The stories of woe in the newspaper business have been dire for a while. But lately they've gotten worse, as Tribune Company filed for bankruptcy and rumors abound that The New York Times Company is looking to sell real estate in order to stay alive. Of course, selling an asset like buildings to subsidize a business like printing newspapers is not a good idea – robbing Peter to pay Paul only delays the day of reckoning. And in the meantime investors are robbed of value while employees are given false hopes of improved business conditions. As we've seen at GM, selling EDS, Hughes and GMAC to subsidize auto manufacturing has not helped management build a stronger company.
And speaking of Detroit, rumor now is that the Detroit Newspaper Partnership, which runs the Detroit Free Press for Gannett and Detroit News for MediaNews Group, will stop printing the newspaper for delivery except on Thursday, Friday and Sunday. Other days will be a single-copy purchase product, very limited. (Read about the changes here.)
The only thing suprising about this announcement is how long it took to happen! By far the highest cost of a newspaper is printing it. Second is delivering it to homes. With subscriptions falling, the economics of distribution have been worsening dramatically. You really want everyone to take the paper as you drive down a street – not one in 3 or one in 4. That creates a compelling reason to advertise, and the cost of distribution low. But the news organizations have been cutting costs of reporters, editors, copyeditors, graphic artists, page layout professionals – all the people who report and relay the news. And in the process, the product has gotten considerably worse. In all cities – not just Detroit.
Obviously, what people value is the news. Not the paper. Today, acquiring news is far faster and easier by checking on-line than reading a newspaper. Thus, newspaper subscribers have been dropping fast. Of those that continue subscribing, estimates range as high as 50% who only continue because they want the advertising inserts on Sunday. But increasingly those ads are being delivered directly to the mail box. As for browsing the news, almost everyone today has multiple options for keeping up with current events via CNN, Fox, MSNBC, CNBC, Fox Business and other television sources. Many businesses run these stations in the background during the workday, making current events very immediate and a lot easier to track than reading a day-old rendition via a paper.
Unfortunately, when we look for news on-line we find that the leading newspaper companies have not been good at taking their most valuable proposition to the distribution system people most want. There are no markets where the "newspaper" has the leading news website. People don't go to NYT.com, or ChicagoTribune.com or LATimes.com or even WSJ.com for most of their news. Readers get what they want faster and easier from superior sources that know not only how to find news, but how to post it fast and make their sites a lot more valuable. And learning how to have a valuable (and profitable) web site is not where these companies have invested their money the last 10 years. By trying to Defend & Extend the paper, they missed learning how to maintain their status as news distribution shifted on-line.
There's an old phrase in newspapers – "Don't bury the lead." It refers to writers spending too long on facts before getting to the "so what." Within these newspaper companies, they buried the value of their business. News was their business – not printing on paper. But Lock-in to old ways of doing business kept them focused on printing papers until…. well…. we see many shutting down and some declaring bankruptcy. Meanwhile, the demand for current news is growing faster than ever! The number of web searches for news articles, and news sites, and blogs keeps growing every month!
Back in Detroit, it's high time some newspaper group finally Disrupted itself and started focusing on what it needs to do, rather than what it want to do (and has always done). In Detroit, people are very worried. Business is terrible. Advertising has fallen off the proverbial cliff. It was only when facing extinction that these papers finally considered focusing on-line rather than focusing on print. It may be too late in Detroit. These organizations have not built strong capability, and they've run out of resources before trying to change. When you fall into the Whirlpool of failure, not much can save you.
But for other news companies, the time for Disruption is NOW. Everyone knows that newspapers are an inefficient news mechanism. Everyone knows that eventually they will be obsolete. Instead of leading the change to on-line, these companies have resisted – hoping they could Defend & Extend their models "another year or two." That is not a strategy – and the tactics rarely work. To be a vital competitor, businesses have to address market shifts by building future scenarios that take into account changes. And then Disrupt their old ways – create a pattern interrupt allowing themselves to fully realize that the future simply canNOT be like the past. Only after Disruption can White Space help develop a new Success Formula.
Let's hope many of struggling news organizations take the time now to Disrupt. If not, if they try to Defend & Extend much longer, they will disappear. And that will be terrible for all of us that depend on these local news groups to tell us what's happening in our towns, counties and states. Not only will investors be wiped out, but the fabric of our communities will be shattered if we lose these local reporters keeping us current about what's happening at the school board and city meetings – and we can't depend upon 15 second television bites to really inform us.