Tuesday, July 19, 2011

Publishers reduce staff at a time of great innovation, when product expansion and experimentation is necessary

Nothing says "lost" quite like the news that another newspaper or magazine publisher is reducing staff. In a time of a revolution in mobile and tablet publishing, many publishers are proving that they have a lack of ideas and little understanding of the potential of the new digital platforms.

Each time I read about another round of layoffs I search in vain for a part of the story that might say that while one department is under the axe, the company will also be adding personnel to help them create new, exciting digital products – but, alas, that paragraph always goes missing.

In a time when smartphone sales are exploding, when Apple is about to announce another blouw out quarter of iPad sales, one would think that companies like Gannett, Tribune Company or McClatchy might just catch on. There is something happening in the world of media, they might conclude, and we should be leaders in the new space.

But instead we hear of a "reshuffling" at Tribune Company, an opportunity to reduce the size of some of its support staffs.

Of course, the reason why so many media companies are being forced to cut more now is not just that revenues continue to decline, but that the earlier decisions that were made to reduce staff in order to eek out an extra penny of profit left these companies without the resources necessary to be leaders in the new digital platforms. For years many newspaper companies, in particular, reduced staffs during relatively good times in order to maintain ridiculous profit margins.

Now, when ad revenue is at a premium, these staffs are ill prepared to be creating and launching new digital products, many of these companies having outsourced much of its development.

As someone who grew up in bad economic times, I was always told that recessions are when one steals market share – the best time to innovate in when the economy is weak.

But today's publisher apparently believe that when times are good one contracts to maximize profits, and when times are tough one contracts to minimize losses. That's a hell of a way to run a media company.