Whap! Whap!

Newspaper executives claim that no one saw the current crisis in the industry coming, so taking on enormous amounts of debt to erect buildings, buy presses an gobble up other papers was prudent business back when publishers were doing such things. Back in the good old days. A year or two ago.

Now that this unforeseen crisis has hit, the only solution is to shed journalists as fast as possible. And, of course, to boost CEO pay to retain top talent. The thing is, the CEOs are the problem, and the journalists are the only viable solution.

Let’s be blunt. I told you so, at least those of you who had the misfortune to work with me or attend a seminar with me. For more than 15 years, I’ve been telling anyone who would that this crisis was inevitable. So have many others. Our biggest mistake was thinking the crisis would hit sooner than it did.

The poor, pitiful, blindsided publishers are lying to their staffs, their investors and their creditors. The rise of the internet with its inherent disintermediation has been coming for years. Google, eBay, craigslist and others didn’t just spring up last night.

The writing was on the wall about display advertisers as well. The folks making the buying decisions were geezers who missed the revolution right along with publishers. Those geezers are quickly being replaced by people who have grown up digitally and never had the newspaper habit.

Penetration has been plummeting for years. No, decades. Major advertisers have been consolidating for decades. Research firms have been pimping their seemingly too-good-to-be-true “readership” numbers to placate advertisers for decades, and publishers have been complicit (should we talk about TMC numbers?). The environmental movement has been gaining steam for decades right along with the price of natural resources.

For the past decade, publishers have been fooling investors about the profitability of the print side of the business, stubbornly refusing to acknowledge that the web, not print, was all that was keeping classifieds alive.

Today we’re watching Bear Stearns executives being led away in handcuffs for misleading investors. There just might be some newspaper CEOs and CFOs who are squirming a bit watching this spectacle. At the very least, boards should be firing these guys right and left, not increasing their compensation.

But who suffers? Mostly the journalists who get laid off. But also the readers, who have fewer and fewer reasons to pick up the paper every day.

I don’t think the death of newspapers is inevitable.

Unless, of course, the current generation of executives stays in place.

Regardless of the rhetoric, newspapers view themselves first and foremost as factories producing a product, not as information companies.

My first post on the subject suggested that gutting classifieds is a good start to changing the self-image of papers. In that post I mentioned Steve Outing’s new reinventingclassifieds.com, which offers up some innovative thinking. It’s a good site and I don’t want to pick on it or its users. But even among these innovative thinkers you find people tied to some pretty outdated ways of thinking about technology. Here’s an example:

“We need a better online ad placement system and/or verticals offering video/animation, all the bells and whistles at the point of sale. AND ALL THIS FROM ONE VENDOR!”

Software vendors are necessary at papers primarily because of obsolete production methods. Being reliant on these vendors, even the very best ones, limits what a newspaper can do. Until newspapers adapt to open-source, platform-independent software, they’ll be weighed down by their vendors. And these vendors are getting weaker all the time, because trying to run a software company with only a few hundred potential customers is not a very good business model.

In the case of classifieds, the need for specialized vendors virtually disappears with a few relatively minor changes to the business model:

• Make private-party ads free, or at least charge per ad, not by line, and billing becomes easy.
• Stop nickel-and-diming customers with silly upsells, and the software suddenly becomes pretty vanilla.
• Automate the process for web placement and you can survive with almost no staff, so you don’t need vendor workstations.
• Print classifieds in easy-to-read formats and you can use off-the-shelf publishing software.

Some of the software you need if you make the right changes is free. Some of it is a couple hundred dollars a workstation, instead of thousands. Hiring IT help is easier because employees don’t need to know or learn arcane proprietary systems.

Get out of the assembly-line factory thinking, and everything becomes cheaper and easier. “Change” no longer means endless vendor interviews and scary, problematic conversions; it becomes organic and fluid.

Online revenue accounts for about 10 percent of revenue at The New York Times, we keep reading. Classifieds for roughly 30 percent.

But many classified advertisers view the web component as equal to (or in some cases greater than) the print component. So why not evenly split the revenue between print and online or, if you want to be arbitrary, apply it to online? Suddenly, ‘online revenue’ is one third to one half of total revenue.

Changing the accounting method is more than semantics. Doing so focuses strategy where it belongs: On the future, instead of the past. We know people are willing to buy online-only classifieds, but where’s the evidence people would buy print-only ads now, or certainly in the future?

In the final analysis, accounting probably doesn’t matter. Survival of newspaper classifieds is far from certain, and the more time and money papers sink into them, the less time and money they have for preserving news. If papers don’t start to choose one over the other, they might end up with neither.

Despite all the talk of newspapers as information companies, the current round of cost cutting makes it clear what publishers think their real business is: Running factories to turn out paper products.

I’m picking on Ottaway, but we’ve heard the same line from every publisher in the country. Classified revenue is tanking, so what to do? Lay off newsroom employees, of course. Here’s a graph from a Cape Cod Times story:

The Standard-Times newsroom absorbed more cuts than any other department, losing three full-time and three part-time employees. The other full-time employees are from the advertising and marketing departments. Two other positions, currently vacant, also were eliminated.

Why not instead try shedding the albatross that is dragging down the industry? Why not instead try beefing up what brings people to the paper in the first place?

A good place to start is with classifieds. Classifieds always have been the sacred cow because they were the cash cow. But lately they have started to look more like the lame, diseased cows we see being prodded into slaughterhouses.

Yet instead of intentionally shedding print classifieds to cut production costs, publishers shed newshole and the reporters who fill it.

And no, I’m not forgetting classifieds’ other contribution to newspapers: Drawing readers, especially younger readers. But the cold, hard fact is that they’re really not doing a very good job of that anymore, either.

So here’s the plan:

• Make private-party classifieds free. Slash the cost for contract advertisers.
• Charge for ads that require human intervention, for priority placement and other enhancements. Many Craigslist ads are poorly written. Maybe charge for expert advice on wording, which also then buys priority placement.
• Stop running daily classifieds as they exist today. Run all car ads one day a week, all real estate another, all garage sales another (or at least all that pay a small upcharge). That helps give the ads the bulk to compare to Auto Trader and other publications and gives readers a call to action to buy the paper on a specific day. It also slashes costs. (All ads would be available at all times online.)
• Instead of a big, gray page of liners, publish the ads on letter-sized paper inserted into the paper. That makes the ads more attractive and easier to carry while driving around to garage sales, open houses, etc. It also eliminated the need to balance sections, artificially fill the classified section, etc.

That’s a start. It’s a good way to break the obsession with the manufacturing process. It’s a way to start viewing classifieds as information, not a section. It reduces revenue, but that revenue is disappearing anyway; this at least helps preserve the bulk of information to draw eyeballs.

It’s a crazy plan, I know, but it might just help pull papers out of the death spiral so many are in right now.

Update: Somehow until today I have missed a new site called reinventingclassifieds.com. It’s run by Steve Outing, so most of you probably already know about it. If not, take a look.

The St. Petersburg Times is redesigning its print product. Some of the changes , such as dropping stock listings, are inevitable. Some, such as merging metro and business are trendy, if misguided.

Some, to me, are just baffling. Why, for example, bring back color weather? The article says people asked for it. Readers want many things, but papers are trying to prioritize those wants. Why weather? Will anyone drop their subscription because the package shrinks or even disappears? I’m a weather fanatic, with a computerized weather station on one of my sheds, but I haven’t looked at a newspaper weather section in years. More than almost any other subject, weather is an arena in which papers can’t compete against TV, radio and the internet. Why to one of your weaknesses at the expense of things papers excel at (or could), such as local business coverage?

Why not drop weather and greatly expand business? It doesn’t even have to be expensive coverage. Lists of new businesses, property sales, promotions, etc., are valuable to people, can add dozens of local names to the paper and can be compiled by clerks. TV stations aren’t going to do that, but they’ll happily kick your butt with their weather coverage, so papers lose in both regards.

And if times are as bad as newspapers suggest, maybe it’s time for some radical ideas. Here’s the most radical I can think of: What about eliminating some print classified content? When you think about, papers are already “benefiting” if you can call it that, from reduced newsprint costs because classified sections are shrinking.

Why not try to turn that to your advantage? Why not convert large chunks of classifieds to free, online only ads? Why not fight back against CraigsList instead of meekly letting it claw you to death? You can still charge for upsells to print, perhaps at a hefty premium if you’re lucky. Maybe you can print all classifieds twice a week, for example, instead of every day, or print all car ads one day, all real estate another, all garage sales another, etc.

Rethinking classifieds might well seem like potential suicide for a newspaper.

But doing the same old same old is guaranteed suicide.

I run a company that carries people and freight to Hawaii.
Way back when, people used boats to haul all this cargo. But then came a new-fangled invention called railroads. Back then, hauling people and cargo to Hawaii was so lucrative that my grandfather and some of the other cargo companies bought railroad trains and even built bridges to Hawaii to haul stuff over there.
Now railroads are expensive to run, and very capital-intensive, so soon most of our competitors failed, leaving us with all the business.
Our customer base became very diverse. There were the people. They wanted to be entertained and kept informed of events back home on their way to Hawaii, so we hired people to report the news. We also hired entertainers. Mostly comics.
We carried freight of various classifications. So many classifications in fact that eventually we came to call the freight “Classifieds”
We also carried chickens, because Hawaiians wanted eggs and livestock. We built tables for the livestock to perch on so we could collect the eggs without bending over. We eventually came to refer to these as livestock tables, and then simply as “stock tables.” (more…)