Mike Fromowitz's Blog: Is there a future for newspapers?

It must be hard for some of the great newspaper brands to remain calm given the tsunami that is currently wreaking havoc on the traditional newspaper media business.  The Tsunami started ages ago, but the shock waves are now starting to hit with real force, accelerated by the economic uncertainty all around us.

The future of newspapers has been widely debated. With the industry facing soaring newsprint prices, slumping ad sales, the loss of much classified advertising and precipitous drops in circulation, newspapers the world over are cutting back staff and closing editions. Some major brands in the USA and Europe are on the ropes financially. Recent headlines tell the story.

• “Time Inc., (Fortune, People and Sports Illustrated) to cut 600 jobs”.
• “Gannett to cut 3,000 newspaper jobs” (They are the largest newspaper publisher in the USA).
• “Thomson Reuters eyes massive layoffs”
• “Washington Post profit falls 86 per cent”
• “New York Times debt cut to junk”

Circulation falls in several Asian countries and territories

Many Asian newspapers are suffering too. Of all the media alternatives in the age of digital, print has been the worst hit. In Asia, ad revenue for newspapers and magazines had been predicted to expand by 8% according to media buyers and 10.7% (Ficci-KPMG report). Media specialists now say the sector will be lucky if advertising revenue does not contract.

For newspapers in Asia, the advertising squeeze comes at a time when newsprint imports are adding immensely to their cost burden—especially in countries like India. Bigger print advertisers such as real estate, banking, finance and insurance companies are conserving their money while a few others have, over the years, migrated to other media such as on-ground activities and digital. Some traditional newspaper advertisers such as automobiles, telecom and even education have moved bigger chunks of their budgets to television.

According to WAN IFRA and OECD research, circulation fell in several Asian countries and territories including Hong Kong, Japan, Korea, Malaysia, Singapore and Taiwan.  On the positive side, despite the signs of newspaper’s downturn, and the fact that young people are moving to the Internet and to free papers (up 23.51 percent last year), China and India continue to show healthy figures. They are the world leaders in the newspaper industry, in terms of size, accounting for 45 of the world’s 100 largest newspapers. Fueled by a growing literacy rate and press reforms, India, China and Indonesia are enjoying what may be the world’s last great newspaper boom.

It’s not all that bad for newspapers in India, China, Japan and Indonesia

In China, where state censorship directives are dispensed daily to newspaper editors, a press revolution is under way. The free-market reality has forced editors to print stories that sell. While the People’s Daily, the Communist Party’s official mouthpiece, publishes numbing headlines like “China, India to narrow trade gap”, other Chinese newspapers are attracting readers by delving into corruption scandals and celebrity sex lives.

India has more daily newspapers than any other country and leads in paid-for daily circulation, surpassing China. Newspapers will continue to dominate India where 5% of the population has access to the Internet. In many developing markets, newspapers enjoy boom times, thanks in part to increased literacy rates, improved employment opportunities and more disposable income. The potential for online news delivered via net-by-text cloud-based services, which is opening the door for people to access the Internet via mobile phone, is enormous.

The market in Indonesia, another anomaly, is so buoyant that a new English-language paper, the Jakarta Globe, revved up its printing presses as several cash-strapped American papers were printing their final editions. The Indonesian middle class is growing, and many households subscribe to two newspapers. People like to hold the newspaper in their hands and even clip stories or save copies. It’s seen as a valuable product.

In Japan, the average household still subscribes to more than one newspaper. In fact, the Japanese are the world’s most avid newspaper readers, despite a dip in circulation over the past couple of years.

US and European newspapers ahead of a dangerous curve

The view in most of Asian countries, however, is not that they are immune to the problems of they see happening to American and European newspapers, but rather that the U.S. and European newspaper industry is ahead of them in navigating a dangerous curve.

While many Asian newspapers are not suffering from the immediate loss of advertising as US and European newspapers are—particularly the vanishing of classified—they can see their audience is moving online, as well as to television and satellite news channels. If not in the next two or three years, probably in the next five or ten, they will be faced with exactly the same problems.

The mistakes and the triumphs of Western journalism will be the laboratory for these media elsewhere. And in places like India, a country that is both developed and developing at the same time, they may both learn from the Western experiences and probably leap ahead.

The questions are: How can you monetize the audience that has gathered on the web? What are the prospects for charging for the content there? What are the trends in advertising online? What do the data tell us about the other prospects for revenue online beyond advertising or subscriptions?

Newspapers have a consumer problem

The paradox of all these announcements is that newspapers and magazines do not have an audience problem — newspaper Web sites are a vital source of news, and growing — but they do have a consumer problem.

The failure of newspapers today is that they haven’t realized that the real enemy is “everything is available immediately, and free, elsewhere.” If you are one of the millions of people who still read a newspaper, you are in the minority. This same information is available to many more millions on this paper’s Web site, in RSS feeds, on hand-held devices, linked and summarized all over the Web.

As an example, the iPad is a crystal clear reminder of the news industry’s failure to produce an effective news show online. The challenge facing newspapers today is not only to embrace the iPad’s abilities in sophisticated apps, but to learn how to turn links into a consistent, continuous news show across all devices: web, mobile, and tablet. As the eyeballs leave the newspapers’ web sites, this can be a major step in bringing them back.

From a newspaper industry perspective, there is good news and bad news in the strategy above. The good news is that the customer can access the newspaper’s information in almost any given moment. The bad news is that at any junction, the competition is just one click away. Furthermore, newspapers are no longer only competing with one another but with all the possibilities on the web: e-mails, Facebook, Twitter, Linkedin, Mashable, Google and other news sources.

So the issue is not only about creating a consistent, continuous experience on different devices, but also what kind of experience should it be? How can newspapers make users spend more time on their sites?

Consumers showing signs of news fatigue

The abundance of news and ubiquity of choice do not necessarily translate into a better news environment for consumers. Recent studies show signs of news fatigue; that is, consumers appear debilitated by information overload and unsatisfying news experiences.  And the numbers tell a pretty clear story.

People are spending less time on newspaper sites, often looking for news on other platforms (e.g.: Facebook and Twitter). According to Nielsen data, users spend less and less time on newspapers sites – about 30 minutes a month in the first quarter of 2010, as opposed to almost seven hours a month on Facebook. One of the most important questions facing the newspaper industry today is how to bring these eyeballs back.

I think the iPad is one answer. It has shown that it is possible to create a journalistic show on a digital platform. Sites or news applications no longer have to look like a bunch of boring links tightly grouped together. Instead, they can take the form of an appealing package of information, one that has a good chance of captivating the reader/user.

What’s happening to original reporting?

A news website I looked into recently, publishes about 12-15 articles a day from what seems to be an impressive assortment of freelance writers. I must admit, I’ve never heard of any of them. Most of the contributors write one or two articles per day for this site, and presumably also write for other sites supported by a content ‘farm’.

There is no original reporting to speak of. Their writing follows a predictable format: They reads three or four stories on the Internet or in  business or trade publications and they create a summary—which to me sounds like a news roundup format. I didn’t see any evidence of research beyond the repackaged stuff.  Sure, some writers add a dose of their own opinion, but for the most part no one strays too far from the original.

I scanned about a dozen articles and didn’t see any evidence of research beyond repackaged material. Is this the new journalism? Is the journalist’s editorial/article less important than the source material he/she finds online?

Online publishers don’t give a damn—as long as the search engines are delivering.

As for many of the online news services, I think there is a total lack of quality control. It doesn’t appear that anyone is reading the stuff these writers post. I’m finding typos and grammatical errors that would have been caught with even a minimum of editorial oversight. Seems to me like the publishers don’t give a damn—as long as the search engines are delivering.

Sites that are continuously updated with breaking news and new content get more attention from search engines. I’m not implying that all the content I see is junk. Some of the writers have at least chosen their topics well. But what matters now, more than ever, is speed.  These are the new economics of the working journalist. Though the work I see isn’t the stuff that’s going to win a Pulitzer prize, I assume it does enable some writers to actually sustain themselves.

You still can’t beat the feel of a real newspaper.

I’m one of those who reads the news online, but I also highly enjoy picking up a real newspaper each and every morning and surrounding myself with world and local news over a freshly roasted cup of coffee. So for me, it’s difficult to watch the kind of wrenching change I’m seeing this industry go through.

Don’t get me wrong—I think the newspaper business is going to be around for a while. I just think it’s going to employ fewer people, and while it may involve roughly the same amount of news, it’s going to involve a lot less paper.

Though I seem to spend no less than 28 hours a day at my computer, I can’t imagine a world without a good traditional newspaper in my hands. The newspaper to me is a very personal and enjoyable indulgence.

I would surely miss reading my New York Times over fishbowl-size cups of café au lait and baskets of freshly baked croissants at the Balthazar on 80 Spring Street in New York City; I would miss my South China Morning Post in Hong Kong on dim sum Sundays;  I would miss my Singapore Straits Times over breakfast of roti parathas;  I would miss my Bangkok Post over leisurely lunches at the Oriental’s Verandha overlooking the Chao Phraya river.

For those of us old enough to still care about waking up on a Sunday morning to an edition of your favourite newspaper, it will mean the end of a certain kind of civilized ritual that has defined most of our adult lives.

Newspapers have three attributes that make them still relevant.

They are low-cost or no cost,. They are highly portable. They are highly efficient—you can scan through more bits of information on a printed news page faster than you can online, on a computer,  PDA or on a cell phone.

The two attributes it lacks are timeliness, because it is tied to a once-a-day publishing schedule, and interactivity. If those two attributes can be solved technologically, there’s a huge, robust future for newspapers.

Newspapers must choose new strategies

From a branding standpoint, the Internet has done much to eradicate the meaningful distinctions among newspaper brands. With the drop in newspaper advertising these past five years, the old ways of running a newspaper can no longer succeed. They are faced with choosing new strategies for their mature but declining businesses.

This year, Warren Buffett, chairman and CEO of Berkshire,  bucked the widespread pessimism trend about the future of newspapers by buying up 63 daily and weekly newspapers in the Southeast USA for $142 million from financially troubled Media General Inc. He is concentrating on small and medium papers in defensible markets, while steering clear of metro markets, where costs are high and competition is fierce. Buffett believes that in two or three years from now, we will see a much better-defined pattern of operations online and in print by papers.

“In towns and cities where there is a strong sense of community, there is no more important institution than the local paper,” said Buffett in a press release. “The many locales served by the newspapers we are acquiring fall firmly in this mold.”

According to Scott Bosley, Executive Director of the American Society of Newspaper Editors: “The word newspaper is going to disappear. We’ll talk about news’ rather than newspapers’ because there are going to be so many other ways that people get their news. Newspaper companies are becoming information companies. The definition of news is broadening and the way we’re delivering it is changing.

I remain hopeful that we will continue to have newspapers in print because people appreciate the way they’re organized and the tactile experience. They’ll be smaller, slimmer and more targeted. Newspapers on the Web will be free, but some will be paid for. Which brings me to my last thought: Why don’t newspapers do a better job of advertising themselves?

When will newspapers learn: They’ve got to promote their brands?

I have done several newspaper campaigns in my day, but I must admit, most newspapers have never taken advertising seriously. That’s a shame, and one of the big reasons many are failing today. Of course, they’re serious about the advertising they print. And their advertisers, I presume, believe that big ads work to garner customer interest and move merchandise.

But when it comes to promoting themselves, newspapers have historically been almost completely uninterested. This is especially peculiar when it comes to some of the great newspaper brands which seems to view advertising as of only minor usefulness.

Newspapers need to spend more on advertising to keep their brand image top of mind.  Coca Cola, for example,  spends about 14% of revenue on advertising while newspapers spend less than 1%. Everyone knows Coca Cola are and what they do, so why spend so much on advertising? Because it ensures we remember who they are and what they do. On the other hand, newspapers are being forgotten by many people.

Most newspaper ads I see these days could be run by just about any newspaper. They do very little to build on a solid positioning strategy that will make them a distinctive authority, and an “irreplaceable experience”. If some good newspaper ads exist, I have surely missed them.

I don’t know what the rationale is with newspapers not advertising themselves. I suspect that part of the refusal on the part of papers to think creatively about advertising themselves is the product of a longstanding sense that that kind of self-promotion is suspect or beneath them. It’s probably some combination of “we’re the news; we don’t need to advertise” and “advertising is expensive”.  Seems they are missing the point, because no matter how visible you are, you’ll always benefit from reinforcing what you’re all about.

It may be desirable for some newspapers to “reinvent” themselves in order to create a new experience for readers. But in all cases, the emphasis should be on identifying ways to improve the experience for the readers whether that results in “reinvention” or not.

I believe there is a newspaper way of doing things and a newspaper culture that permeates the industry. But the culture tends to be inwardly focused and not reader-oriented. This makes it difficult for newspapers to tackle brand-building on their own (without a professional brand consultant). What they fail to understand is that it requires a real willingness to not just listen to customers, current or desired, but to change the product and services in ways that will have real meaning and relevance to customers, and communicate that change with a distinctive advertising message.

Mike Fromowitz
OCTANE