Posted by: structureofnews | March 6, 2012

The Newspapers’ Dilemma

The Project for Excellence in Journalism unveiled a nice study today on how newspapers are – or more accurately, aren’t – adapting to the digital world. It’s nice not least because it has real numbers in it (albeit anonymized), which lets people dive into the details.

The headline number is that, on average, papers are losing $7 in print revenue for every $1 gained in digital revenue (although the report points out that mileage varies, sometimes considerably, among papers.)  And the headline headline is that there continues to be a massive cultural divide in newspaper companies, between those attached to legacy ways of doing business (and news) and those who want to change faster.

“Probably the most difficult thing is to change a corporate culture because you don’t really have the power to do it,” noted one executive. “You can change CEOs, executive VPs, digital VPs. You can wave this magic wand all you want. But at the end of the day, the troops in the field hunker down. From our company, and I would venture for other organizations as well, the most difficult thing to do is change it. “

Culture change is hard work.  But it isn’t simply a question of dinosaur-like curmudgeons standing in the way of needed change (although that’s doubtless true too); it’s that the entire structure of legacy newspapers is built about – no surprise – legacy processes and legacy customers.  And that there are very good business reasons for sticking to such practices, at least in the short run. In the long run, it may be suicidal, but as Clay Christensen noted in The Innovator’s Dilemma, that’s why great companies often fail in the face of a disruptive innovation.  The PEJ report notes that:

…the unavoidable fact that the part of the newspaper industry that is growing, digital, continues to provide only a small part of the revenue, while the part that is shrinking, print, provides most of the money-a paradox that is difficult to navigate and hard to resist.

So culture stands in the way, no doubt.  But so do hard-headed business judgements about revenues.  That’s not to say that the curmudgeons are right; they aren’t. But it’s a very tricky balancing act trying to manage current operations and future growth – especially when there are no clear models yet of what works in the digital world. Is mobile the future? Paywalls? Services? More targeted advertising?  Choosing which one to invest in – because most organizations don’t have the resources to invest in all – involves making critical decisions on very little information.

What would be great would be a similar in-depth study of the new online news ventures – their costs, revenues, audience, etc – so people could plumb them for clues to the future too.

Still, ultimately publishers (and editors) have to take a leap of faith – something easy to say, but hard to do when you’re responsible for a public institution, people’s jobs and, in the case of public companies, other people’s money.  But staying still isn’t an option, either.

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