The business of news

I recently had a fascinating conversation with a UK newspaper executive about the current state and probable future of newspapers in the UK. His way of understanding the industry is an interesting one: Two things are happening simultaneously to the newspaper business, and together these arguably represent the biggest challenge to the way receive and consume newspapers in the long and storied history of printed news. The implications, I think, are of interest to owners, producers and consumers of newspapers alike.

The first of the changes he sees is that the commercial businesses that support newspapers are becoming "vertically detached". He described how, in the Fleet Street sense, newspapers would have been vertically organized in a physcial way: printing presses in the basement, production and pre-press on the ground floor, a newsroom with reporters and editors on the 1st floor, advertising and marketing above them, and a board of management sitting at the top, so that copy could literally "flow down" and out the door to trucks waiting to distribute the papers to newsagents all over the city. This would have paralleled the business ownership model: whoever sat at the top owned the building and all the printing equipment, paid salaries to people to go and gather the news and sell advertising, and might have even owned the paper mills that brought in the raw newsprint and the trucks that carted the finished folded newspapers away.

This model is no longer required, though, and is fast becoming obsolete. "If we were setting up a newspaper from scratch today, there is no way we'd even consider this model, but that's what a lot of us are dealing with today," he tells me. At any step of the way there are now specialist who complete part of the chain as contractors and allow newspapers owners and publishers to focus on other things. Don't want to own bulky presses and have to keep engineers on staff to maintain them? Use a contract printer or find the spare capacity on magazine presses or the like. Don't want to keep an expensive staff of foreign correspondents or recognizable op-ed writers? Use copy from one of the many agencies (AFP, AP, PA, etc) or pick-and-choose syndicated columnists from a Chinese menu to create exactly the editorial you want. Ditto for ad sales -- any number of agencies will take the problem of buying and selling ad space off your hands, for a price. Publishers and newspaper owners, then, have the challenge to either do all these tasks as well as the specialists, or else re-shape their business to allow contractors to help finish the task.

The other major change in the news industry, my executive told me, is how the news is also "horizontally un-bundling". What he means by that is this: what we think of as a 'newspaper' is really a combination of quite a few products -- a 'news' product (Tony Blair said today...), an 'information' product (tonight at 8pm on Channel 4...), a 'prestige' product ("I read the Financial Times because I have an important, powerful job, and I want people on the train to recognize that"), an entertainment product, a job-search product, a property-sales product, a motor-sales product, and so forth.

Consumers, and most especially rich consumers as we have in the UK, Ireland and the US, now have the ability to obtain only the portions they want from other sources, and are no longer forced to buy the entire newspaper to get the pieces they actually want. Many, of course, still do, but almost none are obliged to. For the 'news' bits, 24-hour TV, radio and Internet sites often do a much better job of getting the facts out quickly. Mobile phones, always-on broadband, digital TV and countless other little digital innovations are chipping away at newspapers' hold on accessing raw information. Google alone has changed the way people look for information, and the full effects have not been realized. For the other products like job opportunites and property sales, there are now specialized, focused online services that allow more interactivity and better targeting than a mass market newspaper.

These two changes together, this "vertical detachment" and "horizontal un-bundling", together are sending the newspaper business literally into bits, or in his words, "atomization". The challenge for executives like him is to keep enough pieces together to keep the business running while at the same time keep the end product interesting enough for thousands and thousands of people to buy each day. It will be a combination of adapting to the times and doing more online services, adapting to The Times and keeping the physcial format sharp and interesting, enticing readers with quality editorial and snazzy promotion, and fighting tooth and nail to keep precious property and recruitment advertising away from competitiors of all stripes.