Sadly however, the people that have run these industries from the top always seem to be clueless as to what the future holds. I will read with interest the changes new Fairfax Chairman, Roger Corbett makes in his first 3 months in charge or if he just takes a ‘steady as she goes’ approach. In my opinion he has to immediately show he has got something to offer and he has to get creative .

In the first of a two part series I am going to take a look at The Print Newspaper both here in Australia and also in The USA where I am currently located. In Australia we have two major real estate newspapers, The Sydney Morning Herald and The Age these are both controlled by Fairfax.

The second part of this series to be released this time next week will focus on the future of online newspapers.

The Boardroom

We have a management problem, boardrooms are filled with people that have a good record of running traditional companies or companies that have made the digital transition easily. However, the majority of boardrooms today are filled with people that are not qualified to understand the digital age and the behavior of their own market in this digital age.

In the beginning it was much easier to launch a jobs, cars or houses website if you had an established classifieds newspaper to get it off the ground. Realestate.com.au was not saved by investment from News Ltd (although it helped) , it was the aggressive push through their newspapers and property guides from News Ltd (and a slack competitor) that established its success.

Today it is nearly impossibly to run a newspaper if you do not have strong jobs, cars and houses website in each of the key markets. Newspapers can no longer survive without the online world!

For an established newspaper to change, it has to start at the top. If the stories of Roger Corbett are true, then he must change his attitude or he will be remembered as the Chairman who sank Fairfax. The man has had great success in the past and I cannot see how at his age and with his bank account, he could not want more, than to make the changes needed in his own headspace to make this work.

You cannot be successful if you think that the newspaper market will get back to normal levels once the economy picks up; or if your only other idea is to wait for other Internet companies to succeed and then purchase them at inflated prices; or if you invest more in marketing and less in your journalistic talent; or think more tabloid news stories will appeal to the masses!

You have to understand that what is broken cannot be fixed in the same ways you have attempted to fix them in the past.

Yesterdays News

I love newspapers, I read them every single day. Actually, let me clarify, I read the news everyday, but I rarely buy newspapers.

The reason I do not buy newspapers is fairly simple, and is summed up in the following statement.

When was the last time a real news story broke in a newspaper, before it broke online?

You, like me cannot think of one recent event. If you are using an RSS reader (like me) and get your news delivered this way, you probably hear about the news before anyone in a newspaper newsroom hears about it. Even better Twitter (and the right accompanying application) will get it to you quicker.

Yesterdays News

Let us look at the first issue, news. The first time I really thought it was over for newspapers was when Saddam Hussein’s rein ended. I remember reading the headlines outside a newsagent in Hobart, Tasmania almost 24 hours after it happened, as if it just happened! Remember that statue coming down? This is the papers biggest problem, it cannot scoop news, so it tries to make up news.

Michael Jackson dies and for 2 weeks we have a different headline each day, each one trying to out do the previous. This is not news, it isn’t even interesting, you don’t create news – you find it – and you cannot find it unless you grow your journalists and give them the freedom and time to search for it.

The Classifieds

Once upon a time we read a newspaper to look for a job, a house, a car, a garage sale or a classified. You purchased the Trading Post to look for a bargain and you may have even looked at advertising for a coupon to take to Coles or Woollies.

Classifieds will never return, they will continue to shrink and someone will have to do the maths one day on whether it is worthwhile to run the wretched things in print.

Classifieds are now almost exclusively online, so there must be a conduit between the print version which should be about stories and statistics, to the online which should be the classifieds and even more statistics.

Subscriptions

The price of a daily newspaper is dirt cheap, yet fewer people are willing to pay for it. In Australia, I purchased Wired and Fast Company magazines each month. I loved these magazines, but air freighted and at $16 an issue it was ridiculous, but I still paid for it. Since I arrived in the USA and have an address here, I have subscribed to both magazines at a total cost of $19.80 for 24 issues!

Surely these companies lose money? I think you have already guessed why they do it. Their thinking is that they make the purchase so cheap that it makes common sense to just subscribe – even for the casual buyer, the losses on delivery are minimal and are offset by the increase in advertising revenues. Lifting your guaranteed monthly subscriptions, lifts your total guaranteed readership and impresses potential advertisers.

This is exactly what newspapers need to do. They can keep their newsstand price the same, but run promotions for $9.95 per annum where you can get the newspaper delivered to your door 7 days a week, 365 days a year. Anything more than $19.95 per annum is not an impulse buy and therefore will not work.

There are many ways you can offset this price, increases in advertisers, bundling other companies leaflets, flyers etc.

The Rockstar Journalists

We only have to look at the current stocks of young journalists to know just how sad a situation we are in. Gone are the days of journalists dedicating months to a story and cracking a scandal, the majority are now relegated to press releases or are so tied up covering so many stories, that they have no time to actual do any real beat reporting. Many journalists now have too many job titles and business cards that it is laughable.

Examples

• Political Correspondent James Worthy
• Youth with James ‘JimmyW’ Worthy
• Yachting Expert James Worthy
• Lawn Bowls with James Worthy
• Ask James
• Religious Affairs with Brother James

We are about to enter a new era of the rockstar journalist. These are the same journalists that we read today, but newspapers will be making them into rockstars. Even though the first stage will be shallow, I believe that the newspapers across the globe will need to get back to breeding stars, beat journalists and real local content.

Sure, we have some good journalists in the political arena, an almost endless supply of financial experts, plenty of celebrity style journalists and some that provide us with a running commentary on social issues from both sides such as Peter Fitzsimons and Miranda Devine, both of whom are excellent writers, but are more social commentators than true investigative journalists.

I am talking about beat journalists, a breed who follow a lead for months/years, who give us real gritty local and national impact stories and every now and then crack a conspiracy – journalists that know it is a mortal sin to end any scandal with the word ‘gate’.

A newspaper should provoke a discussion in the workplace and around the nations dinner tables and only beat journalism can do that!

Newspapers are facing slow death and I think only the true beat journalist can save them. Michael Moore has some interesting comments on the death of newspapers. It comes in at 21 minute mark if you want to jump straight to it.

Design

Jacek Utko, is a newspaper designer, he has had some great success in lifting circulation. Newspapers are boring and they need a re-design, it will not make all the difference, but it is all part of the new solution. You can also read an interview with Jacek here.

Watch this February 2009 Ted Talk by Jacek.

Distribution

I currently live in Boston, where you have the Boston Globe and the Boston Herald, each one of these companies have their own set of delivery trucks. The cost of delivering newspapers does not have to be so high. Come together, open your network up to other local newspapers and periodicals, where you actually make money from the distribution.

Do Newspapers still matter?

I love newspapers, I think they can still survive, they will never thrive like before, that is because the classifieds ‘rivers of gold’ (jobs, cars, houses) are lost forever to the web, but they have a real relevance to a cities identity. It will be a sad day if this is lost and the blame for this will lie squarely with the owners of these media groups – who still seem to think that it is their right to control the media and not simply a time limited privilege!

Summary

It is a tough sell. I cannot see many newspapers surviving if the boardrooms just think that everything will be fine once the economy picks up. Everything from the people to design, subscriptions, distribution must change.

Next week in part two, I will talk about the future of online newspapers and provide soe great examples of what we can expect in the next generation.

As for another ‘dreamer’ Ron Walker is trying to paint his tenure at Fairfax as a savior telling ABC PM, “If we had continued to rely on the cash flows from the Sydney Morning Herald, the Age and the Financial Review, the company wouldn’t have existed today, so, it’s paid off for us”. Yes Ron, paying $700 plus million for a ‘New Zealand only’ classifieds site saved Fairfax! Fairfax has some great opportunities but the window is closing very fast and buying up expensive digital assets that do not even cover the interest on the loan to buy that same asset is not the answer. I have no idea what Ron Walker has done in his time on the Fairfax board, but I can assure you he will not be remembered as a savior!

It truly dumbfounds me how large organisations such as Telstra, Fairfax, PBL or News Limited rarely ever create a unique product from scratch. They are all very good at buying assets at the height of the market and selling or getting out at the bottom of the market. These companies already have huge traffic to their major sites and massive databases in the classifieds arena, be it in cars, jobs, houses or general classifieds., so it should be relatively easy for them to create successful new products and increase shareholder value.

They need to get out of the habit of buying up websites for 100′s of millions of dollars and invest a few million each year in a ‘Black Ops’ style tech team to come up with new and exciting products from existing databases/systems they have.

This team should be able to tap into (read) any database and should be able to create new products from scratch without someone telling them ‘no you cannot do that, this will affect this or that’. The idea is that you create new products and test them in markets across your digital assets. This team should be able to go and meet with any division of the organisation and be granted access to any data. Yes, you must have some oversight, but that is at the end of the process, not at the beginning – if a product doesn’t fit – or is too risky – it gets shelved.

The alternative is to continue dying a slow death and live in denial. There does come a time when banks will abandon these companies or their money will run  out and for some of them the only way to survive will be to do what Telstra is doing and selling off or closing down assets.

This is the digital era and web/mobile based products will be everything to these companies in less than 10 years.

Sensis bought www.tradingpost.com.au in 2004 for a massive $636 million dollars and the business has been sliding back on them since then.

Some pretty big claims have been coming out of Sensis lately, including one that states “2 million people” already use www.tradingpost.com.au each month. Sensis were trying to hold this up against ebay’s 5 million account holders to show that they might gain traction in online auctions.

Now that has to be PR spin plain and simple. After reading this I quickly surveyed the next 20 people I met and not one person had visited www.tradingpost.com.au within the past several months and most have never visited it at all.

Maybe they had 2 million visits, but I doubt they had 2 million visitors. Could you imagine how many visits ebay.com.au would have every single month to compare this against.

Fanciful claims coming out Sensis staff is nothing new though. In the past we have seen claims from a self confessed rank and file Sensis employee (that seemed like a PR person incognito) that Sensis was responsible for generating $61 billion of sales from just the Metro editions of the Yellow Pages. When challenged he offered some Doctor as proof of the figures hoping that might impress.. and then when challenged again admitted that he remembered it off some powerpoint slide he seen once and that meant of course that there was no proof, not one single shred of evidence to his claim.

(see http://www.business2.com.au/2007/07/22/yellow-pages-advertising-closing-soon/)

Of course that was a little hard to prove considering it represented nearly 10% of Australia’s GDP and thus meant $1 in every $10 spent in Australia was meant to have been generated through just a handful of Yellow Pages editions around Australia.

Sensis have released recently that they are working on an iPhone search application which is interesting as its parent company, Telsta has not confirmed it will even be handling the iPhone when it comes here, unlike Vodaphone and Optus who have both shouted out loud about their involvement.

Sensis was going to set the search world on fire but their attempt was just laughable. Google delivered us just a touch over 63,000 visits over the past 12 months. In that same time Sensis.com.au delivered… wait for it… 8.

Lets not forget the www.whitepages.com.au… that was actually responsible for another 8 visits. I get far more traffic in a week from people clicking on my name on this blog than I get from Sensis in a year.

Sensis have never impressed online and I cant see them turning it around and now they expect us to believe that they are to tackle the online auction space. Whats Next..? Maybe they might try and follow www.trademe.co.nz impessive example and take on real estate classifieds. Better watch out REA, their online pedigree is impressive!

Positive Spin
Whilst Sensis will be putting a positive spin on this, I think they will get a very lukewarm reception from Agents. Another reason is that it costs only a few dollars for private advertisers to advertise in the Trading Post, so Sensis will be caught between a rock and a hard place, on the one hand convincing Agents to advertise in Just Listed and the other trying to woo as many private advertisers to the Trading Post.

Going National?
Just Listed last year announced it would be going national by the middle of this year, this will be a test for them as I really do not think they can, most Agents I speak to do not get any real results from the website and the only reason they advertise is because it is FREE.

Sensis more than any other company in Australia’s history has blundered from one IT purchase to another and their balance sheet from purchases would be in the red by at least a couple of hundred million dollars, will Just Listed go the same way?

Interesting times ahead!