Jackson Jambalaya

Peter Kann, former publisher of the Wall Street Journal, penned a column in Saturday's edition on the future of newspapers and what is wrong with the newspaper industry. Copy of column Makes some very valid points that stand out in stark contrast to this earlier statement by the Clarion-Ledger's Ronnie Agnew. Kann writes:

"Imagine yourself the proprietor of a venerable and profitable business whose success is based on the quality of your distinctive product, the brand loyalty of your customers, and the fair price they are willing to pay for the value you provide.

Then you hire some bright young managers who develop a new and improved version of your product that can be distributed faster and accessed more conveniently than the old one. The new version—essentially a repackaging since core components are the same—appeals to traditional and new customers. No mystery there, since unlike the older version, for which you still charge, the new one is given away for free.

Consequently, your total customer base grows but your revenues do not. Your profits shrink as the free version lures customers from the paid one. You begin to wonder whether there might be a little flaw in your new business model, whether perhaps you should have charged for the new and improved version, but all the experts now tell you it is too late for that...."

The obvious choice is to change the model but everyone says you can't do that because the customers are used to getting their online information for free. They can be used to it all they want, right up until the day when their online sources go out of business. Kann continues:

"a business analyst landing here from Mars logically might question why an unwieldy newsprint product, stale as soon as it rolls off the press and not updated till another sun rises, should not be free whereas the new Internet product, offering all the same news plus more and evolving as does the news around the clock, should not be worth a pretty price? An even wiser Martian might conclude that customers should be given a choice, or offered a combination, but that they should be expected to pay for both...."

Seems as though I've written this before on this website. I compare it to offering MS Office 2007 for free while selling MS Office 97 for $150. Think that would allow Microsoft to stay in business for long? Kann blames newspapers for changing their models to depend more on advertising revenue:

"If publishers were at fault here for chasing ever larger audiences, editors and even reporters all too often were complicit. The list of modern journalistic flaws and failings is long, but surely includes the blurring of traditional lines between news and opinion and news and entertainment, predatory pack journalism, an undue emphasis on conflict rather than context, pessimism and cynicism (as differentiated from appropriate skepticism and criticism), social orthodoxy, elitism, flea-like attention spans, and more. Yes, the traditional newsprint medium was becoming less appealing, but its messages also were becoming less enlightening. (Gee, this wouldn't apply to our local newspaper, would it?)

In any case, by the time Internet editions arrived, the prevailing philosophy in most publishing companies already was that customers could not be expected to pay much for content, that it was easier simply to rely on advertising. The new Internet editions were merely the ultimate extension of that trend: free news to the consumer, total reliance on the advertiser...."

This of course led to the predictable outcome: fewer paying customers and even less advertising revenue as advertising revenue derived from the internet doesn't even come close to that gained from print editions. The newspapers lost more revenue when search sites such as Craig's List and Monster.com appeared on the horizon. Kann states the WSJ faced a dilemma over ten years ago: adopt a free version or charge subscription prices for the online editions:

"At the dawn of the era of online editions this newspaper, like all the others, was faced with a free or pay choice. At the time, I was chairman of Dow Jones, the Journal's parent company, and virtually alone we chose to charge for our online content. The reasons for this have been the subject of much ensuing speculation...."

People say, "yeah, but its the Wall Street Journal, of course they were successful in charging subscriptions. Such arguments miss the point. The key to the paper's success is it offers information not published anywhere else I.e., it is a unique product. Newspapers such as the Clarion-Ledger are in similar niches as no one else publishes the local news as thoroughly as they do:

"The real threat is to the future of news—informative, relevant, reliable news of the wider world around us. And that is disappearing as newspapers, whose reporting staffs still produce most of the news, no longer can afford to do so. As their news budgets and staffs continue to shrink, the key question is what can fill that gap?

Television does not begin to fill it. To the extent broadcast networks ever tried they now have abdicated to so-called cable news channels. These, in turn, now devote most of their resources to covering celebrities, crimes and sundry social trivia and to prime-time programming that pretends to be analysis and informed opinion while mostly offering the spectacle of extremist heads yelling at each other. There are few resources and even less commitment to covering significant news beyond floods and fires.

The Internet is not filling news vacuums either. There are hundreds upon hundreds of online sites and blogs that claim to provide news, but virtually none of them even pretend to pursue the traditional news role of newspapers, which is to invest in professional staffs dispersed around a community and across the country or the globe to cover, analyze, and only then comment on, events. Actually, all they do is comment. (He is correct. Lets be honest here. The blogs in Mississippi mainly publish opinion pieces and links to news articles. This blog has made an attempt to offer some original news stories but the goal is still to provide informed commentary, whether the informed part comes from other news sources or own investigative efforts.)

As to all the free online editions of our newspapers, their business model does not begin to cover the cost of significant news reporting. So the online editions with growing audiences—largely cannibalized from print audiences—rely on the poor print editions for almost all the news they give away. Sadly, there is less and less of that, and the ultimate loser, of course, is the public."