Don't Be a Paper Tiger or a One-Trick Pony

By: Mark Fitzgerald Media economist Robert Picard traveled from Sweden to Mexico City to deliver a message to publishers in the United States: Your traditional way of running a newspaper business is not sustainable ? and the window of opportunity to turn your company around will not stay open for very long.

The pressure on newspaper margins will be even more intense in the future as companies shift more money out of advertising and into other forms of marketing, Picard told some 700 newspaper publishers and executives at the recent Inter American Press Association (IAPA) 62nd General Assembly in Mexico City. Marketers increasingly are concluding that Old Media ? including TV and magazines, as well as newspapers ? are just not worth the investment, he said.

Picard is the founding editor of the Journal of Media Economics, and now directs the Media Management and Transformation Center at the J?nk?ping International Business School in Sweden.

"Running and owning a single product is very problematic," he noted. At a time when nearly all new media initiatives are all paid for by consumers, newspapers are stuck with a model that depends heavily on advertising, said Picard, adding that's especially bad news for the industry's one-trick ponies. Simply relying on new print products won't assure long-term success, either, Picard warned. Of the top 100 U.S. companies, Picard pointed out, not one is a pure-play media business. Twenty-five years ago, he notes, there were eight ? "and they're all gone."

And the Web is unlikely to be a savior, at least in the short term. Picard noted that online, it "often takes 100 times more people who must be reached to get the same advertising revenue from one newspaper reader."

But not all the news was bad from Picard's media think tank. Newspaper companies have numerous market advantages left and have an almost unlimited upside, because right now they capture their audience's attention for barely 2% of its waking hours: "You've got to develop information and entertainment products for the other 98% of their time," he said.

What newspapers must stop doing is thinking of each product as an independent unit that must pay its own way. "Think of new product initiatives not as profit centers, but as R&D," Picard told the publishers. Above all, he added, don't think that relentless cutting costs will work in the long run: "You can never cut a company's way to a sustainable future. You can only cut costs to invest in new products and services."