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Saturday
Mar102012

The Extinction of Newspapers Part 2

The Extinction of Newspapers Part 2

We found that Ross Dawson believes that newspapers are headed for extinction (Part 1). He is not alone in his belief. 

The Pew Research Center just completed a report on the newspaper industry and although the sample size is small, the news isn’t good.

In short, newspapers are increasingly coming under pressure to find a business model that works for a digital world. 

Here’s a small bit of the report:

Many of the executives who were interviewed are enthusiastic about the prospect for mobile revenue, but so far it amounts to very little.

At the same time, newspapers have made only marginal progress in developing new non-advertising revenue streams, such as hosting events, creating digital retail malls that provide transaction fees or, with the exception of a few papers, becoming digital marketing consultants for their advertisers.

The industry is inhibited by several obstacles that executives themselves candidly acknowledge. One involves the difficulty of changing the behavior of people trained in the ways of a mature and monopolistic industry. Still another is 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. One pervasive feeling is that 15 years into the digital transition, executives still feel they are in the early stages of figuring out a how to proceed.

"We have all these [new] products we are working on that we believe are going to deliver results that are part of our sustainability," said one executive. "But we need to eat today."

Another senior executive, capturing a sentiment articulated by many of his peers, talked about a culture of "inertia" that made change more difficult.

Another executive told us bluntly, "There's no doubt we're going out of business right now."

The problem, he explained, is the dilemma that faces many trying to innovate inside older industries. If you changed your company and did not succeed, that could hasten the end of the enterprise. "There might be a 90% chance you'll accelerate the decline if you gamble and a 10% chance you might find the new model," he said. "No one is willing to take that chance."

That’s the problem – “no one is willing” to take a chance on a new business model. According to the data, smaller papers are losing print ad revenue more slowly than their larger cousins; and which could mean they have a little more time to “discover” a way to replace those lost revenues. It could also mean they will simply die a bit more slowly. Sooner or later, newspapers everywhere will either adapt or they will simply cease to exist. The entire report from the Pew Center is here. Joshua Gans from Digitopoly has some thoughts on the Pew Report and my earlier post on the subject of the newspaper business is here.

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