Innovation

As we watch to see if Chrysler disappears into GM: Well, the U.S. auto industry is widely condemned for 30 years of management short-sightedness, and who's going to defend it?

Yet the U.S. auto industry consisted of three companies. The newspaper industry is condemned for not developing Monster, or eBay, or Craigslist, or, in some truly over-the-top moments, Google. (Asking why the newspaper business did not develop Google is like asking why GM did not develop the Atlas rocket. Why exactly would it have?) But think back to 10 years ago, when the Web is four or five years old, and newspapers were starting to put content online. What did the newspaper industry consist of in 1998?

Well, the publicly held companies that were reviled for putting profits first -- Knight Ridder, Tribune, Gannett, Journal Register. And then the two-tier stock companies such as NYT, Times Mirror, Dow Jones-Ottaway, Belo, Scripps, Post, and McClatchy, which at the time was a small company. Occasionally reviled, occasionally not.

And then the privately held giants like Hearst, Advance, Freedom and Media News. And then a host of smaller companies -- Seattle Times, Block, Central, Wehco, Morris, Media General, Cox, Copley, Guy Gannett, Pulitzer, Lee, Landmark, Donrey-Stevens, Pioneer, Swift.

And then even smaller companies with still significant holdings such as World-Herald, Forum, Ogden, Schurz, Nixon, Post & Courier, Harris. And then the independent companies in places like Cedar Rapids and Youngstown and Atlantic City and Hackensack and Arlington Heights.

They all stand in the dock accused of not developing Craigslist? Of not throwing out the old model and putting every bet on the new? Of putting short-sighted profits ahead of long-term gains? We're ranging from the occasionally bombastic and dynasty-obsessed Frank Blethen in Seattle to the quiet down-home Marcils in North Dakota, from the back-and-forth futurism of Knight Ridder and the Cue Cat fiasco at Belo to the print-is-first Walter Hussman in Little Rock. We're ranging from companies that looked for 35 percent margins to ones that were happy with 5.

If there was a way to get it right, someone, somewhere, would have done it. (And indeed, the newspaper business is full of many success stories, and despite the secular components of change, there is a cyclical nature to the newspaper economics of late 2008 as well. Most journalists, of course, ignore the successes because they happen in places like Anniston and Oklahoma City where they do not really want to end up.) This is not three giant companies, based a few miles apart, operating under nearly identical contracts. Newspapers may have been local monopolies, but nationally it was a very diverse group of businesses.

Journalists are good at pointing out how solutions could be easily obtained by doing the right thing, spending lots of other people's money and not worrying about the cost. And journalists are often pretty certain what the right thing is. But sometimes, when you eliminate the blogs of the "we saw the future in 1985" tech-editors-turned-consultants who are still angry about not having been able to do what they wanted, you are left with: We are going to lose our jobs, and it's your fault, you should have done something. We trusted you. What we do is important and so you should have taken better care of us.

Well, yes, in the early 1950s, the Big Three could have seen that given the potential of increased foreign competition, higher oil prices, the growth of environmentalism, exponential changes in health care and mortality rates, and the failure of the United States to comprehensively address medical insurance for decades while every other industrialized country did so -- so knowing, it should not have signed pattern labor contracts that essentially guaranteed health benefits for life to retirees and encouraged them to retire early, in return for relative labor peace to satisfy the post-World War II demand for cars, cars and more cars. Right.

Companies without the same legacy, operating under different conditions and political systems, with factories they had to rebuild because of wartime destruction, from markets where space was less prevalent, roads were worse and gasoline was four times as costly, would come up with different solutions not because they were freaking geniuses, but because they had a different frame of reference. What we're really reacting to is the same thing Michael Moore has said since "Roger & Me" -- why is it that the worker for a long-established successful company finds himself unemployed when it's not his fault, he's done his job well? It must be greed and incompetence. It can't just be, sometimes you win and sometimes you lose.

The newspaper business has made myriad mistakes and few of its business leaders are terribly admirable. But it makes no sense to accuse it of not acting from 1993 on, or even today, as if it were a startup Internet business, or a hobby like Craigslist that just grew, or a program to organize all the world's information. Most innovation does not come from established players -- and should not be expected to.

It's tempting to think that a publisher could just stand up and say, "I'm shutting down the presses, laying off all the drivers and pressmen and carriers and circulation people and the classified ad-takers and a lot of the business side people, and I'm doing this so that we can save the news content and the reporters' jobs." Nice, but egocentric. The publisher has to operate the business he has, not the business he might start today if he were 21 and willing to starve for a while. It's true that the end product of the revolution in information may be the end of the newspaper companies we have known. That would be a shame, and readers of this blog know I do not believe it is inevitable or that the future does not involve print. But to expect that leaders of newspaper companies in the U.S. would have solved this problem by somehow developing Monster or Craigslist themselves is looking for a scapegoat. It comes from the same source as saying that if the publisher was just willing to live on $30,000 a year, eliminate all bonuses, dividends and payments to the owners, and give all that money to the newsroom, the newspaper would be a success, because think of all the great stories we could do. (CareerBuilder did take on Monster with some success. But when they have to compete with free, with niche job boards, etc., even if the newspaper business had created Monster first, it could not have kept all that classified dough rolling in. I am told that the job market in the rest of the world tends to be more localized than in North America, which has led to more success for newspapers overseas in holding onto help-wanted classifieds, which until the real estate collapse was the main source of newspapers' recent economic woes.)

The problem now is that newspaper companies are so confused that they cannot even figure out how to be successful newspaper companies, and they are surrounded by people telling them that they should not even try. It is hard in a cascading-to-the-bottom economy, but they really need to get a grip. More to come next week (as if this wasn't enough!)