The More Things Change…

So, if you’re a publisher these days, your world has come to an end.  Advertising, which is you principal source of funds, is in the toilet and continuing to swirl further down the bowl each passing day.  The internet, which has revolutionized communication and information availability, has also had the unfortunate side effect of gutting your influence and control over the community’s dialogue.  Worst of all, you and your peers are coming to the much-too-late realization that your early attempts to siphon money in the easiest way possible out of the then-emerging website craze actually helped condition the very people who used to regularly buy your wares that information wants to be free, making it all the more difficult to start charging for it.  That about sum it up?

So what’s a beleaguered publisher to do, rather than continue to pile up some sand bags to keep away the Tsunami?  Well, here’s one idea, burn the boats a la Cortes.  According to get-rich-quick internet maven Marc Andreessen, publisher’s should shut down their print business altogether and focus solely on emerging media.  Now, I wouldn’t be surprised to see the industry adapt some suicidal practices (it’s happened before) but this is too much for even me to swallow.  You don’t walk away from what’s still a business producing tens of billions in revenues to pursue a model that nobody, and I mean nobody, is making any money on.  Sure, Google is raking it in with its ad network, but that has nothing to do with content.  Take newspapers out of the mix and it wouldn’t make a blip on Google’s radar.  Their ad network business is all about quantity, not quality of content.  So long as there are virtually infinite websites with free content, regardless of how good it is, Google will make money.  And publishers simply don’t have the access to the boatloads of people that Google does through its insanely popular search engine.

Well, the Wall Street Journal makes money online, you say.  That’s true, but it’s with very specialized information targeted to a key demographic, that being very well-off people who have tons of discretionary income.  That income guarantees that they will take the path of least resistance, i.e. paying for a subscription to the Journal online, rather than find an end-around to their soft paywall to get the stuff for free.  The Journal is only making the money it is because there audience can afford to pay for it and have no reason to circumvent that.  If they did, you can bet they would, and the Journal’s online revenue would plummet accordingly.

I’ve heard tell that the poster-child for news aggregation (at least in the U.S.) The Huffington Post makes its fair share of coin, as well.  But with this, we’re talking about a content dependent website that flat refuses to pay anyone for creating the content that it monetizes.  That may seem all well and good now, but trust me, that type of model will quickly turn into lowest-common-denominator material from people who don’t need to earn a living, a personal agenda-driven platform for the views of folks not looking for cash or outright exploitation of other people’s material after the well of “sure, I’ll write that for free” professionals dries up, especially if the publishers of the site start raking in real bucks.

And there may be a few more out there who bring in some dollars in online revenue, but they are small-time peanuts compared to the revenue walking away from print.  To be certain, print publishing is heading toward being unsustainable, and there will come a time, sooner than later, that burning the boats may make sense, but that day is certainly not today.  Andreessen, if you recall, was the creator of the Netscape web browser.  Netscape had a thriving little business going until Microsoft decided to kill it by proliferating free versions of Internet Explorer everywhere.  He was fortunate enough to convince AOL (the bastion of early-internet-age bad business decisions) to buy his operation, setting him up for life while Netscape died a slow and painful death, with AOL eating it all the way.  A smart business decision by Andreessen, to be sure, but certainly not the resume to be spouting off about sustainable long-term business models.

In the past, when faced with emerging technologies as new competition, newspapers expanded their operations, and their products to compensate, to much success.  But that won’t work anymore.  As newspapers got ever-broader in size and scope, the society around us changed. We no longer have the time or the desire to sift through super-sized collections of printed material, no matter how much additional advertising revenue it generates for the publisher.  After all, when you can get the specific information you are looking for at the touch of a few buttons on your phone, or a few mouse clicks on your computer, who is still buying the five-pound pile of pulp paper every week to sift through to find that same info?  This time, adding some special sections won’t get the job done.

But there’s this new thing called the iPad that’s coming out in a few weeks, and that will make things all better, you tell yourself.  It’s just the platform we’re looking for, to be able to sell actual subscriptions to our material, and a whole new basis to attract the advertisers back again.  Okay, it definitely has potential as a medium for information, but with a rather large caveat.  In order to capitalize on this, you’re going to have to produce very high quality content and market it to an audience that is very different from that which you are used to.  The prevailing talk amongst publishers is like this emerging possibility is simply an extension of what they have always done.  Didn’t we already go down this road with newspaper websites?  And if there is any advertising base to this, how long do you think it will be before others are offering material on these things for free, putting you in the same position you are now, competing with free alternatives for an audience that is very fickle about where they spend their increasingly hard-earned dollars?

But rather than dive in after this possibility, promising as it may be, publishers are–none too surprisingly–talking big while not acting and getting into pissing contests over control of meaningless data.  The latter part is the least surprising as it shows, in no uncertain terms, that advertising is still the primary focus of any effort publishers engage in.  Despite the fact that ad rates, both in print and online, are continuing to plummet, publishers still can’t see past the profits of yesterday.  Ad efficiency, which is a big buzzword nowadays thanks to online ad networks that claim highly targeted tracking data to bring in advertisers, has consistently driven the price of advertising downward.  That’s okay if you’re Google or someone else operating an enormous, bulk ad network, but for a newspaper, this is a losing play.  Just look at the point of view from the higher-ups at the New York Times.  According to them, letting Apple control subscriber data causes them to lose access to valuable information about reader habits.  In other words, valuable information they believe they can use to entice advertisers.  It’s still not about selling a top-quality product to the consumers, it’s about using those consumers to sell a product to the advertisers.

That’s not to say that the iPad is going to be some great game-changing thing.  It’s not a helluva lot different, other than a bigger screen, from options already out there.  Still, it could be a step toward truly mobile platforms that change people’s information consumption habits. Or it could be a waste of time.  As interesting as the iPad, Amazon Kindle, Sony eReader or any of the other current tablets may be, there’s already other, more interesting alternatives coming on quickly.  How about fold-able electronic paper that can have content updating all day long? That’s the next step, and it’ll likely be available just a few months after the iPad hits stores.

The problem has long been that publishing is an industry that is slow to accept change.  In the past, change would come in small bumps with lots of time in between to adapt.  Today, change comes in massive shifts only months, and sometimes weeks, apart.  The industry doesn’t have time to sit, reflect and argue about what happened yesterday.  They have to figure out what’s coming tomorrow, because, when that does come, someone else will be readying what’s coming the next day, and the day after that and the day after that.  Publishing is already ten steps behind the technology wave, and with each day that we still argue these same, worn-out points, they lose another step.  The industry’s strength is in its content.  Even scaled back, they still have the greatest collection of creative minds going.  The platforms people are looking to are constantly changing, but the information is the same.  We have mobile devices capable of presenting anything and everything to people in ways never before conceived.  And what is the big game-plan for many publishers in 2010?  Paywalls on their websites.  If this was still 2004, then that might make sense.  But today, a quarter of the way into 2010, it is way too little, way too late.  And by the time they figure this out, that declining print ad revenue may have fallen far enough that burning the boats is the only option left.

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Published in: on March 13, 2010 at 6:12 pm  Comments (2)  
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  1. I’ve been reading your site with interest almost since you started. I’ve also been in and around the Internet business since the early 90s, back when “online” meant first AOL and then MSN when it was a dialup business. I’m amazed 20 years later how little so many business people still understand about how the Internet is disrupting their business models.

    I find it absolutely fascinating to watch the slow death of the newspapers. It’s super-slow-mo race car crash bursting into flames spectacular. I can’t tear myself away. It’s unseemly and undignified. It’s fantastic pulp-fiction theater. It’s dinosaurs starving to death, not burning to death in a meteor strike. It’s delicious.

    Why any newspaper (except maybe the WSJ) has a market value >$0 is beyond me. I bought a Sunday Baltimore Sun not long ago, and as you point out, it’s basically content free. There’s little hard news reporting unless it has to do with some underclass person whose government handout has gone missing. Won’t make that mistake again.

    Vacationed in the Palm Beach area recently, and went out to pick up a Sunday Palm Beach Post. No surprise… a bunch of glossy coupons, a fat society page section, and little other content of any meaning. I wanted to take it back to the convenience store for a refund.

    Keep up the good work!

    • I agree, it is fascinating to watch. I’m dealing with some stuff myself recently that I won’t detail here at the moment because of other concerns, but even in this atmosphere where it should be clear to anyone with a pulse that quality unique content is the path to the future, we’re seeing an increasing trend amongst publishers toward even more advertorial and press release style content in last ditch efforts to attract advertisers. They’re essentially putting the potential advertising base in the position of the audience for a given publication, reasoning that it will lead to more paying ads. In the extreme short term, it might, but consider, when you have to give an advertiser a 1/2 page advertorial article in order to compel them to buy a 1/4 page ad, you’re actually paying to produce 3/4 page in print with a return cost for only a 1/3 of that. This not only squeezes the available space for truly original content, the type of which actually attracts and keeps readers (the people advertisers are trying to reach), it also significantly cuts down on the return per page as an advertorial is essentially an unpaid ad. Couple that with continued cutbacks and layoffs on content creation staff, a strong push to use more material that is free or very, very low expense, and you’re creating products that appeal only to advertisers, and I’m pretty sure businesses aren’t improving their bottom lines much by buying their own stuff or reading publications that are basically echo chambers of their own marketing messages.


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