Shoptalk: The Swiss Alliance

By: Tom Mohr Newspapers must win online, or face a future of painful contraction. To win, industry leaders must adopt a Marshall Plan containing two key objectives: transitioning papers to common platforms, and acquiring the ability to sell top-quality online product to our advertisers. To fulfill these objectives, proudly independent companies must aggregate into an industrywide network ? and each company must cede some control over its digital future to a organization that manages it. This will require a degree of cooperation and trust rarely witnessed in the newspaper business,

one that can only be achieved through the active, visionary leadership of the industry's captains. But if they pursue this path and plug into the power of network economics, they will tap into $4 billion in revenue for the industry by 2010.

I believe newspapers' social purpose ? the building of civil society in cities and towns across America through the daily output of good journalism ? is worth fighting for. Securing the future of the industry's social purpose requires securing its financial future, and I have concluded that depends on an industrywide understanding of seven key points:

Local newspapers will not be the innovation source for top online product. After 12 years of the consumer Web, not a single example of breakthrough online innovation has emerged from a newspaper company.

"Local" is not, in itself, fully defensible online. All online success stories benefit from network economics. Network economics is characterized by two benefits: the network effect and scale economics. Individual newspapers, acting alone, can't gain the leverage of network economics.

Even Gannett, the largest newspaper company in the U.S., has only limited network leverage. However, the newspaper industry as a whole boasts 56 million monthly unique visitors, fully one-third of the entire U.S. Internet audience. If we were to build an industrywide network, we would take the lead in combined monthly unique visitors versus other online news sites, and gain the critical bargaining power that would open the door to sharp deals with vertical online leaders in all the ad verticals that matter.

The big money is not in newspaper Web sites, but in gaining access to top-tier product via partnerships with vertical online leaders. Access to top online product will only come from deals with existing vertical online leaders. And if partners can work with newspapers efficiently through a single organization (let's call it "Switzerland Inc."), deals can get done.

Moving newspaper Web sites onto common platforms will deliver improvements in quality, cost reduction, traffic, and revenue. What I mean by "common platforms" includes a common content management system, a common classified marketplace solution, common ad serving capabilities, a common ad network, shared content, feature functionality within key channels, a common underlying technical infrastructure, and common supporting financial systems, metrics, and analytics.

I don't mean one site for the newspaper industry. Nor do I mean that every site would look the same. The consumer would go to the unique URL they've always known, and see the unique newspaper Web site they would expect to find. Content would be prioritized and managed locally. Producer tools would offer templates that employ effective usability practices, but also allow for unique presentation and design. However, there would be standardization where that standardization adds value.

When networked, newspapers bring critical assets to the table that strengthen their competitive position versus online-only players.

The window of opportunity is closing; failure to act will compromise the future of the newspaper business.

Ultimately, the key is leadership at the highest levels.

Space here prohibits a full explanation of all of these points, but an expanded version can be viewed at E&P Online in the "Columns" section.

It won't be easy. To create a Switzerland Inc., thorny strategic issues must be addressed. These include divergent company objectives, competitive dynamics, network ownership and governance issues, and affiliate structure. The tactical concerns are no less daunting, including sales-territory overlaps, pricing, and branding requirements. There are migration planning issues, and antitrust considerations.

But it's worth exploring, rather than trying to strengthen stock prices through layoffs. This is a fight for the future of quality news ? and for finding new ways to enrich the shared life in an online world. Conviction in the vision must be deep, for it will be tested. Inevitable miscues will challenge resolve. But committed leaders make change happen, no matter how hard that may be.



Tom Mohr was president of Knight Ridder Digital until its sale to McClatchy. He is now director of the New Media Innovation Lab at Arizona State University and an executive at Charles Venture Partners.