Designs for Success

If newspapers wish to be profitable, they need to stop thinking PAPER. Years ago in school, I read a Harvard Business Review article from Theodore Levitt, first published in 1960 (and updated since), that challenged businesses to understand the business they were actually engaged in. The article noted how railroads ignored the airplane industry as they saw themselves in the railroad business instead of the transportation business and how Hollywood studios ignored for decades the power of and profits from television.

You see that same stubborn myopia today with the Internet. While the world has embraced the Internet, the music industry, the motion picture industry, and the newspaper industry have either ignored or fought against new technologies every step of the way. When video tapes (betamax and VHS) first appeared for public use, the movie industry went to court to prevent people from owning or recording movies. They feared people would stop going to theatres. Today, the successor to the video tape, the DVD, now accounts for 30% greater sales than box office receipts. What will broadband sales and rentals be when the movie industry finally not only accepts the technology, but embraces it?

Here in Denver, the remaining daily newspaper, The Denver Post, charges $30 per year for the ability to view a digital copy of each day’s newspaper. For your $30 you are able to view page by page, ad by ad the exact layout of the paper you could have delivered to you doorstep for $100 a year.  At the same time,  anyone can go to denverpost.com and conduct a search for any person or subject and get just news they want for free. So why pay the $30? For the ads??? Well, as it turns out (apparently unbeknown to those working at the newspaper), advertising is what pays the salaries of the reporters and staff, and those businesses who shell out thousands and thousands of dollars each day for each individual ad are ignored and pushed aside. Advertising rates have not kept pace with decreased circulation. They have in fact increased. So where is the incentive for advertisers to continue supporting a medium that is bleeding customers?

The Denver Post (and all major daily newspapers) should reverse it’s online model. They should give away FREE the digital representation of the daily newspaper (with an online registration for email campaigns) and let the advertisers, who in point of fact allow the lights to stay on, profit from the increased exposure for their ads in the paper and charge for the luxury of searching specific articles or topics. Consumers who are willing to peruse the paper (and all its advertisements) can do so FREE to their heart’s content. Those who really want to dig deeper into a story and read every story over the past several years about a specific person or topic, then  pay , whether by the search or by subscription.

Let’s take this concept to the next level and say each paper allows consumers to customize their online news with the sections and stories of interest to them, in a format such as iGoogle or Yahoo. All you need to get this Free custom online news is register and sign up on the Newspaper’s website.  Now, imagine instead of spending the hundreds of thousands of dollars a year a newspaper does advertising paper, it promotes  its online news product.  Imagine after a period of time promoting FREE news with an email signup, the database the newspaper would have to lease to advertisers. There is still plenty of money to be made in providing news and information….the newspaper companies just have to start thinking off the printed page.