Recently, the Washington Post ombudsman Deborah Howell wrote a piece entitled Ten Ways To Keep A Newspaper Strong.  As ombudsman Ms. Howell’s job is to represent the public needs to the paper.  I’ll break down her 10 points here and highlight how pursuing these suggestions put the publisher of the paper in a revenue dilemma.  This is the dilemma of all newspapers moving to the Internet and the subject of my MA Thesis, exploring online economic sustainability.

(1) Exclusivity is a virtue. -she touts the content of the paper as being unique but do KidsPost, the Style Invitational, Federal Diary, In The Loop and Dr. Gridlock generate enough revenue to achieve economic sustainability?  What about the columnists she mentions?  The New York Times found out the hard way that putting their “unique voices” behind a pay wall was an untenable revenue model, Times Select folded after only 2 years due to a lack of paying subscribers (roughly 220,000).  In the age of the Internet where there are virtually unlimited voices, the New York Times overvalued the draw of their columnists voices.

What is exclusive in the current online landscape?  Twitter I suppose, ironically they have yet to develop a revenue stream. They recently turned down a $500million acquisition offer from Facebook.  This tells me they are either attempting to create their own revenue stream (not intrusive advertising, probably selling their user data for analysis), or considering A higher offer as their exit strategy.  Either way, the point is that “exclusivity” online almost does not exist.  A newspaper’s online value proposition should be “fulfilling an unmet need” usually this means just covering news and reporting it.  Where did people go when terrorists attacked Mumbai?  They didn’t go to find columnist commentary and opinion, the sought to find news coverage.

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(2) Outshine competitors on what The Post can do best. That means all things local and Washington. -she goes on to give examples, many of which are related to national and DC politics.  Politico and politico.com already do this, with a more nimble publishing platform (online always, print only when congress is in session).  Their mission is to cover national politics!

Attempting to do all things local is a loosing bet.  Even the Girl Scouts target only women.  They intentionally have alienated 50% of the human population with their mission, to help girls, in order to best serve the needs of girls.  The “hyperlocal” model breaks down when readers and advertisers have alternate means of finding local information.  For instance, Google maps to find local food, Craigslist for local classifieds, Rotten Tomatoes for movie lisings, Twitter for updates, social networking sites for communicating, and thousands of other niche blogs.

(3) Readers, don’t expect The Post to have everything -see the point above.  So what can they expect?  What unmet need are readers fulfilling when visiting your site?  Got it?  Now monetize it in line with the market value.  Incidentally my ideas on newspapers and need are not new, NYU journalism department chair Jay Rosen has a couple of great articles on need here and here.

(4) If information is easily obtainable elsewhere, it’s fair game to be trimmed in The Post -see points 1 and 2

(5) When newsprint is at a premium — the two biggest expenses are people and paper — reporters should learn to engage readers quickly and tell a story faster. If long leads or long stories don’t hold a reader through every paragraph, editors should make them shorter. -I’m not sure what to make of this point.  If a newspaper is printing material that is filling an unmet need, thus creating monetizable value, then the costs associated with such a service must be in-line with that value.  Making stories shorter to save on paper suggests the content of the story holds no value.  Print or online, why publish the story at all?

(6) The Post’s strong bureau in Iraq is worth every penny of the more than $1 million a year that it costs to be there. And coverage in the Middle East, Afghanistan, Pakistan and India is crucial for Post readers. -international news reporting for the masses is nice to have, espeicialy when we have troops in those countries fighting.   The publisher’s dilemma is monetizing that content.

Nicholas Carr wrote a great piece in April entitled The Great Unbundling, I recommend every newspaper publisher read it.  In that piece he explains how bundled content in a printed newspaper creates a product that is more valuable than the sum of its parts. Online, the bundling concept fall apart because readers do not thumb through an entire website (as they potentially do in print).  Online readers target specific articles or sections.  They may not even come in through the front page.

Carr goes on, “The most successful articles in economic terms are the ones that attract high priced ads”.  I feel that this is why CNet.com, which is expected to post revenue of $450 million in 2008, was just purchased by CBS for $1.8 Billion.  Selling TV’s next to war stories just does not work well online.

(7) When The Post can’t cover it all, it can do a better job of putting many stories in local, national and world briefings that can send readers online for details. -What need is being met by putting briefings in a printed product only to send the reader online?  How cost effective is this information delivery method?

(8) Exclusive investigative reporting should be a franchise, concentrating on projects that are intensely meaningful to readers. The Post has not done anything more worthwhile in recent years than uncovering scandalous conditions at Walter Reed Army Medical Center. Veterans issues should remain an important topic to cover. -That was a great piece of journalism that brought about meaningful change, no doubt.  The publisher’s dilemma is how to generate enough revenue to sustain such journalism.

If a newspaper’s mission is to serve the public good then it’s best hope for economic sustainability may be to run the paper as a non-profit.  NPR does a good job of this: “NPR supports its operations through a combination of membership dues and programming fees from over 860 independent radio stations, sponsorship from private foundations and corporations, and revenue from the sales of transcripts, books, CDs, and merchandise.“  It must be noted that 2007 year end revenue for NPR Inc. was $179 Million and for The Washington Post Company was $4.1 Billion that’s with a B of which about $890 Million came from their newspaper publishing units.  If the Internet is a disruptive technology, then maybe $179 Million is the new $890 Million?  At least for now.

(9) The Post must be a watchdog on local government, business, education, courts, law enforcement and institutions. -see number 8 above

(10) It must also give a strong sense of what it’s like to live around the region.-I don’t understand.  What unmet need is this fulfilling?  How is that need translated into value?

The chart above show the top 10 news stories of 2007.  The most common story had to do with the 2008 campaign and the number 10 news category was health care stories.  Aside from the very last category, “health care”, how can a newspaper sell valuable advertising next to the content above?  Is that 1.5% enough to prop up all the other categories?  Clearly it is not.  The most lucrative newspaper would be one that had nothing but product reviews in it.  But then, it would not be a “newspaper” would it?

The purpose of this article is to highlight the newspaper publishers’ dilemma in moving a bundled print product to an unbundled online environment.  This dilemma is facing the entire newspaper industry right now.  The way ahead is rough and uncertain.  There currently exists no economically sustainable model for newspapers online and there may not be one until newspapers find their new online value. Please correct me if I am wrong with examples.  I am very interested.

Is $179 Million the new $890 Million?  If that is the case, newspapers really need to eliminate their shotgun approach to content production and bring their operations in line with the new value structure.  This last statement is nothing new, but it bears repeating because the disparity between print revenue and online revenue is large.

Just as an example, only 10% of NYTimes revenue came from online operations and 12.8% of WashingtonPost revenue came from online operations.  At this point, eliminating the print product would lower operating costs approximately 50% but eliminate 90% of revenues!

If newspapers want to remain in the news business they need to figure out how to subsidize journalism.  The best way I can see to accomplish this at the moment is by diversifying the revenue streams coming in to the parent company.  Examples:

• CBS own outdoor billboards and now Cnet.com
• Washington Post owns Kaplan and Cable One
• IBD, FT, and WSJ conduct business and investor conferences
• News corp owns Fox, Dow Jones, an international marketing company, and newspapers around the globe
• McClatchy owns mostly newspapers, hence their troubles
• NYTimes owns mostly newspapers, hence their growing troubles
• Gannett owns mostly newspapers, hence their growing troubles

-robert ivan