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December 21, 2007 / Toby Dayton

Disaggregating Newspapers Won’t Help Most Dailies

In an interesting post yesterday, Dave Morgan (Executive V.P. of Global Advertising Strategy for AOL) suggests that by disaggregating their businesses and opening up each component part to operate and even compete independently, daily newspapers can save themselves from complete oblivion. Clearly, there is some merit to Morgan’s argument, and some papers (mostly in the weekly newspaper and alternative publishing segments) have already started to take small steps down this path. I also agree with Morgan that the vast majority of dailies in the U.S. will eventually have to transform their business models (radically in most cases) in order to survive. The problem is that very few daily newspapers are equipped to manage such a transformation. Not only is management, for the most part, completely resistant to change, but the core, fundamental characteristics of the daily newspapers themselves are simply not suited for the types of changes that Morgan and the shifting, competitive landscape demand.

Local News & News Editing – Morgan proposes that local dailies license their news, reporting, and investigative journalism content to other local, national, and international sites. Unfortunately, the quality of this product has been curtailed dramatically over the past few years as the dailies have reduced staff, eliminated columnists, and shut down bureaus. In the past year, I have kept loose track of the major local stories that I read about first in other newspapers or on the web (from both professional sources and blogs), and it’s astounding how rarely the Star Tribune (our local daily in Minneapolis) is the original source for local news. There is simply not enough value in this product to allow local dailies to sell, in sufficient volume, their content.

Distribution – Newspapers do have the potential to add revenue streams from their distribution networks, but is it big enough to warrant a separate business? And as newspaper subscribers continue to decline, the number of households served will diminish over time, and the value of the network will deteriorate.

Ad Sales & Direct Marketing – Morgan suggests that newspapers can sell advertising for media vehicles other than just the daily paper. I cannot imagine a media business ever turning even a portion of their sales operation over to the dailies. Daily newspapers have never developed a true sales culture within their organizations. Ever. As monopolists in their markets, at least until the arrival of the internet and alternative weeklies, their sales forces have always been and largely still are simply order takers who do little more than ask for a credit card number and the print-ready copy of the ad to be placed in the paper. Despite some pretty favorable attributes they enjoyed a decade ago and what was then a decent head-start lead over the web (which has obviously evaporated since), newspapers have struggled massively to transition to a more sales-oriented culture that can effectively sell to customers who are increasingly demanding a unique, measurable, and significant value proposition. Other than an extremely small number of exceptions, newspapers will never be able to generate revenue by selling advertising for other media properties.

Printing – Most newspapers are already generating revenue by turning their printing operations into a profit center. Unfortunately, this hasn’t helped much to this point as evidenced by the horrendous performance of the large newspapers around the country.

Digital – Morgan suggests that newspapers could help themselves by letting their web teams loose to compete in the open market. Much like the argument against them letting their sales force loose, I cannot imagine turning to the local newspaper’s web/digital teams for anything. Most local newspaper web sites (and I mean local – not the Washington Post, New York Times, or Wall Street Journal) are poorly designed, difficult or impossible to navigate, utilize antiquated search, and annoy readers with features and advertising that few care about. Even worse, most newspaper sites are years behind in the adoption of web technology. This is precisely why newspapers are in the predicament they’re in – they simply aren’t able to compete against smaller, smarter, nimbler, more innovative companies that have grabbed market share away from them. So why would anyone suspect that those same in-house assets have the faintest hope of competing in the marketplace?

Disaggregating newspapers into smaller businesses will not save most daily newspapers. Having said that, however, I do think that many will do exactly what Morgan advocates – some by choice, and some because they have no choice. But in the end, it won’t make much difference. The newspaper business has seen its best days.

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[tags]Daily newspapers, Death of the Dailies, Dave Morgan, Why Newspapers Are Failing[/tags]