A Series of Niches

April 27th, 2009

Newspapers are dying. Print subscribers are down, print advertising revenue has declined precipitously, and there is no reason to think either of these trends will change.

The newspaper’s current model — focus on print, provide general news, and monetize it through an ever-increasing number of mass-market, obtrusive ads — may as well be labeled dead.

Newspapers themselves are not important. Newspapers are a medium, but their value is in the reporting and analysis. Newspapers provide an important balance to cable news and news web sites, which provide immediate, but shallow, coverage of events happening right now. Newspapers move slower, gather more information, and provide more depth to stories.

Cable news does not do this. They thrive on breaking news, on shock, on blustering commentators who like to stir the pot without adding anything substantive. No in-depth reporting on subjects, or well-reasoned thoughts — just noise.

Newspapers are a creation of an entirely different time period, where cable TV, the Internet, the phone, even electricity, did not exist. People then had no way of knowing what was happening in the world around them. People needed to know general news — what big events were happening, and newspapers were an incredibly effective way to deliver it.

This is no longer the case. When you can find general news on the phone in your pocket or the television across the room, printing tens of thousands of newspapers each day which, once read, will be thrown away, is monumentally wasteful.

Not only is it wasteful, but the content is a commodity. Because we can get general news from almost anywhere for free, there is little reason to subscribe to a newspaper.

So newspapers are providing an important function packaged in a dead business model. But we need newspapers’ primary value, in-depth reporting — so how can they survive?

Eliminate the Newspaper

It pains my heart to say, as I have a special love for reading a newspaper every morning, but the first thing newspaper organizations need to do is eliminate the newspaper. The newspaper is, simply, an inferior medium compared to the Internet. It is incredibly costly, wasteful, and perhaps worse, much more rigid than the web in what can be displayed.

Eliminating the newspaper is the first step. The second is to streamline the organization. Reorganize the company so it does not depend upon people working in cubicles — work primarily over the web. Sell the buildings made unnecessary by this reorganization. This eliminates costs, and makes the company more agile and effective, because the company can easily hire new writers and journalists who live thousands of miles away from company headquarters, or even on a different continent. The company can quickly pull in new talent as necessary.

The last part is important. Although newspapers will move slower than others in doing reporting, they must be an organization that can shift goals and focus quickly.

It is in the Details

Newspapers will survive by re-focusing on what they do best: extensive reporting on very specific subjects. Newspapers should drastically reduce current event reporting, and immerse themselves in the details.

Do not just report on the re-emergence of piracy in the Gulf of Aden; report on its root causes in lawless-Somalia, what groups are involved, and how they operate. Provide an extensive narrative for the reader, so they can understand why piracy is happening now, what is causing it, and what can be done to stop it. Give the reader a nuanced and substantive understanding of the topic.

Do not just report on Pixar’s new film and quarterly earnings; report on Pixar’s production process, how they promote creativity through building layout and giving ownership to directors. Allow the reader to understand why Pixar is so successful.

They should leave breaking news and shallow journalism to the cable news networks and other news organizations, because there is little competitive advantage to be gained in it. It is a race to the bottom to see who can provide the quickest and cheapest reporting, and while integral, it is impossible to build a business around being cheaper than everyone else when the commodity is already free.

Newspapers must re-invent themselves as the authoritative source on very specific subjects, because this utilizes their biggest advantage: quality and detailed journalism. If a current newspaper organization does not have gifted journalists who love diving into stories and finding every detail, then they better remedy that fast. If they do not, they will not survive very much longer.

Quality and depth of reporting, rather than speed of reporting; insight and understanding of a topic, rather than shock. These should be the new points of emphasis: quality, depth, insight, understanding.

They should select a few narrowly-defined subjects, and create the absolute best writing on the subject. If I am trying to save a news organization, I would want to be the only place people go to when they want reporting and analysis on the technology industry, or local news in Chicago, or politics, or whatever else.

The reason is because people are, less and less, interested in the general and more interested in the specific. People certainly fell into their niches in the past, but the economics of targeting a niche were wrong. It was difficult to justify employing reporters and writers, and paying rent on a building and printing newspapers or magazines when your target market was in the hundreds of thousands at best rather than the millions. There was no way to turn a profit.

So these very niche publications did not exist in a large way, and we were left with general news coverage. But the Internet makes targeting niches not only possible, but profitable, too. Printing, delivery and overhead costs are almost non-existant compared to costs associated with print, and finding those people is infinitely easier.

Because it is now easier, and more publications exist to serve specific niche subjects, people have shifted their focus to them. And here is an important part for newspaper organizations: serving niches can more easily be monetized.

Advertising and Monetizing

Online advertising is broken. Web sites place ads to the side of content, and readers learn to ignore it; so web sites put ads in the header, and readers learn to ignore it; so web sites put ads in-line with content, and readers learn to scroll past it; so web sites use video ads and create ones that overflow into the content, so readers stop reading.

Web sites using advertising have been attacking the wrong problem. The problem is not that readers do not see the ads. The problem is that the ads are absolute shit, and for absolute shit-products, so readers ignore them.

By devising ever-newer and even more intrusive ads, web sites are driving readers even farther away. Either they will adapt and begin ignoring the new technique, too, or they will stop reading the web site’s content.

Here is where focusing on very specific subjects creates another advantage. By targeting specific subjects, and thus very defined readership, the re-invented newspaper will be able to do something incredible: use ads that are relevant and interesting to the reader.

It is pretty simple. If your readers are creative professionals, then you should place ads for creative software and related products. If your readership is politically-active, then you should place ads for well-written books and other web sites like FiveThirtyEight.com.

The key is to respect the reader, and see ads as an additional service rather than just a means of revenue. The reinvented newspaper must work feverishly to insure the quality of these ads. Unless the ads are for products and services that are genuinely good and interesting, then they may as well use the punch-the-monkey ads used now. They must really believe in the products and services being advertised.

No flashing ads, no video, no ads which overflow into the content — just well-designed, subtle ads for good products.

The Deck and Fusion Ads have pioneered this for creative professionals. From their work, we know this works; I never click on ads on major news websites, but I routinely click on ads on Daring Fireball. Even more powerfully, when Tweetie for Mac was released with ads supplies by Fusion, many users sung their praises for the ads on Twitter. They love both the subtleness of the ads, and the products advertised. Some have bought Tweetie for Mac (which removes the ads) and enabled the ads anyway, because they enjoy them so much.

This proves that when ads are well-designed, subtle and for good products, people will not only click on them, but will like them.

Most companies may not be willing to put so much effort into vetting ads for their web site, and for good reason; their core focus is reporting and analysis, not finding good advertisers. But this opens the door for more ad networks similar to the Deck and Fusion Ads, which will provide quality ads for specific niches.

Imagine a world where advertising companies are not to be despised, but loved, because their model is no longer to serve up as many ads as possible for terrible products, but rather to identify good products and services in their niche, and place them on good web sites. It would be a much better world than what we have now.

I see other means of generating revenue, too. Eliminating the newspaper and magazine as the primary medium for their content does not mean they cannot offer a print edition — but it should be positioned as a premium service for their readers, finely-designed with only the best content from the time period, and likely not printed more than once a quarter.

I do not think all newspaper companies can (or should) follow this route. Some will survive, because they are already really good at what they do — the New York Times and the Wall Street Journal, for example.

But for many other smaller newspaper companies, and for future news organizations, re-focusing on specific subjects, and dedicating themselves to providing the best reporting and analysis on those subjects available, will be an excellent way to succeed.

Selling a commodity is an excellent way to fail, but creating a high-quality product is a great way to succeed. They should choose the latter.