Tuesday, September 10, 2013
Capitalizing on the Value of Newspapers
I teach both undergraduates and MBA students at the University of Houston. Both groups have been assigned a Harvard Business case studying the Paywall at the New York Times. This is an interesting case and shows the challenges faced by newspapers that are trying to survive in a digital media world.
Interestingly, the case focuses on the rate charged for the print form of the newspaper vs. the digital edition. The digital edition is less expensive and the print plus the digital edition is less than the print only newspaper.
The case also focuses on the penetrability of the Paywall. Some social networking sites have access to NYT content free.
Finally, the case looks at the challenges to transition from print to digital and perhaps most importantly the value created by the newspaper.
As I have watched newspapers address these challenges, it seems that almost universally there has been little attention paid to the value created by newspapers and newspaper journalism.
There is no question that the newspaper creates value for readers and that value is translated into value for advertisers. Arriving at the precise value of newspapers or newspaper journalism requires a fundamental understanding of the segments of the market that are served.
For each segment, the newspaper organization is “hired” to perform certain functions. For example, some newspaper readers want a credible news source that provides in-depth coverage. Others look for a comfortable source of all types of information to be enjoyed early in the morning with coffee or in the evening to “wind down”.
A more extensive list of jobs a news organization is “hired” for includes:
1. Immediate updates of certain news events,
2. To provide information on developing stories and informed commentaries,
3. To provide investigative and “Fourth Estate” reporting,
4. To provide information on entertainment,
5. To provide information and cost comparisons for family budgeting,
6. To provide a sense of being knowledgeable of current events,
7. To provide a way of understanding how society is changing,
8. To provide entertainment,
9. To act as a learning tool,
10. To act as a repository for important, accurate information.
11. To provide advertisers with a reliable way to deliver sales messages to their consumers.
If news organizations are required to do these things, why are they having such a difficult time putting together a strategy that assimilates print and digital capabilities in a cohesive manner that can be marketed effectively?
From where I sit it appears that there is no overarching strategy that addresses the jobs that newspapers are “hired” to do. Rather, the approach has been reactionary to competition and splintered with respect to addressing challenges. In other words the strategy has been a series of actions taken to address various symptoms of a paradigm shift that has a digital format.
Most of the reaction has been to address revenue shortfalls. Newspapers created responses for Internet programs that attacked the classified and retail advertising categories. They then responded to the significant falls in circulation. Newspapers now have a plethora of tactical answers for the various digital programs that impact their businesses but they don’t typically have an overarching strategy.
I believe that there is still time to develop a strategy for newspaper organizations. The first step is to develop a more complete list of jobs a newspaper organization is “hired” to do. This list should come from the readers and advertisers NOT newspaper employees. The questions asked of the readers and advertisers should focus on jobs they need done rather than jobs that newspapers perform.
This list should then be prioritized with the items appearing in most of the customer segments being given the highest priority.
Next this list should be categorized by the method (digital or analog) that can perform the job with the greatest efficacy.
A business plan can then be constructed that allows a newspaper organization to create value for their collective audiences. This business plan can be the basis for creating a marketing strategy that is based on synergistic products that create value.
This line of value creating products will help define distribution, pricing and promotion strategies.
This approach will also help newspaper organizations understand what services need to be transitioned to a digital mode and how that transition can be accomplished.