My entry in the Tomorrow's News, Tomorrow's Journalists blog ring for January. The topic asks:
Do you think it will be the “old” news organizations that achieve the radical transformation they need, or is it more wise (as a journalist) to invest your time in a “new” news startup?
I want to think about this question from the perspective of an investor considering buying a newspaper and implementing a drastic turn-around plan. Or perhaps, with the same money that investor could go off and finance some people to start a competitor. What should they do?
What value do you get out of buying an existing operation?
- A trusted brand name
- Established base of readers and visitors
- A newsroom of talented journalists
- Equipment, computers, office space, etc.
- Content archive
What downside is there to buying an existing operation?
- Piles of debt
- Institutional inertia
- High operating costs
What value do you get from starting fresh?
- Innovative attitudes not burdened by "the way things have always been done"
- Online only focus from the beginning
- Low operating costs
And what downside is there?
- Need to invest in new equipment and software
- Need to build traffic and viewers
- Brand name non-existent
Conventional wisdom would say that the established player has a big advantage. The audience knows and trusts them. So do the advertisers. But let's face it, big companies and dominant industries have a bad track record when it comes to dealing with major change. Not until small and nimble competitors come along and start playing a different game do they realize that the old way of doing things soon won't work anymore. And too often, by the time that realization comes it's too late.
Theodore Levitt's classic 1960 essay Marketing Myopia tells this story far better than I can.
The failure is at the top. The executives responsible for it, in the last analysis, are those who deal with broad aims and policies. Thus:
The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was ﬁlled by others (cars, trucks, airplanes, and even telephones) but because it was not ﬁlled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they deﬁned their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented.
Forty-nine years late, newspaper executives are just now coming to this realization.
The newspaper isn't what's important. Delivering timely and relevant information to readers is. And helping advertisers promote their businesses is.
That's why I believe it would be wiser to invest time in new startups. Journalists can be hired away and readers can be won over, but the combination of debt and inertia is deadly. To turn an existing metro daily around to succeed will take change and reorganization of the "burn the whole thing down and start over" variety that will make Sam Zell's work at the Tribune seem like gentle encouragement.
End note: Where are the local news start ups?
Sure there are lots of local blogs and local news portals, but where are the news sources? I don't know of any local news startup that does consistent original reporting of the cops and courts variety. Or that goes after the car dealerships and retailers that are newspapers main customers, or the baby boomers that are the main subscribers. (If there's a start-up I haven't heard of or thought of, please let me know in the comments) Those are customers that traditional newspapers have had a long monopoly on. That long monopoly means that there hasn't been much innovative thinking about how their needs can be better served, unlike for younger generations. I want to see a startup roll up their sleeves and take on this challenge.