The UK’s INQUIRER weighs in with a smart treatise on why old media publications are getting clobbered, both online and off, and why new entrants like GigaOm and Gawker Media are kicking arse. Some key points:
- Internet publishing more competitive and less lucrative than offline. This necessitates a very different business approach.
- Traditional pubs are saddled with legacy business model: Lots of people, pretty layouts, established practices, unions, high salaries, cannibalization fears. They are also run by career executives who aren’t eager to do what is often the only thing that will save the publication: Fire themselves.
- Leading online publications are lean, mean, and flexible: Om Malik’s handful of employees work out of their houses. Malik built his publications on cheap blogging software that can be up and running in 6 minutes. Valleywag is a two-person operation.
- Paying fancy-schmancy guest columnists big money is just throwing the money down the drain: online economics just won’t support this or other standard old media practices
- Red Herring and other traditional pubs dying because just “porting” old model online. This won’t work–now or ever.
To this we would add: The transition from print to online is a classic example of “disruption.” Print publishing has overshot the needs of the market (think Sears, Microsoft Office, NYT on the doorstep), and early adopters are making do with a far faster, cheaper, and more convenient solution (Wal-Mart, Google Docs and Spreadsheets, blogs). Sure, the new versions aren’t as high quality (fact-checking, writing, spelling, design), but they get the job done. Over time, moreover, the disruptive technology products will improve and push the incumbents toward the high end of the market (DEC/Sun vs. PCs). And eventually, the old model will have lost so many customers that it will no longer be able to support itself.
Many newspapers, such as the New York Times, are doing an excellent job catching up on the blogging trend–by insisting that their current employees do additional work for free. Some NYT bloggers, such as David Carr, Andrew Ross Sorkin, and Floyd Norris, are superb, and their efforts must be driving vast traffic to the NYT site.
The problem the company still faces, however, is how to effectively transition from the fat-money world of print to the hyper-thin money world of the Internet. Converting print reporters into bloggers will help, but it won’t solve the problem: you’ll never be able to replace the revenue you’re losing on the print side, and someday, the print cash flow will run out. This is the problem that any industry threatened with disruption faces (Microsoft’s feeling it, too). It’s not that the incumbents can’t produce the same product as the upstarts–they can–it’s just that throwing their full resources and strategy behind the new model will mean ending up only a fraction of the profitability of their existing business.
The best hope for the newspaper companies, therefore, is to make use of their still-massive cash flow while they can–by investing in digital properties (such as the NYT’s About.com) that, over time, will gradually eat the print paper’s lunch. Most newspaper companies are doing this, but they aren’t doing it aggressively enough. A dozen years after Netscape and three after Google’s IPO, online revenues at the NYT are still only 10% of the business.
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