Diversification: A path forward for newspapers?

May 16 2013

Greg Boothroyd needed to find a reason to stay in the mountains where he wanted his son to grow up. So he turned to Scott McLeod and found a way, albeit a very risky way.

Boothroyd and McLeod decided to start a weekly, regional paper in the Appalachian mountains of North Carolina. This may seem like a foolish business venture to some, starting a paper in remote area during a time when paper circulation continues to decline, but they decided to take a leap of faith, Boothroyd said.

Fourteen years later, Smoky Mountain News distributes 16,000 papers a week in 600 locations across four counties, the Cherokee Reservation and downtown Asheville. It’s also expanded far beyond the services of a traditional paper, with 40 percent of its revenues coming from the custom publishing it does for companies seeking brochures, company magazines and other products.

Smoky Mountain News is a prime example of the future of newspapers in America—niche publications with diversified product offerings.

“Newspapers can’t just be newspapers anymore,” McLeod said in a room full of North Carolina publishers, editors and writers for an annual North Carolina Press Association dinner. “We have to try out new services to keep our less profitable products going.”

Newspapers are not the only publications that are being affected by shifts in the media industry, though. It is almost a waste of ink to use even a single sentence to acknowledge the massive technological advancements that have taken place during the past decade. Its far-reaching effects are apparent to all as it has transformed every person’s life in some way, including the ways people consume news.

The journalism industry is resilient and will adapt to these new technologies. The question for these media outlets is in what manner they will adapt. Some will say advancements in e-reader and smartphone technology will allow media companies to simply expand, using new delivery services.

More than cosmetic changes
However, this is not the case. The changes we are seeing are not simply cosmetic, as when newspapers added color during the mid-19th century. Rather, this is akin to the reinvention of the printing press, a fundamental change in the way we consume news, driven by changing consumer expectations.

Daily circulation for U.S. newspapers was down 0.7 percent since March 2012, according to the Alliance for Audited Media. Paid subscriptions fell 8 percent in 2012, according to the Pew Research Center. Digital editions, which are included in daily circulation numbers, are now up to 19.3 percent of daily circulations.

The Detroit Media Partnership decided to cut back on home deliveries in 2009. Advance Publications cut down the print schedules for many of its papers in 2012. Postmedia eliminated the Sunday editions in its three papers. Just three weeks ago, The Cleveland Plain Dealer announced that it would only deliver its papers to homes three days a week.

According to the Pew Research Center, 61 percent of people get news online. This makes the Internet the third most popular source of news, which puts it ahead of newspapers. Unique visitors were up about 7.4 percent for digital newspapers in 2011, according to the Newspaper Association of America.

These trends make it clear the core of the media industry is changing and companies must be quick to adapt in order to survive.

Consumer tastes continue to develop
The above statistics are all byproducts of changing expectations as technology develops.

One of the biggest changes is that of the daily news cycle, according to John Clark, executive producer for Reese News Lab, an experimental news and research project at the University of North Carolina at Chapel Hill that focuses on mobile and digital news delivery.

“The concept of a news cycle is ridiculous now,” Clark said. “Everyone wants news all the time.”

A news cycle is, however, developing across multiple platforms for the individual user, Clark said. Research has shown that media consumers prefer to read long-form articles in newspapers in the morning, watch television during the afternoon and settle down with tablets at night; the Internet tends to fill in the gaps in between. News organizations are just struggling to adjust to the new cross-platform cycle.

Lillian Knoepp, news director at Reese News Lab, said journalists also need to realize that stories cannot be displayed in the same manner across all of the platforms. “It doesn’t work anymore to just take whatever you have in print and put it online,” Knoepp said. “People don’t want to read a wall of text and a grainy photo on their phone. They want something that is interactive and engaging.”

Furthermore, not every reader wants the same presentation and style. While some consumers enjoy long-form, others prefer bullets, breaking-news updates or even gifs.

Therein lies the problem. “A single news organization can’t do all that,” Clark said. “And they’re uncomfortable with that. They don’t want to give up control.”

Survival of the fittest
As advertising and subscription revenue continue to decrease, media companies are forced to find alternative methods to pay the bills.

The first and most obvious method is the paywall. The New York Times, which built its paywall in 2011, appears to be having success as its daily circulation increased 18 percent since March 2012, according to an Alliance for Audited Media report.

“People are beginning to see more value in their newspaper,” Clark said. “The paywall is a good short-term solution. It will at least stop the bleeding.”

But most agree it will not sustain media on its own, especially if not implemented correctly.

Knoepp said people aren’t willing to pay for a subscription because they expect high levels of accessibility. “When the Boston Marathon bombings happened, people took down their paywalls, trying to be moral and helpful,” she said. “But at the same time, they’re taking away their revenue stream when there’s an actual desired for their content.”

Companies like the Smoky Mountain News and American City Business Journals are also finding other ways to diversify their product offerings.

American City Business Journals has been using events as a way to supplement its subscription revenues. The events, the company says, provide invaluable networking opportunities to local businesses that may not have access to otherwise.

“It doesn’t matter what price we charge for tickets,” Beth Hunt, manager of editorial operations at American City Business Journal, said. “People will buy the ticket no matter what.”

“The brand is so trustworthy that businesses want to have their names tied to ours,” Sougata Mukherjee, editor at the Triangle Business Journal, said.

New technologies and delivery methods, which have decreased revenues from traditional products, have forced media companies to fundamentally change their business models.

“It keeps journalism alive,” Mukherjee said. “It keeps good journalists doing what they do best.”

Fundamental changes continue
Many say that the next fundamental change in the industry will be the rise of niche publications, including hyper-local and community publications.

“You’ll see a lot of fragmentation in the industry,” Clark said. “Companies like Buzzfeed are finding their niche.”

Warren Buffett, a renowned investor and CEO of Berkshire Hathaway Inc., purchased 28 local daily papers for $344 million during the past 15 months, including his hometown’s paper.

“Newspapers continue to reign supreme, however, in the delivery of local news,” he said in Berkshire Hathaway’s annual report. “If you want to know what’s going in your town – whether the news is about the mayor or taxes or high school football—there is no substitute for a local newspaper that is doing its job.”

These are just a few of the many changes in consumer tastes and business. The list of changes goes on.

But it is clear that the internet and mobile platforms aren’t just additional ways to deliver the news. They’re causing media companies to look at the fundamentals of their business and adapt the way they write, deliver and communicate.

“We’re watching history right now,” Mukherjee said. “It goes much beyond the product.”

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