Thursday, July 04, 2013

How I killed newspapers, Part Two

OK, I didn’t really kill newspapers.
But my career began when newspapers were doing extraordinarily well, and continued as they did less and less well. For much of the time, I was in newspaper management. So I’m hardly blameless.
Looking back, it’s amazing how many mistakes we made.
In my early days at The Red Deer Advocate, we published two 96-page newspapers in the run-up to Christmas. Advertisers needed to use the paper, and we benefited. (The paper made lots of money, circulation was increasing and we were adding newsroom staff every year.)
A chunk of that advertising was from big grocery and department stores, which would buy six or eight pages of advertising at a time.
Then the stores thought of a cheaper way to reach readers. They printed flyers and pay us to insert them in the newspaper. Eight pages of actual ads might have cost them $7,000. The flyer would cost about one-third of that.
The newspaper industry didn’t like flyers, naturally. One response was to charge high rates to insert them in the paper. (Arguing in part that the charges were justified because being part of the newspaper added value.)
So other businesses charged less and grabbed the business, especially community newspapers that were emerging, in many markets, as strong competitors.
Newspapers were nicely profitable in those days. Revenue was strong and subscribing to your local paper was practically an act of citizenship. Technology was reducing labour costs. The days of a reporter typing a story and then having editors hand the copy to a higher-paid composing room employee who would type it again to produce the type were ending.
But there were already warning signs of trouble ahead, and not just from low-cost competitors. Any research showed newspaper readers skewed old. The younger people were, the less likely they were to pick up the paper. We made small and ineffective efforts to reach them, but mostly told ourselves they would grow into our products. And readership fell, for almost all papers, year after year.
The world changed much faster than we did. Newspapers were slow to experiment with the Internet and online distribution of news and information. We watched as Craigslist scooped away classified advertising. (A double blow that meant lost revenue and one less reason for people to read the paper.) 
And we never really worked at understanding how people’s information needs - and sources - were changing. In the mid-90s, when I was at the Times Colonist, we did a research project on readers’ needs and interests. After polling and focus groups, the consultant reported people in Victoria had very low news needs. They just weren’t interested in news as much as they were in working in their gardens or sailing. That’s partly a reflection of Victoria’s population, but I suspect they were in vanguard in terms of their attitudes toward news. Around the same time a young woman told me she didn’t need the media because if something important happened, someone usually told her about it. That attitude, amplified by a flood of information, is increasingly present.
There were certainly a few efforts to tinker with the product. But not many. And few sustained, bold experiments. (The National Post was innovative when launched, but hardly a bold new direction for newspapers.)
Why? I’d suggest four big reasons.
First, newspapers were a “mature industry.” Ian MacDougall, a consultant whose work involves corporate lifecycles, warns that stage brings the risk of complacency and an environment where innovation or even raising problems is discouraged. Short-term financial results take priority over long-term growth.
Second, corporate ownership brought a focus on short-term results. Corporate managers needed to report growing quarterly profits, or investment analysts would write bad reports, shareholders would sell and stock price would fall. Investing in research or new products doesn’t get much support in that kind of environment. And the response to any drop in revenue is to look for quick expense reductions, even if that risks long-term damage.
Third, many papers - most larger papers - had costly, inflexible union agreements, signed when times were good. National advertisers, for example, began sending completed ads for publication in the 1970s so they had control of the way they looked. Union contracts gave some composing rooms jurisdiction over all production. So, as a compromise, compositors typeset and made up versions of the ad, which was then thrown in the garbage. The Vancouver Sun and Province quit accepting inserts last year. The union contract called for mailroom staff to be paid more than $90,000 and ‘stuffers,’ who put the flyers into the papers, to be paid the equivalent of more than $60,000 a year. 
And, fourth, many people in the industry at every level were delusional. I started writing about newspapers after after a lively exchange on Twitter, which was started by a tweet from a journalist that “you can't beat your daily newspaper for value... less than a cup of coffee... ante up, folks.”
We kept telling each other what great value we were and how much people needed us, even as they were sending the opposite message. And, in many ways, we still are.
So what will work? That’s another blog post.


Norm Farrell said...

The tyranny of quarterly reports is widespread in modern business. Dedication to short term corporate goals discourages focus on vital long-term objectives and that almost guarantees disastrous enterprise results, eventually.

When business management was taught years ago, the focus was a little different. Staff expected to spend much of a career with one employer and that meant most people cared about the company's position a few years forward. Unions were constrained by members' loyalty to employers and were responsive to managers who cultivated good relationships. That policy didn't appeal to the suits at Postmedia, its predecessors and other media companies accustomed to easy profits and powerful positions in the marketplace.

Paul, your comment about people in the industry being delusional was perhaps a bit harsh directed to the person who asked us to ante up. He's long been a worthy contributor and probably had tongue in cheek. However, he should remember that most of us do ante up heavily for communications, way too heavily when you consider the non-competitive pricing allowed in Canada's cable, internet and telephone services. The newsguy who wants us to ante up more has been employed by organizations that have been and are dragging in more than they deserve.

If consumers ever get real choice, more than the newspaper publishers will be in trouble.

paul said...

Agree entirely on short-term corporate focus.
I didn't mean to be unkind to Rod, an interesting guy and skilled journalists. The point was that in telling ourselves a newspaper is great value, we forget that customers actually get to decide, and have increasingly been disagreeing.

Anonymous said...

As a life-long buyer and reader of newspapers, who still thinks the most thorough and accurate reporting and commentary in many fields are provided by our better dailies, I'm concerned about the inconsistent quality and reliability of the emerging news sources available online.

The thousands of middle-class jobs that are disappearing as newspapers cut staff are also part of a disturbing and widening pattern in North America. Broadcast media are facing similar problems to a lesser degree.

Age seems to play a part in these trends. I have never seen our daughter, who is 21 and just graduated from university, read a newspaper or watch a TV news broadcast, yet somehow she is quite well-informed on national and international events. She and her intelligent, well educated friends are quite able to get by without the delivery of information and advertising in the "dead tree" or nightly news formats.

Unless the existing major newspapers can popularize and monetize their electronic editions, and get a lot of young readers to ante up at the paywall, they're likely doomed, at a significant political, cultural, and economic cost to our society.

e.a.f. said...

I learnt to read, reading newspapers. there were always interesting stories, great writers, investigative reporting, etc. Then it got worse and worse and worse. So after buying and reading newspapers for 40 yrs I quit. there wasn't anything there anymore.

Many of the major newspapers became nothing but shrills for provincial and federal governments. writers such as Palmer, once offered good articles, now not so much. You wonder who took over his body.

It isn't that I didn't like the print media. I spend approx. $40 a month on magazines.

The days of Majory Nichols, Sima Holt, Jack Wasserman, etc. who helped form my political and social views aren't there any more. The political slant of newspaper opinions is so off centre, its not in touch with reality.

Going on line I find newspapers in other parts of the world which are worth reading. There just isn't much in Canada. T.V. provides news, but the all news channels aren't always that accurate and jsut keep repeating the same programs over and over. They don't report much news these days either. Just blood and shootings.

I'd still prefer to have a decent newspaper delivered to my door or get one at the store. There just isn't anything in the papers in B.C. anymore which are worth paying for.

Management isn't about newspapers, providing news and opinions, its about keeping the shareholders happy and executives making their bonuses.

I certainly would not pay for "on-line" news the papers provide. it isn't worth it.

You didn't help kill newspapers, the suits who knew nothing about the news business did that.

Anonymous said...

Rafe Mair on Mainstream Media a Decade after Leaving CKNW

Anonymous said...

I would one waste one cent on a postmedia rag.have not paid for one in over ten years and when I do leaf through one at a café I feel like barfing. These rags can/t suckhole enough to the corporate criminal BC liberals.

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