Wednesday, November 28, 2007

An industry in dire need of innovation

Talking today with a colleague in the innovation space, we were discussing industries that are more or less capable and prepared for change. Many industries have a history of research and development or new product development, and so may be more culturally and systemically prepared for innovation. Some industries, however, have had little change in many years and are less able to consider the tasks necessary for innovation. The industry we spent some time talking about most specifically is the newspaper industry.

Tom Brokaw made news recently by stating that he felt the Washington Post would not be published on paper in the next few years. That's because there are two significant trends impacting the news business. First, demographically, younger people get their news from a range of sources, including the internet, radio and television, rather than the newspaper. Reading seems a bit old fashioned. The older generations who were faithful newspaper readers are dying off. Second, the availability of information has exploded. You can get real time news and insights on any topic, from a wide range of sources online. Many times a story in the daily paper will seem like yesterday's news, if not older. The relevancy of the information and its currency are at risk.

Newspapers face dwindling subscriber bases and make money on advertising, especially local advertising like car dealers, real estate and local merchants. They make no money and place little value on the content they generate. Newspapers also are still a very "local" phenomenon, a reminder of the past when stores, restaurants and businesses competed locally but not geographically or nationally. What Ted Turner did to broadcast television with TBS was to create a "national" channel. Other than the USA Today, there's not a "national" newspaper.

All of these factors mean that newspapers and the media companies that own them need to rapidly change, yet they face significant hurdles. Most newspapers are still small, family-owned businesses with little cross-fertilization in the management ranks. Culturally, newspapers are fairly independent and not willing to adopt lessons that other businesses have learned. There are a number of cultural factors that will make innovation difficult, at a time when radical innovation is required.

I can see at least three alternatives for newspapers: one, fulfill the "last mile", two, sell content not advertising and three, build a national presence. In the first case, the "last mile" is where all the difficulties lie and all the value is hidden. There are still very important needs for very local news, commentary and information, but the newspapers need to become information brokers for the local community rather than simply news providers. Second, many newspapers have extensive contacts in wide geographic areas and deep experience reflected in their reporters. Why not publish the stories and allow individuals to aggregate the papers online? Then, the newspapers would compete on the best content rather than assume a captive local audience. Finally, newspapers could create a more national newspaper by aggregating information from a broad array of sources and publishing the newspaper online for a national audience.

These are a few ideas for the newspaper industry - I'm sure there are more. But this industry faces a number of challenges from the web, from the steady stream of content and information, and the existing demographics. Anyone watching the trends carefully could see this coming. Think about a world with no tactile Washington Post or New York Times. It could happen, sooner than they think.
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posted by Jeffrey Phillips at 8:03 AM

3 Comments:

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