Print Media Should Emulate Google

Print Media Should Emulate Google
By David Evans
http://www.forbes.com/home/opinions/2007/04/24/new spaper-form-factor-oped- cx_de_0424newspaper.html

The stories about the troubles in the newspaper industry and the search for solutions keep on coming.

The Tribune Company has joined the ranks of other newspapers in whacking employees at the Chicago Tribune and LA Times to save costs. Meanwhile, The Inquirer in Philadelphia is cleverly raising revenue by selling sponsorships for columns--the new PhillyInc column will carry the Citizens Bank logo. Both should conjure visions of the little Dutch boy with his finger in the dyke.

Newspapers have attracted readers because they have content people value and respect. Less staff means fewer fresh stories and ad-sponsored columns diminishes the credibility that has been the industry's calling card since the first newspapers hit the streets in the U.S. in 1690.

Not surprisingly, angry investors are circling the wagons. On Wednesday, the Ochs/Sulzberger families are defending their stewardship of The New York Times at the annual shareholder meeting.

So, what's the solution? It's the form factor, stupid.

The newspaper business has a simple model: charge advertisers for getting access to readers whom you attract with relevant content and cheap prices. That's been a great model for a few centuries now, and it is far from dying. No reason to depart from it--and, in fact, that's precisely the model Google is using to sweep a path of destruction through every advertising-supported media business there is (more on this momentarily). It's the physical method that newspapers use to do this--what business types call the "form factor"--that's the problem, the Achilles Heel of the industry's current business model. Printing content and displaying ads on paper is going to go the way of the vinyl record and perhaps even the CD.

Here's why. Traditional media sell advertisers a pig in a poke. Advertisers don't know whether a reader actually looks at their ad much less buys anything as a result. And they can't really target their ads beyond picking a type of newspaper and section to focus on in the hopes of reaching a particular demographic group.

Google and its ilk only charge advertisers when a viewer clicks on the very page containing their ad and perhaps, in the future, only when the viewer actually buys something. Plus, they can use all that information collected from past searches and other information they've gleaned about viewers to target ads with an increasing degree of accuracy. The technology is a different as a Schwinn one-speed bike is from a Porsche 911 turbo.

So, if anyone is going to save the newspaper industry, it isn't any of the moguls who think they can breathe life into a dying technology. It is more likely to be someone like Steve Jobs who can devise a really appealing way to make newspapers available digitally.

Sony, Microsoft and others have tried to come up with digital readers but so far most people aren't that excited. But suppose someone invented a digital newspaper, connected wirelessly to the Internet, that people actually enjoyed reading over coffee in the morning or taking along their morning train ride. Then newspapers could insert advertisements that people could click on, or advertisements that were tailored to knowledge about the person reading the ad. They would be playing on a more level playing field with Google and similar firms.

Unfortunately, this is a tall order, and the newspaper industry may not have time to wait. In the interim the online world is sucking so much advertising from the newspaper industry that it may be going into a protracted death spiral. As advertisers desert, newspapers cut content and raise prices to readers, as the New York Post did this week when it doubled its newsstand price to 50 cents. All this could lead to fewer readers and to even fewer advertisers. This will only be compounded as advertising and content also shifts to mobile phones--screens that almost everyone now carries every minute of the day.

Make no mistake: The only way to stop the slide of the newspaper industry into oblivion is to replace the traditional paper "form factor" with a technology that can compete with pay-per-click, per-per-action and contextual advertising. Anything less will only accelerate the industry's decline.

David S. Evans, visiting professor, University College in London, is founder of Market Platform Dynamics and co-author with Richard Schmalensee, Dean of the MIT Sloan School, of Catalyst Code: The Strategies Behind the World's Most Dynamic Companies, to be published by Harvard Business School Press next month.