Amid wall-to-wall news coverage about banks, insurance companies, auto manufacturers, and other pillars of the American economy that are buckling under the oppressive weight of the global financial crisis, the fact that the print media outlets reporting that news are themselves on the verge of financial ruin may be lost on readers.
Within the past few months, such venerable daily newspapers as The Cincinnati Post and the Rocky Mountain News have ceased to exist, the Seattle Post-Intelligencer has changed its format to an online-only publication, and rumors have swirled that the San Francisco Chronicle is next on the chopping block. These headlines behind the headlines serve as stark reminders that the publishing industry is changing dramatically and that print news outlets will need to learn how to adapt if they want to survive.
A new report from California-based research firm Outsell, Inc. outlines the problems with the publishing industry’s current business model and offers some advice on how to weather the economic storm. The firm’s “Information Industry Outlook 2009: No Guts, No Glory” has a cheeky title, but it aims to deliver some sobering news to media and information companies. Outsell CEO Anthea Stratigos, citing research from the report, says that many news outlets have suffered because they’re stuck in between the two viable market positions for information companies. She uses a retail metaphor to describe the two positions. The first is the Wal-Mart model. This category is composed of those few news outlets that have the resources and capacity to compete on the largest possible scale. Successful news aggregators and wire services—such as Google News and Reuters—occupy this end of the spectrum. The other end of the spectrum is the Tiffany’s model: boutique-style media outlets that aim to capture a focused readership by providing specialized information. ESPN and regional or local periodicals occupy this space.
One problem that may be plaguing beleaguered papers such as the Rocky Mountain News and the Seattle-Post Intelligencer is a reach that is too broad without enough boutique specialization. “Some [newspapers] are feeling pain from the economy, doubly so if they are operating with obsolete business or delivery models,” Stratigos says. “Other information providers, such as those specializing in market research, healthcare
or compliance, are somewhat recession proof or behave counter-cyclically in downturns.”
More broadly, newspapers and print publications are suffering across the board from loss of revenue due to declining advertising sales, which have fallen by a third since their peak in 2005. The old revenue-generating formulas are beginning to falter, so the industry as a whole is struggling to reinvent itself. As Stratigos sees it, there are three general areas in which innovative publishing companies are staying ahead of the curve: by effectively incorporating digital technologies into their business models, by modernizing their workflows, and by capitalizing on user-generated content.
The print media is currently a living laboratory for these three channels of innovation. The New York Times is once again flirting with the idea of charging online subscription fees, and The Christian Science Monitor has made the transition to being an online-only news outlet. The Huffington Post, which Outsell cites as one of its 30 companies to watch, was founded as an “internet newspaper” in 2005 and has been steadily gaining
traction and readership ever since. But The Huffington Post can’t claim to have figured out how to operate a self-sustaining free online news source just yet—the site is largely dependent on venture capital funding for its operating costs. It is nevertheless a template that traditional publications may look to as they ponder their own futures.
Pundits and prognosticators envision the oversaturated industry contracting until there are just a handful of “print” (in other words, nonbroadcast) news outlets left in the country and that those remaining outlets will charge subscription fees for online access just as their predecessors charged for daily newspaper delivery. At the rate that papers around the country have been disintegrating, the future may be here sooner than we think.