Phillip Crawley's review on Where NEWS? Reports

Those looking for optimism about the future of newspapers in these dark days for the industry, with dailies dropping like flies in North America, can find some support in the two strategy papers by Horst Pirker and his team.

Of the two, I find more comfort in the MMM strategy than in the hybrid model, which looks like a “one foot in the grave” scenario for paid dailies. It’s life, but not as we want to remember it.

In a market where lack of revenue – for all media: television, radio, print, and online – is the common global factor, the merits of partly abandoning one source of income escape me. Even at the reduced circulation levels commonplace in Europe and North America, copies sold still account for far more revenue than online advertising sales for newspapers.

Many North American papers have been too timid to apply premium pricing, either to single copy or subscription sales, so it’s true that they have less to lose. Offering potential readers your paper for $1 a week not only reeks of desperation, it screws the market for everyone else. Tabloid papers with a cover price of 50 cents, way below the cost of production and distribution, and near-giveaway subscription trials are only postponing the day of reckoning by going the hybrid route – soon they will be frees anyway.

It’s worth noting that The Globe and Mail’s circulation revenue is double what it was eight years ago when the launch of Conrad Black’s folly, the National Post, drove down pricing across Canada because of his deep discounting policies, contributing to the huge losses which still dog the Post. As it faded, The Globe was able to resume its premium pricing policy, hence the recovery in circulation revenue.

None of the six cases quoted in the hybrid strategy paper offer convincing proof that this is anything else but a last-gasp throw of the dice to retain some fraction of circulation revenue, and the credibility that goes with a paid paper.

Having worked in Hong Kong for five years as editor of The South China Morning Post when Rupert Murdoch owned it, I have no faith in the claims – unverified, of course – made by The Standard that it has finally found a successful business model after 60 years of trying and failing. And that is the most positive of the six hybrid case studies examined by Horst’s team.

The analysis of the multi-media, multi-channel, multi-platform (MMM) strategy is a sound, if somewhat academic, exposition of why it can work for newspapers, in the broader definition of that too-narrow word. My caveat is that it is beyond the scope and capability of many smaller newspapers. Only ownership groups who have the resources to distribute quality content across a multiplicity of platforms can afford to play in this space.

Before The Globe and Mail – part-owned by the Thomson family of Toronto, who bought Reuters to create Thomson Reuters – could take the next step forward in its digital evolution, significant capital investment was required to provide the IT infrastructure to enable our 350 journalists to feed stories to our family of websites simultaneously as well as service our print needs.

Integrated newsrooms have been in existence in North America for 10 years but they are no panacea for commercial success. Some of the big U.S. dailies that adopted this model have fallen victim to the precipitous fall-off in advertising spending, compounded by ownership issues that have drained resources from newsrooms.

There is no doubt in my mind that the 24x7 customised delivery of quality content is the industry’s best bet for a viable future. Where the strategy paper stops short is in tackling the question of how profitable the business can be for the survivors, when you still need to fund a large newsroom full of top-class talent to serve the multiple needs of the target audience.

Many owners in Canada and the USA have already sacrificed editorial quality in the orgy of cost-cutting that has gone on since last year, and the evidence is plain to see in the weak, thin products that do nothing to impress advertisers or readers.

Horst and his team should move on next to an analysis of the revenues likely to arise from MMM in a normalised economic environment.

While it is interesting to look at some old stand-by “truths,” and ask if they still have meaning, it is more relevant to be asking how many owners who come through this recession will have the confidence and the capital to make the investment in MMM.

For instance, the authors recall that it is nearly 50 years since Harvard’s Theodore Levitt argued that a failure to understand the nature of their core business caused the railroad companies to lose ground to competitors like the automobile and airline industries. Are newspapers making the same mistake? Only if the owners and managers are asleep at the wheel.

And that’s the most encouraging message to take away from reading both of these papers: Don't blame the economy when you can do something about it yourself. We still can.

Page first published: 07.04.2009