Newspapers: It’s not a revenue problem, it’s a culture problem

The Project for Excellence in Journalism at the Pew Research Center has come out with a substantial new report on the efforts of newspapers both large and small to grow their digital businesses, and — not surprisingly, perhaps — the results are all over the map. Although on average the news is rather bleak, with more than $7 in print revenue lost for every $1 produced by digital, some papers have managed to generate some strong growth, while others have lost revenue on their digital operations. And if there is one thing that comes through loud and clear when it comes to explaining this discrepancy, it is that culture matters more than anything.
The Pew report notes that the study involved 38 newspapers of various sizes belonging to six different chains, and was based on detailed internal data on revenue and other criteria, as well as in-depth interviews with executives and managers from more than a dozen of the papers surveyed. The research center said that, of the newspapers it looked at, seven had suffered declines in digital revenue over the previous year — in one case, a decline of more than 35 percent — while two other papers saw increases of 50 percent and 60 percent in their digital ad revenues (the newspaper that saw 60 percent growth also boosted its print ad revenue by 8 percent). As the report put it:

These variances suggest that the future of newspapers, rather than being determined entirely by sweeping trends, can be significantly affected by company culture and management — even at papers of quite different sizes.

A culture of inertia, and a lack of appetite for risk

And what is this cultural problem? According to Pew, several of the senior managers who were interviewed described a culture of “inertia” that made change difficult to achieve within the paper, and another executive said bluntly that “there’s no doubt we’re going out of business right now.” According to this executive, no one wanted to take the risk of trying to change or innovate because of a fear that they would not succeed — and then their company would fail anyway, and they would be blamed for it. “There might be a 90-percent chance you’ll accelerate the decline if you gamble and a 10-percent chance you might find the new model,” this executive said, and “no one is willing to take that chance.”
My paidContent colleague Staci Kramer is right that this particular Pew study left out some information that might be worthwhile in looking at newspapers and their revenue-generating abilities — such as any data on paywalls, which more and more papers seem to be implementing in an attempt to boost their bottom lines. But on the cultural issue, the results of the survey definitely ring true, at least based on my experiences in the newspaper business over the past couple of decades. It’s also the reason why some media veterans say they have given up on newspapers.

That sense of inertia and the fear of failure are two of the biggest stumbling blocks holding some newspaper chains back from disrupting their own businesses instead of standing by and watching while others disrupt them. This is what media consultant Anil Dash of Expert Labs and Activate Media means when he says that more media companies need to “think like startups.” Startups have no legacy business to disrupt, so they don’t have to worry about the impact on their bottom line (since most don’t have one of those either), and the best are not afraid of failure. If anything, they seek it out, so they can learn from it.

Put the digital types in charge, and start stacking those dimes

This is also why one of the single biggest efforts at disrupting the traditional newspaper business from inside has come from Journal-Register Co. under former CEO John Paton, after he took over management of the company in 2010. The previous version of the company went bankrupt and effectively ceased to exist — so Paton had a virtual blank slate when it came to trying new ideas, and likely a somewhat desperate board and investors as well. So the CEO promoted an aggressive “digital first” approach that involved outsourcing whatever possible in order to cut costs, and “stacking the digital dimes” in order to make up for print revenue losses (something Paton says is starting to pay off).
It’s no coincidence that in a number of presentations about his approach, Paton — who has since become CEO of the Media News Group newspaper chain — talks about the issues that newspapers have with their cultures, and how in his view one of the biggest changes that most traditional papers have to take is to “put the digital types in charge of everything.”┬áThis is likely not a comfortable message for many news executives to hear, but it comes closer to a solution than the road taken by many, which is to put newspaper managers in charge of digital. In a lot of cases, this is like putting the chickens in charge of managing the fox.
It’s refreshing to see some newspapers experiment with their own disruption, as the Washington Post has via projects such as its news-recommendation engine Trove and its Facebook social-reading app. The paper also just hired Rob Malda — better known as Commander Taco, the founder of pioneering online community Slashdot — as chief strategist for its internal WaPo Labs unit. But for too many newspapers, disrupting their own culture is something that just doesn’t come naturally, and that could literally mean the difference between life and death.
Post and thumbnail images courtesy of Flickr users Tony Margiocchi and Kevin Lim.