The New Digital Economics for Newspapers

August 24th, 2004

Life is Local say the Johnston Press.
And here is the news
Newspapers are on their knees, humbled by the new digital economics, declining into irrelevance, lacking investment, increasingly ignored by readers and scrabbling over a smaller advertising cake. The best that owners can do is to manage the decline as profitably as possible until papers wither away and die.
It is true that a generation ago, the red tops were dominant "gap fillers". Now the mobile phone is challenging that: its reach is almost universal and it is carried all the time. Competition doesn't just come in the form of SMS: a far more powerful competitor is gaming and other cheaper audio-visual and digital platforms.
There is also the emerging issue of VOD via mobile and digital delivery technologies. Young men in particular who would once picked up their red top will now open up their phone and play a game instead.
There is also the critical issue that readers of newsprint are ageing, and young people are learning to access content via digital platforms more and more.

The habit of reading newspapers amongst the young is declining, although there are exceptions like the success of Metro in London.
The economic wave of change, driven through the convergence and the falling cost-line of technology, coupled with changing customer behaviour can be seen as either terminally life threatening, or life enhancing.
60+ customer touchpoints
Today the empowered customer is more interested in experiences, service and authenticity.

For customers the critical contributors to their 'personal' P&L are based upon value: 

  1. Value for money?
  2. Value for time?
  3. Return on attention – was it worthwhile paying attention to this thing?
  4. Emotional return – was it a cause of happiness or hassle?
  5. Return on labour – was it worth it?

As we live in a increasingly information rich world, there is an economic need for brands to deliver 'engagement' via 'value-added' content or services to their customers. These value-added services must deliver on each individual's personal needs and desires.
Research shows there are 60+ touchpoints that a brand can often have with its customer. This means that engaging and keeping customers means that relevant content has to be delivered to them wherever they are, whenever they want it.
So it will be MY content, MY services, what I want, what MY interest are, what supports MY work needs, what makes MY life easier. Extending Me is personal; is relevant; is customised; is about community; is about permission; and is multi-session. We don't want your services. We want our services. We want what we want, not what you want or what you want us to want.
One could argue that the local UK regional press has been myopic in their inability to understand the local news opportunity staring them in the face. But that would be a sweeping and unfair statement. As there are many examples of local and regional titles responding to the changing business climate.
For example, Roy Greenslade in a Guardian article wrote

Four of the weeklies that have substantially grown their sales recently – the Doncaster Free Press, Derbyshire Times, Wakefield Express and Mansfield Chad – are owned by Johnston Press, the fourth largest chain.
Employing a similar philosophy, Merrill Diplock, editor of the Doncaster Free Press, has added almost 7% to her sales and recently produced a 200-page issue. She also points to the growth of supplements, particularly one for property, and the re-entry to the main league of the town's football club, Doncaster Rovers, as reasons for increased reader interest. She further argues that in an area where there are 120 primary schools and 18 comprehensives, the paper has reaped the rewards of making the parents of school-age children into a "target market".
The Barnsley Chronicle's editor, Robert Cockcroft, famously pioneered the use of non-journalists as reporters and has gone from strength to strength ever since, as yet another set of excellent sales figures prove. Now lots of papers are doing the same, including the Derbyshire Times, which has 30 village correspondents filing reports.

And it is important to remember that regional papers form the second largest advertising medium behind television. According to the Advertising Association, advertisers in 2002 spent 870m with the regional press, increasing its share of overall media expenditure to 21%.
However, there is no doubt that newsprint has to evolve to survive. Regional and local newspapers, vital parts of their communities for decades, need to evolve to survive. This must include using digital channels to create audience contact and new revenue streams.
For example, the price of TV distribution is falling. Taking a position on Astra just to serve a few hundred thousand people is now viable. Free sat will make it more so.
Local press has news gathering capabilities, easily adaptable to TV.
The classic cliche is that the US railways in the end failed cause they saw themselves as in the railway business, not the transport business, local press has the same problem they see themselves as in print not information.
The only major programing missing in the UK is truly local news, (and truly local TV advertising)
On TV the BBC and ITV produce regional news not local news. Although that is about to change if one looks at what the BBC is proposing, to the point that it could significantly threaten the business model of local newspapers.
In a Guardian article May 10 2004, the article says

Life is is going to get a lot tougher for the regional press if the BBC is allowed to make on-line local news its new battleground. At the moment the BBC can fight for the local market with unfair competitive advantage, backed by licence-fee funding, but local newspapers are pinning their hopes on the imminent Graf report about the BBC's online activities to help…The BBC is capable of disrupting this process from an unfair competitive position and it shows little concern for the impact it will have. The BBCi local service offers localised news, entertainment listings, features, webcams, message boards, weather, travel, a directory and audio vault of local bands, and local sport. In short, much of the content of a good local paper and many of the items a newspaper would want to put on its own website if it could afford to.

There is never enough real local news to fill a channel but there is enough local news to drive a regular bulletin. And the technology is there for local and national newspapers to deliver news and content via audio-visual technology.
When one considers the point that, if Caxton and Gutenberg had had the facility of digital and audio-visual delivery platforms they would have used that instead of moveable type. As much as I love the smell of ink on paper.
Downloading and broadband makes this even more practical.
So it makes little sense for the nationals and local print organisations to fiddle about with digital and audio-visual technology. They need to embrace it and pole vault themselves into the 21st Century. Putting these capabilities at the heart of what they do rather than at the periphery. The new digital economics changes everything.

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