Why Newspapers are Screwed, and How They Can Become Great Again.
There's been a lot of talk lately about how Newspapers are failing, and they in turn have enjoyed blaming the internet in general, and Google in particular for "stealing" their headlines. It's a funny argument seeing as Google sends them free traffic, but it remains popular amongst the old newspaper companies.
To see how ludicrous it is, let's journey back 15 years to the days before the internet. (If you used the internet 15 years ago, just go back further. Not much changed for many decades back then.)
Back then, when they wanted to sell a newspaper, they would write eye-catching headlines and then put them prominently on every newsstand and street corner. The headline was free, but if you wanted the story it would cost you a few quarters.
(Some people argue that the newspaper companies are hurting because they're losing the $0.xx/paper they charge. This is silly, since if you wanted to have a pound of blank paper delivered to your house every day it would cost a lot more than that. The newspapers can finally skip all the expenses of actually printing a paper. They should be happy.)
In those days, if a newsstand wasn't displaying the headlines prominently enough, the newspaper company would threaten the newsstand with horrible things if it didn't shape up. If you go back far enough, you'd have kids on the corner yelling "Extra! Extra! [Headline here]".
So back then using headlines to drive traffic to your paper was the whole idea. Now they want to sue the "virtual newsstand". They should be grateful for the free traffic but they're not. The fundamental reason they complain, is that they aren't making money off of web-pages with articles. It costs more to research the story than you can get paid from ads on it.
The secret is, a page with news was NEVER profitable, even when the page was physically paper.
The way newspapers made money back then, was selling ads for stuff that had very little to do with the news. Classifieds, announcements, job listings, automotive listings, real estate listings, movie times, and even government notices were all very profitable pages of the news paper.
If you'll recall back in those days, if you wanted to know when a movie was playing, you looked in the paper. There was a small table with the showtimes, and it was surrounded by ads. The content cost almost nothing to create, and the advertising was highly targeted to people who wanted to watch a movie.
These and the other "verticals" as they're called were like printing money for the papers. The companies used the news as an excuse to get into everyones home, and then provided all these profitable verticals to pay for it.
Of course today, if you want to buy a car, you go to vehix.com. Jobs are at monster.com. Classifieds are at craigslist.com. If you don't know where to look, there's Google. Most of what we used to use newspapers for is now on the internet.
Newspaper companies are getting slaughtered. They saw the internet coming, and did a pretty good job of moving their news online, but they forgot about the rest (i.e. money making part) of their business. There's no reason a newspaper company couldn't have turned their automotive section into vehix.com. Same with their classifieds, or movie listings.
Instead of creating an "internet worthy" set of vertical sites, they mearly reprinted the listings from their papers, usually with low quality graphics, or no pictures at all. No wonder someone swooped in and created monster.com. The internet enabled a better job hunting experience, but the newspaper companies didn't use their expertise in the area to make the best website.
The papers are in big trouble now because when I want to know movie times I ask Google or Fandango. Same with classifieds, home listings, and almost anything else. The only thing I still want from newspaper companies is news from their website. I certainly have no reason to buy a physical newspaper.
They can complain all they want, but they'll never get all those verticals back in their control. Their only options now are to go out of business, or figure out how to make money off the news.
There's lots of ideas for the latter, including micro-payments or subscriptions, but in the end there's going to exist free, ad supported news out there, so anything else is going to fail. That just leaves making more money from the ads. There's two ways to do that: Make the advertisers pay more per viewer, or get more page views. Ironically both of these viable solutions are exactly the things Google helps newspapers do.
There's still going to be a lot of shake out in the industry. For decades every newspaper has posted almost identical articles about everything. Usually these articles were bought from a pool like the AP, or Reuters. The internet doesn't need hundreds of identical articles for every story, and hundreds of newspapers aren't adding value any more. Those papers are going to fail in the internet age. Once the number of papers starts to fall, though, the power of the internet will finally do the impossible: With enough viewers, it will be profitable to put a news article on a page. And as we've seen from hundreds of companies, the profits on the internet can be huge.
Out of this newspaper apocalypse, there will emerge a few dozen papers who will have incredibly trusted brands, and will be known for their high quality news. They will write articles that are aimed primarily at internet readers. We demand immediate news, with updates that know what we've already read. We need multimedia that is interactive. We expect hyper-links to original sources and more information.
Each paper that succeeds at this transformation will get readership that was inconceivable 15 years ago: Tens or even Hundreds of Millions of readers! Advertisers will also be able to sell very targeted ads to these readers, and will pay far higher rates than they do today. The result will be record income. Free from having hundreds of staff writing up movie times, or running printing presses, these new "papers" will be able to spend more on real journalists, to write more articles. The magic of the internet will connect readers with articles about obscure topics. The result will further build the newspaper brand, and increase the number of pages and ads shown. This virtuous cycle will make these companies incredibly successful members of the internet age.
The question now is which papers will stop looking backwards, and start transforming themselves into the great news brands of the future.
To see how ludicrous it is, let's journey back 15 years to the days before the internet. (If you used the internet 15 years ago, just go back further. Not much changed for many decades back then.)
Back then, when they wanted to sell a newspaper, they would write eye-catching headlines and then put them prominently on every newsstand and street corner. The headline was free, but if you wanted the story it would cost you a few quarters.
(Some people argue that the newspaper companies are hurting because they're losing the $0.xx/paper they charge. This is silly, since if you wanted to have a pound of blank paper delivered to your house every day it would cost a lot more than that. The newspapers can finally skip all the expenses of actually printing a paper. They should be happy.)
In those days, if a newsstand wasn't displaying the headlines prominently enough, the newspaper company would threaten the newsstand with horrible things if it didn't shape up. If you go back far enough, you'd have kids on the corner yelling "Extra! Extra! [Headline here]".
So back then using headlines to drive traffic to your paper was the whole idea. Now they want to sue the "virtual newsstand". They should be grateful for the free traffic but they're not. The fundamental reason they complain, is that they aren't making money off of web-pages with articles. It costs more to research the story than you can get paid from ads on it.
The secret is, a page with news was NEVER profitable, even when the page was physically paper.
The way newspapers made money back then, was selling ads for stuff that had very little to do with the news. Classifieds, announcements, job listings, automotive listings, real estate listings, movie times, and even government notices were all very profitable pages of the news paper.
If you'll recall back in those days, if you wanted to know when a movie was playing, you looked in the paper. There was a small table with the showtimes, and it was surrounded by ads. The content cost almost nothing to create, and the advertising was highly targeted to people who wanted to watch a movie.
These and the other "verticals" as they're called were like printing money for the papers. The companies used the news as an excuse to get into everyones home, and then provided all these profitable verticals to pay for it.
Of course today, if you want to buy a car, you go to vehix.com. Jobs are at monster.com. Classifieds are at craigslist.com. If you don't know where to look, there's Google. Most of what we used to use newspapers for is now on the internet.
Newspaper companies are getting slaughtered. They saw the internet coming, and did a pretty good job of moving their news online, but they forgot about the rest (i.e. money making part) of their business. There's no reason a newspaper company couldn't have turned their automotive section into vehix.com. Same with their classifieds, or movie listings.
Instead of creating an "internet worthy" set of vertical sites, they mearly reprinted the listings from their papers, usually with low quality graphics, or no pictures at all. No wonder someone swooped in and created monster.com. The internet enabled a better job hunting experience, but the newspaper companies didn't use their expertise in the area to make the best website.
The papers are in big trouble now because when I want to know movie times I ask Google or Fandango. Same with classifieds, home listings, and almost anything else. The only thing I still want from newspaper companies is news from their website. I certainly have no reason to buy a physical newspaper.
They can complain all they want, but they'll never get all those verticals back in their control. Their only options now are to go out of business, or figure out how to make money off the news.
There's lots of ideas for the latter, including micro-payments or subscriptions, but in the end there's going to exist free, ad supported news out there, so anything else is going to fail. That just leaves making more money from the ads. There's two ways to do that: Make the advertisers pay more per viewer, or get more page views. Ironically both of these viable solutions are exactly the things Google helps newspapers do.
There's still going to be a lot of shake out in the industry. For decades every newspaper has posted almost identical articles about everything. Usually these articles were bought from a pool like the AP, or Reuters. The internet doesn't need hundreds of identical articles for every story, and hundreds of newspapers aren't adding value any more. Those papers are going to fail in the internet age. Once the number of papers starts to fall, though, the power of the internet will finally do the impossible: With enough viewers, it will be profitable to put a news article on a page. And as we've seen from hundreds of companies, the profits on the internet can be huge.
Out of this newspaper apocalypse, there will emerge a few dozen papers who will have incredibly trusted brands, and will be known for their high quality news. They will write articles that are aimed primarily at internet readers. We demand immediate news, with updates that know what we've already read. We need multimedia that is interactive. We expect hyper-links to original sources and more information.
Each paper that succeeds at this transformation will get readership that was inconceivable 15 years ago: Tens or even Hundreds of Millions of readers! Advertisers will also be able to sell very targeted ads to these readers, and will pay far higher rates than they do today. The result will be record income. Free from having hundreds of staff writing up movie times, or running printing presses, these new "papers" will be able to spend more on real journalists, to write more articles. The magic of the internet will connect readers with articles about obscure topics. The result will further build the newspaper brand, and increase the number of pages and ads shown. This virtuous cycle will make these companies incredibly successful members of the internet age.
The question now is which papers will stop looking backwards, and start transforming themselves into the great news brands of the future.
posted by Ze Ace at
4:52 PM
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