Newspapers: Innovate or Else!

The green shoots viewpoint on our economy holds that there will be new vitality within our businesses and households as our nation comes out of this recession.  The theory’s relevance depends, in part, upon how likely you believe it is that our country is bouncing back.  If you don’t put much faith in a higher Dow, and instead use unemployment as your metric, then you probably don’t have much reason to worry about the predictive value of green shoots.

Newspapers have traditionally been a cyclical industry whose rise and fall, driven by advertising revenue, corresponds to the health our larger economy. Newspaper ad pages grow when companies feel like consumers are ready to make buying decisions.  They shrink when businesses don’t see value, on the margins, of putting their brand before buyers.  If our economy is going to come back, green shooters might say that newspapers will be on the leading curve of that recovery.

That counters all of the evidence.  Ad pages are still down, and new revenue is going over to online vendors like Yahoo, or Google’s Doubleclick.

It is not just the Economy

This would be a sad story if newspapers were just victims of an external problem.  Ah, but that’s not the case.  Newspapers have been managed without any direction for some time.  They have hung on to old ways in spite of the changes brought on by the internet.  They have done little to demonstrate the value of their products to investors.

I did a fair amount of traveling last week. At each stop, I could see evidence of the mistakes, or the resulting shortcomings, or our newspapers.

On Thursday, I contacted about 10 North Carolina newspapers about our visit to DC.  Since we were working with people from cities all across North Carolina, there were a lot of small towns to call.  Rocky Mount was a good example – we had 15 people from a little town in Eastern North Carolina who were going to get on a bus and drive to DC to meet three congressmen and a host of federal regulators to talk about foreclosures – and in spite of that, the paper didn’t have time to write a brief. It’s a story that just writes itself!  It was early, way before deadlines!  Come on!

I contacted Winston-Salem – but they don’t have a business reporter.  Actually, Durham and High Point don’t have a business reporter either.  Staff FTEs are thin, and business reporting is often just something on the blur of metro.  One business section’s main story was that a local fast food restaurant had caught on fire.

I remember working for a local paper in the late 90s.  If we had gotten a tip about that story, the question would have been “do we ride the bus, or just cover them when they leave?”

On Friday, I spoke in Cleveland at a small conference on lending.  During the wrap-up, the speaker acknowledged that while all four of the panelists for this session were the same as last year, that only he could attend.  In the past, each panelist had been a business reporter from the local Cleveland business press (the Plain-Dealer, the weekly, and public radio.)  This year, all three reporters had been laid off, and the public radio person was unavailable.

On Saturday, I participated in a charity bicycle ride.  At the third rest stop, a photographer was taking pictures with a Canon professional digital camera.  “Are you with the Herald-Sun,” I asked. “Well,” he said, “I was, but now I am unemployed.”

Newspapers did this to themselves

Part of this is about a lack of competition. Since the 70s, newspapers have seen their competition dwindle.  There are very few two-newspaper towns anymore.  Joint operating agreements, in some instances, have preserved duopolistic arrangements, but only through a non-competitive agreement.

When a lack of competition from within existing suppliers was met by innovation, newspapers responded poorly.  They chose to cut staff.  (Scripps, McClatchy, Knight Ridder Tribune, New York Times…get the picture?) Our local paper has dropped from 250 reporters to just 130 in the last year alone. It makes no sense to strip away your product, but that is what they did.  Can you imagine if Coke, upon getting competition from water and tea drinks, decided to switch from 12 ounce cans to 6 ounce cans? That’s essentially what newspapers did. Recently, they’ve taken to offering that 6 ounce can at the price of a 20 ounce can – now my paper costs 75 cents and it has very little staff content.

Strategically, newspapers responded by focusing on community news.  The civic journalism movement, led by people like Davis Merritt in Wichita, created excellent reporting on basic civic issues.  That said, while the vanguard of civic journalism produced some great work.  But, people often criticized civic journalism for supporting a decision to lessen the role of international and national news in local papers.  That critique might not serve to convict civic coverage, but it was prescient: in the last decade, we have witnessed the death of the newspaper bureau. The industry made decisions to steer away from some of the content that readers had grown to appreciate.

The internet, with its ability to track readers, has demonstrated that people like to read about national news. David Brooks once commented that if he wanted to get a lot of readers for his stories, he would put something in the title about either Obama or spouses – everyone has something to say about both of those things.

Then, there is the possibility that newspapers failed because they tried to do the right thing, but they went about it the wrong way. Going back to the idea of local journalism, it appears that readers do want some local coverage.  Online readership is flocking to hyper-local journalism (i.e. Everyblock).  Forbes is trying to mimic that, but there are some challenges to overcome with the kinds of staff costs that go with journalism of that caliber.

Going back to my own experience, I see how online sites have redesigned the structure of information to pick up bits and pieces of the kinds of content that local papers used to provide.  Yelp.Com, for instance, is providing local coverage of community businesses.  It’s shallow and wide – with five-star ratings aggregated within metro areas, driven by entirely voluntary commentary.  Newspapers could have had that business with their own online sites.  Instead, they are just providing us with the same movie reviews, only now they come from the Associated Press instead of our local reviewer.