Thursday, May 31, 2012

The Newhouse model

Gee, has it really been two months away. ACES conference. Problems with a new editing system. Moving the newsroom. New owners. Inflamed Achilles tendon. Probably have lost all my readers. Thought about just letting it fade away -- who blogs now, anyway... Whoops, it turns out that's the answer!

As Charles Apple said in his great blog for ACES, we will remember the day -- the day when Advance Publications turned its Digital All-In strategy from a curiosity associated with the poor economy in Michigan into an incipient national policy by saying that its newspapers in Birmingham, Mobile, Huntsville, and New Orleans -- gasp, New Orleans, where we still remember people eagerly scooping up Times-Picayunes after Katrina, where the newspaper has proudly boasted of its highest household penetration rate in the nation -- will move to three-day-a-week publication in print and put their major emphasis online.

There are many things to be cynical about here -- this will result in a large loss not only of jobs, but of compensation as people must reapply for jobs. To hear it discussed, daily coverage may be more on a blog model. I don't know how Advance runs these days, but in the old days when I worked in Flint, the model was -- as long as you made enough money that you did your proportional share of supporting the Newhouse family, what you did with the rest of it was up to you. When times were good, this meant that many once-mediocre papers -- such as the Times-Picayune -- suddenly became really good. Now times are bad and are projected to remain so forever. And these papers are in monopoly markets (in the old days) and so Advance can do whatever it wants -- as opposed to, say, the family's beloved Newark Star-Ledger. As a diehard printie, I have been in mourning for days.

But at the same time I have to look at this from the other angle and see it this way -- is Advance the only company that really is committed to the philosophy of Digital First as opposed to merely talking the talk? Earl Wilkinson of the International Newsmedia Marketing Association has been writing extensively about how publishers are saying the biggest enemy in their embracing the future is their own staffs -- people who grew up in the newspaper business, were successful in it, loved it, adapted to it, and really can't think of how to do things except in the way they were taught to do it for decades. (As a new story in Philadelphia Magazine puts it about the owners of alt-weeklies: "It’s that they care just enough to be paralyzed—to lean back and do nothing and watch their papers, their brands, their properties, bleed."

(Note to reader: This is a really long post, but it didn't provide a good way to break it into two.)

In newspapers, we study things, we analyze the risks, we create committees, we do mockups, we expect that the time and money to do things the "right" way should be provided. We don't like things that damage our historical integrity. We like to build securely on the foundation we have established, to make things that will stand the test of time. Meanwhile, people who do not care about these things as much keep developing new online products that people immediately flock to and love, even if their attention proves fickle and they abandon them a few months later. As a former Australian newspaper executive put it: "Forests of customers are not holding their breath, waiting for a newspaper to launch with a new font or with a few more photos, or a new writer or two. In fact, they are not waiting for anything. People are quite happy with the news they are receiving, whether from news brands or Facebook or Twitter. It is up to publishers to provide them with an alternative that is better than what they are now content to consume."

I don't like the fact that publishers seem to be blaming their problems on the people who work for them. Generally people will follow a clear direction, and you play the cards you're dealt. But Advance has apparently decided to have a new deal. And these sometimes are people who, as with the executives of Media General, just said for years, "Heck, we've got a strong business and we just have to cut to keep it afloat," instead of saying, "Holy cow, something's gone really wrong here." And now they blame their staffs? C'mon. But still...

The Internet utopians and digiterati for years have been saying, "Stop trying to defend your dying or dead print business." Had they simply used the word "declining," they might have gotten more traction. But they had seen the future and had little respect for those who had not. And those who held the fort thus felt they had to defend it, because -- that's what you do when under attack. Still, other than screaming "Never trust anyone who wants to run a printing press," what was being said?

  • Newspapers have to be smaller. People have more things to read and no longer are willing to block out 20 minutes to just "read the paper."
  • Newspapers that simply state the next morning what people already know are irrelevant.
  • The cost structure of daily print newspapers is not sustainable without classified revenue.
  • People during a week go back and forth among print and online.
  • It's not that many young people don't read print newspapers -- it's that they don't want seven-day delivery.
  • The mistake many newspapers made with online -- well, one of the mistakes -- was to base the cost structure not on being a startup or smaller, lower-paying venture, but to run them as corporate divisions with the staffing a mature organization would bring.
  • The "story" -- in terms of being the 20-inch summing-up -- no longer works for some news events. People want little bits of update -- to follow the story in real time like it was a TV show. The omniscient lead is off-putting.
  • All that money that's going to defend and support the "declining" print product should be spent on digital development instead. In the short run it may look like throwing good money after bad, but in the long run if you don't, you'll be stuck with a print product no one reads and a digital product -- no one reads.
  • The skills of your legacy staff may not match today's business requirements, no matter if you have the best newspaper staff in the country.
  • Local news isn't as important to provide daily as national news. People like to catch up on their community once or twice a week. They want to gossip about Obama or Romney every day.
  • Instead of trying to serve everyone in the market -- the business model of "our customers are everyone within range of our trucks" -- figure out who your customers really are, serve them, and forget most of the rest.
Lots of companies have said, "Well, Digital First." But it seems that only Advance Publications -- which was forced into this in Michigan by the Detroit papers' decision to cut back home delivery while still printing seven days a week (which I have been told, although not authoritatively, had something to do with a condition in the JOA agreement affecting Media News Group's share of the pie if it didn't publish a daily newspaper until 2012) and the resulting loss of preprint business in its newspapers in Ann Arbor, Flint, Saginaw and Bay City, which were reeling from the then-current collapse of the auto business already -- said, as a result, "You know, we can do this today. We don't need to keep the daily newspaper alive for a couple more years. We can turn it into a thrice-weekly and suffer no ill effect -- because, except for Sunday, no one buys the paper for anything except ads anyway." (Last part my interpretation.)

At first the answer was to kill the Ann Arbor News -- which, although a reasonably large and seemingly successful paper, had had market penetration problems for years and was getting weaker as Ann Arbor became ever more a suburb of Detroit -- replacing it with a twice-weekly mix of hometown-weekly and alt-magazine -- and drop the other papers back to three days a week. Demand -- apparently much of it by politicians who wanted their night meetings covered -- brought back a fourth day outstate. But the seed was planted. What was the point of a Saturday paper if people could get high school sports online? What was the point of a Monday paper if the only real news in it was sports? And what was the point of a Tuesday paper since Tuesday had always been the weakest ad day after Saturday? Here was a model. Maybe. Maybe we didn't want to do it, but we did it.

For the rest of Michigan, a different model was tried later -- the Detroit model of seven-day publication, but three-day home delivery. Apparently the conclusion Advance has drawn is either 1) if you're only going to home deliver three days, you don't need the other four days in print, or 2) further research is needed to see if you can get away with just the three-day-a-week print paper.

Also, it appears -- I'm not completely sure -- that Advance is going to a more blog-centric model for breaking news. Now, the Los Angeles Times has done this online, but then has people write a print paper story as well, or offers one or the other -- it seems that in New Orleans nothing will be written specifically for the paper, everything will be repurposed. Really, the print paper will only exist as something for people to be weaned off of. And this is quite a volte-face, for until recently Advance had been using Birmingham as a model of its commitment to print.

(At this point it is worth noting that one of Newhouse's advisers is Jeff Jarvis. Longtime readers of this column will, of course, know that name. Jeff has at least, apparently, learned not to scream, "Print is dead." One assumes he is now getting consulting contracts from people who do not wish him to say that.)

To do this, Advance in Alabama and Louisiana is getting rid of a number of things:
  • As in Michigan, it's getting rid of its old newspaper buildings, moving reporters and assigning editors into smaller downtown offices.
  • By reorganizing itself as a new company (NOLA Live) or whatever that's in a fundamentally different business (no longer a daily newspaper), it is in essence laying off its entire staff and hiring back who it wants -- at, in many cases, doubtless lesser pay.
  • By eliminating seven-day delivery, it will abandon that sizable chunk of senior-citizen readers who don't have computers or who buy the paper every day just to work the puzzle -- but whom advertisers have no interest in reaching, because they don't buy anything. It can do this because with new ABC rules including digital editions, the hit to circulation figures will not be as extensive.
  • By eliminating a lot of production costs, it will be able to adjust its profits -- and the Newhouse family's checks -- more toward what an online site can actually produce, which will never be what print could.
  • By making the print product into essentially a higher-class triweekly, it can compress advertising into three days, presumably making it a more efficient vehicle for the print advertiser.
One has to assume that based on its experiences in Michigan, Advance believes this will work. One also has to assume that Advance, by being willing to wager the farm in a way no one else has, is willing to say -- if it doesn't work and our papers fade into irrelevance, well, they were going out of business anyway in the long run and at least we weren't subsidizing the same level of losses in the short. If we lose the franchise, we were going to lose it anyway. This is, after all, the company that let the Long Island Press, one of America's largest dailies, simply wither into insignificance. And let's not forget the St. Louis Globe-Democrat.

As an earlier edition of this blog noted, we have now entered the era where some cities will have daily newspapers and others will not depending merely upon who owns the franchise. (Papers near New Orleans, such as the Baton Rouge Advocate, have said they will continue seven-day publication. Indeed, there are still seven-day papers near Detroit.) What happens to the daily paper in your town now depends on its owners' long-term business strategy.

What this means to the people of New Orleans who have seen the Times-Picayune as part of their city's rebirth; what this means to the people of Birmingham who have seen the News as a vital part of investigating the county's miasma of bad decisions; what this means to the people of Huntsville, Mobile and Pascagoula, who suddenly live in cities without daily newspapers -- this remains to be seen. Some opportunists will jump on this bandwagon in other cities, others will "study it with interest" but hold back to see the advertising numbers at the end of the year. The same thing is happening in England, where the Johnstone Press has said that by 2020 it expects most of its papers to be weeklies, whereas another major publisher has said it is basing its strategy on seven days in print now and then.

Advance did a heck of a job in its own papers of trying to spin this as a wonderful thing, an advance, so to speak, and not do the usual newspaper thing of "To our readers, we regret that circumstances cause us to..." And as meters and pay walls grow in popularity, more publishers will be saying -- if I can get circulation revenue off digital, why should I pay for diesel fuel and ink? On the other hand, the daily print newspaper has been a market avatar. Why throw away the thing that makes you distinctive? As David Carr noted in the New York Times, "A newspaper, even one short on advertising, is a great ad for at least one thing: the paper itself. The constancy of a daily paper — in the rack at the convenience store on Frenchman Street or on the tables of the coffeehouse on Maple Street — is a reminder to a city that someone is out there watching. Important journalism will still be done at The Times-Picayune. ... But you have to wonder whether it will still have the same impact when it doesn’t land day after day on doorsteps all over the city."

And what does this do to the civic leadership of these towns -- is a daily newspaper something like a symphony orchestra, something you need to have to be taken seriously even if it doesn't make money? (The civic leadership is still largely people who grew up with and were validated by newspapers.) And while we're at it, what exactly is Warren Buffett's strategy for Omaha and Richmond and Greensboro?

But we have now crossed a line. A major newspaper publisher has said it is no longer necessary for a major city to have a major daily print newspaper. Now, the ball is in the hands of the readers. My gut feeling: Many of them will say how sorry they are and how much they miss it -- on social media, as they look for links to things friends tell them they want to read..