Newspaper Coalition for Net Ads

BusinessWeek looks at some newspapers that are joining together to build on the net rather than fighting the trend. A coalition of Yahoo, Hearst, MediaNews Group have apparently been in discussions since Oct. to leverage online classified ads such as Yahoo's HotJobs.com site.

"Help-wanted is the quick cash," says one executive involved in the discussions, "but news search is the long-term future." At least one newspaper executive involved in the discussions says he nurses hopes that Web surfers eventually will pay small fees -- micropayments, in Web parlance -- for some newspaper content.

It is true that newspapers need to explore new services online. Newspapers won't survive by simply replicating online what they do in print.  That's a classic mistake for incuments confronted by a potentially disruptive innovation. 

Newspapers need to explore what are the real problems consumers have and how can newspapers help solve them.  And media companies may learn from online efforts working with Yahoo.

Trouble is that coalition members won't share the same priorities for the project. And newspapers may put the breaks on some efforts out of fear of cannibalization of current ad revenues.

Further reading on media trends at BusinessWeek writer Jon Fine's media blog.

Comments

[Paul Paetz]

This is a dumb idea that is simply hastening the end of traditional low and middle-brow newspapers. The problem is that most papers have dumbed-down their content so much, and relied on the same one or two sources for their information, that they don't offer anything substantive of value.

In other words, why would I agree to pay anything (micro-payments or otherwise) when I can get better information for free from the blogosphere? The only thing that a traditional newspaper (why focus just on newspapers unless paper is the important defining attribute?) has that is worth something is a sense of locality. But that is also true of local radio, tv, and underground journals. So locality (which enables sales of classified ads within a regional context) is just another low value commodity offering, which in comparison to the past business model, will seem like a bad market to pursue by the incumbents.

As you have previously pointed out, traditional papers are too heavily invested in trying to protect the status quo rather than defining the future. In a world where everything I could want is available online already, and most of it is free, an aggregation function that validates content (including YouTube videos) for niche markets and places a stamp of authority (a brand) is the future, and they will not be able to charge me for that. They may be able to charge advertisers for packaging niche markets, but not the consumer of the information unless they add high-value analysis (which is Dow Jones niche) and unique content. And, the size of that niche is rapidly falling as it fragments into many microniches.

Ask yourself what vulnerabilities traditional newspapers, even banded together, face in this new world, and it becomes more apparent why their model is doomed before it launches. For example, if I get two or three smart people working together in a basement, I can outperform a traditional local paper on aggregating niche content both in terms of higher quality and lower cost basis. In fact, that's what A-list bloggers are already doing. And, such an individual or small group of individuals can build a much more highly profitable business charging much lower advertising rates and undermining any ability of an old model mediocre-quality mass market medium to survive, on a fraction of the revenue base needed to support a big city daily paper.

They don't need to collectivize, they need to break into small parts. To chase the niches with high quality targeted services, rather than more of the pablum that big cities dailies serve up today. There is only a need for between one and three general purpose national middle-of-the-road media organizations, and there is already plenty of well established competition for that in TV networks, cable networks, USA Today, radio syndicates, and even Yahoo.

Even though the singular advantage that existing papers have in their home city is local market presence and knowledge, it seems highly unlikely that they will be the activists who create the future business model because that means radical reformation of their business entity and shrinkage of scale to become more useful and cost competitive.

You hit the nail on the head by noting that this involves cannibalization of existing ad revenues. And, that's the rub. Traditional newspaper owners all believe that they can stem the tide of defections, and deep down, they don't believe they need to change in a big way to do it. Sure, they'll tweak a little here and there and think that they are innovating, but they'll be the last ones selling buggy whips 10 years after the rest of the world has moved to horseless carriages.