February 03, 2010
/ by Katrina M Mendolera
Jack Myers Interview
In the last year there have been many forays into the search for a sustainable business model for newspapers. From nonprofit models, content-sharing agreements, and paywalls, theories abound on the industry’s salvation.
While the industry debates which path has the most potential, media economist Jack Myers has been focusing his career on a plan he believes holds the promise of success. In a recent interview with Myers, he offered his opinion on several media trends that have gained popularity over the last year and offered his insight into what he believes to be the future for newspapers.
KMM: You mentioned that you were working on a sustainable business model for newspapers – what are some of the ideas that you have?
JM: The newspaper industry has been focused on news and journalism. My focus is on commerce. Newspaper publishers seem to have missed the key point that consumers once relied on them as their primary source for information on everything local for sale: to find houses, cars, jobs, restaurants, events, entertainment, products and services. Throughout the second half of the 20th century, universities became important centers for journalism education. Syracuse University’s Newhouse School, Columbia University, Northwestern, USC, and many other universities built expansive departments to advance journalistic learning, with a focus on editorial and production. The business of media remained, for most universities, an afterthought. Advertising curricula also focused on the creative processes, ethics and role of advertising in American life, with little if any emphasis on business models, return-on-investment metrics, or organizational roles. This reality remains the case, with few university programs addressing the destructive forces that are at large in the media world today. In the corner offices at most major media companies, editorial voices reign supreme and as much as business realities may appear to be at the forefront, it is the editorial product that is perceived as the core deliverable to consumers. Ads – both display and classified – are the fill packaged to fit into the editorial content. It should not be lost on the newspaper industry that those papers that continue to do well – pennysavers and local weeklies – design their content with advertising at the forefront and editorial content packaged around it.
KMM: Do you think paywalls will be effective in bringing in more revenue for newspapers?
JM: Paywalls can only work if the content is exclusive, compelling and truly valuable. I believe the Wall Street Journal would find it easier to make $100 million selling 100 $1 million “Bloomberg-like” corporate subscriptions to Wall Street firms than they will selling 650,000 $150 subscriptions. For the average local newspaper, paywalls will be counter-productive in the long term.
KMM: How do you think that newspapers can balance online and print coverage to bring in more dollars?
JM: The distribution model needs to be fundamentally recalibrated. Charging more for home distribution is fair and equitable to the consumer. They are paying for the convenience of a service. Newsstand distribution should be somewhat less costly than home distribution or at least equitable in cost but not more than home service. Online distribution is rightfully free, since the paper is saving on costs across the board. If advertising cannot support the free online distribution model, then in the long term, the economics just won’t work. Home and newsstand distribution will inevitably be disintermediated by online, mobile and e-reader availability, and trying to shift home and newsstand pay-for-content economics to a tech-enabled society is just not a sustainable model. If a local paper invests in highly valuable journalistic capabilities and believes it is appropriate to limit access to that content, then they will need to generate sufficient subscription revenues to be profitable without dependence on other revenue streams.
KMM: Several months ago the Dallas Morning News broke tradition and reorganized by asking editorial to answer to sales people renamed “managers.” What is your opinion of that sort of set up? How close is too close when it comes to advertising and editorial?
JM: Well, conceptually that’s a step in an interesting direction, but it was misguided. Salespeople will try to guide writers to focus on the “story” about advertisers. They will put sales ahead of journalistic integrity. It’s completely appropriate for newspapers to assure that editorial environments are advertiser friendly … that news and relevant content are a value-add to the commerce information and resources consumers are actually seeking. Advertising should not be viewed by editors as an intrusion on their stories. The real key for newspapers is to monetize their relationships with local businesses by using a company like Live Technology, one of my clients [full disclosure], to develop an automated solution for local newspapers to provide consumers with easy online access to all local retail and commercial resources and for simple online access for advertisers to place their messages across all local media channels simply and cost-effectively. This model applies to all newspapers that have a loyal, core audience and a strong and relevant brand identity. The key is the ability to use that brand to bring audiences to a central hub where all local commerce can be conducted, founded on a principle of offering free online classified advertising. There are a few newspaper groups exploring this model now. But they struggle with the need to convert their current paid online classified business to free and to refocus their priorities on becoming the center for commerce for their local communities rather than (or in addition to) making news aggregation their number-one business goal.
Finally, in the long run as newspapers regain their economic footing, they can once again invest in journalism that is unfettered by economic concerns. Foundations are likely to step up to underwrite journalistic enterprise. National news and investigative units will be underwritten by multiple newspaper organizations. Once local newspaper sites establish themselves as the primary local source for their communities’ commerce needs and interests, the news reporting and journalistic components can be allowed to thrive.
Jack Myers is a media economist and founder of the M.E.D.I.Advisory Group, which works with media companies, agencies and marketers to develop and implement investment and growth strategies. He writes the weekly Jack Myers Business Report and is the author of several books, which include “Reconnecting with Customers: Building Brands and Profits in The Relationship Age,” “Adbashing: Surviving the Attacks on Advertising,” and “Virtual Worlds: Rewiring Your Emotional Future.” In addition to his many accomplishments, he was the recipient of the George Foster Peabody Award for journalism, Crystal Heart Award from the Heartland Film Festival, and has been nominated for both an Academy and Emmy Award.
— Katrina M. Mendolera
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