10 Comments

Summary:

Several media industry executives argue that the disruption of the newspaper industry was inevitable, and that there was nothing much those in charge of the business could have done to prevent it or adapt to it. But is that true?

At the Brainstorm tech conference on Wednesday, several media-industry heavyweights talked about a video project they did for Harvard University in which they interviewed leaders in the industry about the rise of digital and the decline of newspapers as a force in the media business, and also gave some of their own thoughts about whether media companies could have avoided what they called a “digital riptide” that sucked the business under.

Their answer was no — because the upheaval was too widespread to resist, and the disruption of their business model too financially painful. But is their analysis correct? Yes and no.

The three directors of the project, which was put together for Harvard’s Kennedy School of Government, are former Time Inc. editor-in-chief John Huey, former New York Times editor of digital Martin Nisenholtz and Paul Sagan, executive chairman of Akamai Technologies. They interviewed about 60 media insiders about the digital disruption that turned their industry on its head. And their conclusion? As Sharon Waxman of The Wrap put it in her summary of their Brainstorm panel discussion: “Advertising went away and there’s nothing newspapers could have done about it.”

Is the innovator’s dilemma an excuse?

Nisenholtz, the man who launched the original New York Times website and later acquired About.com for $410 million (and was instrumental in the rise of RSS), said that all of the media executives who were interviewed came to a similar conclusion, and many mentioned Harvard business guru Clay Christensen’s “innovator’s dilemma,” which describes how incumbents in an industry typically fail to make the changes that are necessary to their survival. As Nisenholtz put it:

“What was common to every interview was the notion of the innovator’s dilemma. Is the Internet sustaining innovation?… Or is it fundamentally disruptive? Does it kill the business model? In the case of journalism, for journalism it was sustaining. But for the advertising it was disruptive. The oxygen got taken out of the financial model.”

Disrupt

Is this a fair description of what happened to the newspaper industry over the past decade? It’s fair in the sense that advertising has been undergoing its own fundamental disruption. As Clay Shirky has described, the old days of simply buying and selling ads based on some kind of geographically-based monopoly on information — something newspapers used to have going for them — are no more. And advertisers have also gone in search of targeted audiences and measurable impact, something newspapers have never been much good at, but digital outlets and social networks promise to provide.

At the same time, however, this explanation feels a bit too simplistic, as well as fatalistic — not to mention convenient, in the sense that it absolves any of those who were running media businesses over the past decade (including Nisenholtz and Huey) of any responsibility for having failed to see the disruption coming, or having neglected to take whatever steps they could to adapt more rapidly. In effect, it says: “We couldn’t help it! Advertising disappeared. It’s not our fault.”

There were things that could have been done

Was there anything newspaper companies could have done? Sure there is. How about not just shovelling print material online for half a decade or so with no links and no recognition that the internet even exists? That might have been a start. Or how about trying a little harder to figure out how the flow of information was changing, and how the democratization of distribution that the web and social networks provide could be used to their advantage, instead of feared and belittled? To Nisenholtz’s credit, About.com was a smart move in that direction — too bad it was one of the only ones.

Christensen’s principle does say that incumbents routinely fail to make the changes that are required even when they see the necessity to do so, usually because they fail to understand — or refuse to understand — how the disruption they see changes the nature of their business (a classic example being the train industry not seeing itself as being in the transportation business, and missing the disruptive effect of trucking). But it’s not like these changes are an act of God that can’t be adapted to.

The so-called “original sin” wasn’t

One thing the Fortune panel got right was to debunk the idea that not charging for content was some kind of “original sin,” to use a phrase coined by Walter Isaacson of Time, who says he was seduced by Madison Avenue advertising executives with bags of money who wanted to see more pageviews, “and that was the beginning of the end of journalism.” Sagan said that charging for content wouldn’t have worked for most in the early days of the web, and Nisenholtz noted that the web has actually been a great boon for journalism — just not for traditional media businesses like the newspaper industry.

The title of the project Nisenholtz, Huey and Sagan are involved in (which will be released in full online in September) is Digital Riptide, a name that compares the disruption of the newspaper business to an undertow that can’t be resisted. “The strongest swimmer in the world can get caught up in a riptide,” Huey said. I think a better metaphor would be a tsunami — which provides evidence of its arrival, at least for those who are paying attention, and is survivable if those caught up in it take the appropriate steps.

That’s not to say if newspaper companies had tried harder to adapt that they wouldn’t still have suffered painful financial turmoil, since there are systemic costs and structures associated with print that the newspaper business has to somehow deal with, just as the steel industry and the automotive industry have. But to imply that it was something that no one had any control over and couldn’t possibly have done anything about misunderstands the nature of what happened.

Post and thumbnail images courtesy of Flickr users Zarko Drincic and Scott Beale

  1. Great piece. I wonder whether hindsight is 20/20 and now it’s easy to see the rips of change. However, you would think that big outfits would have people on the lookout for changing trends and be working to adapt on an ongoing basis.

    It’s encouraging to see innovation in news/journalism. Although they are often tiny and experimental, it’s worth keeping ears/eyes open to innovators. Check out my top 5 from this year’s Stanford Knight Fellows: http://nextrends.swissnexsanfrancisco.org/futureofnews/

    Share
  2. Reblogged this on Censemaking and commented:
    Matthew Ingram does a good job of doing a retrospective on the state of newspapers and questioning the fit their current predicament has with disruptive innovation. Interesting to consider that public health and its communications are facing similar challenges with how people get and use health information. I can’t help but think there is a lot to learn here about what was and wasn’t done by newspapers (who are still around).

    Share
  3. Couldn’t disagree more with the “experts” debunking of the original sin concept. I wonder if they just find it hard to accept that they were spectacularly gullible. Giving away your core product for free didn’t make business sense then and it doesn’t now.
    Thankfully current bosses understand this and are now doing something about it with the subscription model launching throughout the industry, but there’s a lost decade which may be hard to recover from.

    Share
  4. Matthew Schmidt, APR Friday, July 26, 2013

    Like your suggestion that the proper title of the project should be tsunami and not riptide. Riptides are dangerous, but you need only swim across the current to reach the inward flow on each side of the outbound. So you can survive a riptide by adapting to the flow (which newspapers have only belatedly recognized). The only escape from a tsunami is to reach high ground before the wave arrives; a race against nature that is very hard to win.

    Share
  5. I continue to scratch my head about why so much energy and resources continue to be focused on analyzing what went wrong with the newspaper industry — as if the lessons of the past will somehow inform strategies going forward. We know why the newspaper business has been in decline. What does it matter if it was preventable or not? I would love to see all of this brain power focused on creative and innovative business strategies to sustain investments in quality and aggressive journalism. Can we please stop looking in the rearview mirror and concentrate on the road ahead?

    Share
    1. Fred Schecker Tuesday, July 30, 2013

      I agree that it is generally more productive to look forward rather than backward, but I also think the newspaper industry is a case study in what not to do when faced with a disruptive change.
      As someone who was working on digital news products before Netscape was a browser, I believe the industry leaders made several decisions in the early days that came back to haunt them – and I’m not talking about giving content away for free, the current industry scapegoat.
      For me, one of the early mistakes was to decide we were content companies, not technology companies. We focused on polishing our “quality content” while the innovators focused on creating new tools for a new medium.
      Now, the industry should be focusing ahead and morphing into something new, but management for the most part seems to be focused on squeezing the last bit of profit from a failing business.

      Share
  6. Why don’t they talk about the obvious things that happened? Craigslist killing the classified ad business, for example. Or people getting news from TV instead of newpapers because they don’t want to wait till tomorrow morning to find out what happened today? The Internet and digital media are only the latest pieces of the decline of newspapers. Radio and television started the process long before that.

    Share
    1. Good point, Ed. Thanks for the comment.

      Share
    2. Certainly, newspaper audience was in a very slow decline as TV and cable news emerged, but the industry was hugely profitable and saw its largest revenue in 2005. Classified peaked at $19 billion in 2000, but was still $17 billion in 2005. Craigs List started in 1999 and mostly impacted newspaper general merchandise revenue, which was a small part of their overall classified revenue. But Craigs List was symptomatic of the price destruction that impacted all newspaper categories. What hurt newspapers was reliance on major advertisers who were either themselves being disrupted or were finding more effective ROI elsewhere. That is why the industry is laser focused on revenue diversification.

      Share
  7. Two side issues popped out of this discussion for me that might be worth more exploration:
    – I was in newsrooms in the ’80s when editors started steering their papers away from meeting coverage, which they said readers didn’t want anymore. I’ve seen a heard a lot of discussions lately about the value of that accountability journalism and the reason it needs to be supported.
    – I wonder what effect the decline of the middle class has had on newspaper journalism and journalism generally. Was this change in the audience a factor? Could it be that fewer people with the disposable income to purchase papers and the products they advertised messed up the economics of the business? On the content side, is it the middle class that wants and will pay for accountability journalism?

    Share

Comments have been disabled for this post