Reinventing the Newspaper

Newspapers are dying.  Their business model is burning to the ground.  They cannot fend off the Internet and other threats despite their virtual monopoly and economies of scale in printing and distribution.  Advertisers are moving on.  Yet while traditional newsrooms are shrinking, journalism is thriving and the consumption of news is skyrocketing.  Why are newspapers shutting down?  As Clay Shirky describes it:

"If you want to know why newspapers are in such trouble, the most salient fact is this: Printing presses are terrifically expensive to set up and to run. This bit of economics, normal since Gutenberg, limits competition while creating positive returns to scale for the press owner, a happy pair of economic effects that feed on each other."

"With the old economics destroyed, organizational forms perfected for industrial production have to be replaced with structures optimized for digital data. It makes increasingly less sense even to talk about a publishing industry, because the core problem publishing solves — the incredible difficulty, complexity, and expense of making something available to the public — has stopped being a problem."

"Round and round this goes, with the people committed to saving newspapers demanding to know “If the old model is broken, what will work in its place?” To which the answer is: Nothing. Nothing will work. There is no general model for newspapers to replace the one the internet just broke."

Perhaps it is not the newspaper model, per se, that needs replaced.  Perhaps it is the components of that model that need innovation: printing, distribution, and journalism.  Let's examine how.

PRINTING

Gutenberg's innovation of printing multiple copies of one newspaper was a huge step forward in 1500.  Today's large scale printing machines are still built on that idea.  Companies like Siemens that produce these machines need to engineer new versions of large volume printers that can take custom digital content and print one unique copy of a paper, then print a different one, the next one, etc, at very high speeds.    This would allow news companies to create a custom newspaper for every single subscriber.  The capability is already in existence to some degree with the printing of custom mail order catalogs.  That technology needs to be extended to allow mass scale customization - a unique paper for every household.

DISTRIBUTION

Newspaper companies have well-established skills and resources to take the printed paper right from the presses to your doorstep.  But they need to "backward integrate" distribution into how they collect content.  Today, news organizations rely on their own staff as well as syndicated content from AP and other organizations.  The proliferation of blogs and other content providers gives news organization a tremendous opportunity to reinvent their business model by excelling at:  news aggregation and brokering.  Today's consumer wants more relevant content than what is sent to them in a traditional newspaper.  They use RSS feeds to aggregate their own content.  Newspapers could do this for the consumer based on the use of meta-tagging and preferences much like what Pandora has done with music*.  Instead of a Music Genome, the news industry needs to create the "News Genome", a structured architecture of news preferencing that allows customers to pre-identify what they prefer so that news organizations can source and broker it back to them - in printed form, delivered to their doorstep. 

JOURNALISM

Journalism has been dominated by a relatively small group of reporters who go out and collect news and content.  Today, there are millions of "journalists" under The Long Tail creating content.  The key is how their content is fed into the meta-tagging "News Genome" idea discussed above.  To give them an incentive to feed quality, relevant content into that system, news organizations could make micropayments to a journalist for each time and only when their content is pulled in and brokered back out to a subscriber.  Clay Shirky is correct when he says consumers won't pay for news because they have never paid for news.  So the idea of micropayments from consumers won't work.  But micropayments to the journalist when they get a "hit" on their content would create the right incentives to the system.  News organizations need to establish a preferencing system of tagging for each of their subscribers, then source and broker relevant, tagged, content to them in RSS-like fashion.

What would it look like?  Imagine the ultimate newspaper.  It would have articles, editorials, advertising and other content that is custom tailored to your beliefs, lifestyle, affiliations and preferences.  If you like to keep abreast of world news, so be it.  But if you are also liberal-minded, these same articles would have a liberal bent to them.  If you live in Cincinnati, but root for the Chicago Bears, your sports section would have Bears news, not Bengals.  Even the obituaries would be connected to you and your world.  If a great-uncle of your college roommate passes away, you would get to read about it.  Your entire newspaper would be not only filled with the news and information that is relevant to you, but it is also written in a tone and orientation that matches your view of the world.  For newspapers, this means instead of printing millions of copies of one version of the daily paper, they now have to print a million versions, one for each of a million different readers.  Wow!

A custom newspaper has advantages for the advertisers as well.  It is the advertisers, not the subscribers, after all, who subsidize journalism.  With custom newspapers, advertisers could target their ads in line with the keyword tags so that the ad appeals to that subscriber's interests and values.  My bet is advertisers would pay more for this with the promise of more effective ad placement.  More money on the table leaves more room for micropayments to journalists.  The loop is closed.

As Shirky notes, "No one experiment is going to replace what we are now losing with the demise of news on paper, but over time, the collection of new experiments that do work might give us the journalism we need."

* "Pandora for the News" idea courtesy of David Showers, Washington, D.C.

Comments

[Fred H Schlegel]

Nicely put. In addition to the innovation necessary to change the real distribution/collection/creation cost structures, most of today's news organizations are also hampered by financial leveraging that left them ill prepared to take such necessary steps. So unfortunately the majority of today's brands are probably going to go the way of the old TV set mfgs. Brand names bought and sold by nimbler, smarter competitors.

[Drew]

Fred, thanks. Interesting insight. Given the highly leveraged nature of this industry, that usually means one thing: consolidation. My guess, though, is that it will take more than a handful of struggling newspapers to join together. They will need some outside players, too, from other parts of the value chain...fresh money.