Bzzzz! A New Newspaper Business Model

That’s my made up name for my made up newspaper of the future business model.  Why do I need this?  Because I am basically a conceptual thinking guy, I need mental models to get my creative juices going.  Sometimes this creates a mess on the floor as puddles of gray matter ooze out.  Other times I come up with some rally good ideas.

In any event, I’ve decided to use Bzzz! As a way to think out loud about the newspaper of the future and how to make it once more “essential” and thus profitable.

What will Shape a New Business Model for Newspapers?

Every good business plan starts with market research and since this is the digital age and I have no money to throw away I did what everyone else on the internet does—I got mine by Googling it.  And one of the most recent is the 8th annual survey by the University of Southern California Annenberg Center for the Digital Future. The survey is conducted in 23 countries.  Find the report at: www.digitalcenter.org . The survey findings:

53

Minutes per week spent on average reading news online in 2008; up from 41 minutes per week in 2007

22%

The share who canceled a newspaper or magazine in the last year.

30%

Market penetration rate for internet use tipping point after which newspaper decline accelerates on average across 23 countries surveyed.

61%

Readers who would miss their newspaper if it went away; up from 56% in 2007.

80%

Americans now online; up from 20% in 1994.

17

Average online use per week; BUT heavy users average 42 hr/week

22%

Users setting a search engine as their home page

80%

Now have high speed broadband internet access

44%

Users who post photos online

65%

Users who shop online

69%

Share of those who shop online to avoid retail stores or the mall

93%

Worry about online security and identify theft

52%

6%

61%

51%

never click on web advertisement links;

say they do click web ad links;

say they never impulse shop with a web advertisement

resist paying for content despite big negative view of web advertising

52%

Use the internet for social networking; up from 44% in 2007

15%

Belong to online “communities” most frequently for hobbies

44%

Those who feel ignored because of online use by family members

28%

Parents who think kids spent too much time online; 4th year of increase

64%

Internet is essential to political campaigns

23%

Internet makes candidates care more responsive to constituents

36%

Favor voting online

The other key factor in re-shaping the newspaper business model for the future is our growing access to mobile communications.  It makes little sense to replace the print business model for an online model that tethers us to our desktop or laptops when increasingly we use smart phones to carry our content with us to consume in bite sized pieces.  To add this factor to our business model consider the following from a recent study entitled “Network Effects: An Introduction to Broadband Technology and Regulation,” written by Charles Davidson and Michael Santorelli of the Advanced Communications Law and Policy Institute at New York Law School.  You can find this study at:  download the PDF here.   The study found:

262

Million wireless US subscribers in 2008; up from 44 in ’96, 28 in ’95.

84%

Market penetration rate for wireless phones; up from 11% in 1995

16%

Share of households who dropped landline service and are only wireless

100

Million broadband lines in use today compared to 4 million in 2000

99.9%

Zip codes with broadband access today

90%

Population share within reach of at least 4 broadband carriers today

100%

Fiber optic cable connections doubled from 2006 to 2007 and is rising

40

Million Americans now with 3G internet mobile access

142

Million in US streamed video online in 2008; was 94 million in 2005

235

Average min/mo online video viewing in 2008 up from 73 in 2005

Looking for Competitive Advantage

While any blogger with access to the internet could theoretically go into the digital newspaper business, the traditional news organizations have some things going for them which can be adapted to the digital marketplace including the following:

  1. Brand Recognition.
  2. Local Content and Feet on the Street
  3. Segmentation and Sales Infrastructure
  4. Print Distribution Capabilities

OK I admit it, Bzzzz! will never have the same brand recognition or gravitas as The New York Times.  But as any good product manager will tell you the brand has value if it continues to connect the products being pitched to the consumers who want them. Unfortunately for the New York Times and many other big name newspapers that brand value is declining along with advertising revenue.

EXTRA!  EXTRA!  For the news commodity, newspapers are still the way most people nostalgically want to get their news.  The problem is the newspaper has not kept up with changing technology and mobility, and increasingly the brand value is being diminished or tarnished in the eyes of readers because of the political spin or perceived bias of the news and editorial staff.  The revenue business model issues are serious but they can be “fixed” but the loss of reputation value will be writ large in newspaper obituaries.

Oh, we content junkies still want opinion and will still read columnists and editorials.  We just don’t want it co-mingled with the hard news.  And worse, we don’t want the news organization to slant their coverage and try to make up our minds for us in advance.

Local content and reporting was once the hallmark of the newspaper.  Beat reporters got to know the issues, the players and the politics.  Yet the best reported the facts of the story on the news pages and bellowed loudly about the politics on the editorial page.  Most of these local reporters today are gone already morphed into bloggers or corporate communications staff writers after being  cut in rounds of staff reductions as advertising revenues declined.  Today newspapers are in the final round cutting the printing and logistics back office legacy costs which are all that’s left to produce cost savings.

The newspaper of the future need not depend upon an army of paid reporters.  One of the secrets to the newspaper of the future is to combine the hunger for local content and insight with the dual passions of belonging to a vibrant community and being heard.  No, reporting will not turn into a “hobby” but there are plenty out there who would use it as a part-time job with a micro payments system of rewarding quality content producers. Bzzz! type digital news organizations would enlist the masses who are connected to the rhythm of the street, knowledgeable on the issues of the day, and insightful about its implications to produce content useful on the Hometown Daily Blab and for USA Today.

If I were Gannett or The NYT I would reinvent myself as a integrated community of news gathers and create an online framework to create niche communities which can be aggregated into categories of users and then further aggregate industries, markets, regions or countries using a modular building block set of templates that allow the community to ‘plug and play’ local content commingled with state, national or international news, feature stories, and other content to create an endlessly interesting and perpetually changing news mosaic.

The system of building communities of passionate users and contributors linked around a common news platform customizable to fit individual tastes, deliverable electronically on iPhones, netbooks and Kindles or printable, if I really have to have it that way is what Bzzzz! would be about.

My business goal is to engage the mind’s endless search for insight about the changing world, to understand the market drivers and issues we face, or just to find something new and interesting to read and be able to organize it so I can take it with me and consume it passionately all as part of a community where I pay for the privilege of contributing content and “belonging” to something special.

I want to Tweet!  I want to have my own Facebook page.  I want to be recognized for what I know.  I want my opinion sought.  I want to express my views on the burning issues of the day.  Occasionally, I want to rant and rave even if it is to some face editor who turns around and publishes the Daily Rants—searchable by key word, of course.  These longings that can only be satisfied in a community setting are the DNA of the new digital newspaper.  Feed me and I will follow you!

The New Sales Model for the Digital Newspaper is Community-building and Niche Mass Customization of Connections and Content

Newspapers were organized to sell classified advertising which Craigslist, Yahoo and Google have largely taken from them.  But none of the online advertising sites focus on reinforcing the new business model for newspapers—building a dedicated community of users who not only pay for the privilege but contribute the irreplaceable local content, insight and connections.

I belong to Linked-In and regard it as a very competent professional networking site.  It saves me time and –pardon the pun—reduces my carbon foot print because I don’t have to go to so many boring conferences to stay connected to the Bzzz! In my business.  Like Linked-In groups, the newspaper of the digital tomorrow is a collection of thousands of groups segmented in ways that require Business Objects software to slice and dice to extract the value-added potential.

But slice and dice is exactly what gives Bzzz! its buzz for advertisers and merchants.  The ability to segment audiences based upon their passions, markets, buying habits and page ranks enables the Bzzz! Platform to reclaim its advertising prowess and target in ways impossible in the print world.

  1. Online “feet on the street” should create competitive advantage for online companies. These local contacts from the legacy sales force should allow Bzzzz! to penetrate the local ad base with online, mobile and other (lower priced) niche products.   And with partners from a cadre on online users who make money quickly responding to community needs for advertising products I predict the site will be very sticky.

Community, collaboration, fast response, revenue producing, connection, and the ability to participate and belong—-that is the new definition of essential that Bzzzz! would offer.

So I offer this first installment of my business model discussion for Bzzz!

Stay Tuned!  And please give me feedback—how can I make the Bzzz! Business model better?