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Summary:

Research by the Pew Center has turned up several examples of newspapers that seem to have reversed the declining revenue most of the industry is suffering from, although the methods they have chosen to do this are very different.

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The pain that the newspaper industry is going through is well known by now, a generational shift driven by massive declines in print advertising revenue and a continued slide in circulation that is affecting virtually every country around the world. So is anyone managing to survive and even prosper in this challenging environment? According to a new report from the Pew Research Center, the answer is yes — but the methods by which these four newspapers have done so are very different.

The report, which was produced as part of the Pew Center’s Project for Excellence in Journalism, looked at four newspapers that emerged as potential success stories from an earlier piece of research the center did called “The Search For a New Business Model.” That study noted the grim fact that for every dollar in digital advertising revenue, the average newspaper was losing 7 dollars in print ad revenue — a statistic that has now gotten even worse: the Pew Center now says that an average of 16 dollars in print revenue is lost for every dollar of digital revenue gained.

Different pathways to success

The newspapers that are profiled in the Pew report are all small to medium-sized dailies in four states: Florida, California, Utah and Tennessee. All have managed to boost their revenue over the past year using a combination of strategies — some focused on protecting print and some focused on growing the digital side. If nothing else, the report makes it clear that the path to success can be very different from newspaper to newspaper.

The four papers profiled are:

  • The Naples Daily News in Florida, which has a weekday circulation of about 45,000 and has seen revenue growth in 2011 and 2012, in part by protecting print revenue.
  • The Santa Rosa Press Democrat in California, which has a circulation of about 53,000 and developed its own internal digital-media agency that has driven digital revenue growth.
  • The Deseret News in Utah, which has a circulation of about 90,000 and is run by former Harvard Business professor Clark Gilbert, who significantly re-engineered the company.
  • The Columbia Daily Herald in Tennessee, which has a circulation of about 12,000 and has prospered as a result of half a dozen new digital-revenue experiments.

As the Pew report notes, the Deseret News is something of a special case in the sense that the company’s CEO, former Harvard Business professor Clark Gilbert, built a career on teaching students and advising companies about disruption before he left to take on the challenge of running Deseret Digital Media — the parent company of the Deseret News — which is the new-media arm of the Church of Jesus Christ of Latter-Day Saints. Part of Gilbert’s strategy has been to reach out to potential Mormon subscribers outside of the newspaper’s traditional coverage area.

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Separation of traditional and digital

The biggest factor in Gilbert’s revamping of the company, according to the Pew Center, was his conviction that separating the digital from the traditional is a crucial element of any digital success story. This is a conclusion also arrived at by his former Harvard colleague Clay Christensen: in a recent study of the media industry’s woes entitled Breaking News, Christensen said separation of traditional and digital is the only way media companies can prosper. As the Pew report puts it:

“Gilbert has a theory of media evolution: The legacy business is the crocodile, the prehistoric creature that will shrink, but can survive. The digital business is the mammal, the new life form designed to dominate the future. And they need to be managed apart.”

This lesson is also brought home by the experience of the Santa Rosa Press Democrat, where the company created a separate marketing agency that helps advertising clients make the transition to digital, a unit that generated about 25 percent of its digital revenue in 2012 and is expected to see about 60-percent growth this year. The company’s digital director said it was important that the agency “have a start-up feel to it and not be swallowed by the older Press Democrat brand.”

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In some cases, the lesson that these success stories can teach boils down to “know your market.” In Florida, for example, the Naples Daily News has spent a lot of time protecting its print revenue (in par by re-engineering its sales force) — but this strategy might not work as well for some communities as it does in a city where the median age is over 60, a segment of the market that typically enjoys print more than younger users do. The Orange County Register is making similar big bets on protecting the print franchise under new owner Aaron Kushner.

Four lessons worth considering

From my reading of the Pew report, here are the four lessons that these success stories seem to be trying to teach us:

  • Separate your businesses: As Gilbert and Christensen both make clear, having the same people run both the traditional and the digital side simultaneously is like having the fox manage the chicken coop. It doesn’t work, and it annoys the chickens (or worse).
  • Know your market: In some cases, a strategy like the one the Naples Daily News and Orange County Register are taking may work, but only if your market has enough print-heavy subscribers to justify the relative over-investment in that part of your business.
  • Try almost everything: The tiny Columbia Daily Herald in Tennessee has managed to generate digital revenue growth that exceeds many of its larger competitors primarily because it has launched half a dozen different ventures on the digital side.
  • Go big or go home: If there’s one over-arching lesson from the Pew study, it is that whatever strategy you decide on, you have to commit to it wholeheartedly or it will almost certainly fail. Incrementalism is not the key to success.

Not all of these lessons are going to be applicable to every situation — and some of the strategies that these newspapers have chosen to pursue may ultimately prove to be unwise. We don’t have a very long track record of success for other media outlets to look at for tips, but what we do have seems to suggest that if you aren’t experimenting with alternative digital revenue sources and allowing your paper to do that in a relatively independent way, you are unlikely to succeed.

Post and thumbnail images courtesy of Shutterstock / Don Skarpo and Pew Center

  1. Also worth looking at the TriCity News in Asbury Park, NJ. It’s chock full of ads and quite a success story? Their secret? No web site. People have to read the paper.

    http://www.nytimes.com/2008/12/22/business/media/22carr.html?_r=0

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    1. Thanks, Brian — that’s certainly the most extreme example of a certain strategy, but given the right market I suppose it could work.

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      1. Paid copies gives a promise of readership, but no guarantees can be made about unique visitors from one day (or week) to the next.

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  2. Experimenting with alternate digital media revenue strategies ia luxury that few publishers can enjoy when they are trying to figure out just the daily bread…

    Also, there comes a time when the digital marketing unit of say, The Santa Rosa PD becomes weighed down by having to support the print side, and could become uncompetitive against rivals that don’t have the same handicap. In the digital world it’s very easy to cherry pick, that’s what Craigslist did,it took the ads, and dropped the expensive news articles. Now, just 32 staff at Craigslist provide classified ads for more than 300 cities and they’ve taken away more than $16 billion a year in revenues from the newspaper industry while making about $150m a year.

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    1. “Experimenting with alternate digital media revenue strategies is a luxury that few publishers can enjoy.”

      That’s like saying that in 1900 few horse-drawn buggy manufacturers could afford to put gasoline engines in their buggies.

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  3. Experimenting too much may water down the main product. If you take print people away from their main duties, the print paper will suffer.

    Papers that are seeing a decrease in sales may want to look at how they circulate. Look at every store where they are sold. Does their place in the stores look appealing? Modern? Are the delivery guys doing a good job of keeping the racks looking clean and vibrant? Could there be new stores in town that may want to carry the product? Is the paper’s Newspapers In Education program really getting younger folks to read the paper (are you sending guest speakers in to talk to students and get them excited about journalism), or are schools just a place to dump off a couple of bundles of papers?

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  4. Excellent post! I spent several months studying the Journalism industry as part of my grad studies. Very insightful post. I look forward to seeing the transformation of newspapers considering the growing influence of technology. Definitely aligns with Eric Newton’s perspective stemming from his writings at the Knight Foundation.

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  5. Muhammad Abd Al-Hameed Friday, February 15, 2013

    The separation of paper and digital operations will suit the most the big ones, such as The New York Times. The problems is there are no listeners to out-of-the-box solutions. They are doomed to fail.

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  6. The split is the key to digital media success – while they are carrying legacy millstones they can never succeed.

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