Saving newspapers: Decapitalize printing
Papers' suffering began before the current economic crisis. We already occupied the front seats as the roller coaster started down this twisty slope. Sweeping global deleveraging makes quite the thrill ride, like an out-of-body experience during your own massive heart attack.
Ignore for a moment the unique characteristics of newspapers in today's competitive media/information landscape. Think only of what any high-fixed-cost, capital-intensive business would do -- should do -- in a deleveraging economy:
- Cut fixed costs.
- Don't buy depreciating assets you could rent, lease or otherwise pay-as-you-go. (Not to be crass, but this includes human expertise.)
- Reduce capital as you deleverage. Sell big iron to help pay down debt.
I am no economist, but I know that much.
Strategies laid out by industry leaders to survive the current economy seem Darwinist: Adapt or die. Most publishers and holding company executives I know believe this, and want to adapt. Trouble is, Darwinism depends on chance and time. Newspaper survival strategies all attempt to rush the process well ahead of natural selection, and predict how to adapt.
(Climbing to higher altitude ... With respect to all personal beliefs, please suspend them hypothetically for a moment to imagine we all evolved from some single-cell organism simmered from primordial soup. That organism had no awareness of the many, diversified adaptations its kind would take between then and now. We humans -- highest on today's food chain -- may be smarter, more self-aware, than that cell. Yet even the most evolved species on this planet has almost no more ability to forecast which adaptations, or mutations, will survive and which will fail. For that matter, if you fall more in the intelligent design camp, you still realize we know almost nothing about our future that would help us adapt meaningfully for it. OK, back to conversational cruising altitude ...)
Newspaper holding companies already went through rounds of fixed cost cuts the past two years -- not so much adaptation as bunkering. Some local newspapers already cut the operating processes required to print and distribute newspapers to the point where those operations could fail more often, more completely. In fatter days, newspapers refined these processes to unprecedented levels of reliability and quality control, but now those levels are too expensive.
It costs plenty to own and operate a high-speed newspaper press. You can cut only so much and still operate one successfully. That leads strategists to the first big forecasting question:
Will local news and information, delivered in a printed form, inevitably die?
If you guess yes, then strategic planning must focus on pace and timing of decline, and how to decapitalize print operations to zero at a pace that coincides with the overall print death spiral. (Note this conversation so far does not include Internet/online/interactive mutations, only the fate of printed local news and information. Online evolution frankly just clouds the crystal ball for print.)
If you guess no, or truly believe no, then strategic planning must focus on the second big forecasting question:
Will local news and information, delivered in a printed form, survive without fundamental changes?
If you guess yes on this one, I commend you for your optimism and wish you well, but expect you to be shown wrong soon. As such, the rest of us can jump to the third big forecasting question:
How must printed local news and information adapt, or mutate, to survive?
Though I just burned through a lot of bytes explaining why we can't be sure of answers to this question, I'll offer some ideas anyway:
Digitize printing: At some point, many American newspapers will, or should, cross a line where it would be more practical and cost-efficient to sell off high-speed newspaper presses and replace them with digital print-on-demand units spread in distribution centers across their local markets. Fortunately, newspapers with different business models in emerging international economies still want presses, so good used printing equipment fetches more than salvage rates.
It still costs more per copy, above a fairly low press run threshold, to roll out periodicals on digital printers than high-speed offset printing presses. Those lines, however, cross at a higher press run threshold every year. As it stands, the digital process generates far less waste, offers far more configuration options (paper size, folding/binding, color) and allows more granular tailoring of the output right down to different contents in each copy.
Watch Dan Pacheco's Printcasting developments closely. My read: This project attempts to cut cost, waste and inflexibility out of producing printed periodicals, while adding customization and speed to market for publishers of most any scale. I don't know if it will work -- Pacheco doesn't either, I'd guess. But it represents a creative, logical and valiant effort, with realistic chances of success.
Any such conversion becomes expensive for an incumbent local newspaper that owns "big iron" presses. In that case, you can't just stop what you're doing and sell the big presses, then use the money for the digital printers. Holding company CFOs probably would line up to remind me many companies cannot service current debt, let alone float more for the transition. Junk bonds, anyone?
I imagine, therefore, that Pacheco's experiments and others like them may favor new entrants to local economies for printed news and information. Incumbent holding companies might be able to free up funds for capital investment by consolidating printing if they are fortunate enough to have local newspapers clustered geographically in ways that would support regional printing centers. One press rolling off 10 newspapers in a 100-mile radius saves money vs. 10 presses, or even five, printing the same titles. That short-term efficiency might release funds to invest in digital printing that could, eventually, replace even the remaining central press.
Of course, that approach presumes you have to buy the digital equipment outright. You don't. Through direct leasing or partnerships with digital print shops (e.g., FedEx Office, nee Kinko's, and its kind) you could try before you buy, or skip the buy step altogether until and unless it makes financial sense to own depreciable capital.
Customization: Digital printing allows much more granular customization of the printed products. "The Daily Me" becomes more tangible in print vs. just pointing locals to a me-too version of My Yahoo on the Web.
(Reminder: One time only, we're stipulating that the future for print newspapers is not inextricably tied to interactive services, and focusing only on ways print might survive. If you think everything's going online no matter what, this whole line of reasoning probably means nothing to you, and that's OK. Thanks for stopping by, and please avail yourself of the 99 out of 100 posts here that focus on interactive media instead of print.)
I recommended print product customization years ago to cater to niche interests, but in broad strokes that seem crude by comparison to what we could do now. I did not presume at that point that we would decapitalize printing and shift to more nimble digital equipment. But at that time, though we all feared it, no one really forecast the steep slope of today's decline in business fundamentals.
Frequency: Moving printing from a central facility to distributed digital presses means shorter transportation distances -- in some cases, no transportation at all. Eventually digital printing could achieve a price point where it makes sense to replace dumb boxes at single copy points of sale with on-demand printers. People buying a paper at the nearest convenience store would always get an up-to-the-minute edition that way.
In that world, online represents instant plus archival information on demand; single copy represents the freshest news "snapshots" with print portability, fidelity and disposability; and home delivered print still represents the old tradeoff of doorstep convenience vs. information time lag. Even for old-school home delivery, you shorten the time lag by moving good-quality printing out closer to the customers. But I guess home delivery might not survive -- might not need to -- even if the rest of this digital printing franchise succeeds.
I wrote most of this post last night, then decided to sleep on it before posting. I'm glad I waited.
Newspaper industry executives soon will convene at MediaXChange, the newly coined uberconference and trade show put on by the Newspaper Association of America. I'm going, so I started receiving direct mail solicitations from vendors coming to this show a week or so ago. This morning, I received a vendor postcard that was obviously digitally printed, and customized with a headline and marketing copy that included my name several times.
Though the vendor's products run a bit out of scope for my "day job," the custom digital printing made me take notice. Print still has power when the beholder finds it relevant.
I would humbly suggest that executives in attendance at MediaXChange walk the floor hunting for ways to use this same approach for our own venerable direct-distribution products: printed newspapers. The adaptations I noodled through here may not be enough, or even in the correct direction, to save print. But print won't last anyway as long as we're chained to those expensive, depreciating, big-iron presses.