By Bob Mentzinger
The buildings have been sold. The printing operations have been consolidated and the presses sold off. Staff has been cut beyond what’s needed to deliver quality service. Delivery days have been limited, page size and count cut back. Some titles have stopped publishing altogether.
It should be obvious by now that newspapers cannot cut their way out of their sinking fortunes. They need new sources of revenue. Yesterday.
Speaking of yesterday, anyone squeamish about newspapers diversifying their revenue by servicing advertisers must have very short memories. In the glory days of monopoly, before the Internet changed everything, retail display advertising comprised 60-70 percent of most major metro dailies’ budgets. Classifieds were another 25 percent. The price of a subscription – “reader revenue,” now more than half the revenue pie – hardly mattered.
When the Internet came to the corner office of a newspaper company at the dawn of the 20thcentury, essentially offering to print customized newspapers and deliver them for free to each of their customers, eliminating production and distribution costs and providing a more personalized product, executives refused. Instead, they merely repurposed their print product and gave it away for free. Is that a business model?
This was as far back as 20 years ago. Since then, ad-supported revenue has nose-dived in the all-important print category. Digital ads have proved clunky and produce only 10 cents of revenue on the print dollar.
Where has the innovation been?
Digital marketing, press release distribution, local information brokering and other commercial information services – these are all well within the DNA of newspaper companies, who have been the voices of their communities for years with a reliable mix of news and advertising, and even low-brow audiences could discern one from another.
New services have been needed to pay newspapers’ bills and preserve their core missions for decades.
Unfortunately, in that time, monopoly-era mindsets in the corporate offices of newspapers failed to deploy these services. In the meantime, as the moat of a monopoly on the printing press disappeared, Yelp, Foursquare, Twitter, Craiglist, Groupon and other, more nimble multimedia information providers filled the breach of local information brokering, offering actionable, custom local information and shopping deals at virtually no cost to consumers.
Compare that with newspapers, whose cover prices have doubled while their pages were halved and information quality generally declined, without a real commitment to digital, much less mobile. What’s left is a Black Friday newspaper fat with inserts and not much else.
Given all the evidence amid the smoking ruins of the newspaper industry, it’s obvious that new services, new revenue streams are needed.
In Maine, a tie-up between the Bangor Daily News and a local digital marketing firm known as Dream Local, which specializes in targeting ad messages to likely consumers, seems a good model for newspapers to buy the local advertising R&D they could not or would not develop on their own during the Internet boom.
Time will tell, but newspapers are way behind the digital innovation curve and have a long way to go to catch up.
Do newspapers need to provide a new suite of services to advertisers? You bet. But to master the technologies and realize the promise of the 21st century, first they must enter the 20th.