Newspapers as mainframes

I believe that newspapers are and should be businesses, that market pressure is not only good but necessary, for newspapers are all about serving the public and if the public doesn’t want them, well, does that tell you something? The problem is that newspapers became monopolies, which made them fat, sassy, snotty, and lazy. See this very good post by a technologist turned VC who worked at the embattled Knight Ridder about newspapers as mainframes:

The short-form story in the modern history of computing is the deconstruction of the mainframe. Nothing in computing exists today that did not exist in some precursor form back in the original mainframes. The evolution of computing is the continuous unbundling of each of the components, cost reduction and miniaturization, and subsequent empowerment of the user at the point of delivery. Newspapers are Mainframes. The transformational power of the Internet lies in its incessant pressure to unbundle….

The business model of the newspaper is based on two principles – network effects and bundling.

The network effect is the classifieds business. The reason there is only one major newspaper per city, nearly everywhere, is that the classifieds business is a winner-take-all business. This made newspapers ‘natural monopolies.’ The net effect of the natural monopoly was that the competitive pressure for innovation disappeared. How many industries can you name where the product form, features, and delivery has not changed in 75 years? The marketing gene was largely bred out of the industry by becoming local monopolies. Monopolies fail catastrophically because of their inability to respond when the competitive landscape changes dramatically. This is the incumbent’s disadvantage. The very immunity to competition that made newspapers such great businesses also created resistance to market forces.

The bundling is the aggregation of all the varied content to attract and retain the audience. The core premise is you’ll read some content regularly, not necessarily all content….

But the Internet is that ruthless and incessant force for unbundling. Everything is a click away. Search costs are crushed.

Newspapers are Internet victims, but they are far from being the only industry under siege. Newspapers are especially impacted because two of the three main components of their cost structure are obsoleted. Advertising sales moves from traditional ‘push’ to advertiser self-service. All the physical assets of printing and delivery are obsoleted by the shared infrastructure of the Internet. If most of the cost structure goes to zero value, what’s left are news gathering and editing organizations and IT.

I like that: A newspaper is an IBM 360. A blog is an Apple 2. Go read the rest. Then see the post above about people trying to see newspapers as something other than businesses.

  • Yeah he’s right. His view is “simplistic” and IMHO a little conceited. He has no idea how much he doesn’t really know.

    Has he ever run a years worth of display ads? Has he ever written, produced, merchandised or paid (out of his pocket) for any? Has he ever lived or died by the results? It doesn’t appear he has. How then can he begin to grasp the customer’s need, desires, and dissatisfactions?

    He says move from a push model to self-service. Newspapers are doing $40 billion dollars in local and regional advertising. Do some test runs of that “self-service model” and see how many of those clients are satisfied enough to buy again and again.

    That said he does make some good points too.

  • I’m not so sure the comparison to mainframe computers is accurate. The immenent death of the mainframe has been predicted since the ’80s and there is more mainframe computing power in place than there ever has been. The distributed world is growing faster, of course, but people have discovered that mainframes are still pretty useful beasties. With newspapers, have we figured out whether they’re going to be useful in a more online world yet? What we know is they are losing ground, and I don’t think there is anything about newsprint that makes it irreplaceable by the Web. It’s a shame, because I’m one of those people who like their morning paper.

  • Jeff, I don’t agree with the analogy.

    Mainframes and Apple II’s were both computers, they were used for different things, but they were fundamentally the same thing. I have some perspective on this because I was an active software developer at the analogous time in the evolution of PCs.

    I think the relationship between blogs and newspapers goes like this. The bloggers are the former sources of newspaper reporters routing around the reporter-as-aggregator. In that sense there’s absolutely nothing remarkable about the transition that’s going on. Reporters are like travel agents, we can do it for ourselves now, where before, it was economic to have an intermediary.

    I guess if you want to follow the mainframe analogy, the newspapers are like the IT Managers of the past.

    BTW, I did two illustratons of this a few years ago, one entitled Mainframes are computers too, and Apple sparked a revolution.

    Both are exactly on-topic for this discussion.

  • This analogy is interesting – but in truth Mainframes are making a big comeback in corporate IT departments, partly because they offer unparalleled power and security, and lower TCO. Will newspapers make a similar comeback?

    In fact, there’s a blog dedicated to the Mainframe:

  • Gentlemen, you are only making Jeff’s (and Peter’s) point for him.

    Mainframes are indeed back. IBM, in particular, resurrected them from the almost certain doom they had been lumbering towards for years. How did they do this?

    By destroying the mainframe priesthood culture that had surrounded the computer and impeded access. The advantage of an IBM eServer mainframe today is that you can pack hundreds of virtual servers — all pretending they are PC-like servers — in the same space. In other words, mainframes survived by becoming efficient and synergistic means of doing what everyone was doing outside mainframes.

    This is typified by IBM’s ad series, where a panicked group rushes into a server room, to discover the entire computer farm replaced by a single mainframe. The mainframe, it is implied, didn’t muscle the PCs out. It’s doing what they were doing, just more efficiently. This is in opposition to the old ways of using mainframes, which were (because of the priesthood and its restriction of user access) *less* efficient than the PCs.

    What would be the analogy at, say, Knight Ridder, or the New York Times? What about a stable of high-profile, well-regarded, quality-controlled journo-bloggers, with a group of “public editors” accepting a raft of submitted tips, story ideas, and corrections, and using the connections of an old-school newspaper to become a simultaneous dead-tree and webcrawling powerhouse? Can you see a “Best of our Blogs” section of the op-eds? Or “Stringer’s Corner” where the up-and-coming get to print 200-word stories?

    Step one, of course, is to convince the priesthood that change is needed… but we all know that process is in the works. Newspapers, like mainframes, will be reborn when the newsroom monastery walls come down.

  • Randall

    I agree with Catfish. The problem with mainframes was not the technology (although there was some of that) — it was the control which the IT Departments demanded and the time and expense that they required to meet the demands of business managers. When PCs came along managers realized that they could take the raw feed from the mainframe and manipulate the data on their own to make it useful. Natrually the IT Departments scoffed at the PC as a toy and tried to ignore its value.

    The analogy with the newspaper industry is striking if not perfect. Newspapers (and much of what we call the MSM) are the old IT Departments seeking to maintain control of the data. They scoff at blogs and try to ignore their impact.

    The IT staff who adapted to the PC and a networked IT infrastructure survived and even thrived; even IBM finally saw the light and transformed. The same seems to be happening with the MSM.

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