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(August 16, 2001) It's really all about customers. While there is no question that freedom of the press is a critical aspect of contemporary civilization, the particular form has changed in a variety of ways over the 300 year existence of the newspaper. The freedom, we think, is to deliver the people what they want and are willing to pay for. The decidedly Jeffersonian attitude of current newspaper owners (we know better than our readers about what they want) is the sort of market arrogance that threatens the very life of this important industry.
We took a look at the history of the oldest newspaper ( the Worcester Journal) and uncovered a delightful story about an enterprise that understood that it had customers throughout its three hundred year history.
Ever since the foundation of a free press was laid just over 300 years ago, there has been a Berrow's Worcester Journal - preceded for a short time by the Worcester Post-man, which begat the Journal. The Journal's history mirrors the history of Great Britain - the early years gave predominance to national and international news. With the advent of radio and television the Journal gradually switched to providing local news and commentary.In other words, newspapers have continuously shifted their attention as their readership changed in scope interest and preference. We think that this is best facilitated by direct contact with those customers which puts the current empires in a difficult position: they do not have regular contact with their customers. It's worth noting that we mean "paying" customers as opposed to those who receive the news at a subsidy. We refer to those people as "subscribers" or "readers". Paying customers use the newspaper as a tool to reach subscribers. They will pay for those services as long as there isn't a better and cheaper alternative.
Newspapers have also engaged in relatively unrelated businesses as a part of their overall financial strategy:
Bryan (the founder/editor) also sold patent medicines, a side line associated with many of the early provincial newspapers. His goods included an elixir for the dropsy, powder for gout, Hypo drops, Royal Chemical wash ball and Dr Egton's Balsamick.. Confronted with an obvious dilemma, the newspaper companies punted. It has been clear for a number of years that the Recruitment advertising business was eroding. Having lost the automotive and real estate franchise to local operations (the Job Fairs threatened to do the same thing), the remaining cash cow in the portfolio was Employment Advertising. The decision makers needed results faster than organic growth could supply yet refused to invest at market rates in properties that could succeed. You can imagine the celebrations that occurred during the mutual back patting parties that happened after the dot com crash. We sincerely hope that several someones' behinds are being kicked around the various newspaper board rooms. Unable to decide on an optimal strategy, the heirs to the fortunes chose to behave like Venture Capitalists, finding hedge strategies while Million dollar startups stole their business. It is very important to remember that the newspapers turned up their noses at the opportunity to acquire Monster for $1M five or six years ago. At that point, they were only willing to invest $500K. The result of the VC approach has been to institutionalize the "day late, dollar short" mind set. Unfortunately, most of the several someones who should be disciplined are CEOs and Board Chairmen, completely removed from real accountability. Their underlings will suffer the beatings for their leaders' lack of leadership.
The real cause of BrassRing's market failure is a combination of misunderstanding customers, this penny wise, pound foolish approach and the belief that their funders had deep pockets. While the newspaper "magnates" invested with an eye on pennies, the employees of BrassRing (and other related failures) assumed that their mistakes were insured by "really rich guys". The various businesses spawned by the approach ate resources as if they were well-heeled while being inherently under funded. It was a recipe for complete disaster.
Then, as now, the newspapers hoped that their charges would become independent. Unfortunately, they were unable to execute the necessary weaning required to generate the independence. At some point, the industry leaders will begin to ask themselves why they always create variations on the "CareerPath" theme. Tomorrow: Some suggestions and a future. - John Sumser © TwoColorHat. All Rights Reserved.
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by John Sumser
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