And we had 70% market share….
The Day of Reckoning has arrived.
Or at least it has started.
Sam Zell’s Tribune Company goes Chapter 11.
The New York Times is so close to the edge that it has to mortgage its new headquarters to raise $225 million to meet a debt note that comes due May 2009.
NBC announces yet another round of cuts, and we are still at the beginning.
Change… vast and rapid change, is coming to the media business. Now its a matter of survival, and only those willing to make the most radical changes in cost of operation are going to survive.
And this is not limited to the newspaper business, although they are first in line because the web carried text before it carried video. About 10 years before. So what television operations are seeing happen to newspapers today is going to happen to them tomorrow.
The ability of the web to carry text for free to 2+ billion homes around the world changed the fundamentals of the newspaper business. It no longer made any sense to gather news, print it on paper and sell it on the street corner. As much as 85% of the costs associated with publishing a newspaper are bound up in the cost of the physical production of the paper – the presses, the ink, the trucks to move the product around and put it in your hands.
The web offered an alternative – not a parallel distribution method, but an alternative. One or the other.
And, at the same time as the web offered that alternative, it also began to eat newspaper’s advertising dollars.
In the past decade or so, newspapers globally have been in decline. This isn’t a result of the recession. This was happening in the boom decade.
Newspaper’s revenues have been eroding over time, ironically, as younger readers migrate to the web (or indeed simply started there and never left).
Newspapers have two options now: follow the model of the Christian Science Monitor and pull the plug on print entirely, or go out of business.
In a wonderful piece by Jay Yarrow, Donald Graham, Publisher of the Washington Post said, “The business model that used to work at newspapers does not work any more.”
Television news is not far behind. Not by a long shot. Just ask the people who work at NBC. And the local stations are going to follow suit.
That does not mean that news is not a viable business. But, as Donald Graham says, it is not viable the way it has been done until now.
The answer, I think, is a radical cost cutting on the production side, commensurate with the radical cuts in revenue and income that the web has wrought. Fortunately, technology is on the cost-cutting side.
Small cameras and laptops in the hands of well trained journalists can create a treasure trove of digital content on a daily basis from all over the world. The technology already exists.
Not to put too fine a point on it, but for $25 million, one-tenth of the money the Times has raised by mortgaging its building to one time service the interest on their debt… for one tenth of that, NBC News could field 250 digital journalists around the world, at $100,000 each. Those reporters, all carrying digital cameras and laptops could file daily enough material to feed all NBC operations, all web news, as well as a great deal of NYtimes.com.
The asset to protect here is the content – the journalism. Not the building.
The place to feed here is the web.
Media companies have an opportunity, and a rapidly closing window, to re-invent themselves as digital content creators, or they can close the doors and turn out the lights.
The potential is there.
It’s in the newsroom.
Put it to work.
Leverage (not to use too dirty a word) off the only asset you have. Your journalism.
In a world of global free internet access, newspaper’s and television station’s only real asset goes home every night.
If they don’t come back, you have nothing.
If you equip and train them for the new digital world, you have everything.