Friday, May 25, 2012

Upheavel in the newspaper business

Two noteworthy items this week: First, the New Orleans Times-Picayune has decided to cut back to three days a week: Wed, Fri and Sunday.  The paper will cut back on staff as well.  It will continue to provide free news on its website.  Puzzle: nationwide newspapers get over 80% of their revenue from print ads.  One has to wonder if newspapers are on a death path.  

But that brings us to news item #2:  Bloomberg reports that Warren Buffett is thinking about buying more newspapers.  Buffett is not known for getting into a market too late.  So how is he going to make money?  Presumably he will have to change the business model, including the ongoing practice at most papers of providing online content for free.

Newspapers could cut costs tremendously if they could shift customers to online.  The trick is that they would then need to get additional revenue online -- both ads and subscription fees.  Getting people to pay for something that they have had for years is no small feat.  TV stations provide local news on their websites (in print and video), which complicates matters even further. 

The heart of the matter, in my view, is what content can today's newspapers companies create that no one else can?  If you look at your typical newspaper, you see a wide range of material: national news, state and local news, human interest stories, comics, sports, movie reviews, recipes, obits, and more.  Some of this stuff is done better on specialized websites such as  Do not be surprised to see newspapers ditching non-local content and perhaps even forming strategic alliances with the local TV stations. 

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