Saturday, April 4, 2009

Saving Newspapers

Dean has been commenting about the demise of newspapers here and here. I must admit, I share Dean's fondness for them. It's easier to read them while eating breakfast (and less sloppy) than sitting in front of my computer or scrolling the Blackberry. Government cash is only going to kill the newspaper industry, so I thought I would present a different business model, so they can be saved.

Newspapers have some strengths they should play to. First, they have an unparalleled knowledge of the local community. Second, if they haven't squandered it, they have a reputation for even-handedness in reporting. Finally, and much overlooked, they have a low cost distribution network.

So what's to be done? First, to cut costs, they need to jettison the foreign bureaus and anything else where they can't be be number one or two. Second, they can't compete with the free ads offered by Craigslist and The Reader online, so don't try. Instead they should offer their ads for free on line.

I know what you're thinking, where does the money come from? First, if classified advertisers also want their ad in print, then they get charged, but it is going to be the same ad as offered on line to keep costs down. Second, their traditional source of print ads from businesses will remain, but probably continue to decline. But the key to further revenue streams is to emulate Google and Facebook.

I think that newspapers can successfully compete with Craigslist because Craigslist has failed to monetize their operation, so a monetized operation can probably deliver a better product. Craigslist only charges for a few categories of ads. Newspapers could offer targeted ads based on viewer searches and page views of other ads, advertising on top of advertising, but it already works. Just like Google delivers ads targeted based on user search so can the newspapers. They will probably even want to outsource the technology provisioning to Google, at least initially. Although I would be personally wary of Google's business practices, their failure to prevent click fraud being my chief concern.

Next, subscribers would get online accounts, to go with home delivery, that will allow them to receive coupons or other bargains they can't get anywhere else, to incentivize on line use. Developing a knowledge of consumer preferences from the subscriber base will allow the newspapers to deliver targeted free samples or coupons to their readership. This is intended to emulate the way Facebook delivers ads based on your interests and seems to make good money doing so. This is also something no else can do as cheaply as newspapers and plays to one of their strengths, in distribution. To my knowledge, the only targeted physical advertising today goes through the mail system. Seems like competing with post office shouldn't be too tough, especially with more in depth customer knowledge.

This plan is just a broad outline, and as simple as it appears, I doubt that most newspapers will do anything about it. For some reason, practitioners in dying industries tend to stop innovating and circle the wagons. I hope for a better outcome, so that's my two cents.

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