Newspapers caught in “the big oven”

The New York Times is reporting “Editors and publishers in a relvolving door.”  

(http://www.nytimes.com/2009/01/19/business/media/19paper.html)

(A longer, better version appeared in print on 1/19, page B7.)

“The primary explanation is the unremitting pressure on these guys to produce journalism at a lower and lower cost,”  Conrad C. Fink, a professor of newspaper management at the University of Georgia, told The Times.

The print version of the article points out that the problem also stems from a “gentlemanly” culture where the managers don’t know how to “claw” for every dollar.

To go deeper, the problems of newspaper are a lack of being innovative on the advertising side.

Instead, the focus is on cutting costs. Now newspapers find themselves fighting a two-front war: the same “elephant in the corner” on the revenue side and a mounting one of producing journalism at a lower cost (challenging indeed).

If you could roll back the clock, papers should have jumped on the revenue problems much sooner. Don’t jump onto the Web until you can find a way to “monetize” the content. Papers had a chance, too: this is exactly what led to the failure of most Internet companies in the late ’90s — a problem they should have learned from.

It stemmed from an entrenched management culture that was too used to getting its own way for decades — almost like a utility with approved rates of returns.

The focus should have been on bringing in experienced ad and marketing people from other industries — ones that knew how to “pick up pennies off the floor,” a phrase we often used when I worked at CNET (one of the successful dot.coms).

Now papers are behind the proverbial eight-ball. They fell into the  trap of cost cutting to meet short-term revenue goals. That’s easy, though some are at a point of burning up the furniture to keep the oven going — a favorite Danny Kaye tale (attributed to a Tolstoy short story) called the “Big Oven.” (http://en.wikipedia.org/wiki/The_Big_Oven)

They need to regroup and focus on revenue, with three missions:

1. Again, find advertising and marketing executives from industries where you need to work harder and faster to make money. Turning to former dot.com executives is no answer: As I said, they never learned to monetize. I’d go to some hi-tech industries: middle and small-cap ones where the executives learn to “think out of the box” — or die.

2. Blow up the newspaper advertising culture. The culture still has the utility mindset. It needs leaders who can change that. In fact, you need to borrow from the skill sets of experienced newspaper beat reporters — tenacious, much more Web centric, results- and deadline-oriented and deeply focused. I see more of that in newsrooms nowadays than on advertising staffs.

3. Launch new products. Sometimes you need to spend money to make money. Newspapers are so tight with their money nowadays, they forget good opportunities exist right under their noses. They need to create new revenue streams. The opportunity to launch business weeklies exists throughout the country, including here. You can start small and grow the product. In short, you need a set of entrepreneurs within your company.

All told, the future of the newspaper industry depends on growing revenue ASAP, not cutting costs. For the most part, I see just the opposite occurring. Otherwise, you end up with the “Big Oven” scenario.

Author: jeffpelline

Jeff Pelline is a veteran editor and award-winning journalist - in print and online. He is publisher of Sierra FoodWineArt magazine and its website SierraCulture.com. Jeff covered business and technology for The San Francisco Chronicle for years, was a founding editor and Editor of CNET News, and was Editor of The Union, a 145-year-old newspaper in Grass Valley. Jeff has a bachelor's degree from UC Berkeley and a master's from Northwestern University. His hobbies include sailing and trout fishing.

6 thoughts on “Newspapers caught in “the big oven””

  1. Good points Jeff. Another problem is the leaders of “parent” companies only looking at the cost of a subordinate company and ordering spending reductions instead of revenue generation. They seem more intent on cutting the Indians (so to speak) who make or sell a product and keeping the chiefs.

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