Saving Newspapers I: Focus on consumer experience

Play along at home. You're a newspaper publisher. You have already absorbed recent research showing newspapers are losing younger readers fast. And now you see the depressing newspaper circulation numbers released this week.

What do you do? Wring hands and spin it, as has been the fashionable response? Or pull in your best thinkers, quickly identify and localize the underlying problems, analyze them and develop solutions?

I can't help with the hand-wringing, but I'd like to try to help with the problem-solving.

This post is my first attempt to do exactly that: describe problems that plague or perplex American newspaper (or, more precisely, local news media) managers, attempt to analyze them, and propose solutions. I'll do this as an occasional series in the Sensible Internet Design journal and, as appropriate, in the e-newsletter.

Some Small Initiatives patrons, I know, don't work in the newspaper business. If you're one of them, I hope many of these topics and recommendations will apply to you, as well.

Let's begin with those new, ugly circulation reports:

Problems

• Most daily newspapers in the United States are losing paid circulation.
• This week's reports, and even the last round in November 2004, indicate the rate of loss is accelerating.
• The problem compounds in growth markets, because newspapers' share in those markets declines faster as they stand still or retreat amid overall population growth.
• Because paid circulation and market share drive advertising rates and volumes, key ad revenue streams are diverted to wherever that audience is going.
• Perception becomes reality: pundits, advertisers and many everday people the industry wants as readers perceive the newspaper industry as slow and set in its ways -- exacerbating the business problems with image problems.

Analysis

We must distinguish the causes of the 20-year (or 30- or 40- depending on how you read the numbers) circulation decline from causes for the recent acceleration. In particular, don't be so quick to pin this week's circulation crater on any current Internet buzz-darlings.

Blogs aren't the reason, nor are "citizen journalism" sites, Google News, Podcasting or Craigslist.

Nope. Circulation numbers are just now falling to where market forces would have taken them were it not for the common use of subscription telemarketing and mysterious "other paid" pricing schemes.

Subscription telemarketing generates short-term, high-churn, discounted circulation -- hardly what advertisers want. Telemarketing isn't gone, but much of the market dried up when federal and state do-not-call lists manifested tremendous consumer distaste for it.

Meanwhile, advertisers and Wall Street started punishing the industry for "other paid" pricing in the early oughts. Then a thoroughly publicized series of circulation reporting scandals put all circulation development strategies under microscopes. Newspapers are recoiling from these tactics faster than the painted cat ran from Pepe Le Pew.

In short, a series of current events adjusted an economic trend line to where it should have gone without artificial stimuli.

(This theory is a mirror image of my beliefs about gasoline prices. Sure, the recent spike in petrol is shocking to the economy after so many years of cheap fuel. And if you choose, you can blame China's energy thirst, Middle Eastern strife or your choice of political dealings.

But why should we be surprised? If U.S. gas prices had followed the compounded rate of inflation for everything but energy these past 20 years, it'd be running about $2.40-$2.50 a gallon on average right now. I just filled up at $2.09 a gallon here in East Tennessee; heck, it's a bargain!)

Thus if newspapers hadn't propped up their circulations using marketing tactics that yield low-value, non-loyal consumer relationships, they'd be ... about where they are this week, if not worse.

That explains the crater. But it leaves us to understand and learn from the more dangerous long-term trend. That trend, friends, derives from changes in consumer behavior toward news and information that began decades ago, roughly when broadcast media became prevalent.

Some, not all, of those behavior changes in recent years reflect growing interest in Internet products and services. Certainly, as the Internet expanded into most homes and businesses, consumers diverted some of their time from other activities for it.

The Internet itself, however, did not create new consumer behaviors as much as it evolved to reflect:

• A faster or higher fidelity way for consumers to do what they already did, or ...
• A compelling way to do new things consumers had hoped to do one way or another.

That first item includes news. No one can deny the Web works well for people who truly want to keep posted on current events. And newspapers' own Web sites get plenty of attention from news junkies.

Cannibalization? Maybe, but that's not the real problem. Long before any of us started publishing online, I recall, publishers and industry pundits lamented a declining interest in news among American consumers. In those days, they loved to blame TV newscasts for "dumbing down" complex issues and creating an uninformed generation.

They were smart to flag the decline in news interest decades ago, but wrong about the cause.

Those two bullet points three paragraphs ago? You can apply them to radio and television, too. Don't blame Ron Burgundy for dumbing down the news. Understand that Ron's kind merely gave many people all the news they wanted, passively, the way they wanted it.

Face it. Many Americans not only do not feel a compelling need for news, they have aversions to it. At best, they struggle to find time for it.

American consumer interests and behavior have been diffusing into ever-smaller fragments for more than half a century. The more we stayed inside our newly air-conditioned houses; the more we drove solo to work in our cars, windows up, with radios, then tape decks, then CDs; the more mass communications grew and then started to absorb interpersonal communications; the more we turned air travel from a vain luxury into 1,500-mile business day trips for junior sales staff; the faster the social fabric frayed into 300 million loosely connected threads.

Now think about your neighbors. First, do you even know them all? If so, congratulations. In many neighborhoods, you would be the exception.

Of those you do know, how many have social, political, religious or financial interests just like yours? How many like exactly the same music, movies or TV shows?

Why do you think Billboard now needs 20-some different Top 40 genre charts?

Yet your neighbors who subscribe to the paper get exactly the same paper you do every day. Blame the limitations of high-fixed-cost printing and trucking networks if you must; Vin Crosbie explained that trap quite well last year.

I've said this before: A newspaper is a daily convenience bundle of perhaps 50 different value propositions. Even among a newspaper's most loyal readers, none would assign equal value to all 50, and few could honestly claim to avail themselves of more than half a newspaper's information value in a day.

Think of it another way. Let's say I realize that every house on my block holds people who like to eat fruits and vegetables. So I go around offering to deliver fruit and veggie baskets to their doorsteps every morning for a periodic fee. Half the families agree.

So one morning, I deliver baskets that each contain the exact same mix of 50 fruits and vegetables to each paying household. The next morning, another basket, with a somewhat different mix of 50 foods, but still the same for every house.

I know, through instinct or research, there's no way any of these families can possibly eat everything I provided, and it's unlikely any one person in those homes will ever care for more than half the food varieties I include in the basket every day.

No matter what mix I deliver, I know they're just going to pick out what they want and throw the rest away. Even the rare gourmand who likes all 50 items in the basket won't have time or appetite for all of them.

Wouldn't you say that was wasteful?

Solutions

Crosbie also laid out proposed solutions, which I still agree are good starting points. They were, with my notes:

1. Use technology to match newspapers' available content to consumers' individual interests [customization, personalization, filtering].
2. Converge [I'd say intertwine] delivery formats, including print, online, wireless and emerging channels.
3. Focus less on content production, more on the unique value [as long as it remains unique] of delivering a complete package of content.

On item 1, I believe end-user customization of information services works much better if the services have been pre-segmented. Newspaper companies not only don't do this, but may not know how. They've never had to. For practical guidance, they need look no further than their cousins in the magazine business.

Before you go ridiculing me for holding up the even-more-beleaguered mag biz as an example, know this: Even today, magazine publishers that properly define underserved demographic, interest-group or psychographic niches can launch new print magazine titles aimed at those groups -- and succeed.

Care to try to launch a mainstream daily newspaper anywhere near you?

Mag publishers know how to define audience interest segments, personify them and tailor information to them.

I believe it's time for the newspaper business to bust the daily convenience bundle, and divvy up those 50 value propositions. Our consumers won't segment themselves in plain sight for us.

First, do the homework -- the market research -- to understand which key audience interest segments are most prevalent in that local/regional mass you've been serving, and get a sense of depth of those interests. Then decide which audience segments really want the kind of in-depth news and information you could provide if you focused on their interests. Of those, decide which segments will be most attractive to valuable classes of advertisers.

Of the 50 value propositions, expect to shed maybe half in this unbundling process. Even local institutional coverage and breaking news can be peppered into the niche services, now that global "big stories" have been turned to commodities on the cable networks and the Web. That would mean draining off some of our Fourth Estate ego, and acknowledging that news coverage is no longer a monolithic activity in our communities.

Take your best shot at providing niche information and commerce services aimed at your top identified segments. These services should be delivered every way you know: print, online, wherever. If the theory of the printing business is still "an idle press makes no money," then this effort would surely cut down on your press idle time.

Interest-segment information often knows no geographic boundaries. How many special-interest magazines do you know that limit themselves to only one town or county?

So consider niche service development a competitive advantage. Properly done, it should allow you to grow your business beyond range of your trucks, even as you continue to serve some purely local interests.

On item 2, I have little to add. I agree. Always have. Online becomes each newspaper's library of all available current and archival information. Print becomes a periodic "best-of" snapshot and/or "for-the-scrapbook" analog record. Mobile becomes an alert service and feedback loop.

With that breakdown of roles, online also becomes the default buy for advertising, with other formats becoming the upsells. That's going to happen with or without us, kids.

On item 3, what the industry must understand is how the definition of "delivery" changes in the Internet age. Sure, there's still value in delivering physical products in trucks to doorsteps. But a newspaper is a physical product only because the paper itself carries the information. The information itself isn't a product, it's a service. Now we're seeing wires and airwaves become a more efficient way to deliver that same information, without the need for a physical platform.

So what do you do with all those trucks? Well, you could pull a Kramer/Newman stunt and fill empty cargo space with returnable bottles and cans. Or you could adapt routes and equipment to deliver other things.

Sure, the industry tinkered with "alternate delivery" in the '80s, but today something new has been added: e-commerce, which in many cases still screams for superior consumer experience on the fulfillment side.

In fact, that's the other missing piece here: tireless pursuit of superior consumer experience with everything we do. Cases in point:

• Newspaper Web sites with subscription management interfaces that let you sign up for new home delivery, report a missed delivery or even order a vacation stop -- but don't let you cancel.
• Integrated voice response systems (phone trees) that instantly segregate consumers based on whether they intend to spend money with the newspaper or wish to complain about something.
• Customer relationship management systems that are not integrated, such that a phone rep can't know whether a consumer who places a classified ad is also a current subscriber, or vice versa.
• Ditto for printside customer systems that do not permit instant registration for online services that require them (shouldn't every new subscriber to the paper be offered a user ID and password for Web content?).
• And what about those Web registration systems? Isn't it about time we figured out how to let consumers register only once, then manage all the things they should want to do on our sites? A few of many examples: ordering a subscription, posting to a message board, buying from the news archive, placing a merchandise-for-sale ad, storing favorite search strings, choosing colors and type sizes.

Maybe it's time for newspapers to consolidate circulation, marketing, audience development, research, metrics and customer service functions -- for all offline and online services -- into a "consumer experience division."

But the mission would have to change. A consumer experience division can't focus on promoting general-interest news, finessing gross circulation numbers (including the banal "readership" calculations) or driving revenue directly from consumers. Any consumer fee-for-content revenues must be considered subsidies, at best, and fragile in any case as we move to a digital world.

Instead, the mission should be understanding and meeting first-cut needs of targeted consumer segments, so we will have more loyal consumers using more of our information services in a more focused fashion.

I say "first-cut" because once we have tailored information services to key interest segments, those audiences can personalize the experience the rest of the way. The 50-piece fruit basket turns into a couple of pieces of citrus delivered just to fans of sweet-and-sour. Let them decide whether to eat the orange or the grapefruit today, but only one piece gets set aside, not 49. Plus, there's a better chance a citrus fan might come back later to eat the other piece.

Yes, we would be packaging information in niche bundles instead of a general-interest blob. But we would still broaden the definition of "information" to include editorial content that doesn't necessarily match today's description of "local news," and commercial content that goes well beyond display or classified ads. I mean true merchandising, true commerce, even product order fulfillment in the form of doorstep delivery where it makes sense.

Success would mean growing audiences that can be more precisely addressed (based on interests, demographics and geography) than ever in the industry's history. In that world, we could afford to take little or nothing from consumers while giving them more of -- yet no more than -- what they need from an information service.

Those consumers pay for their usage with their very interest in our services, and by association, our advertisers' services. Even the ads could be better tailored, generating better and easier-to-measure responses.

Am I naive about this? Maybe so. I can't possibly flesh out or prove these concepts in this one newsletter. I can't guarantee any of it will work. I doubt it's necessary to do all this, all at once, at the expense of the current mainstream products.

I just believe it could work and could be done in manageable steps. Even if it doesn't work, "nicheification" permits graceful, educational failure in a way general-interest newspaper publishing can't.

Look again at the magazine industry. Titles come, titles go. But the publishing houses keep new ones in the pipeline all the time, responding to -- dare I say anticipating, sometimes -- trends in consumer behavior.

Wouldn't it be nice, for once, to be the industry that gets out ahead of trends?