The Future of Local Newspapers: Product vs Platform

Where did I put that Soap Box?

I've been involved with in the newspapers' online industry for almost 6 years now, and I believe this is the first time I'm publicly writing about my thoughts on the future of the local newspaper. I've remained quiet mostly because I believe there are already plenty of cooks in the proverbial kitchen trying to bake us a delicious newspaper success cake. However a recent API summit on the future of newspapers has prompted me to break with tradition and speak my mind.

The API has created a 5-step program for newspapers to build a successful online business model, and I personally believe they are almost entirely steps in the wrong direction. In their findings, API labels "deciding to give away their valuable online content" as the newspaper's original sin, whereas I would contest that trying to strong-arm a new technological medium into supporting an existing business model is the key culprit here.

A Product is an Extension of its Platform

Platforms create the foundation for products in the same way that a medium provides a canvas for an artist, and just like creating a masterful piece of art, the product and the platform must complement each other in order to have a successful business. For newspapers they are experiencing their platform shift from newsprint to the internet.

One of the API's 5 recommendations is to "create value by beginning to charge for it." To me this shows that they don't quite understand the internet as a product platform. The API believes that the product's value is constant regardless of its platform, and because people are willing to spend money on a newspaper's content in print, they will be willing to spend money on the same content online. I don't believe this to necessarily be the case at all.

Consider Flash-based games. There aren't many people out there who would spend money to play a small Flash-based game. Most websites offer games like this for free alongside banner advertising. Take for example this game, which appears to have been created in 2005 and distributed freely. I honestly can't picture anyone paying money to play this game in a web browser, however an almost identical game is behind one of the iPhone's greatest App Store success stories, where people paid $2.99 for an almost identical game. Simply put, the value for an almost identical product was completely altered by its platform.

The Internet as a Platform

While the internet appears to have near limitless possibilities and thus makes it very hard to define as a platform, at its very core the internet (or to be more specific a web browser browsing the internet) is all about the sharing of information. In fact, the very reason for creating the internet in the first place was to build a distributed repository of information where a single person could almost instantly communicate a message to thousands of people at the push of a few buttons. It's only in the past 10-15 years that the internet has exponentially grown and now serves as a storefront, a gaming platform, and even an entirely new way of communicating.

Remeber, on the internet information wants to be freely distributed and easily accessible, and if used properly, that single characteristic can result in your business model having exponential growth beyond your wildest dreams. Conversely, If used improperly, it can result in you being demonized by your customers. Back in the 90s, people didn't even know how they were going to monetize such a radical new concept. America Online had its paid niche-services and keyword-based premium content, while some websites looked into subscription based payment gateways. When the business model dust settled a bit, it was ultimately banner advertisements that was left standing tallest.

In retrospect, I believe the reason for this is simple. Unlike other revenue models, banner advertisements leverage the internet's core purpose: freely distributed and easily accessible information. Many of the other business models relied in keeping information proprietary and thus were ultimately defeated by the very foundations of their platform. Your product's platform is like a river, and your business is like a canoe. If you build your business around paddling against the river's current, when the thunderstorms come and that current picks up... you're going to lose.

The Newspaper Product and Business Model Today

When thinking about the Newspaper's current product and business model, I think it's important to realize that both were shaped by the platform (newsprint) over 100's of years. For example, It took just over a century of newspaper publishing before the first classified ad was printed in 1704 in the Boston News-Letter. Today display and classified advertisements are considered pillars of the newspaper business model, something many people believe it cannot function without.

Indeed newspapers have over time evolved dramatically from the initial concept, but one thing has remained constant throughout a majority of its existence: newspapers are about information, particularly local information. They may not have as much of a monopoly on that local information as they once did, but I firmly believe that no one is better positioned to take local information to the next level than newspaper publishers.

I believe that the newspaper is what it is today because it started with a core product (local information) distributed via a relatively static platform (disposable paper sheets), and over centuries have been evolving to better utilize the paper they're printed on, leading up to today where we've nearly perfected the model. As we move forward, we must keep this in mind: The internet is an entirely new platform, and the online product is going to have to be re-evolved on this new platform if it's to reach the same potential as the print product.

Where Do We Go From Here?

First I'd like to summarize some of the points I touched on earlier:

• The Internet is a platform best suited for making information widely accessible.
• Building a business model which relies on stifling the accessibility of information on the internet is doomed to fail.
• Local newspapers are better positioned than anyone at being the ultimate source of local information.
• Your product must complement its platform to thrive.

In the past, newspapers have tried their best to copy and paste their print product and its business model onto the internet, and have had limited success doing so. In my opinion, The first step to a brighter future is by re-creating the product in a way that best serves its customers while simultaneously leveraging the internet's strengths. Keeping the previously mentioned key points in mind, I've tried to come up with a simple business model that I believe fits that criteria

All content is free - The newspaper's website is built to be easily accessible to both search engines and users alike. Integrate as best as possible with Facebook, Twitter, Google, etc...

People still subscribe to it - UserVoice allows a website's users to recommend, vote on, and talk about new features for the website. Using a similar work flow, a subscription to the local newspaper would enable community members to recommend and vote up topics to be covered. This way instead of charging for access to community information, your giving people a role in selecting the content of the newspaper in exchange for their support. This could hypothetically be setup as a tiered subscription model:

• $5/mo - 5 votes and 1 article idea submission / month
• $10/mo - 15 votes and 2 article idea / month
• $20/mo - 50 votes and 5 article ideas / month

Newspapers build healthy communities - A study by Princeton university shows that newspapers perform an important function in their communities, and by supporting their local newspaper by subscribing, residents are supporting a healthier community. Help the communities you serve understand this.

Additional benefits to subscribers - On popular message boards, I've seen people spend up to $25/year just to have special colors next to their forum names. Honor those who take an active role in their community by giving them similar digital badges on their comments which sets them apart from other commentors. Consider giving them a free classified ad a month and other supplemental benefits for subscribing.

Classified ads are valuable - Craigslist may list classified ads for free, but that doesn't mean those ads lack value. Create a local classifieds site which presents data in a clean intuitive way, and you have a sell-able product. Paid advertisements have a degree of legitimacy that free ads can never obtain, and this can certainly be leveraged.

Keep banner ads non-intrusive and always on - Your subscribers are your most loyal visitors and thus the most sought-after by local advertisers. Don't be tempted to remove advertisements for paid subscribers, but at the same time make sure your ads don't in any way inhibit the user's experience. If you do have page interrupt or similar intrusive advertisements, allow paid subscribers to disable those, or better yet get rid of intrusive ads all together.

We'll Get There

Because newspapers do perform an important role in their communities, I'm truly confident we're going to figure this out. I may not be 100% on the mark here, but I'm happy to share my perspective with everyone. Even if you don't agree with my thoughts, I hope it proves useful to you in some way.

- JB