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November 28, 2014

New Orleans' Forced March to Digital

John Paton may be getting most of the Digital First headlines, but behind the scenes the digital first pressures are building up on publishers on both sides of the Atlantic.

Today, we hear that the Newhouse’s Times-Picayune is following the “Michigan model,”  no longer a “daily” paper, but one published three days a week on paper. That model, launched in Michigan at the beginning of February, has quickly proven itself to Newhouse execs. The principles, if not the execution — or the longer-term impact — are clear:

  • Pare down print days so as to keep 80%-plus of print advertising. Sunday is a natural here, with its heavy preprint business. Those preprints are endangered themselves, but not immediately; they now account for about a fifth of all newspaper company revenue in the U.S.  Keep another “market” day midweek, both for preprint and display advertisers, and probably add another day, Friday, to get to people as they move in their leisure (and shopping) days.
  • Use the print strip-down to completely shake up — and streamline — the organizational charts. In Michigan, that meant two “new companies,” though both, of course, are owned by Newhouse. One, ML MediaLive,  focuses on the core of the digital business (content, sales and marketing)  and the other, Advance Central,  on everything else, production, distribution and all the accounting and HR functions. Importantly, instead of having separate organizations for each of these functions per title, in Michigan, Newhouse could could combine them into a single, cheaper-to-operate unit.
  • Bet on the digital future, for readers and advertisers, promising the kinds of advanced digital products — from desktop to smartphone to tablet — that will keep customers coming in.

The New Orleans move looks to be a forced march to digital. With the Michigan results good enough to proceed, and print advertising in a near-death spiral, Newhouse is circling the print wagons, hoping to milk the remaining print advertising by corraling it into a few days of the week. Surely, it will lose some print advertising, but even a small additional loss should be made up by the major cost reductions, in printing, production, distribution and staffing. In one of the earliest moves, Gannett moved its Detroit Free Press to three days a week, back at bottom of the recession, and later claimed it had kept 90% of its advertising; my efforts to confirm whether that meant 90% of ad revenue or 90% of ad customers — a big difference — were unsuccessful.

I’d call it a forced march because it doesn’t look like the Times-Picayune, or its new successor, the NOLA Media Group, is yet ready for the digital transformation. It has been making a digital transition, and there ‘s a big difference between the two. It doesn’t have a digital circulation strategy yet in place; though about a fifth of U.S. dailies do. Digital circulation is key to making this work, so that core print readers become more likely to transition with the enterprise — and keep paying their monthly subscription bills. The Times-Picayune did launch an iPad app in Apri, though it’s clearly in beta, with four of the same stories repeated this morning on the iPad version home page.

Plainly, Newhouse’s thinking itself has been transformed. It is the last major US newspaper company to have kept its digital business separate, through Advance Digital, though responsibility for the digital business has been moving away from Advance Digital to the newspapers over the months. Now, it is embracing full bore the principles of digital first, part of a movement we’re going to see across the U.S. and Europe, as publishers respond to the same environment Newhouse is facing. In fact, Johnston Press, a significant UK publisher, turned five of its dailies — presto, magico — into weeklies and may soon the same with others.

The perils are three-fold, at least:

  • Revenue: Though this is a bid to retain, or regain, profitability, there are too many moving income pieces — print ads, digital ads, circulation — to know how stable revenue may be in 2013-2015.
  • Readership: A well-decorated, prize-winning “paper” of 134,000 daily circulation and 155,000 Sunday circulation, it is profoundly a print habit. How will its readers really adjust to the other four days week of digital-only, if they’re not strongly digital — and don’t have great digital products to consume. Big worry: Breaking the daily habit makes newspaper companies far less essential far more quickly. One other thing: a Center for Public Integrity/Lens project showed how relatively poor Internet access is in New Orleans, so the impact of print-less days may have more impact there than other cities.
  • Regard: The loss of as many as another 50 newsroom jobs, bringing the vaunted newsroom down to 100, from a pre-Katrina high of 265, is a major loss, and can’t be painted otherwise. The community reaction will be strong, and it’s hard to predict how long-lasting. But, then, the long slide in New Orleans, and everywhere, has already significantly reduced community reliance and regard for newspaper companies and what they do.

The New Orleans move is not a shocking one. By 2020, we’ll be used to a few days a week of print, or maybe just “the Sunday paper,” and wonder why we chopped down whole forests; didn’t we always have these tablets?  Newsprint is going the way of the steam engine, to be visited in theme parks. US newspaper companies are using only a little more than half of what they consumed, in newsprint, a decade ago.

Will the print habit be abandoned by publishers well before then? In 2013? Or 2015%. The when is important, because the creation of community journalism — in tradition or transition or transformation — demands readiness. Readiness to serve community news needs, with a business model underneath that service that can be sustained. Newhouse isn’t yet there, nor is anyone else, but now we’ll see now how this new shock therapy works.

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