Innovation at newspapers: What direction?

Don't let Steve Yelvington's excellent rebuttal (started to say “analysis,” but it's more direct than that) to the American Press Institute “Newspaper Economic Action Plan” pass without due consideration.

The API plan points the newspaper industry toward paid or subsidized online content, with assumptions such as, “Consumers perceive that content produced by news organizations is valuable to them,” and, “Consumers will actually make content purchases when they are confronted with many free options.” Yelvington and others, such as Techdirt's Michael Masnick, tread through myriad reasons to suspect paid content models, so I'll set that argument aside.

I focused instead on Yelvington's last points:

“Many of these weaknesses were discussed at length several years ago in the API's first NewspaperNext report, which recommended that newspapers clean up and maximize their poorly operated current lines of business (advertising) and then aggressively seek to create new kinds of businesses predicated on an analysis of poorly met consumer needs — jobs that people are struggling to get done.

“Such new businesses may in fact yield direct revenue from consumers, but they are not a paid content strategy. The N2 path is one of innovation — starting small, starting at the low end, willing to make cheap mistakes and adjust quickly, and evolving new kinds of content and services.

“Any path that attempts to reverse 15 years of social and technological change and force individuals to suddenly assume primary responsibility for financing the the old content and services is doomed from the start.”

Commenters traded thoughts on the future of advertising. Hal O'Brien: “Newspapers aren't dying. Advertising is dying; it's just taking newspapers with it as the low-hanging fruit.” Then, Howard Owens: “Newspapers are dying not because it isn't a valuable distribution model, nor because its advertising is per se ineffective. Newspapers are dying because even the subscribers newspapers retain find their papers boring and out of touch.” Then, Taylor Walsh: “The more appropriate question is: 'How do you lash together audience and advertisers in the same online social experience?'”

To all these points, I add some observations:

  • Advertising (more precisely, marketing communications) is not dead or dying. It is morphing, evolving, becoming radically more efficient. All messages, whether commercial or not, over time become less expensive to ready, aim and fire — even if the receipt and absorption of a given message remains extremely important to the originator. A dollar spent on marcom next year, even adjusted for inflation, buys better message quality and more units of message delivered. Both gross revenues and margins for the intermediaries, if any, decrease. Eventually, the model's efficiency crowds out some intermediaries, leaving only those who find new ways to add value in the form of better quality or more efficient distribution per message.
  • I have said this before, but it bears repeating. Any business models that pay for journalism will derive progressively less value from adjacency to or distribution with the products of journalism. No reasonable model of traffic growth, format transformation, or inventory yield management gets a typical local newspaper.com's banner ads, alone, to a point where they can cover the typical local newsroom payroll. Yes, you can point to certain blogs and niche content collectives that cover their content costs with adjacent ads — but most such cases cover a lot more ground with a narrower focus and far fewer people than a typical local newsroom. A solo blogger, opinion leader, with a true global audience can make it work because that's much more market reach per dollar spent on content.
  • Newspapers that have attempted the “jobs to be done” innovation approach (I have some experience with this) struggled to find profound enough undone jobs in their local economies, or to sustain nascent businesses that address the ones they did find. Say all you want about the giant sucking sound of the core business; yes, that contributed to our difficulties with innovation. To me, the struggle also signals a marketplace reality: consumers and business leaders establish expectations of their local media companies, and do not always respond well to those companies' attempts to break out of the box. I believe, as a result, that newspaper companies should focus innovation on improving the suite of marketing solutions they offer to local businesses. So advertising is evolving, adjacency is dying, paid content's a non-starter. Fine, fine, fine, but businesses still have offers and messages they need to optimize, then put in front of current and prospective customers right now, again tomorrow, again the next day. Shouldn't we be equipped to help them do that? Shouldn't they expect that from us? Can't we do more than just sell space in print or on the Web, leaving them to fill it best they can?