In Desperation, Detroit Papers Flip the Switch
As the Great Detroit Experiment begins, the industry owes them for acknowledging the obvious. As Lou Mleczko, president of the Detroit Newspaper Guild Local 22, reported:
"And [Detroit Media Partnership CEO David] Hunke said, if we don't do this, the
current model is unsustainable. So he'd rather take the calculated risk
of going to a new format — rather than sit back and do incremental
cutbacks."
Unsustainable. In other words, the business model is broken. The cracking we've been hearing are the default roars and whispers coming out of the companies and the lenders. Tribune's bankruptcy made a hole in the ice and now the idea of doing business as usual in 2009 seems increasingly unthinkable.
So Detroit, our newspaper Detroit, is going green. Green as in aiming for a sustainable, profitable model. Green as in fewer felled trees and more pixels. Green as in new green tech fresh, in line with the times with the change in Presidential Administration. Expect many more papers to soon follow the trend, as it appears that about half of the top 50 papers are now unprofitable.
It's a startling plan, even though we expected it. We'll debate the details and the chances of it working, but one fact is clear: A major American city will essentially see its daily newspaper(s) disappear. The Free Press and the News, as print products, won't completely disappear on certain days of the week — a one-section product will be available on the streets — but the institution of the daily newspaper is disappearing in Detroit.
What we know about the Detroit plans is this:
- The Free Press will be home-delivered Thursdays, Fridays
and Sundays, while The News will be home-delivered
Thursdays and Fridays, probably starting in March. - The papers will print one-section street editions
on the days without home delivery. - The papers will push daily replica e-editions harder, associating them with the new three-day-a-week subscriptions.
- There will be no immediate newsroom layoffs, but overall job cuts would reach about 10%.
So Gannett, the healthiest of the big newspaper companies, and MediaNews, highly leveraged and walking on debt eggshells, decided it was time to flip the switch. Freedom's East Valley Tribune is flipping the switch Jan. 7, moving from a six-day daily to a four-day "daily" in print and urging readers to move online every day for the freshest news. The Christian Science Monitor ("The Monitor Flips the Switch") going online, save one weekend paper, in April.
So will it work?
Let's take a quick look at the moving pieces:
- The Savings: Figure that production costs amount to about a third of newspaper costs. This move will significantly reduce those costs.
- The Circulation Revenue Loss: Circulation has contributed about 20% of newspapers' revenues. So the partnership will take a double hit here. It will charge a bit less for reduced-day print subscriptions, and inevitably numerous subscribers will opt out.
- "New" Daily Digital "Editions": The papers' will be pushing daily electronic editions, but don't expect that these will produce much in revenue. These editions, powered by companies like LibreDigital (nee Newsstand), Olive Software and NewspaperDirect, have had greater success in captive Newspapers in Education programs than in consumer acceptance. They are essentially counter-intuitive products: older readers who may like the idea of "reading the paper" in its traditional format don't like reading online; younger readers who like reading online find it nonsensical to read yesterday's news — and pay for it — when they can news of the moment free online.
- Ad Revenues: We've seen Monday and Tuesday papers especially hollow out in advertising. The bet in Detroit, in Phoenix and soon in many other cities — most newspaper companies are now talking about flipping the switch as well — is that papers can hold on to the lion's share of the print revenue within the remaining print publishing days. The big question: what percentage? Will three days a week in print be enough to hold 75% or 90% of print ad revenues? Those are the metrics that will determine "sustainability."
- New Products: The partnership employed IDEO, a brilliant company that often gets to the heart of marketing for customers from Samsung and Procter & Gamble to the Mayo Clinic and Oxfam. In its release, the partnership cited all the digital add-ons, mainly niche plays, that will be added in Detroit, from Gannett's MomsLikeMe and Metromix to HighSchoolSports.net to niche fashion print. It's a catalog of what the industry is trying in the great transition. Many are good ideas, but none are home runs. It's a game of singles at this point.
The biggest moving piece here though is habit. It's elusive. Newspapers' great success and great profits grew out of their dailiness, as addictive as cigarettes, without the nicotine. Readers got used to picking one up daily and advertisers got used to using their dailiness to market. As the Detroit newspapers, and others, flip the switch, they're also hitting the circuit breaker. That current of electricity that flowed in the commercial and community information marketplaces is being disrupted, and the disruptors — from Yahoo and Google on the one hand to CNN, Politico and Huffington Post on the other — now find they'll be competing with the old newspaper companies on more even ground, but without the legacy costs.
So this move pushes two newspapers at least into deeper competition in the digital marketplaces of the day, marketplaces they have had mixed, and often underwhelming, success in. That's why today's announcement, as intriguing as it is, is probably just another step in the ongoing shrinkage of the US press.