Monday, April 16, 2012

Many pieces loosely joined, or the newsonomics of small things

While self-appointed digital gurus like John Paton and Clark Gilbert preach the gospel of "digital first," there are more thoughtful people out there who are giving voice to the future of news in a way that actually makes sense.

Ken Doctor at Harvard's Nieman Foundation, for example, talks about the "newsonomics of small things." While many in the news business -- and, more specifically, the newspaper business -- hope to replace the former golden eggs of classified, big box advertising and inserts with other big revenue streams, Doctor is more realistic.

"But maybe, say a couple of advisers, you need to learn how to assemble a bunch of those golden eggs. Some will never grow big, to be sure — but some may thrive, and if you add three or four of them together, maybe they will begin to approach the size of that golden egg," he writes.

So, Doctor borrows from David Weinberger, a fellow at Harvard’s Berkman Center for the Internet and Society and co-author of the book The Cluetrain Manifesto, who came up with a way to describe how the Web works: He called it, "small pieces, loosely joined."

"One of the things I took from this," Doctor writes, "is the idea that the Web allows for individuals and small groups or entities to have almost as much power as — and in some cases more power than — established players."

Mind you, the golden eggs of yesteryear -- classifieds, inserts, retail ROP -- remain the golden eggs of today at most small and mid-sized newspapers. At many, these categories are growing again. However, they all produce far less than they did seven or eight years ago, and if we're to achieve our total revenues of the pre-recession days, we can't rely solely on growing those traditional categories.

The problem with Paton, Gilbert, et. Al., is -- to continue to egg metaphor -- that they are putting all their eggs in one basket. This is neither necessary nor wise. It has no hope of becoming the sustainable business model we all seek. I think they must know that, since the math isn't terribly complicated. Why they proceed is beyond my comprehension. Why they continue to be feted at every newspaper industry conference in the land is even more mystifying.

Bundling -- essentially forcing advertisers to buy multiple platforms -- is essentially dead, and never was a great idea. Doctor quotes Meinolf Ellers of dpa-infocom: "What we all see — newspaper publisher or news agency — is that the bundle is eroding, losing its power. The more we see the bundle losing market share and reaching the end of its lifecycle, the more we have to work on smaller, fragmented products that, not each by each, but overall, can compensate. That’s the strategy.”

Doctor, unlike most so-called experts, even provides a list of six "small things" that could work:
1. In-source printing and distribution.  He quotes Jim Moroney of the Dallas Morning News: "... if you’re not outsourcing, take the extra capacity of your print facility and bring in as much commercial broadsheet or tab newsprint work as you can. There’s no reason to have idle capacity.” At the Post Company, this already represents 13 percent of our revenue, more than double the percentage of five years ago. Also, Doctor suggests, deliver for USA Today, the New York Times, the Wall Street Journal. (At the Post Register, we even deliver bread and car parts to Salmon.)

2. In-source marketing services. "Talk to marketing services execs and they’ll tell you that today marketing services revenues — money paid by local merchants to publishers who help them with their advertising, in addition to any ads those merchants buy on publisher websites or in the paper — amounts to at least 10 percent of overall digital ad revenues." Doctor suggests this has a small short-term revenue potential -- about 1-3 percent of the total -- but could grow. This is an area Jerry has encouraged us to pursue, and it's time we did.

3. Custom publishing, or producing what we used to call niche publications. These are not special sections. These are publications more like last year's INL product that had wide distribution.

4. Event production and marketing. The Post Register was an early-adapter of this tactic and we want to get back into it, tactically.
5. Syndication. Sell your content over and over.
6. Ebooks. We've done books before. Can we mine our archives to produce ebooks?
Meanwhile, Mathew Ingram over at gigaom uses different terminology to talk about the same things, including a riff on some of the things we've talked about at the Post Register when it comes to experimenting with mobile.
"But the things that really interest me are the ones that fit the kind of “velvet rope” model I have argued for as an alternative to a hard paywall around content: the ones that encourage a kind of membership approach, where new features or ways of packaging content or experiences related to that content are offered to readers. So live events, for example, which both the Texas Tribune and the Atlantic have been using to their advantage, or e-books, which are a different way of packaging content, can be remarkably profitable, even if that content has already appeared on the Web for free."
At the Post Register, we've talked about throwing a lot of things against the wall to see what sticks. Finally, someone has come up with a better way to describe it: "Many pieces, loosely joined." This strategy will not return us to the revenue peaks of the early and mid-2000s overnight, which means we'll need to continue to operate leaner and tougher than we once did. It does, however, offer the most likely pathway back to a sustainable business model.

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