Wednesday, August 7, 2013
Boston Globe and Washington Post
Interesting news that the Boston Globe sold for $70 million and the Washington Post sold for $250 million. These newspapers would have commanded at least 5 times that selling price a decade ago.
This is further evidence that print media is in trouble. The question is if the trouble is truly from the presence of digital products or from management’s inability to change the business model of newspapers.
By selling to owners in other fields of business, perhaps newspapers will find a way to succeed. Selling the Washington Post to the founder of Amazon.com, Jeff Bezos may provide some new innovative solutions. Selling the Chicago Tribune to a private investment firm did not provide a favorable outcome.
I would say that the Amazon.com approach to building customer relationships has a better chance of success than most. I would also say that the owner of the Boston Red Sox, John Henry, has a better idea of how to engage an audience than most.
I have spent a lot of time studying the affect of the digital age on the newspaper business. The digital age offers a lot of advantages with respect to the immediacy of news and the facilitation of the marketplace. There isn’t a news happening on the planet that isn’t available to the general public on an almost immediate basis. Amazon.com is probably the best example of the impact of the digital age on retailing.
Still, the printed newspaper has a following. The Wall Street Journal recently listed the top 10 newspapers by circulation:
1. The Wall Street Journal — 2,378,827 (includes 898,102 digital editions)
2. The New York Times — 1,865,318 (includes 1,133,923 digital editions)
3. USA Today — 1,674,306 (includes 249,900 digital editions)
4. Los Angeles Times — 653,868 (includes 177,720 digital editions and 43,275 branded editions)
5. Daily News of New York — 516,165 (includes 155,706 digital editions)
6. New York Post — 500,521 (includes 200,571 digital editions)
7. The Washington Post — 474,767 (includes 42,313 digital editions and 1,305 branded editions)
8. Chicago Sun-Times — 470,548 (includes 77,660 digital editions and 208,087 branded editions)
9. The Denver Post — 416,676 (includes 192,805 digital editions and 10,041 branded editions)
10. Chicago Tribune — 414,930 (includes 46,785 digital editions
These statistics show that there is still demand for a printed newspaper product and a growing demand for digital newspapers. Part of this demand is based on the “comfortableness” factor of an audience that likes the regularity, familiarity and credibility of newspaper reporting.
An area to really study is the growth of digital newspaper products. These products are usually a digital copy of the printed product. They carry all of the printed product’s attributes to a purely digital format. This is different from the newspaper’s website which will not have the “feel” or look of the newspaper.
I have written in the past about the advantages of advertising frequency and constant reach of an identifiable audience that are lost when the focus is on a web site as opposed to the printed or digital newspaper. While these are real losses they will probably not be the critical factors in saving newspapers.
The critical factors will be in understanding the audience and building a bonding relationship with that audience. Here, Jeff Bezos and John Henry excel.
If you have ever done business on Amazon.com, you immediately realize what a friendly experience is provided. My wife recently tried to buy a water filter for our refrigerator from the manufacturer. She spent about 30 minutes on line and was completely frustrated. She then thought she would give Amazon.com a try and about three minutes later she had ordered and paid for the filter. There are a lot of commerce websites but Amazon.com stands at the head of the class for creating an experience that invites customers to return.
While in a different business, John Henry has consistently had one of the highest attendance records in major league baseball. I was visiting with a friend who managed the business side of the San Francisco Giants who said that it was important to understand baseball is competing with all forms of entertainment. The critical factor was making certain that the crowd enjoyed the total experience. This is a lesson that is not lost on John Henry.
News will continue to be important and building a consistent audience will be critical to creating an advertising base to make a newspaper a profitable enterprise. Taking elements of the old model and melding them with elements of the new, while creating a bonding relationship with the audience will be critical. I think these two entrepreneurs have the ability to apply insights from their past successes to their purchases of newspaper organizations.
I also wouldn’t discount Warren Buffet’s ability to apply his notions of how to create successful, lasting business enterprises to the newspaper organizations he is purchasing.