What newspaper publishers could learn from the music business

July 16, 2009 | Posted by: Shahed Ahmed

Just last week, a friend, who is also a big sports fanatic, was mulling over a subscription to a print magazine that covers the greater world of sports. Five years ago, the subscription would have been a no-brainer for him, but not anymore. After some thought, he said the following, “There is plenty to read online about teams and sports that I’m most interested in – basketball and football. Why would I care to read about baseball all summer in (insert name of magazine)?” He can track down the most relevant content online and he doesn’t need a magazine editor to tell him what’s “news”. Thought this was a good exchange to share, given that my friend’s decision is a microcosm of decisions that people are making every day to abandon print and go online for news and information. Of course, where the “eyeballs” go the ad dollars will follow.

In May, Maurice Levy, chairman and chief executive of the world's fourth-largest advertising network, Publicis Groupe, said that the publishing industry is faced with a “deep and profound” structural crisis, a problem that won’t be solved simply by an economic recovery. Or put more succinctly, Levy declared that the traditional ad model for analogue media [print media] is broken. While Levy’s comments hold weight, given his and his company’s position, this is not new news to the publishing industry. Just ask the executives and editors at BusinessWeek – the latest in a growing number of “traditional media” outfits facing financial hardship leading to tough business decisions.

In this blog post I wanted to discuss the misconceptions around exactly what’s broken and how the “traditional media” landscape might change as a result. There was an article recently in Fast Company written by Kit Eaton that references a new study by Cornell researchers, which found that blogs generally followed traditional media in the business of “breaking news”. Eaton presents this research as a validation of the power of old media and states that news is “still in the hands of the same people.” The article goes on to question “old guard media moguls” that complain about blog’s, or other social media’s, role in the erosion of old media’s powerbase and how these same executives throw out terms like subscription and paid content. But, the point that Eaton seems to miss is that the recent financial trials of traditional media has never really been about content, it has been about eyeballs (who reads their content directly) and about ad dollars.

There is some inherent value in breaking news. And, given the advantage in resources that traditional media continues to have on a majority of the blogger community it will allow them to continue to break news, produce great investigative reports and compelling content on an ongoing and consistent basis. But, blogs pose a threat because 2.5 hours after an old media outlet breaks a key story (whether online or even in print) the "news", according to the same Cornell study, has already propagated to many relevant blogs, digg, reddit, twitter, and perhaps even on Facebook and other social channels. I go online seeking news, do a search for the story, or check out my RSS reader, and maybe I see the news on a blog first, or on Twitter. Maybe I don't click through to the old media Web site to read the rest. That leads to lost eyeballs and lost revenue for the old media outlet. Old media is losing print revenue because users are going online and it is losing online ad revenue because there is increasing competition from social networks for those limited ad dollars.
 
The reason traditional media is broken is tied to ad revenue, not content so much (though good content should be a given). I’m an advertiser with X amount of dollars, where do I advertise? The top-tier old media Web site that receives 10 million hits a month or Facebook that attracts 90 million users? Or Google, that attracts 140 million? Twitter, Facebook and Google are all attracting way more eyeballs and, given some of the advanced data mining that these networks are doing to gather information on their users, can all identify specific demographics in a much more targeted way that any newspaper Web site can currently.

So, by now you are probably wondering about the blog headline? You’re probably thinking, ‘what does all this have to do with the music industry?’ I equate this scenario somewhat to what the music industry went through with Napster and other P2P software. That industry continued to create good content, but the distribution channel went haywire and out of their control. A similar thing is happening to traditional media. Just like the music industry, some have tried to keep the content constrained, by putting it behind subscription, for example. But the Web is viral and controlling content, particularly written content (it's not like tracking an mp3 file), is difficult, despite Web site’s like Attributor.com (thanks Sam Whitmore for the reference!).

There are a couple of ways this could go. Publishers could either try to bring more users to their own domain, keeps users engaged, perhaps using social networking principles, within the confines of their Web site. Some of the outlets are dabbling with this new model -- BusinessWeek Business Xchange and Forbes CIO network. We'll see how these work. Or, traditional publishers could look to create an entirely new content distribution channel by partnering with the social web platforms. Partnering with Facebook, Twitter, Hulu, YouTube, etc. to syndicate content and build that syndication, perhaps tied to page-views and a % of ad dollars, into a new revenue source, to piggy-back on the existing ad revenue generated through their own Web site. Because, the fact remains that old media is still great at breaking news and producing good content.