Monday, August 19, 2013

Smashing idols

“A contrarian zigs when others zag, but an iconoclast, derived from Greek, ‘smashes idols.’ The newspaper industry has erected two idols that must be smashed. The first is the notion that digital information must be free. The second is that the newspaper business can only be saved by digital solutions. Both are false.” – Eric Spitz, co-owner of the Orange County Register
Eric Spitz is not a newspaper guy. He’s a beer guy.

Prior to becoming co-owner of the Orange County Register, the 14th-largest newspaper in the U.S., his claim to fame was to help revive the Narrangasett Brewing Company, the official beer of the Boston Red Sox. So, naturally, he bought a newspaper.

He and co-owner, Aaron Kushner, were trend-starters. Coming out of other industries (Kushner was once in the greeting card business), they bought Freedom Newspapers and its Anaheim-based flagship from a family no longer interested in newspapers. We’ve since seen Warren Buffett and Jeff Bezos snap up newspapers for similar reasons.

Perhaps this is what it takes to slap newspaper people upside the head sufficiently to waken them from their digital fantasy.

In the same Wall Street Journal column in which he made the above statement, he wrote:

“In the past 12 months we hired 350 people, built 25 new sections, revamped all of our weekly community papers (even making two of them into dailies) and launched a weekly set of magazines. Beginning in the first quarter of 2013 we have seen year-over-year increases in both subscription revenue and in advertising revenue. In other words, it's time to stop chasing the digital ghost.”

Spitz, the outsider, is astonished at the stupidity of newspapers that gave their news away for free online.

“How can a newspaper charge for its content when other competitors choose to give away their work?” he writes. “The old-fashioned way – by differentiating the content, boosting its quality, and making it essential to the community it serves.”

There’s no guarantee that Spitz is right. Predictions regarding the “legacy media” of newspapers, broadcast television and radio over the past 15 years or so have been consistently wrong. But there are some basic ideas that have worked within capitalism for a long time that can be summarized thusly: Charge a fair price for a product that people want. Spend less than you bring in.

As Spitz clearly understands, the Internet didn’t suspend the rules. He recognizes that online advertising has its place, but it has limitations.

“Just for fun,” he writes, “walk into a Starbucks and ask the first 10 people you see, ‘When was the last time you clicked on or even paid attention to a digital ad?’ The overwhelming majority will say ‘never’ or ‘not on purpose.’ ”

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