Gannett layoffs

Spitz: Papers can stop chasing 'digital ghost'



Editor's note: This article originally appeared in The Wall Street Journal

Article Tab: Eric Spitz, president of Freedom Communications.
Eric Spitz, president of Freedom Communications.
LEONARD ORTIZ, ORANGE COUNTY REGISTER

This month a couple of successful businessmen with no newspaper experience acquired two of America’s storied media institutions. Boston Red Sox owner John Henry purchased the Boston Globe and Amazon CEO Jeff Bezos bought the Washington Post.

Many people are wondering why.

I cannot answer for these new owners, but I may be able to shed some light. A year ago my business partner, Aaron Kushner, and I bought Freedom Communications, which includes the Orange County Register, the nation’s 14th-largest daily newspaper. Neither Aaron nor I came from the newspaper industry, but we are both entrepreneurs inclined to question the conventional wisdom.

A contrarian zigs when others zag, but an iconoclast, derived from Greek, “smashes idols.” The newspaper industry has erected two idols that must be smashed. The first is the notion that digital information must be free. The second is that the newspaper business can only be saved by digital solutions. Both are false.

One of the most important decisions every company makes is determining how much to charge customers for its products. Unfortunately, nearly the entire newspaper industry determined — at the dawn of the Internet era way back in the 1990s — to price its digitally delivered news at zero.

I don’t know many industries that can survive pricing their core product at free. In fact, I’m less surprised at how many subscribers the newspaper industry has lost since this decision than by how many subscribers still remain, knowing that they pay for content that others get for free.

That’s why in March the Orange County Register joined the few papers in the country with a strict online paywall, which means that readers who want to access our content online—whether by laptop, smartphone or tablet, must buy a subscription or pay a daily rate.

How can a newspaper charge for its content when other competitors choose to give away their work? The old-fashioned way — by differentiating the content, boosting its quality and making it essential to the community it serves. HBO, satellite radio and FedEx famously figured out this value problem. Why not newspapers?

I know of only two major newspaper companies that have not seen significant declines in their subscriber bases in the past decade: The Wall Street Journal and Groupa Reforma, the largest newspaper company in Mexico. The former has never given away its digital content, and the latter erected its first paywall in 2002.

The digital question is trickier. Over the past decade we have witnessed a wholesale transition of the global economy into one where we are all connected to the Internet and addicted to our digital devices. But it still feels like early days for digital advertising.

Most companies that sell digital ads are struggling mightily because these ads don’t work as well as those in other media formats. Just for fun, walk into a Starbucks and ask the first 10 people you see, “When was the last time you clicked on or even paid attention to a digital ad?” The overwhelming majority will say “never” or “not on purpose.”

Because advertisers are searching for ways to connect with digital natives, they are shifting dollars to online and mobile. But this shift need not come at the direct expense of print. Somehow, despite decades of shrinking ratings and declining consumer time spent watching TV, the television advertising market continues to grow. Newspaper advertising remains the most efficient means of reaching a local audience, so why has this industry ceded so much ground?

Today, digital revenue makes up around 10 percent of the industry’s total, yet most newspaper CEOs would say that their core strategic initiatives are to find new digital revenue streams and to reduce the impact of print on their businesses. Why not focus on 90 percent of the pie and stem the declines — or even make the pie grow bigger?

By focusing on product quality and value, we’ve done that at the Orange County Register. In the past 12 months we’ve hired 350 people, built 25 new sections, launched a weekly set of magazines and created a subscriber rewards program called Register Connect. We’ve also revamped 24 of our weekly community papers, making two of them into dailies. Today we launched the Long Beach Register, a brand new daily.

Beginning in the first quarter of 2013, we have seen year-over-year increases in both subscription revenue and in advertising revenue. In other words, it’s time to stop chasing the digital ghost.

Perhaps John Henry and Jeff Bezos, the industry’s newest owners, will have innovative ideas that will make it strong again, or maybe they’ll discover that the business isn’t as broken as everyone thinks and that readers are actually willing to pay for news that matters to their daily lives.

I’d guess that we all got into this business for the same basic reason. We share a common belief that newspapers matter to our society and unite the communities we serve. Sometimes people buy companies because they want to do some good. Thomas Jefferson said, “An informed citizenry is at the heart of a dynamic democracy.” I think he was right.

Eric Spitz is president of Freedom Communications Inc.

 

That Spitz story was so perfect. A bunch of slick corporate-speak types infiltrated Gannett and other companies and proclaimed print dead. Print was never dead, folks. Thing is, newsroom people have forever been treated like shit and the AD PEOPLE like spoiled brats. The ad people said they couldn't sell print anymore and the higher-ups believed them instead of demanding they get the job done. The slick think tankers came in and for huge consulting fees convinced publishers newsprint was OUT, the Internet in. Now Spitz shows us everybody should have stayed the course. I'm just surprised publishers didn't totally get rid of the print product during the apex of all the think-tank bullshit regarding newspaper Websites. It may be too late now with people like Spitz scaring publishers into thinking they may have made a mistake trusting the Web people (the same Web people who said 'give it away for free' ... see how THAT is changing?!) Keep slashing, Gannett. It really has worked.

 

1. Spitz is not really correct. It wasn't that the product was "given away for free" but that they gave the ads away for free. They devalued the product from Day 1. Buy a print ad and, oh, we'll throw in this online advertising for nothing. When the print ads started going down, why would anyone start paying for something they never had to (or very cheaply) previously?

2. No mention of how he's going to get younger people to start reading the paper, which is the real issue.

I wish him all the luck and hope his strategy spurs hiring, etc., but seems like short-term thinking and success.

p.s. Gannett does suck, though. As does most newspaper management, who have no clue and try to go from the latest fad to the next without any real plan other than "mobile will save us" no "tablets will save us" no "video will save us" no "it was mobile all along."

 

That only happened after the tech bubble burst and it was the only way to sell ads (primarily banner ads).

 

The big problem is the younger generation not reading papers and having a lukewarm interest at best for news in general. It's going to take a real national crisis, like a Great Depression or big war, for the younger generation to realize they have to give a shit about what's going in in their community, state, country and world.

 

"The younger generation not reading papers and having a lukewarm interest at best for news in general" has been true for my entire lifetime, which stretches back far more than I care to admit. This is not a new phenomenon.

 

True, but there's never been a distraction as powerful and pervasive as the Internet/mobile, where - by the way - the younger generation can read newspapers and follow the news if it ever chooses to do so. I still have a hard time believing that generation will ever develop a love affair with ink on dead trees.

 

Et tu Pensacola?

http://www.pensacoladigest.com/2013/08/shakeup-at-the-pnj/

 

This does not jibe with the fact that newspapers get more readership than ever when one includes the digital products, which is mostly read by younger readers, who generally pay for the content through their subscriptions to internet access and smart phone usage.

Part of the issue is somebody is getting paid for allowing people to access information and it's not the people providing the information.

 

We can agree to disagree on this I guess. Not the way things happened as I know it.

 

Is it more than ever - and by this I mean % of population, not just numbers. Obviously a few more people on this earth in 2013 than say 1963. Just curious.

Also, your last statement is surely a sticking point. People already pay $ for Internet / phone access. Trying to squeeze more out of them is not easy.

 

Always thought newspapers should buy Internet providers, include the newspaper with the monthly cost of the Internet. But that ship sailed long ago.