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Let the bad ideas flow

Submitted by yelvington on March 25, 2009 - 1:32pm

With all the hyperbolic, ill-sourced and often self-serving End of Days coverage of the newspaper industry lately, we shouldn't be surprised to see any number of really bad ideas surfacing -- and I don't just mean paywalls.

I say: Let the bad ideas flow. Sometimes bad ideas spark good ones. Just don't drink the Kool-Aid.

Here's one that might smell good but bear poison: Maryland Sen. Ben Cardin's proposal to let newspapers dodge taxes by declaring themselves to be nonprofit charities.

If you believe that the core problem of newspapers is that they have owners who demand profits, then you might think this is a good thing. But that's not the core problem. Owners may have been responsible for creating the current panic by borrowing too heavily to acquire more newspapers, but ownership ultimately is a minor issue in the long-term picture. If you're bleeding millions of dollars a month, a little help with your taxes isn't going to keep your obsolete metro monster alive.

The poison in Cardin's elixir? It effectively puts the government in the position of licensing these institutions. It attempts to define newspapers in some ways that are bound to backfire, and such newspapers would be banned from publishing opinion, a dangerous slope. Robert Picard has a thorough dissection of the proposal.

Another deadly idea is buried inside Silicon Alley Insider's 10 Newspapers That Will Survive The Apocalypse, which quotes "an investor who has already plunked millions into the industry and is in the process of spending much more."

This one is convinced that the path forward is "cutting newsroom bloat and R&D costs" and "stop 'spending on trying to find their way out' and 'instead run their current good business.' ... He says local papers should have a Web site run by two people that links to international and national news and keeps all local content behind a pay wall or off the Internet entirely."

That's just sad: Dining off the carcass of a rotting business.

Newspapers got where they are today by underinvesting in R&D, not overinvesting. The debt load didn't come from building websites. Newspaper companies borrowed to buy more of the past, not to build a future.

Comments

That investor represents everything that is wrong with the industry: throwing away long-term investment for short-term profit results. Like gutting your news staff. Underinvesting in web, as you say.

Steve, once again, I can't agree more. It is clear that non profit is not a solution for newspapers bleeding money. Non-profit or not they still have to break even. On top of that, media executives take the advertising model for granted. They should not. I wrote about it here, if you're interested: http://mediacafe.blogspot.com/2009/03/why-is-it-going-to-be-increasingly-more.html

Agree, though you have said it better. Costco, for example, is better positioned for the future because it has always focused on long-term gains. Walmart has scramble the past few years to dump its short-term gains in favor of long-term.

I agree, Cardin' tax relief proposal, as well-meaning as it is, has problems. But putting "the government in the position of licensing these institutions" is not one of them. In his Unboxed column in The New York Times, Steve Lohr looks at how business thinker look at business history. The March 28 (2009) column, called How Crisis Shapes the Corporate Model. He’s not talking about newspapers here, but all business. But, that includes newspapers’ as well. Lohr talks to John Hagel III, the co-director of the Deloitte Center for Edge Innovation, who says, looking at what has happened in past downturns, we can expect to see companies forced to go beyond simple cost-cutting to take a hard look at the economics of their businesses. So far, that’s, “Duh!” Keep reading. Most companies, Hagle says, are actually bundles of three different businesses: 1) infrastructure management, 2) product and service development and commercialization, and 3) customer relations. This certainly applies to most daily newspaper operations. So, Steve, it’s not about how much newspapers invest today. It’s how they invest their resources. The current crisis, Mr. Hagel says, opens the door to “an unbundling of the corporation” to achieve greater efficiency and profitability. I’ll let other offer their insights into infrastructure, which does need major changes. Not what is said about new product development: It is “not one that lends itself not to size, but to small creative teams, and thus is the most difficult for large corporations.” Mr. Hagel doesn’t point to a media company for a good example. (Which one would you pick? There are, indeed, some.) Instead, he cites “Procter & Gamble as a big company that understands the benefits of unbundling. It has set a goal of getting half its new-product innovations from outside the company, through licensing and collaboration with partners. Another point in the article: Again, “corporations will be regarded more as social organizations, whose obligations extend well beyond Wall Street, according to Rakesh Khurana, a professor at Harvard Business School.” He suggests that businesses will be marketing themselves as “pillars of their communities and pillars of American manufacturing, not purely economic entities.” Question: Who in the world is in the best position to help local, regional and national firms send out the message they are “pillars of their communities and pillars of American manufacturing, not purely economic entities.” Newspapers? If not, why now? This is what I am working on.