Valor de cambio

by Mike Shatzkin / idealog.com

The business news has been very painful for newspapers lately. A piece we saw a couple of days ago says both the New York Times and the Wall Street Journal are going to cut back sharply on their arts coverage. The advertising simply isn’t there to support it.

Fuente original: Newspaper publishers face very different and much more immediate threats than book publishers – The Shatzkin Files The Shatzkin Files.

And recently before that, we read a piece suggesting that perhaps newspapers should have just ignored the whole digital thing (a frighteningly obtuse suggestion) and then right afterwards a Times story documenting the collapse of advertising dollars available for print which pretty much obviates the “just skip digital” idea. (One wonders if the people advocating that solution are not aware that overall ad budgets are reviewed by all advertisers regularly and the budgets are routinely reallocated to put more into digital and less into print! This is not a “secret” trend.)

I have been sharpening my understanding of book publishing economics with real experience for 50 years. My view of periodical media is purely as a consumer and fan, but a very longtime consumer and fan. I got the first magazine subscription of my own 60 years ago when my parents gave me my wish of a Sports Illustrated sub for my 9th birthday. Shortly thereafter, I talked them into getting The New York Times by home delivery and that started my daily habit of looking at the front page and the box scores before breakfast. When I went to UCLA, the first thing I did was get home delivery of the Los Angeles Times.

At one point or another, I got subscriptions of my own to Newsweek, Time, and US News & World Report. And Business Week. And Sport. And The Sporting News. And the Nation, the New Republic, and National Review. And New York and the New Yorker and, for a while, New West! When there was a sports daily called The National, I bought it at my newsstand along with the News and Newsday.

But that’s all done now. I have two print subscriptions left: The New York Times and The New Yorker. I have recently found that their online prompts through emails and digests have led me to read most of what the print edition offers on my phone before the print edition arrives! (Still, I have no plans to cancel either because digital-only isn’t that much cheaper and I still get a bit of value out of the print.)

While I think the book business still has years of viability in front of it, I can’t see a way to sustain the periodicals. It isn’t just about consumption in print versus consumption in digital. There are two massive differences between the businesses.

1. Newspapers (and magazines) depend on advertising in their business model; book publishers don’t.

2. Newspapers (and magazines) are aggregates of content while many books are themselves a single unit of content. You can get the box scores or the weather or the national news headlines from a variety of places, no matter how unique or distinctive are other parts of the newspaper you buy. You wouldn’t find an acceptable substitute for the sixth chapter of a novel you’re reading.

The first point was one the periodical publishers could figure they had covered because their online offering would pick up digital advertising for support as print declined. They could see that they could reach a much bigger audience with digital than they could with print. So there was room for optimism that moving the whole kit-and-caboodle to the web could work synergistically with the print edition. Of course, we’ve learned since that each recorded eyeball earns less online than each theoretical eyeball did when it was delivered by the print edition. And then there’s the way Google and Facebook have swept up all the online ad dollars.

But that wasn’t the bigger problem. The other one was.

The aggregation created by each newspaper was intended to compete as an aggregation. In the 20th century, a consumer didn’t have the choice of reading the Times’s op-ed page and the News’s coverage of the Yankees unless s/he bought both newspapers. But, even with the paywalls that are up today (and weren’t up at the beginning), there is a lot of competition for almost every single individual piece of content in every newspaper. And it has also become just about impossible for a printed newspaper to deliver you any “surprises”: any news that is important to you personally that you won’t have seen first in an email or an online aggregator (including that own newspaper’s web site.) Any “scoop” will be “reported” by competitors and the information itself would be in the public domain very quickly after it is released.

So, the fundamental distinction between the businesses is that publishers often sell an indivisible unit and newspapers (and magazines) sell aggregates of content nuggets, each of which is valued differently by different readers of the paper and each of which has its own array of competitors.

It occurred to me more than six years ago that there would be trouble when the consumer’s “unit of appreciation” did not equal the publisher’s “unit of sale”. The most dramatic example was offered by the recorded music business which sold albums (unit of sale) to satisfy its market’s appreciation for songs (unit of appreciation).

Both the “whole” newspaper and the record album made sense in a physical world. It would simply not be practical for the newspaper to deliver recipes and box scores on your lawn and national news and TV listings on mine. Record companies “stamped” records and CDs, and it was approximately the same cost basis to them whether they gave you one or two songs when they did that or twelve. Both business models were built on aggregations when physical requirements made the aggregations sensible and the consumer readily went along with it.

Book publishers certainly have serious challenges in front of them. In the short run, they are learning that novels work better as both print and digital productsthan cookbooks (where the unit of individual content appreciated is the recipe, although for the printed version there are rewards in the entire presentation). They are dealing with consolidation on the distribution side which threatens their margins at the same time that increased competition from indies forces down retail prices. There is reason to believe that long-form reading itself may diminish as our attention spans are increasingly shaped by mobile consumption with many built-in distractions. The commercial book business is already shrinking and it will continue to do so. But the core business model by which publishers acquire units of content, develop and refine them, and then market and distribute them, is currently only eroding. The advertising-based model for printed newspapers and magazines appears to be collapsing.

Newspapers and magazines have already diminished sharply and now seem to be do so at an accelerated rate of speed. I don’t see any way to save the status quo ante. Newspapers and magazines aren’t “coming back”. But I do have a few thoughts that perhaps offer insight to the current owners and workers in an anachronistic paradigm about how to focus most effectively on the challenges they face.

1. Stop thinking about the overall business — The New York Times or Business Week or Sports Illustrated — and start thinking about the individual pieces of content created on a regular basis and the competition for each piece.

2. That leads pretty quickly to recognizing what’s “unique”. In the case of the Times, that’s likely to be the in-depth reporting by very solid intellects. I’d be figuring out how to broaden and deepen that and sell it in segments. There should be a global audience for Times reporting on Washington, on New York City, and on finance, for example. These should be built out at as subscription products. It is even possible that foundation or grant money would support them as well as subscribers.

3. Most local newspapers’ biggest unique asset is their local reporting. It is also what is most in society’s interest to maintain. But they really add very little value with a lot of their content, much of which comes from wire services and syndicators. Getting local support for local reporting will be harder in some places, easier in others. But building a local subscription base for local news coverage has shown signs of being a sustainable model; continuing to sell a locally-branded and -curated aggregation of information ubiquitously available elsewhere clearly is not.

This last makes it clear that I’ve elided one key reason for the shrinkage of the newspaper business. It no longer requires a local production-and-delivery system to hand you most of what that local production-and-delivery system sold — with what was usually really just a smattering of local customization — for the past 100 or 150 years.

My friend, Michael Cairns, saw the local angle years ago and well before that figured that The New York Times would be selling tech to enable better local reporting to other newspapers. Too bad that didn’t happen and it could have been (perhaps still could be) a great revenue stream for the Times.

There is developing public concern for the loss of journalism through the loss of newspapers. Contributions support the efforts of ProPublica, for example, although their stories may come to light through conventional vehicles like the New York Daily News. It has been suggested in serious circles that government should support independent journalism.

Each large and (historically) successful newspaper is a large business on a one-way path to oblivion. Within each of them, though, are a number of seeds for smaller businesses that might survive and thrive in an environment where they weren’t shackled to large overheads performing redundant services.

So while newspapers and magazines should continue to pursue events and any ecommerce opportunities they see, they should also recognize that they are riding on a seriously dated business model. If there’s still cash to extract from it, that’s fine. But it is like a mine that has been worked for years or a machine designed for years of use that has now performed for decades. Efficiency will continue to decline and eventually it won’t be commercially productive at all. Lots of perfectly competent and capable blacksmiths couldn’t adjust to a world that needed fewer of them and more auto mechanics.

The obvious exceptions to both my experience and my generalizations are the most niche-y specialist magazines, except the bigger they are, the more they would be subject to the problems I’m describing. But the more focused their audience’s interests, the more their advertisers are likely to be loyal and the more that other things like events might add measurable revenue. The critical mass requirements for print remain a challenge, but the chances of converting to a workable web-only proposition might be better if there’s a strong brand.

And intensely local works just like niche-y. It is ironic that many local newspapers have cut back on local coverage, which is precisely what can work for them commercially because the most local advertisers (restaurants, health clubs, local elections) don’t have a lot of other choices. And local coverage can attract other support.