumstances, so the unjustness, if any, is circumstance-specific.

        What would Levine have had Ann Arbor do instead of reducing salaries across the board? If he’s going claim that there was some money left for salaries, let’s see some evidence. If not, then pay folks more involves paying fewer people. So, who else gets cut, and why isn’t that at least as bad?

  • steve

    i don’t know how anyone can build a better craigslist than craig & co.

    i put a ‘want to buy’ ad for an apple macbook on there yesterday and have at least three good leads in a 30 mile radius of where i’m sitting come to me out of the seven calls/emials i’ve received in less than 24 hours.

    pretty certain any newspaper couldn’t even have it on the street in that amount of time.

    thanks craig!

    • Dermitt

      “The number one way you find a job is through referral and LinkedIn is
      the biggest referral network out there,”said Charlene Li
      Looking for jobs is the same thing. The newspaper help wanted ads are about gone, at least in print. The irony is that people with lost newspaper jobs will not be looking in the paper for new jobs. Referrals won’t help. If you spent 30 years newspapering and all of the newspapers are gone, then what? You have a big referral network and no jobs to find. Hell, it’s getting difficult to find a newspaper. I guess more people will start blogs.

      Read “How Getting An F On Your School Paper Makes You A Better Blogger”

      • steve

        good point.

        and just to let everyone know, i picked up a 13″ macbook in the closest thing to new one could expect complete with the box it came in and store receipt from the apple store in the name of the party i purchased it from for $500.

        posted, shopped and deal completed in roughly 24 hours.

        nice.

        thanks to craig and co. it’ll be a nice present to open for a friend on xmas day.

  • http://www.twitter.com/themediaisdying Paul Armstrong

    I used to be sad when I see posts like this but now I am just mad. I can’t believe that it’s taking so long to get rid of the dead weight and just move/push forward. The technology is there and yet nadda. No innovation, no QR codes, no augmented RSS feed-fed reality to make the dead tree sing/relevant again.

    It amazes makes me that in this day and age so (allbeit dwindling) many are influenced by a few shortsighted organisations hellbent on clinging to an era of control that feels positively victorian. Embrace and enable and ye shall win : http://community.prweek.com/blogs/firehose/archive/2009/12/02/rupert-murdoch-imagine-we-are-nose-to-nose-with-my-hands-on-your-cheeks-make-this-and-make-it-fast.aspx

  • http://screamingtiger.blogspot.com/ Ron Kurr

    Jeff, one thing I cannot figure out is why the resistance to change? If the current business models are failing and people are losing money and jobs, what is it about the industry that prevents it from saying enough is enough and try something new? Is it that things haven’t gotten bad enough yet? Personally, the only print media I get is the Sunday paper so it would not directly affect me if they all ceased to exist but I’m aware that many people’s livelihoods are at stake and cannot understand why new ideas aren’t being tried. As the old saying goes, insanity is doing the same thing over and over and expecting different results.

  • Scott Suttell

    I’d say a lot of different things are being tried, but because print still amounts to 85% or more of the revenue for most newspapers, it looks like papers are doing nothing but clinging to the old models.

    Papers still need the print editions to generate revenue so they can finance new-media initiatives. Hope they can figure things out quickly.

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  • http://www.reactrix.com Robert Hoffer

    The increasing lack of print newspapers is going to make starting the fire in the fireplace slightly more challenging this year. Other than that … it’s hard to care.

  • Gert Steens

    What about that old chestnut, the Freemium model: Metro-like free morning newspaper, with news, pictures and display ads (with complimenting blog and twitter-feed), and in the evening a paid-for edition with opinion pages, documentary/research features (with complimenting archive website)?

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  • Robert Levine

    @ Freeman
    >>>What would Levine have had Ann Arbor do instead of reducing salaries across the board? If he’s going claim that there was some money left for salaries, let’s see some evidence.

    The evidence is Jeff’s consulting money – he doesn’t work cheap, so they obviously had some cash. I think that money would have been better spent on reporting.

    Once again, that’s Rob or Mr. Levine to you, Freetard. And _please_ tell us how YOU retain top talent when you advertise yourself as so eager to make salary reductions.

    • http://www.buzzmachine.com Jeff Jarvis

      Stop the insults (the infantile ***tards) or I will have to ban you again.

    • Andy Freeman

      Is Levine saying that Jarvis should work for free or that the money spent on restructuring shouldn’t have spent? (If he’s going to argue that he’d have done the job for less, I’ll ask why he isn’t doing so, as there is lots of such work to be done.)

      As to “that money would have been better spent on reporting”, I’ll note that they were spending that money on reporting, and going down the drain. I don’t know that it will survive with those changes, but without some change, it was dead.

      I think that one should pay what it takes to get folks to show up to do the work that you want done. And, if you can’t pay that, you go out of biz.

      If Levine disagrees, I’ll ask him how often he pays more for housing, transportation, food, etc. Are salaries different or just journalist salaries?

      As to “retain top talent”, the Ann Arbor folks are free to take jobs that pay more. Why isn’t Levine offering them such jobs?

  • Mike Manitoba

    Happy holidays, everybody.

  • Eric Gauvin

    Jeff Jarvis is a self-sacrificing university professor. I read it on the internets.

  • Andy Freeman

    > Please provide a business name so the U.S. Labor Dept can conduct an appropriate investigation.

    Into what? Be specific. What law or contract does Levine think that I’ve violated?

    I’ll help. Within contractual and statutory limits, I believe that an employer is free to set and change salaries. Employees are free to go elsewhere.

    FWIW, Levine has said that his employer operates the same way. Since he has that business name, I’m sure that he’s already forwarded the relevant information to the US Labor Department. Right?

  • Andy Freeman

    > I’ve asked you what you do a few times. Tell me or stop talking.

    I’ve asked Levine questions that he’s ducked. I didn’t presume to insist that he answer or cease posting.

    This is Jarvis’ venue, so it’s clear that he can place requirements on participants and can delegate that authority.

    What is the basis for Levine’s claim to that authority?

  • Andy Freeman

    > And I think you’ll agree that anything I’ve said to you is nothing compared to the pain of losing a job in an economy like this one.

    So what? Does crapping on Jarvis save anyone’s job?

  • Jon

    It hasn’t happened because media CEOs would have to:
    o Admit for real they lost their monopoly power to the peasantry.
    o Take a major personal pay cut.
    o Fire many, many of their ol’ executive buddies and nephews.
    o Give the few buddy xecs who remained a huge pay cut
    o Move from the tony downtown digs to someplace affordable, without such a good view for the CEO.
    o Did we mention admitting to loss of power and especially personal pay cuts?
    ALOT of media phat has built up over the centuries when they could afford it.

    Of course, all that’s in fact, their responsibilities to their organizations. But that’s why not so many have the guts, and are instead tinkering around the margins with firing a few peasants they don’t know.

  • http://essaysfornobody.wordpress.com Ed

    I couldn’t agree more. So much of big print media’s bemoaning of its financial state is contrived of their own mismanagement, not the decline of their profit.

    seems like the opportunities are out there, if there is good timing
    http://essaysfornobody.wordpress.com/2009/12/17/on-timing/

  • Andy Gaudreau

    What is happening and not happening in news (in relation to the prognostications about it) reminds me of the ways Walter Benjamin’s predictions of the effects of technology on art in his well-known essay “Art in the Age of Mechanical Reproduction” have and have not come true.

    Benjamin said that art’s “aura” (that sense of art’s greatness and awe which according to him was the result of aristocratic values and class power and control) would be destroyed by the mass reproduction and distribution of art.

    Well, that sort of came true. The reproduction/distribution part was prescient to say the least, but auras seem to be stronger than ever. (Witness our unquenchable and fickle lust for idolization of anything resembling “famous” including–because we now have easy access to them–ordinary people.)

    I think this is because while technological evolution is historical and contingent, aura-loving is an enduring human trait.

    This same dynamic applies to what is happening with news: vis a vis both the fracturing of control because of technology, and our ever-undiminished desire. Big bureaus may shrink and become diffuse, but news (our need, our love for news) will remain strong and, with technology, only feed opportunities to uncover and broadcast it.

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