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(August 15, 2001) The brouhaha we generated with last week's article on BrassRing got us to thinking about the future of the newspaper industry in general. It's been a tough year or two. With failures on all fronts, the typical "day late and a dollar short" tactics they've used to preserve their Recruitment Advertising franchise are no longer appropriate. Certainly, the broad scale destruction of the national Job Fair business (accomplished by Brass Ring in a record time of 12 months); overt failure to develop a software company (Brass Ring again); various integrated mega-plays into the investment portfolio (it must be well over a half billion dollars); the silly flirtation with job scraping standardization using CareerCast and the naive desire to coordinate sales to cut off the ad agencies (and the overhanging threat of anti-trust litigation); and the limp revenues produced by stand alone offerings ought to be enough to make even the wealthy trust fund managers wary.
Every time we get a phone call from a newspaper company asking "What's the future?", we point to MediaBistro. Not surprisingly, they never ask why and never, ever visit. We highly recommend talking with Tony Lee at the CareerJournal (the only one who gets it). Meanwhile, MediaBistro is busily teaching the reporters and editors who work in those newspapers how to think about future employment. At the same time, Tony Lee is running a profitable shop.
Let's see .... ignore the price points in the replacement industry and fail; ignore the advice you solicit and fail; ignore the fact that your employees are experiencing the answer ... hmmmm? Is this the 1950s or what?
Well, that's at least a part of the problem.Recently, we mourned the passing of Katherine Graham, the Pulitzer Prize winning chairman of the executive committee at the Washington Post Company. Ms. Graham was an heroic figure who was directly responsible for the seismic shift in the importance and power of the Newspaper industry during the late 20th Century. While the post was in the midst of its own IPO, she decided, against the advice of her bankers and lawyers, to publish the Pentagon Papers. The act ultimately led to the downfall of the Nixon Administration. It established the newspapers as a fourth arm of the government and institutionalized "investigative reporting". At the time, she was barely coming into her own as the company's executive. Her career, which surprised everyone around her was the result of the untimely death of her husband and her willingness to take the mantle of leadership that was thrust her way. Although we are not at all sure that she'd find the comparison flattering, it's pretty clear that Ms. Graham was the last of the great newspaper managers. An empire builder and architect at heart, she lived the kind of intellectual heroism reserved for characters in an Ayn Rand novel. While Alan Greenspan doesn't hide his roots in Rand's teachings, we're relatively certain that the industry's current ownership would find the prospect of admiring a Randian heroine somewhat unsettling. The heroes in Rand's novels accomplish things by risking extreme failure in pursuit of a vision. The newspaper's current ownership manages risk in incremental portions. The game is about preserving the legacy they've been handed, not about building a new world.
That's why they are failing.
Fundamentally, newspapers are not about the way they are currently organized. Buttressed by the need to insulate the supposedly critical "investigative" function from the evil corrupting influence of (oohs) money, the newspaper business is always composed of two unrelated silos of influence: editorial and publishing. The embodiment of Ms. Graham's vision, this organizational structure is what led to the newspaper's loss of direct contact with their customers.
In the seventies, Bernie Hodes, another heroic figure, determined to "disintermediate" the newspapers from their customers by developing his small recruitment advertising agency into a national force. Methodically, he took over the "grunt work" of dealing with the ins and outs of customer relationships. The result? A huge (and continuing to grow) Recruitment Advertising business. The newspapers foreverafter understood so little about their customers that they, to this day, have to hire statisticians to mine the tax databases in order to determine the sources of their Recruitment revenue.
It's a situation you see every day. Peoplesoft, another company held hostage by its distribution channels, has to make extreme investments to rebuild the direct contact it used to have with its customers. When times were good, they ceded all of those relationships to their consulting partners. For any company that has let go of customer contact, rebuilding is slow and painful. When the original owners of the job fair business restart from the mess left by Brass Ring, they will be making the assumption that no one in the newspaper industry has figured out the criticality of customer contact.
- John Sumser © TwoColorHat. All Rights Reserved.
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by John Sumser
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