Friday, December 12, 2008

Detroit: Doomsday, or a new day?

Yesterday's speculations about the future of Detroit's newspapers have now yielded clear confirmation that something big is up.

If the Detroit Newspaper Partnership shakeup was to have been limited to doing its share of the current round of 10 percent workforce reductions at Gannett, those cuts would have been announced over the past week or two. Instead, the Free Press reports today (as leaked yesterday to Gannett Blog) that CEO David Hunke confirmed in an e-mailed memo that a more fundamental change is in the cards. The rumors are that it'll be drastic--Gannett Blog's description:
Under the purported plan, one or both Detroit papers would end home delivery entirely, except for perhaps two or three days a week -- the more-lucrative Thursday, Friday and Sunday editions. Other days, there would be some sort of slimmed-down single-copy-only version. And everyone would be encouraged to subscribe to already-available electronic editions of the Freep and the News.
If any of this turns out to be right, Detroit will be the first major U. S. city where the old daily newspaper model is broken and a risky new experimental strategy is implemented. Reactions are understandably mixed:

Alan Mutter, the Newsosaur calls it "Motown Madness," and seems to assume that all the potential downsides will materialize. There are no upsides in his view:
In moving to intermittent home delivery, the Motown papers run two potentially fatal risks:
  • Significantly reducing daily newspaper consumption among the most loyal print readers.
  • Triggering a further erosion of already weak print advertising revenues.
He quotes extensively a former Gannett circulation exec who believes strongly in the value of home delivery. This is not surprising; most circulation executives I've known advocated for years that newspapers should refrain from publishing all their content online in order to force readers to buy print.

The influential Madrid designer Juan Antonia Giner (who is very fond of one-sentence paragraphs) is similarly critical in Innovations in Newspapers:

You cannot survive by offering the print product only a few days a week.

Reading a print newspaper is a daily habit.

If you want to survive, you need to produce a “necessary newspaper” not an “occasional newspaper.”

U.S. newspapers are lost, confused and in the hands of publishers and managers who don’t want to invest in the future.

Don’t want to invest in journalism.

Don’t want to innovate.

Don’t want to compete.

This is lack of vision.

Lack of faith in change.

Just greed, greed, greed.

On the positive side, there's me (in yesterday's post):
But with a dismal economic scene in Detroit, with or without an auto bailout, it will be nearly impossible for the JOA to be profitable in its current configuration. No amount of cost-cutting will do the trick. The only way out is, in fact, to "blow up the organization" and launch an entirely new business model. Under the circumstances, this kind of thinking ought to help Gannett's battered stock price, which can't sink much lower, in any case. And MediaNews should be pleased to go along for the ride; since they have total downside protection, they can only win.
Look for a bold rationalization of the market that pushes the boundaries of what's permissible both under anti-trust and FCC rules. In my mind, this should include: a big shift to an online-first-and-foremost culture; a Free Press published Thursdays and Sundays; a slim, Monday-Friday Detroit News free paper; and a strong alliance between the Free Press and a leading TV broadcaster in town. Certainly this kind of scenario entails more job cuts, but it would represent a strategic restructuring that has a good chance of succeeding, not a tactical retrenchment that's just a step on the way to oblivion. We'll find out Tuesday whether David Hunke is a strategist, or a tactician.
And over at Poynter, Rick Edmonds, while not directly addressing the Detroit situation, provides insight on the digital redirection Gannett is engaged in:
[T]he thrust of the Gannett story is that the company is making itself into a digital-intensive enterprise as quickly as possible. Its most recent acquisition is a small company, Ripple 6, that provides marketing solutions for social networking media. Gannett has, at the same time, built sites focused on moms, high school sports and local entertainment. Collectively, the sites are generating traffic of between 1.2 and 2.1 million unique visitors per month each and users spend an impressive 13 minutes per visit. So the elements are coming together for building a new line of business.
Edmonds also links to Gannett CEO Craig Dubow's comments during UBS Media Week, which provide further context:
It's a tougher time for newspapers, but Craig Dubow, Gannett's chairman, president and CEO, has a basic answer for the continued existence of newspapers: consumers will always need content and advertisers will need to reach them. As for why newspapers are the best vehicles for that connection, Dubow turned, interestingly enough, not to print, but to Gannett's web properties. In particular, Dubow, speaking with two other Gannett (NYSE: GCI) execs at the UBS Global Media and Communications (PDF) conference, touted a forthcoming program called ContentOne, which he said "will completely change the way we share content across the company, especially at the local level. It will be created using the web start-up model." It should be up sometime in Q1. The idea is "local content on a national level," and will use the regionally focused sites MomsLikeMe and Metromix as the foundation.
The point here is that Gannett appears to be acting on the realization that printed newspapers are doomed because of demographics. The average daily printed newspaper reader is close to 60 years old. Before long, therefore, printed newspapers will be a niche medium targeting retired people. That is not a sustainable business model. Meanwhile, the younger the demographic, the less likely it is to read newsprint. Among 20-somethings, print readership is near zero, and nothing publishers do will induce them to pick up a printed newspaper on a regular basis.

One newspaper publisher, The Thomson Corporation, looked at these trends and made the strategic choice in the late 1990s to sell its newspaper holdings (when prices were still very good), and to refocus itself as "the world’s leading source of intelligent information for businesses and professionals." If Gannett has decided to similarly refocus on becoming the leading source of intelligent information for consumers, that must lead them in the direction of web first, print secondary, and will be a central element in their decisions for Detroit and other markets.

(Note: corrected spelling of 'Thomson' 12/12 10:17 pm)

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