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How to Save Newspapers

2010 April 28
by Greg Satell

It’s no secret that the newspaper business is in very serious trouble.  That’s a problem for the companies that own newspapers and for the journalists who work for them, but it is also a problem for the rest of us.

Newspapers make up the foundation of the fourth estate that is essential to the functioning of our society.  As somebody who has first hand experience with societies that lack a well functioning free press, I can tell you it isn’t a pretty picture.

There is no problem with newspapers; it’s the newspaper business that needs to be fixed.

The Broken Newspaper Business Model

Historically, newspapers have been a fantastic business.  So much so, that the legendary investor Warren Buffet invested heavily in them (he still owns almost 20% of the Washington Post and a small slice of Gannet) and made a fortune.

The model worked like this:  Newspapers would subsidize print and distribution in order to get the widest possible audience.  They would earn enormous money selling advertising space and more than make up for the money they lost getting papers into people’s hands.

However, they didn’t sell just any kind of advertising, but largely classified advertising.  Anybody who wanted to advertise a job opening, sell a car or even find a lost cat would buy a text ad.  In actuality, newspapers made very little money from display ads that promoted brands.

Then came the internet, the most powerful direct marketing tool ever devised, which shattered the newspaper business model.  Classified advertising abandoned newspapers for the web.  It’s never coming back.

The Chinese Wall

Another crucial element to the business model was the “Chinese Wall” that separated editorial and business interests.  This was to insure that the reporting remained independent.  While it didn’t guarantee truth, whatever falsities that appeared would be come by honestly.

For editors, the Chinese Wall is sacred.  It represents much more than a business practice, it is a rallying cry; a reason for being.  The idea that commercial considerations have no place in editorial rooms is considered to be fundamental to journalistic integrity.

Unfortunately, loyalty to an idea rather than its purpose is a recipe for disaster.  The Chinese Wall concept needs to be updated.  Most importantly, this can be done without endangering journalistic integrity.

The Fundamental Difference between Print and Online Media Businesses

Print businesses sell space.  Electronic media manages inventory.

If a TV station sold all of their prime time, but not their fringe time dayparts they would go broke.  There are a certain amount of hours in the day and a limited amount of commercials per hour.  Whatever you don’t sell you lose.  Costs are up front while revenues are on the back end.

Print is different.  You can add or subtract space fairly easily.  Fewer ads mean fewer pages and lower costs.  More supply can be created in order to meet greater demand.

It is clear that for newspapers to be profitable, they will have to make the web profitable.  Online newspapers are an electronic medium.  The business needs to be run that way.

Managing Inventory Online

The value of inventory on the web varies widely.  Commodity pages, such as social media, go for about one dollar per thousand views (CPT).  Coveted placement on the home pages of valuable brands can go for as much as $100 CPT.

Advertisers don’t buy web pages, they buy campaigns.  They will gladly buy expensive inventory on a site like or and then use cheap commodity space to bring the campaign in for a price.

What’s crucial to understand here is that a media owner needs to have both.  If you only have cheap commodity space, it’s hard to make money (which is why very few social media sites are profitable).  On the other hand, if you only have prime inventory you’ll also go broke.

Managing an online advertising business is like running a mortgage bond business.  You don’t sell the inventory as one unit, but break it up into tranches that can be mixed and match by advertisers to create efficient campaign portfolios.

Newspapers prospered with a similar model, small amounts of premium inventory combined with large amounts of classifieds was essential a print version of the same thing.  Online though, they seem to have lost their way.

Rethinking the Chinese Wall

Print is static.  Ads placed next to content stay there.  Editors have a responsibility to make sure that there is no appearance of impropriety.

The web is dynamic.  An ad appears with a page view, not a specific article.  With less risk of undue commercial influence comes less responsibility.

Moreover, editorial and business sides need to work together in order to ensure the right inventory mix.  Pulitzer prizewinning content can generate not only high ad rates, but also crucial low cost inventory through reader discussion and other social components.  That doesn’t diminish the value of journalism, it enhances it.

Most of all, it creates a profitable business.  An efficient portfolio of prime and fringe inventory is what advertisers demand and that’s what online businesses need to deliver.

Stealing the “Free” Model

While more effective inventory management will help improve online revenues, print operations aren’t going away anytime soon.  Even with the diminished potential due to the online competition, traditional operations contribution to overhead is essential for maintaining a large and talented editorial staff that can competently report and comment on a broad range of topics.

One possible solution is to take a take a key insight from free newspaper business models.  These younger players expect to lose money from the daily newspaper, but they earn enormous margins on high margin supplements.

In effect, the idea is similar to the way newspapers used to lose money with the content heavy part of the paper but earned tons of money on classified sections.  The key difference being that the new emphasis needs to be on brand building display advertising rather than on direct response, where the internet reins supreme.

A More Integrative Approach

In order for a newspaper business of the future to work, functions need to be integrated at the implementational level.  Editorial, technology, user interface. sales and marketing all need to work together to create not only products that inform, entertain and inspire, but also the right ad  inventory mix.

Journalists can no longer create value on their own in blissful ignorance of business realities.  While they shouldn’t cater to specific advertising interests, they do need to create products that will build profit margins.  This has nothing to do with independence, but has everything to do with survival.

This isn’t a problem that can be solved in meetings, but must be overcome by building strong day-to-day working relationships.  Cross-functional teams need to be built and turf battles need to be banished.  There is no such thing as “healthy competition” between departments.  Everybody is going to have to work together.

Finally, as Rishad Tobaccowalla points out, for newspapers to thrive again there needs to be a fundamental shift in the way they are managed.  Sacred cows are a luxury that a starving business can not afford.

– Greg

11 Responses leave one →
  1. Bruce permalink
    April 29, 2010

    A workable business model is one thing, but delivering a product people want is also essential for success. (Duh!, but most of the lamestream media think their problems are only with the business model.) The right business model is not going to reverse the fortunes of the NY Times or CNN–although it might slow the decline a bit. New media has exposed the mainstream media as shills for one side in the political battle–and thus unreliable content–and viewership of both (plus WashPost, SF Chronicle, network news, etc) is in free fall. If you doubt this, explain the contra-examples of the Wall Street Journal (# of subscribers *increased* during the latest period) or FOXNews. Not only can are the WSJ print subscriber #s up, but they are one of the few papers that successfully charges for content. Crappy content can successfully compete against nothing, but it doesn’t do well against free. The business model changes described here won’t help. With quality (i.e. uncompromised) content, the business model changes likely will have a large impact.

  2. April 29, 2010


    Thanks for sharing your perspective.

    – Greg

  3. Bruce permalink
    April 30, 2010

    I meant that the business model changes you suggest *alone* won’t change the fortunes of most papers. They can follow your advice and *still* fail because that addresses only one of two very significant issues.

  4. May 1, 2010


    Very true. And you’re right, many papers have lost their commitment to excellence.

    – Greg

  5. May 6, 2010

    I couldn’t agree more with Bruce’s point that you have to deliver a product people want. However, I think the evidence he uses, while valid to support his point, is explained backwards. With the success of Gingrich’s decades-long campaign to train Republicans to use code words (“death tax” for inheritance tax, as one of the most memorable examples), conservatives began to create a large enough market for a biased media organization to succeed — and Fox has, brilliantly. Murdoch, of course, used the same tactic in England, where there’s a richer tradition of wear-your-politics-on-your-sleeve newspapers, but it’s been 100 years since blatant political bias worked in U.S. newspapers. (Not that NYT, etc. weren’t biased at all — just that they claimed to aspire to objective journalism. Fox and the politico Roger Ailes adopted the “fair and balanced” label on as an inside joke.)

    Nevertheless, the point remains: it’s not (just) the business model. Newspapers (and evening TV news) have been losing audience for decades as people have more and more choices — and have become more and more cynical about the institutions that newspapers have traditionally covered. Indeed, it’s partly the success of newspapers in showing up the corruption in politics (Spiro “nattering nabobs of negativism” Agnew’s paper bags of cash, Abscam, Nixon’s Watergate), and the military (Pentagon papers and $100 hammers) and in business and the church — that have decreased the public’s engagement in these institutions and therefore their interest in reading about them.

    Also, we moved to the suburbs and then from one town to another — breaking our interest in local news — and entering our houses through garage doors with remote controls so we never have to get out of our car where we might speak to neighbors– breaking down our connection to our neighbors…

    It’s true that,,, did help kill classifieds, and Walmart, Kmart and online shopping helped kill display advertising as department stores lost their purpose, while newspapers’ resistance to dealmaking led grocery stores to switch their ads from newspapers to mailed Advo stuff in the 1980s, long before the Web.

    Newspapers really failed to compete on nearly every front! And have resisted to the end the idea that people might not want what they have to offer any more. Am I pessimistic about their chances? Not really, since almost every medium has found a niche for itself after the new media arrived. It just may take another decade for its new shape–both content and business model– to emerge.

  6. Kieran Fagan permalink
    June 1, 2010

    There’s much good sense in this piece, but the writer has got a bit carried away.

    Phrases like “low cost inventory” bother me.

    Crap is crap, even if you use three words to describe it. Much reader-generated commentary is crap. OK, I’m a journalist but it bothers me to see tendentious nonsense and rants published alongside serious well researched stuff. And no, I don’t have an answer either. We need a better way of separating “fact” from opinion and its demented cousin rant.

    This contribution may be crap too, in which case someone should make a professional editorial decision to “spike” it.

  7. June 1, 2010


    There’s a lot of truth to what you say, but as a journalist you can take solace in the fact that a professional journalist’s output is worth 10-20 times what social media is. Moreover, that ration can be increase further by using social components to generate discussion (even if it’s crap discussion).

    So, if nothing else, you can rest assured that Journalist’s work still has real and even measurable value.

    – Greg

  8. June 25, 2010

    Bruce’s example of the Wall Street Journal makes an unintended point. It is growing, but it is also a vertical rather than general circulation model. A large percentage of Journal readers have their copy purchased for them by their employers. If it were aimed at a general rather than specialized audience, it would be falling too.

    The point is that prior to 1900, Journalism was much more rather than less political or targeted than it has been for the last century. As publishers decided to become more objective to attract a more general audience, there was a slow, but growing alienation from readers.

    There are three possible reactions to any story. The reader agrees, disagrees, or thinks the publication was too spineless to take a position. Two of those three outcomes breeds reader alienation.

    Somehow, the reader must have the ability to seamlessly choose what he or she is interested in reading about. Perhaps a setup routine sets a small file of metatags that mirrors reader interest. Those tags then access a database that produces an individualized newspaper for each reader.

    The advertiser already has the ability to define his reader more acutely than ever before. Perhaps publishers need to get out of the selling advertising in specific publication and instead sell advertising to groups of readers with matching characteristics.

    Perhaps the distribution piece of the puzzle is purchased from portal gateways or using certain pieces of hardware to certain applications that are hardware nonspecific.

    In any event, the notion that a general audience model can succeed is guaranteed to fail. People must be treated as individuals. The technology will give us the ability to accomplish a media that isn’t hated by two out of three readers by definition.

  9. June 25, 2010


    Thanks for your input.

    – Greg

  10. Zahid Hussain permalink
    July 29, 2010

    The media is going through an interesting phase of convergence of technologies and transition from traditional one way content delivery module to interactive content delivery module. The readers and viewers do not only receive the news and views they instantly post or share their coments and observations also.

    Newspapers will remain a source of information in geographic and demographic areas where there is access to new communication tools but lack of awareness of their multiple uses. However, news channels have made the task of reporters and journalists more challenging. They are confronted with the challenge to present news and views, article and analyses, stories and interviews which reflect the expertise in “exclusive content engineering,” i. e., in the morning, a week after or a month or two month after the story is carried by news channels, the newspapers and magazines present something new, something different and something that has not been presented or discussed. This is what I see missing in most of the news stories and articles in the newspapers.

    Thanks to social media, a large number of outstanding research scholars who did not have the access to or acceptability of the newspapers editors or news channels owners are now have access to serious readers and net surfers. Nobody expects a story like “How to save Newspapers” from newspaper owners, reporters and journalists. Only Greg can do that and that also on or through social media as an outstanding media expert. Now professionally and technically, an ordinary person like me also knows what is going on in media.

    What newspapers have to worry about is neither circulation nor ad revenue. What they have to worry about is their “content collection and presentation technique” based on indepth research. If they do not adjust themselves to the need of the time to focus on news gathering and views engineering techniques, they will find themselves in BIG…BIG…BIG trouble.

  11. July 30, 2010

    Great insight, Zahid, thanks for sharing!

    – Greg

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