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Archive for January 23rd, 2015

Jay Rosen

Jay Rosen

I commend to your attention Jay Rosen’s blog post suggesting that news companies take the “full stack” approach to a media niche and Ken Doctor’s post examining newspapers’ chances of finally starting to grow revenue just enough to keep pace with inflation.

The posts don’t seem related. Jay looks primarily at digital startups, using legacy media mostly for contrast. He starts out talking about a “complete, end-to-end product or service that bypasses existing companies,” citing a post by Chris Dixon about the software industry.

But mostly Jay focuses on a single point of the full stack, suggesting that news organizations need “a full stack intellectually speaking.” I’d love to see Jay expand on that full intellectual stack, but he zeroes in further, on the very identity of news organizations: “That means defining the beat the way no one else defines it, and coming up with a mission that differs from the industry standard.”

It’s a thoughtful post and I recommend reading it. I’m going to take it in a different direction.

Ken Doctor

Ken Doctor

But first, a quick overview of Ken’s piece, which I also recommend. No one is taking a more detailed look at upheaval in the news business, particularly the newspaper business, than Ken is. This piece asks when (and whether) the newspaper industry can level out after being in a revenue free fall since 2007. Ken’s idea of leveling out is not just to stop losing revenue, but to keep pace with inflation, which Ken projects at 1 percent for 2015 (after a 2.5 percent loss for 2013; 2014 numbers aren’t out yet).

Ken speculates about the chances for growth in 2014 and 2015 in three areas: reader revenue, digital advertising and the “third stream,” an eclectic grouping of revenue sources such as commercial printing, events and marketing services (spoiler alert: He’s not optimistic).

So here’s where I stretch to relate (I hope) Jay’s full-stack thinking to Ken’s analysis of the newspaper industry’s chances to grow.

Let’s start with the point that newspapers were never a full-stack operation. We were at the mercy of newsprint companies, which many times in my career threw budgets into havoc with huge price increases. (I was always puzzled why we never developed a futures market in newsprint, letting companies lock in low prices and/or hedge against price increases.)

On the other end, we didn’t control delivery, turning that over to boys and girls (for the first part of my career) and adults (more later in my career) who were independent contractors. I remember feeling guilty when we would go to court to fight (successfully) against worker comp claims filed by teen-agers injured delivering our papers. When I was at the Kansas City Star and Times, we actually went to the Supreme Court in a battle with our carriers over who controlled our routes, then (after we lost) paid them millions of dollars to buy the routes back. And then we hired the carriers back as independent contractors. We wanted to own the routes, but we still didn’t want to deliver the papers.

I never was thinking about the full-stack metephor until reading Jay’s post, but much of my career, especially the past decade, I have been calling for newspapers to pursue a full-stack approach. In the 1980s (it might have been 1990), I unsuccessfully urged colleagues at the Kansas City Star and Times to follow the lead of cable TV companies and sell modems to customers of the StarText program we were testing, which offered stories to subscribers the night before they would appear in the newspaper. In those days before the World Wide Web, most computer owners (including me) didn’t have modems, and I thought we would have a much bigger audience by offering to sell and install modems for customers, rolling the cost into the subscription price, rather than just selling our service to those with modems. I don’t know whether my approach would have made StarText successful (it wasn’t), but it was my start of thinking about a bigger stack than newspaper executives were thinking of.

From 2005 to 2008, working on the American Press Institute’s Newspaper Next project, which might not have been the full stack, but it called newspapers to think bigger about how they did business. N2 drew a lot of interest and several companies tried different recommendations of N2, but no one implemented the full stack of N2 recommendations.

In 2009, I published my Blueprint for the Complete Community Connection, which was as full a stack of business ideas for a newspaper (or other community news organization) as I’ve seen from anyone. Again, the idea generated interest, but no one tried to implement it.

If that stack wasn’t quite full, I added to it later in 2009 with my suggestion for mobile-first strategy, in 2010 with my call  commissioned obituaries and other life stories and in 2011 with a long list of revenue ideas for newspaper companies.

In two recent jobs, I argued unsuccessfully that we needed stronger technology development operations, both to develop better tools for executing on a full-stack approach and because I was convinced that technology solutions for media companies following our paths would be another revenue important revenue source.

I’m not saying my ideas would have saved newspapers or would have been the path to prosperity for digital startups. I’m sure some of them would have failed.

What I am saying is that Ken’s discussion of potential revenue streams for newspapers is nowhere near the full stack that Jay is advocating or that news companies need to consider.

I may have been unduly pessimistic about the potential for revenue from subscriptions or paywalls. But I was exactly right in 2013 when I said new revenue streams hold more promise for newspapers than paywalls. Ken, who used to be a paywall optimist, now warns: “Don’t expect much growth in circulation revenue for full-year 2014” (he and the Newspaper Association of America both lump digital subscription revenue with print subscriptions). The private numbers I have seen on paywall revenue agree with his outlook.

Ken is more optimistic (but still kind of gloomy) about that “third stream,” which I was blogging about in 2013: “Growth in marketing services should be real, and ramping up, but it’s unlikely to throw off the big dollars needed for the up turnaround. The other new revenue sources are good, but won’t grow a lot.”

Doctor (and NAA, whose numbers he’s using) have a narrow view of that third stream. A full-stack company should pursue such revenue streams as transactions, events, commissioned content, technology solutions and far more. Ken’s right that the current third-stream efforts of newspaper companies won’t grow a lot. But you need a full stack of revenue sources beyond advertising and subscriptions. The sideline efforts we’ve seen so far aren’t nearly enough, but a full stack has great potential.

Ken is right in being pessimistic about newspaper companies’ chances of growing digital advertising revenue: “The industry may be lucky just to stay even in digital ads in 2014.”

Newspaper companies have done a lousy job of selling digital ads, as Ken notes: Only $3.42 billion in 2013, most of it bundled with print ads. Newspapers’ digital ads grew only 1.5 percent in 2013 and Ken doesn’t expect them to do much better (or even as good) in 2014 or 2015.

But digital advertising represents a huge opportunity for a full-stack media company: projected at $52.8 billion this year and growing at 13 percent annually, Doctor says. A full-stack company can pursue digital advertising more aggressively and more successfully than the abject failure of newspaper companies.

It may be too late for newspapers. I don’t anticipate anyone investing what it would take to pursue a full-stack strategy. But I think a full-stack strategy, correctly identifying your niche and mission, as Jay suggests, can be the path to success for digital startups or for legacy media willing to adapt to survive.

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