Friday, January 29, 2010

Newspapers: the one-size-fits-all approach versus the tailored products approach

Write down the headlines, line them up. What do you see? That's the exercise I've been doing this morning.

U.S. Newspaper Circulation Falls
Newspaper circulation may be worse than it looks

New Media:
Google Exec Says Newspapers Need to Re-think Their Models
iPad's Not Soft Enough to Cushion Journalism's Hard Landing

Industry in 'death throes' seeks online salvation
McClatchy CEO: Focused On Free, Ad-Supported Content Model
Newsday says pay model is working
The revenue-neutral NYT paywall

Let's stop there, I could go on all day.

Let's start with summarizing the industry. The fact is newspaper circulation is declining, and the speed of that decline is accelerating.
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☜  Chart via of Rough Numbers

Is this the end of print? Hardly. Some are explaining the decline by stating that they are slowly bringing down circulation strategically, and although that might sound like an excuse, there really is some truth to it. I've heard another newspaper circulation manager predict a turnaround when the economy recovers (whenever that will occur).

But one point that no one can argue is that newspaper print editions are lower in circulation now, and more and more people are getting their news online -- no one argue that point, right? But what is the nature of the online news experience?And what does it say about the way forward?

Fast forward to Google's chief economist, Hal Varian speech at Berkeley yesterday. Varian said that Google has tracked its news traffic and sees a definite pattern:
SF Weekly:
It turns out, that compared with Web search access, Google news access goes up during the day, down in the evening, and way, way down over the weekend. This data is consistent with the results of other studies that indicate Americans still spend much more time with print newspapers than they do with news online -- one Nielsen study found that Internet users spent an average of 38 minutes total per month on newspaper sites.  "What that says to me  is that reading the news online is a worktime activity. ... Most people aren't paid to sit at a computer and read newspapers. They're snatching things throughout the day," Varian said.
Get that? Google News is read during the day when time is short, but newspapers (or newspaper web sites) are preferred leisure time reading -- or at least increases during non-work hours.  If true then newspapers aren't losing the war online completely, they are just losing it most of the time. (I'm sure that makes newspaper execs feel better. Yeah right.)
But how are most newspaper web sites designed? And why are they losing the war during the week and doing better in the evenings and on the weekend?

Aren't most newspaper web sites essentially web versions of their print product?  The New York Times site, probably the best one out there along with The Guardian, is basically the html equivalent of their print product, with some very good multimedia element thrown in. How do people read these sites? Do they linger over it? Yes and no, if Google's Varian is to be believed. You would expect that during the work day someone might go to the NYT site and quickly scan the headlines, then possibly click on a story if they have a few minutes. But when they have time on their hands they can come back and explore deeper into the site.

But like print, the Times web site is a one-size-fits-all approach to the web. If one wants to get headlines who then is the Times' competition? Google, of course, as well as other news aggregators.

Haven't we been here before? Haven't newspapers faced new competition like this in the past? New competitors that package the same content as print newspapers, but package it differently? And how did they react?

In the 80's, when I worked for Hearst and Copley, we began to face stiff competition from product tabloids: auto traders and the like. What did the industry do in the face of the competition? Pretty much what it is doing today, not much. The decline of newspaper classified did not start with Craig's List, after all, it started with the eating away of certain categories to new print competitors. Monster and Craig's List just finished us off.

Now we have a situation where a new kind of news outlet has arisen: the aggregation site. Newspapers can not fight off aggregators by putting online electronic versions of their print products.

To survive and thrive, newspaper companies need to realize one fact: the newspaper is not the product consumers want, the product consumers want is news.  The newspaper is simply a delivery system -- perfect for some people in some situations, absolutely the wrong product in other situations. Publishers once again are faced with the choice of stubbornly keeping to the same path, or becoming less a newspaper publisher and more a publisher.

A publisher takes their content and creates products for different readers -- print for one customer, tablet/reader products for another, quick read aggregation products for another, etc -- they distribute content. Newspapers publishers are hawkers of a single product, and might try to create variations of that same product for different readers.

Some might be saying to themselves, "that's great, expect we've laid off so many editorial people that we are in no position to create multiple products." Well, you can't say the number crunchers weren't warned of this, right? But how many reporters is Google employing? In other words, the aggregators seem to have found a solution to this. Why can't newspaper companies, starved for additional content, employ the same techniques as their online competitors?

This is where the whole pay wall debate gets downright silly. If you are competing against Google then creating a pay wall might not make sense. But if you are in the market for leisure time reading, pay walls could be fine. The issue is what product are you talking about?

Where does the iPad and other readers fit into things? Again, it will depend on the environment. If a consumer is carrying around his tablet during the day, they will probably use the browser in the same fashion as they do now. But in the evening or on the weekend, they have the choice of opening up the browser to visit your web site, or opening up a custom app to linger over your offerings.
There is no doubt this creates a complexity to the design of content that many publishers would prefer not to confront: how do I package my content for quick viewing, while also packaging it for prolonged enjoyment?

Sorry, but there is no shortcut here. You can decide to be in one market instead of many, but realize that the total size of the pie (for that market) may be shrinking, or becoming more crowded.

Newspaper publishers have been used to having a monopoly in their markets. With local reporters and local ad staffs, they felt they could charge what they wanted and faced only minor competition. Today the media market is fragmented like never before. To compete in this new environment, publishers have to realize that they must have multiple products to serve the needs of a consumer base that has different needs and expectations based on where they are, and how much time they have to dedicate to the news.  It is no longer "here is our newspaper, take it or leave, but if you don't take it you will be ill informed."

No, consumers not only have many choices in where they get their news, but also how they connect with local merchants and national brands. If I need to find a local dry cleaners I used to either look in the Yellow Pages, or remember an ad I saw in the paper. Today I open my phone, click on Google Maps, push a button which finds my current location, and then type in "dry cleaner". The process takes less than a minute and the damn thing even can give me directions to the merchant. Can newspapers compete with this? Absolutely.