The broken business model of newspapers

About six weeks ago I took a week off work to catch up on life and do some research and testing of market opportunities. I had several hypotheses I wanted to test and sent content to a closed group of friends and colleagues. My goal was to watch how they reacted to it, to understand how time-poor people consume information…and it was an absolutely fascinating experience.

As part of this excercise, I took the task of reading all the major newspapers every day. It has literally been years since I’ve given that much attention to them – I used to read them daily, but my Gen-Y ways got the better of me, and I moved online. Unfortunately, I still can’t seem to manage my online rituals to efficiently consume information (hence the research I did – turns out other people are struggling as well). Something I realised in the course of my research, is that whilst newspapers are losing circulation due to the Internet – there is a lot they could do to really improve their competitiveness.

Too much detail
I tried reading the main newspapers word for word, and it took me hours. I don’t care how much people whine that they love the newspaper experience – the reality is, the people who read the news also work full-time. They barely have time to take out five minutes in their day; the reason people don’t read newspapers is because of the complexity of life. Personally I work through lunch; and if I don’t work, I am trying to do things in my life so as to make more time for myself after work. The weekend is literally the only time I have a chance to take a time out to read the newspaper – but given I neglect people in my personal life during the week and the myriad of other things I am involved in outside of work, means I don’t even get that chance. I rarely sit down – that’s why I read the news on my phone on the train.

Newspapers contain quality content, there is no doubt about that. However, if you are going to compete in the news business, you need to understand your audience: that’s all they want. If you read any news item in a newspaper, it will be flowered with extra facts, background information, and endless perspectives to colour the central issue. For example, an article about the Central Bank in Australia dropping its cash rate by 1% had several paragraphs talking about the exchange rate. Yes, it’s valid to talk about it – but there were another half dozen articles that did the same thing in the related coverage, and quite frankly, it’s a separate issue. Another article about the impact of the rate change on local business, makes mention that 50 million pizzas get sold through Dominoes Australia. Interesting stuff – but is it relevant to the news?

A newspaper should have a headline, and literally report just on that news. I’m not saying they shouldn’t report on the extra stuff – quite the contrary I love the extra stuff – but they fail to recognise that the problem with reading a newspaper is that it takes so long, and so people can only skim it. Report just the news, and let consumers follow up on the website with extra detail through special links provided.

Newspapers can’t compete in news any more
I was able to get copies of the major newspapers between 11pm and 12.40am – as in, the night before people usually buy it. Those newspapers had been delivered by a truck, after being printed in a factory far away, with thousands of copies being loaded and distributed earlier that evening. Of course, there is a staggered distribution with some newsagents getting them through the night and early morning (about 5am), but it’s still the same newspaper delivered at 12am as at the high profile newsagents.

The timeline for reporting news is a joke. The only hope a newspaper has in reporting news uniquely, is if it breaks it. By breaking news, it has a chance to take its time and frame the flow of information. But is this that common? Most newspapers use shared agencies to pool their resources with stories, like international news. Newspapers are being ignored by consumers, because they get news quicker on the Internet. Why must these media executives continue to ignore the reality that an online news organistaion is much more efficient in distributing breaking news. That’s why newspapers existed in the past, but they no longer fill that role in society – newspapers need to get out of that role (or become “news brand”, but no longer treating print as the prime distribution for that news).

The incentives and structures can’t compete with this new world
Journalists, especially freelancers, get paid by word count.
Readers, especially time poor ones, skim through the newspaper.

See a problem there? It’s called friction. In case you are a mass media executive, let me build on it for you: the economics of information have now changed. When your industry was created several hundred years ago, information was scarce and people had plenty of time. Today, it is people’s time (or “attention”) that is scarce, whereas information is abundant. Tradition through the “art” and skill of journalism seems to drive the industry more than its fundamental economic shifts. As I remarked at the Future of Media Summit several months back after hearing a mass media journalist rant on justifying her existence: “The skill of journalism? It’s just as relevant as the skill of sword makers. It’s nice, but I prefer a gun.”

A business that does not respond to its market, will die one day. The cost structures of the newspaper (and magazine industries) are sustaining a structure that no longer suits the market for which it supposedly caters for. Instead, it relies purely on generational factors of a Luddite population to sustain its circulation, trying to make money on a model that has now been broken.

What’s so exciting about this? The traditional media don’t get it, in the same way a bible-basher won’t accept there is no God despite presenting logic suggesting otherwise. I’ve heard this from friends in the industry, from people I’ve met at conferences, and from observing my own clients who are part of a broader media group.

Denial by a legacy industry can be a beautiful thing for an entrepreneur.

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