To innovate and reinvent, newspapers need research and development

Posted by John Burke on August 30, 2006 at 12:31 PM
In response to this week’s cover story about the decline of newspapers from the best weekly in the world, The Economist, BBC Radio 4 chatted with Guardian editor-in-chief Alan Rusbridger and his equal at the Independent, Simon Kelner to hear what they think about the future of the newspaper.

Their respective papers have followed divergent paths over the past couple of years. Kelner’s Independent was the first British broadsheet to trim itself down to compact format in the fall of 2003. At the same time, it began focusing on the “views”, taking stronger positions and turning itself into something that Kelner called a “viewspaper.”

At the same time, the Guardian remained in broadsheet format (only switching to a Berliner size in September 2005, a design that won several awards) while simultaneously eliminating its traditionally left-leaning stance, opting for a more neutral paper.

Having heard from both E-i-Cs before, their opinions about the future of newspapers have not wavered much: if you’re a newsprint advocate, you’re with Kelner; if you’re just a “give me the news wherever” kind of person, Rusbridger’s your man.

Here's a summary of the BBC interview with some commentary (disclaimer: the commentary comes from a “give me the news wherever” guy. If you’re a print person, please respond with your arguments below in the comments section).

Rusbridger

Some may call him a pessimist. Others a realist. Rusbridger, who is “completely ambivalent about how people consume news,” feels that “the next few years are going to be very expensive for newspapers” and that many papers will not make it. The current crisis papers face is that they are losing money due to falling circulations and relatively stagnant advertising while at the same time they must to invest in R&D to secure their futures.

The R&D story of Rusbridger’s Guardian is certainly one of the most heartening of the print medium adapting to the digital world, and he is not shy to point out that the Guardian’s online revenues are growing at 50% a year (it has also expanded itself internationally; over half of its online public is in the US).

Some would say that the Guardian has been so successful because it is owned by a foundation and thus does not face the stockholder pressures that publicly owned papers deal with in the stock markets.

Others would say that this is just an excuse of companies that have coasted blissfully through the past 15 years with 25% profit margins. Hey, if it ain’t broke don’t fix it.

Well, sure, their business model didn’t break, but its foundations were being nibbled at by the termites of technology. Years of nibbling has added up and the foundations are beginning to crumble. But if public newspaper publishers take the advice of revered industry analyst Lauren Rich Fine, quoted in a New York Times article about the rapid demise of Knight Ridder, they may still have a shot. Said Fine, “If you have the conviction that the news business and the online are a win, put up a ‘work in progress’ sign and say that margins are going to go down.” Their share price may plummet, but newspapers would be investing in their long-term survival.  

Kelner

In the BBC interview, Kelner pushes innovation and giving the public what it wants. This is based on the experience of his own paper which he boasts still sells more copies today than it did three years ago thanks to the switch to compact.
   
All fine and good.

But he goes on, emphasizing innovation without giving any real new ideas. He generalizes, “The role of the newspaper will change. It needs to redefine what its role is in the modern media consumer’s life.”

Did the role of the Independent change for its readers by going compact? According to its latest circulation figures (down 2.7% year on year), it doesn’t seem like it changed for the better.

How is it going to “redefine its role?” By adding more supplements? By transforming its writing style? By keeping the printed paper as a priority and shunning the immediate publishing capabilities of the Web?

In fact, one of his suggestions seems completely contrary to trends: “The financial model (of newspapers) has to change. We need more reliance on circulation revenue because that is revenue we can control by producing a paper that is desirable.”

It sounds nice in theory to charge consumers more to read your news. Even the Economist thinks that top quality papers “should be able to put up the price of their journalism to compensate for advertising revenues lost to the Internet.”

But with circulations declining, information abundantly free online, and markets becoming inundated with free newspapers, is this prospect at all feasible?

The most disturbing part of Kelner’s argument is that even he is not sure if innovations will earn papers money. “If you innovate and give people what they want the readers will follow and, possibly, only possibly profits will follow” (this could be a sign that the Independent is not bringing in as much as it would have liked to after its format switch).

Perhaps the way in which the “financial model of newspapers has to change” is by gradually phasing out the paper product all together. Rusbridger relates something he noticed on the very day of his interview; a young boy trudging down the street delivering a stack of papers. He called the practice “Victorian.”

Since the long-reigning Queen’s era passed with her death in 1901, maybe it’s time for Kelner and other newspaper traditionalists to welcome the 21st century. Numerous innovators would love to be in Kelner’s position. It is he and people like him that have the opportunity to lead the newspaper through the most tumultuous period in its history and a chance to reinvent it for the digital era.   

Sources: The Economist, New York Times, Publicitas

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