Emerging from robust print businesses, many publishers naturally fell into the habit of allowing their legacy print revenues to subsidize their online businesses, investing surpluses from print in online as part of a transitional phase — an incremental investment in the future. At the same time, the pressures to provide online at a lower price, or even free, has been matched by pressures within the print enterprise to lower prices in order to maintain sales — a scissors of pricing woes. Add in the wildcard of social media, which makes it harder to attract visitors to the navigational abundance of your site and related advertising and cross-selling opportunities, in addition to the expense of running even an acceptable Web site with mature email, e-commerce, and content hosting technologies — well, I’ll forgive you if you feel a little daunted and depressed.
A recent essay by Raju Narisetti from Forbes.com, appearing in the June 3 print issue of Forbes India, hits on many of these challenges from the perspective of the Washington Post, where Narisetti is managing editor. With refreshing candor, Narisetti reflects on many of the factors newspapers are struggling with, not the least of which is much greater readership creating far less revenue:
. . . in 2010, 29.3 million readers read some 270 million pages of Post journalism each month, a record. . . . So, what’s the big deal you might ask? Well, for starters, all 35,000 of the now former print subscribers paid us nearly $275 a year to consume the Washington Post. Our online readers pay zero.
He goes on to quickly analyze why the New York Times and Wall Street Journal are anomalies in the online news space, identify the black swan that social media represents for Web sites (“Readers do seem to be willing to pay for mobile engaging experiences and interaction with much of the same content that they are reluctant to pay for at a Web site”), and tackles the dilemma of creating expensive infrastructure to offer low price points to customers (“making the return on investment a clear challenge”).
The real challenge Narisetti sees runs deeper than arguments about free vs. paid, metered vs. open, or subscriptions vs. advertising:
. . . what the prolonged and knee-jerk debate about free vs. paid . . . shows is that we still have what led us here in the first place: An imagination deficit. Rather than apply an ‘all or nothing’ approach focused, perhaps wrongly, on our Web sites, we should be willing to make creative bets on our business model. . . . It is time we figured out how to make it easier, more engaging, and useful. Despite their soaring valuations, Facebook, LinkedIn, and Twitter don’t create much, if anything at all, by way of original content. And, for that matter, neither do Google or YouTube. They simply make it easy, useful, and engaging to their audiences. These are incredibly disruptive times and one thing is clear to me: There isn’t time or room for incrementalism . . .
For publishers, it’s hard to not indulge in incrementalism. Each company creates its own availability error, leading us to think our current staff contains the only experts we need, that the audience we have is as big as the one that’s possible, and that the processes and products on offer delimit those the market will respond to. Non-incremental approaches require new expertise, explore new domains, reach new audiences, create new products, and involve new ways to thinking. For the Washington Post Companies, you can look to Kaplan, the education company it acquired in the 1980s, which has since become a revenue behemoth, dwarfing the newspaper in revenues and allowing the company to cross-subsidize its newspaper business. Interestingly, Narisetti doesn’t mention this — whether owing to mental or corporate compartmentalization, which can also drive incrementalism.
For STM publishers, finding new lines of business with academic, mission, and long-term viability will mean doing more than incrementally polishing and honing what they have. It will mean knowing when enough is enough regarding what is, making investments in what will be, and having the nerve to be both agile and committed.