Time for a New Model

By: Scott Stawski

For years, many have forecast the death of the traditional newspaper. Certainly the business model employed by current newspaper chains is not sustainable in the long term. However, a rapid deployment of a new business model would lead to long-term growth. At its foundation, the newspaper company of the future is a content company. Its mission of gathering and disseminating information is sacrosanct. Whether that information is disseminated via print, Web, or wireless is of no consequence.

To restore long-term sustainable growth, today’s newspaper chains must quickly adopt the following model.

1. Editorial. Protect the local editorial function. This is the core asset of the newspaper. Provide the tools, budget, and personnel to gather information in multiple formats. The day has arrived where a publishing company does not necessarily need to own a television license to provide broadcast content. Utilizing the core aspects of digital asset management, centralize the technology platform used by the editorial function through one enterprise platform, Web-enabled and hosted by a third-party provider.

2. Accounting. Centralize all accounting functions. Many have already been centralized; now, the last remaining functions ? advertising billing and subscription billing ? must follow suit. The technology platform for all accounting functions should be a central, Web-enabled platform most likely hosted by a third party.

3. Circulation. Centralize circulation customer service and outsource it to a third party. Also, centralize the home-subscriber marketing function and support it with a customer-information marketing technology platform hosted by a third party. Once centralized, most of the process can be outsourced to a direct marketing agency with experience in acquisition and retention marketing.

4. Advertising. Newspapers must base their advertising sales process on overall reach, not mere print circulation. Reach is a combination of the print publication, Web sites, podcasts, wireless, and the like. Advertising sales representatives must sell reach. Thus, ROP must be redefined as Run of Product, not Run of Press.

The Audit Bureau of Circulation (ABC) must follow suit and change its reporting to overall reach, not just print circ. If the ABC is unwilling to change with the times, then newspapers should abandon ABC reporting altogether. As long as it is replaced by a reliable mechanism to measure reach, there are many of us who believe that abandoning ABC reporting would not have serious negative consequences in the advertising community. By the way, I am not suggesting doing this in a few years, but by the end of this year.

Advertising sales must primarily remain a local function, with a strong national sales force representing the entire chain. National sales should be supported by a sales force automation platform most likely provided through an application service provider. Private-party classified advertising should be centralized and probably outsourced ? most likely to the same third-party provider used for circulation customer service. Internet advertising sales should not be sold by a separate sales force.

However, the newspaper chains need to open themselves up to the advertising sales and delivery mechanisms of some of the larger Internet players like Google and Yahoo. Their advertising programs are generating large revenue gains from which newspapers’ well-trafficked sites would greatly benefit.

5. Production. As newspaper chains become fully paginated, outsourcing production becomes less of an issue. Local advertisers still have a demand for advertising production, whether in print or on the Web. Several newspapers have shown successfully that this business process can and should be outsourced to a third party.

6. Printing. Outsource the printing business function. Yes, I am suggesting that newspapers divest their printing facilities. Firms that specialize in printing are better suited to optimize other potential revenue from these fixed assets while, on a contract basis, providing the day-to-day printing needed for the daily newspaper. Newspapers would be surprised at the interest level shown in the auction process.

7. Distribution. Outsource the distribution business function. Yes, I am suggesting that newspapers sell off their distribution facilities as well. As with printing, firms that specialize in distribution are better suited to optimize ROI on these assets. Meanwhile, these firms can provide a newspaper’s print distribution on a contract basis.

Will today’s newspaper chains take a short-term hit from these steps? Most likely, yes. However, once business processes are consolidated at the enterprise level ? or outsourced, if they are not core competencies ? the publishing firm will be a nimble player in content creation, aggregation, and distribution regardless of the medium.

Scott Stawski leads the marketing solutions practice at Knightsbridge Solutions, a consulting firm in Chicago, Ill.

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