How I killed newspapers, Part Two

OK, I didn�t really kill newspapers.
But my career began when newspapers were doing extraordinarily well, and continued as they did less and less well. For much of the time, I was in newspaper management. So I�m hardly blameless.
Looking back, it�s amazing how many mistakes we made.
In my early days at The Red Deer Advocate, we published two 96-page newspapers in the run-up to Christmas. Advertisers needed to use the paper, and we benefited. (The paper made lots of money, circulation was increasing and we were adding newsroom staff every year.)
A chunk of that advertising was from big grocery and department stores, which would buy six or eight pages of advertising at a time.
Then the stores thought of a cheaper way to reach readers. They printed flyers and pay us to insert them in the newspaper. Eight pages of actual ads might have cost them $7,000. The flyer would cost about one-third of that.
The newspaper industry didn�t like flyers, naturally. One response was to charge high rates to insert them in the paper. (Arguing in part that the charges were justified because being part of the newspaper added value.)
So other businesses charged less and grabbed the business, especially community newspapers that were emerging, in many markets, as strong competitors.
Newspapers were nicely profitable in those days. Revenue was strong and subscribing to your local paper was practically an act of citizenship. Technology was reducing labour costs. The days of a reporter typing a story and then having editors hand the copy to a higher-paid composing room employee who would type it again to produce the type were ending.
But there were already warning signs of trouble ahead, and not just from low-cost competitors. Any research showed newspaper readers skewed old. The younger people were, the less likely they were to pick up the paper. We made small and ineffective efforts to reach them, but mostly told ourselves they would grow into our products. And readership fell, for almost all papers, year after year.
The world changed much faster than we did. Newspapers were slow to experiment with the Internet and online distribution of news and information. We watched as Craigslist scooped away classified advertising. (A double blow that meant lost revenue and one less reason for people to read the paper.) 
And we never really worked at understanding how people�s information needs - and sources - were changing. In the mid-90s, when I was at the Times Colonist, we did a research project on readers� needs and interests. After polling and focus groups, the consultant reported people in Victoria had very low news needs. They just weren�t interested in news as much as they were in working in their gardens or sailing. That�s partly a reflection of Victoria�s population, but I suspect they were in vanguard in terms of their attitudes toward news. Around the same time a young woman told me she didn�t need the media because if something important happened, someone usually told her about it. That attitude, amplified by a flood of information, is increasingly present.
There were certainly a few efforts to tinker with the product. But not many. And few sustained, bold experiments. (The National Post was innovative when launched, but hardly a bold new direction for newspapers.)
Why? I�d suggest four big reasons.
First, newspapers were a �mature industry.� Ian MacDougall, a consultant whose work involves corporate lifecycles, warns that stage brings the risk of complacency and an environment where innovation or even raising problems is discouraged. Short-term financial results take priority over long-term growth.
Second, corporate ownership brought a focus on short-term results. Corporate managers needed to report growing quarterly profits, or investment analysts would write bad reports, shareholders would sell and stock price would fall. Investing in research or new products doesn�t get much support in that kind of environment. And the response to any drop in revenue is to look for quick expense reductions, even if that risks long-term damage.
Third, many papers - most larger papers - had costly, inflexible union agreements, signed when times were good. National advertisers, for example, began sending completed ads for publication in the 1970s so they had control of the way they looked. Union contracts gave some composing rooms jurisdiction over all production. So, as a compromise, compositors typeset and made up versions of the ad, which was then thrown in the garbage. The Vancouver Sun and Province quit accepting inserts last year. The union contract called for mailroom staff to be paid more than $90,000 and �stuffers,� who put the flyers into the papers, to be paid the equivalent of more than $60,000 a year. 
And, fourth, many people in the industry at every level were delusional. I started writing about newspapers after after a lively exchange on Twitter, which was started by a tweet from a journalist that �you can't beat your daily newspaper for value... less than a cup of coffee... ante up, folks.�
We kept telling each other what great value we were and how much people needed us, even as they were sending the opposite message. And, in many ways, we still are.
So what will work? That�s another blog post.

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