After nearly 150 years in business, on Friday 27th February 2009, the Rocky Mountain News published its final edition. Philadelphia Newspapers have filed for bankruptcy and Hearst is threatening to close the San Francisco Chronicle if it cannot get agreement on massive, wide ranging cuts or a buyer. The Seattle Post-Intelligencer could be next.
The closures are blamed both on a bad economy and also the rise of the Internet. A drastic drop in print classified advertising fueled by online services such as Craigslist alongside the increased consumption of information in digital formats especially by the younger readers has resulted in secular changes in the industry.
While the significant human impact on those who have dedicated their lives to producing quality products is summed up well in the video - Final Edition it also showcases people’s desire to retain the status quo. In today’s environment, that’s not a realistic option.
The financial issues are complex but a lot of the problems have been caused by legacy media companies failing to quickly and boldly address the fundamental question – “what industry are we in”. The need for transformative action has been obvious for many years but the industry, for various reasons, has been unable or unwilling to make radical changes.
“No Iceberg” from Eric Wilkinson, the CEO of the International NewsMedia Marketing Association (INMA) is a good overview of the issues facing the newspaper industry but it probably does not go far enough to address the changes needed.
The correct answer for media companies is to understand they are in the Information business and that the medium – print, online or mobile is secondary.
Delivery of information should be tailored to the needs of target audiences. The laid back, rich visual experience of print, the lean forward search environment of online or the immediate access to targeted local content via mobile devices offer different and complementary experiences – each has its place.
An unhealthy, over-reliance on advertising is the root cause of the problems facing print newspapers in the US. For decades, readers have been trained to receive content that is heavily subsidized by marketers and advertisers. There is a completely different psychology and appreciation of value when someone has to pay. Good content costs a lot of money to produce and if quality products are to survive, both consumers and advertisers have to pay a reasonable share.
Hearst’s president Steven Swartz is halfway through “a 100 days of change” and a memo that is contained in a recent Wall Street Journal blog is well worth a read. But as argued by Jeff Jarvis, it is probably to too late for the evolutionary changes proposed when a more radical approach is still required.
However, I’m extremely interested to learn more about Hearst’s decision to develop an e-reader and to charge for content consumed via mobile devices. While Hearst has not indicated which technology it will use, it could be the reader from Plastic Logic or from their investment FirstPaper. Hearst is also an investor in e-ink.
Plastic Logic's electronic reader is about the size of an 8.5 x 11 inch pad of paper and weighs less than many print magazines and should be available late 2009.
The reader has the potential for widespread use as an alternative to printed publications. But it faces competition from Amazon's new Kindle 2 e-book reader, Sony’s touch screen reader PRS-700, the iRex iLiad and the increasing use of devices such as the iPhone and the iPod Touch to consume digital contact. Reader’s such as ScrollMotion’s Iceberg and LexCycle’s Stanza also put well formatted content in the palm of your hand. Netbooks, mininotebooks, UMPCs all are driving mobile information consumption. Flexible touch screen technology is sure to revolutionize the mobile market over the next few years.
But, there is no easy panacea to the woes of the print industry. The disruption is wrenching in human and economic terms as the world rapidly shifts to the consumption of content via digital mediums.
However, even as distribution mediums and business models face pressure, publishers should take heart that their audiences still seek quality news and information. The addressable audiences is actually expanding, publishers can reach more people in a targeted way than ever before. Despite some fears, democracy is not going to collapse just because some newspapers fail. In fact, greater audience participation, especially at a local and community level is likely to improve government.
New business models are required for publishers to succeed. Users have to pay a fair amount for access to quality content just as advertiser should pay for access to targeted audiences. Perhaps books on demand production using the Expresso Book Machine or magazine on demand from MagCloud will help change the economics.
Mobile offers publishers some light at the end of a long tunnel. It’s still at early stage of deployment but mobile data usage will grow exponentially over the next 5-years. According to a recently released report by the Kelsey Group, mobile advertising in the US will balloon for $3.1 billion by 2013 from $160 million last year.
While the business models for mobile remain under developed, the trends are obvious. Smart publishers will be investing now and preparing their organizations to understand what news and information needs to be delivered via mobile devices in a manner that can economically cover creation costs.
Maybe in 5-years time as mobile becomes a dominant platform for the consumption of content – it will be online businesses that will be lamenting their final editions. Check out the Charlie Rose interview with Marc Andreessen for a great perspective.