Posts about newspapers

Three nails, one coffin

Line by line, newspapers’ businesses are falling apart as they shrink and become less efficient for advertisers against the competition and reach of online. Consider:

* Coupon giant Valassis abandons newspaper distribution for the postal service in three more markets. Says Crains: “The move represents the acknowledgement that newspaper circulation is on the decline and advertising clients want to continue to reach as many people they can in markets with shrinking newspaper coverage.”

This is significant for two reasons: First, consider that a primary reason papers are reducing frequency but maintaining print editions a few days a week is that they can still make money by distributing coupons and circulars. Second, readers value those coupons. I’ve told the story before of my time as Sunday editor of the NY Daily News when we regained coupons after a strike and circulation jumped more than 100,000 – that is, those readers were buying ads, not news. So this becomes a vicious cycle: the more papers shrink, the more value they lose and the more value they lose the more they shrink.

Coupons and circulars are media and they merely use newspapers as distribution vehicles. When they can be distributed online, for free, then the distribution business will fade away.

* Next, newspapers are starting to lose movie listing ads. That advertising used to be content with value – like, say, home and job ads – but now that value can be delivered online, for free – next to a ticket sales opportunity – online. There go a few more dollars and a bit more value.

* Newspapers were smart to start an online company to serve their ghoulish but lucrative line of business in death notices, Legacy.com. But now it has a competitor in Tributes.com. And I wonder how long either of them can continue to convince people that they need an obit service when any web page will do.

None of these, in and of itself, is a killing blow to papers. Just three more dull blows to the kidney.

Sustaining journalism

Finally catching up with David Folkenflik’s NPR piece yesterday about Columbia J-school’s efforts to help news companies update:

And then there’s the BBC Media Show about pay walls and collaborative hyperlocal and more; listen here.

Warning: You’ll hear me on both.

A next generation in Ann Arbor

(First, full disclosure: I consulted for Advance Publications on its project in Ann Arbor and worked for the company for a dozen years as president and creative director of its online arm, Advance.net.)

AnnArbor.com launched on Friday. I think it’s a bigger deal than it seems at first glance. Advance folded the Ann Arbor News the day before and closed that company. On the next day, it launched AnnArbor.com as a new service, based online and in the community, structured very differently from a newspaper: smaller and more collaborative. As folks have noticed on Twitter, the home page looks nothing like a newspaper site of yore. It’s a blog and it’s intensely local.

Note also that the advertising is different. Rather than banners and buttons, AnnArbor.com offers local deals that are interspersed in the content and also listed in a directory. It happens that these deals are published as blog posts and they read that way. We need to try new and more appropriate means of serving local marketers.

The new company will still print two days a week, and that’s probably why people don’t notice just how much of a change this represents. As I said below, there’s still money in distributing coupons and circulars and in some print advertising, so the company will continue to grab that, at least in the transition. But this company is focused online and in the community.

Ann Arbor is a unique place: highly interested in news, highly connected, with a great university, not to mention a Google office, in town. That’s why it was picked. From the moment this shift became public, the project’s editor, Tony Dearing, and business chief, Matt Kraner, were out in the community to build with the community. I said sometime ago that if this works, the community didn’t help them build AnnArbor.com; they helped the community build it (and their own sites in a new news ecosystem in town).

It’s just a beginning. I hope we’ll see the service become more collaborative, more of a network and less of a site. I know they will experiment with new advertising and sales models and methods. And I hope they will find the way to create a sustainable journalistic enterprise serving the town for many years to come. It’s a brave start and I think it’s worth watching, so that’s why I’m drawing it to your attention.

Guardian column: Charity v. collaboration

My Guardian column this week expands on an idea I discussed here, about viewing charity to news organizations as collaboration in the news ecosystem. The kicker: “Charity is likely to be a contributor to the future of news. So will volunteer labour in the form of bloggers and crowdsourcing. But we still need a business model for news. News still needs to be profitable to survive. It’s not a church.”

The death of snail mail & Sunday papers

The Washington Post reports that “in the past year alone, the Postal Service has seen the single largest drop-off in mail volume in its 234-year history…. That downward trend is only accelerating. The Postal Service projects a decline of about 10 billion pieces of mail in each of the next two years, going from a high of 213 billion pieces of mail in 2006 to 170 billion projected for 2010.”

No, physical delivery won’t ever die. (Like a good newspaperman, I lie in headlines to get attention.) Indeed, we’ll get more ever deliveries of more stuff that used to be on store shelves but are now ordered online. That’s what UPS’ and FedEx’ businesses are built for. But, as the Post says, we’re sending fewer messages to each other; we have much better means to do that now. And companies are trying hard to reduce their cost of dealing with us – billing, bank statements – by taking that online.

There is still a business to be had in distributing coupons and circulars (aka junk mail); this is why newspapers are holding onto delivery a day or two a week. But that’s transitional; it won’t last forever.

As volume decreases, costs to users will increase as deliverers try to cover fixed costs that just can’t be cut anymore. Newspapers like to think they, too, have fixed costs and that’s why they keep whining that readers “should” pay their bills. But they don’t; for their core business – content and advertising – papers have new efficiencies online that the Postal Service doesn’t have. Except for those trucks and presses. They are fixed costs and that puts them in the same sinking ship as the mail.

At some point soon, the couponers will desert both the Postal Service and newspapers because they’ll be just too expensive. But consumers still want coupons; they have real value. (I often tell the story of coming back from a strike when I was Sunday editor of the New York Daily News. We didn’t have coupons because our new owner, Robert Maxwell, was feuding with Rupert Murdoch, who controls coupons – aka FSIs or free-standing inserts – in the U.S. When we got them back, circulation went up more than 100,000. Those readers weren’t buying news. They were buying ads.) Coupons are creeping online but it’s still a pain to deal with them digitally. Mobile devices may be the solution, but they’re not there yet.

So physical coupons and circulars are still great business – if you can get them into consumers’ hands. And it occurs to me that someone will craigslist – that is, undercut – both newspapers and the Postal Service in the delivery business. It’s in the interests of Murdoch’s coupon empire to do so and work with large retailers that produce circulars to come up with an alternative. Or an entrepreneur could establish a network to make it happen. I see the return of the paperboy (oops, the world has changed since then; pardon me: the paperyoungperson): networks of small agents who can deliver this material, which isn’t wildly timely (get it there this week) without the cost structure needed for individualized delivery – the Postal Service – or with a time wrapper of expensive content – the newspaper. Again, it’s transitional, but it’s a nice business for some years.

Here’s what happens then: The cost of mailing an old-fashioned letter will become prohibitive as the Postal Service covers its fixed costs for a system we won’t kill.

And the economic benefit of distributing a Sunday newspaper will all but disappear and news organizations – the ones still standing – will have no reason to hold onto the presses and trucks.