Monday, June 8, 2009

Former Cox Newspapers President Jay Smith weighs in on future of newspapers and role of Associated Press

I received a very thoughtful personal e-mail today from Jay Smith, retired president of Cox Newspapers and former chairman of the Newspaper Association of America and board member of the Associated Press, regarding my critique of the American Press Institute's proposals to help save the industry.

I asked him whether I could share it publicly, and he graciously agreed. The following is his e-mail on my previous post - How depresssing 2 - and the non-personal part of my response to him. (He also copied Tom Curley, president and CEO of AP, on his e-mail to me.)

JAY SMITH'S E-MAIL

To:
Subject: Your piece on Romenekso today

John: Although I’ve been retired for a year, I still look in on Romenekso. I saw your piece today and thought it made great sense. As one who wrestled with the so-called business model, especially in the last two decades of my 37 years with Cox Newspapers, I look back with regret on missed opportunities. The first occurred in the mid-90’s when several companies explored the possibility of acquiring Prodigy. Divided over whether the focus should be on classifieds or news, the group bickered until the opportunity passed and was missed. The second occurred more recently, but still can be salvaged.

It involves the Associated Press on whose board I served for several years. Individually, newspapers do not have the technological firepower to compete in the Internet world. Those that have (Cox with its AutoTrader.com entity; Tribune/Gannett with CareerBuilder have put their stakes in the ground). Collectively and on their behalf, AP does have the capacity to help newspapers develop new online businesses that can generate revenue, whether from subscribers or advertisers. More important, AP has access to a nation of newspapers. While few newspapers can gin up content on their own for which users will pay, there is content that, when properly collected and edited, does have real value. For instance, how much might, say, the soft drink industry pay for a daily report of EVERY news item of interest printed in every US newspaper? Such real-time information can be critical to anyone whose living depends on decisions made by the Coca-Colas and Pepsi-Colas of the world.

While this is but one example, you can let your imagination run wild and develop hundreds, if not thousands, of others. In effect, the AP can vacuum up and create a multitude of individual, albeit small, news and information businesses that collectively could approach something of real value for AP and its members.

Sadly, I fear, the leaders of newspapers and newspaper companies have yet to place their faith in such a venture. Until and unless they do, our former colleagues will continue to thrash about in pursuit of the salvation they so desperately need. Jay Smith, former president of Cox Newspapers, Inc.

THE FOLLOWING IS MY RESPONSE

Jay,

Thank you for your thoughtful response to my blog.

I agree with you that individually newspapers don't have the technological firepower to compete in the Internet world. I feel it's now incumbent on me to share on my blog some of my own ideas for how local news organizations committed to the role of furthering our democracy by informing and engaging the public can survive and even thrive in this new era. I'll try to do so over the coming weeks.

I agree with you that AP is one of the organizations positioned to help newspapers create new online businesses. In my corporate role with Scripps, I tried to work with AP to do just that. But it's not easy, as you know, when most folks at a newspaper are just trying to get their daily work done and AP has a million balls in the air. I don't think I was successful.

It seems to me that newspapers, even within large companies like Scripps, are essentially one-of-a-kind businesses in a world where that no longer works, unless you have a really unique product. Local publishers need to be part of a larger national network using shared tools and approaches. I look at what's happening with the iphone and the way Apple opened the door for developers to create new apps and think that local news organizations need to find some similar way to be on a common platform that is open to outsiders, of course with some gatekeeping mechanism to make sure new services/tools make sense. I'm just not sure how we get there. I don't think the industry can get there if all it does is try to hold on to its legacy revenue streams and its legacy business. One thing that concerns me is that newspapers don't seem to be working with local businesses to help them find their own foothold on the Internet and at the same time possibly place themselves in the middle of transactions. This might enable them to find a new revenue stream they couldn't have tapped before. When I read that the new iphone is going to be able to tell where the user is and provide information down to the block level, I think about how newspapers could hep local businesses participate in this new world. Those businesses are also at a disadvantage because they don't have the technological wherewithal either to make the most of the potential of this new era.

As I think you know, my background is as a journalist. I was publisher of the Rocky, but it was an unusual situation because the president and CEO of the Denver Newspaper Agency had revenue responsiblity. I think we've entered a different stage in our business where the publisher can't just be a chief revenue officer. I don't see how local news organizations will be successful if the publisher doesn't feel as responsible for content and services as an individual owner might have in previous generations. I also don't see how the walls between editorial/marketing/
advertising can remain in place. I think local news organizations need a clear and common set of values. But then I think they need to operate more like the way I saw CNN act when it was in Denver for the Democratic National Convention. The marketing people sat in the same room as the journalists. As it seemed did the advertising people. We're all in this together, yet you wouldn't know it from the way we run our organizations.

Thanks again for writing.

Best,

J
Posted by at 1:33 PM
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8 comments:

  1. Sorry, but both voices here are behind the curve. Technology is not the problem, if it ever was. Content management systems and search tools that cost millions of dollars five, ten years ago are free today.

    The barriers are internal politics and external realities.

    In the former category you can come up with your own examples of how big companies can't get out of their own way.

    As for the latter -- have you ever used Google Alerts? Unless you're going to block Google from indexing anything on news sites, which would be suicidal in every imaginable way, you can't re-create the scarcity that existed in 1994 when Newshound was built by Knight-Ridder.
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  3. To say that "individually, newspapers do not have the technological firepower to compete in the Internet world," is to simply admit complete and utter defeat. One of the truly incredible things about the "internet world" is that *individuals* can compete, and can make lasting change. It doesn't happen every time, but most of the great ideas on the web were started by small teams. Look, for instance, at the sites driving social media forward--Twitter, Facebook, Myspace, Digg... all were started by two or three people teams.

    To say that news organizations can't compete in an environment when people barely older than kids are creating new and lasting ideas is simply absurd.
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  4. I have to agree that I don't think newspapers are prepared to compete. I've met some smart people in the business at the operational level, so I know that isn't the problem. I think the bigger issue is the leadership. There's no individual strategy or business model and there's no collective strategy in the industry. Unfortunate but true.
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  5. I think the whole issue of content is a diversion from the real issues: the loss of the local business monopoly over advertising. If content were the real issue, tne NYT and the LAT would not be in the financial troubles that they are in. Google's success is that it cleverly repackaged the content, but withdrawing content from Google would have no effect on the power of the search engines. The central problem facing newspapers is on the business side, larded with do-nothing MBAs drawing eye-popping salaries whose experience in running businesses comes from the textbooks they once read at Wharton. One of the very foolish business decision they made was to cut off the far-off circulation of newspapers and concentrate on the central core of circulation, on which ad rates are based. Maybe they didn't earn their keep, but these were avid newspaper readers who were cast off. Is it any surprise to read that adult readership of newspapers has been steadily declining in the last five years of this supposedly cost-saving approach. These titans of industry also stood by wringing their hands as the retail industry consolidated, depriving newspapers of very expensive full-page ads. Did anyone think of discounting the price for these ads to keep local family-owned department stores operating? I also point to the thinning of the newspaper, turning tabloids into postage-stamp Berliners, while hiking the price. What text teaches that you can make money by giving less and charging more?
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  6. You quote Jay Smith:

    "While few newspapers can gin up content on their own for which users will pay, there is content that, when properly collected and edited, does have real value. For instance, how much might, say, the soft drink industry pay for a daily report of EVERY news item of interest printed in every US newspaper? Such real-time information can be critical to anyone whose living depends on decisions made by the Coca-Colas and Pepsi-Colas of the world."

    It's sad to say, but that idea exemplifies why many newspaper leaders need to get out of the way and retire, because they are are seriously behind the curve (yet don't appear to realize it). The flaw in that example of a revenue idea from Smith is that entrepreneurial companies already perform that service, but to a much more useful and deeper degree. Here in by hometown of Boulder, for example, a company called Collective Intellect serves the Coca-Colas and Pespi's by giving real-time tools that find and filter what's being said about them online. It's not just newspaper articles that mention a company and/or product; a simple free Google Alert can do that. Collective Intellect also does real-time tracking of the social web and social networks, so a company can see what's being said about it on Twitter, Facebook, et al and react right away if necessary.

    Yet another Boulder company, OneRiot, is building a social search engine, so you can search for what's being said about your company in real time. It makes Google search look slow.

    Newspaper executives have GOT to stop thinking that between all the newspapers, they have this treasure trove of content that can be combined and monetized in significant ways. That day is long gone. Most of them are still stuck thinking inside their corporate or industry boxes; as you ably point out, they've got to get way outside and leverage others' content and services as well as their own.

    I fear it's too late. Apparently you can't teach old dogs new tricks.
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  8. It seems to me that the only way for newspapers to survive today is to stop trying to compete with the internet, and instead focus on hyper-LOCAL coverage of news and events. Even with all the modern search technology, it's still not easy to find LOCAL information (boring stuff like school events, sporting events, local births and deaths, local police blotters, new restaurants and stores in the area, what's going on around the town, etc.) AP stories can be found in about 5 seconds all over the internet -- if there's a major event going on in the world (like the recent Haiti earthquake) who's going to wait to read about it in their morning newspaper when they can instantly pull it up on CNN or any other news site? (Or get instant info thru Facebook, Twitter, etc.). If newspapers want to compete with the internet, they will most certainly lose. Competing on a truly LOCAL level greatly lessens the competition, while still allowing papers to sell ads to their local mom-and-pop's as well as national accounts. Instead of trying to keep up with modern technology, they might just need to go back to their roots of good, hard-earned, local journalism. (Besides, they can always use their websites to maintain an internet presence and include the AP stories and local events through that medium as well.) Just my humble opinion.
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