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Repowering newspapers:
Taking a lesson from Toyota and GM

By Alan Jacobson, Brass Tacks Design

The American newspaper industry is in crisis. So is the American auto industry. Both are victims of secular changes, which have been exacerbated by the current economic crisis.

In two of his recent books, NYT's Thomas Friedman quotes Stanford economist Paul Romer: "A crisis is a terrible thing to waste." So let's get to it:

The solution for both industries is remarkably similar: both automakers and publishers need to repower their vehicles with new engines.

Detroit still depends upon dinosaurs for the fossil fuels that power its engines. To survive, automakers must evolve by re-engineering their vehicles. Detroit must deliver cars powered by electricity derived from new, greener sources. This will restore domestic jobs, boost the economy and improve the planet – providing an elegant solution to all three problems.

With Toyota's Prius and Chevy's Volt, America's automakers are offering a new kind of vehicle – an electric car. Now publishers need to deliver a new kind of news vehicle – the electric newspaper.

What's that? Newspapers already have an electric vehicle? Not really.

More than a century ago, stagecoach makers realized they needed to repower their horse-drawn carriages. Some chose steam to power their new vehicles. A decade ago, newspapers chose monolithic, shovelware-based, audience-driven websites to power their new(s) vehicles. Both chose the wrong engine.

The engine that drives newspapers – both print and online – is ad revenue, not audience. And like Detroit, which is replacing internal combustion engines with electric motors, we need to replace our spuriously named, unique visitor engines with the only metric that matters – money. Here's why:

American democracy depends upon a well-informed public. See Jefferson, Thomas. Today, only newspapers have the means to meet this need, and newspapers need ad revenue from print – and increasingly from online – to continue to power this essential journalistic function.

There's more at stake than newspapers and journalists' jobs. So we gotta get real. Real fast. (See why that's such a big challenge, at bottom.)

First, we gotta let go of our Stanley Steamers (a.k.a. newspaper websites) that haven't produced more than ten percent of any newspaper's total revenue since they were launched more than a decade ago. These meager revenues are actually inflated because they don't account for costs borne by the print side: newsgathering by the editorial staff and sales of classifieds by the ad staff. So the weak revenues are actually weaker than they appear.

Bottom line? These sites will never contribute enough to the bottom line to take up the slack from print. It's time for something completely different. Automakers like Toyota and GM are trying something new. Here's a new deal for newspaper sites:
  • Repower online sites with revenue as the number one goal. Audience will take care of itself if we deliver an entirely new enduser experience for editorial and advertising content.

  • Drop the CPM pricing model and adopt the CPC (cost-per-click) pricing model, which made Google the number one advertising company in the world (Market cap: $100 billion).

  • Expand the online offerings to include email marketing. If search is the killer app of online, then email is the killer advertising app of online.

  • Embrace UGC (user-generated content). With never-ending newsroom staff cuts, there are fewer of us everyday. But users are almost limitless and virtually everywhere to extend our gathering of information. If users contribute, they also become part of the audience that we deliver to advertisers.

  • Aggregate. Users don't care where the information comes from, but they want it all in one place. Make that place your place.

  • Redesign online products to make them more effective environments for advertising and to make their content more relevant to endusers.

  • Increase the number of online offerings. Your website can't succeed as an online version of your newspaper. As Mark Potts has explained, online is about niches. You're more likely to be successful with 100 niche sites that leverage the same platform and database, rather than a single, one-size-fits-all, electronic version of your newspaper.

  • Think about the next source of energy: Mobile. Very soon, mobile will eclipse laptops and desktops. Repower your newly energized news and advertising products and services for the mobile platform.
Putting this plan into action won't be easy. Experience has shown that newspaper execs are reluctant to make substantive changes to the print product. Online execs are even more entrenched. Here's what turnaround experts told 50 newspaper execs convened by the American Press Institute this week, "The biggest hurdles to progress are the industry's senior leadership, including some of the people in this room. I am not sure you can take a look at your industry with fresh eyes. Success often takes an outsider to come in and shake things up."

Step one: Get some outside help.

Step two: Prepare to have fun for the first time in a long time.



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