Scoble and Microsoft on the Death of Newspapers

Robert Scoble and Microsoft's Don Dodge point out that they no longer read newspapers.

Scobleizer admits he may live in a bubble, but 40 years of circulation data shows he is not alone. The trends are alarming enough that we identified newspapers as the top entry in our Top 10 list of industries facing disruption earlier this summer.

Some warning signs of disruption are clear:

• Industry fragments into niches;
• New and sometimes strange entrants gain toeholds in the market, often with marginal customers;
• Specialized expertise no longer required;
• Management playbook fails;
• Growth gap opens;
• Management seeks a miracle. (This last stage is often when mergers are trotted out.)

Dodge refers to the Online Newspaper Manifesto published today by a former Knight Ridder exec in Editor & Publisher magazine. The manifesto has some pretty tough talk for the industry, including numerous self-defeating points:

Newspapers don’t boast a critical mass of the world’s best mathematicians, computer scientists and computer programmers in their organizations. Nor are they led by CEO’s with operational experience in online or technology.

The difficulty is that in all but the largest markets, the technology investments required to deliver best-in-class feature functionality are simply too rich for individual local markets to bear, given the limited local revenue opportunities.

Individual newspapers, acting alone, can’t gain the leverage of network economics (to serve local markets.)

Making  a move (to common platforms for content, ads, financial systems etc) is a monumental effort involving operating risk, loss of full local control, significant switching costs and real transition pain. The infrastructures currently in place are the product of years of blood, sweat and tears. Managing this kind of industry- wide change is a bold and daunting challenge. Is it worth it?

It's important when considering disruptive innovation to ask whether the incumbent suppliers (or in this case the proposals in the Manifesto) are innovating to create a new business or are simply 'cramming' tomorrow's fledgling business onto yesterday's overgrown cost structure.  Cramming is a very dangerous and usually fails because it undercuts the innovation and saddles it with yesterday's business.

Crammers typically follow these steps:

• Dismiss the new innovation as inferior or incomplete initially;
• Improve the new innovation to their higher standards;
• Graft the innovation, once it is good enough, onto their current products;
• Maintain current business model;
• Maintain current business processes.

Newspaper publishers can step out of the muck of the Online Manifestor and consider only four simple questions, inspired by a clear-thinker:

• What is it that information consumers value and pay for?
• What do newspaper companies need to become to deliver that?
• What will we do about it?
• If the newspaper business is dead/dying, why is Metro International expanding and gaining share in 21 countries?

** Other views **
Blogger-Journalist Mathew Ingram says 'Good luck with that Manifesto.' "Newspapers can’t even agree on how to measure actual physical newspaper circulation and other easily quantifiable metrics. How could they possibly agree on online standards and/or measurement?"

Ethan Kaplan, a former journalist, says he'd outsurce the backoffice and press and open up (literally) the newsroom to invite in the community: "The power of a newspaper is diminished through the overhead needed to get the information to the world. The panic around the demise of analog media has caused massive compensation through the attempt (poorly) at revenue models in the online space."

TechDirt says newspapers need to disrupt themselves: "They haven't figured out how to translate their offline expertise into the online realm...Simply teaming up to take on Google or Yahoo doesn't get at the root of the problem. The solution is not to eke out a few extra pennies per click, but to expand the market."