The Future of Newspapers and "Free"

Malcolm Gladwell's review of Chris Anderson's new book "Free" set off a big blogosphere discussion the past couple days. Which I guess is what you want when you are trying to sell a book. Gladwell didn't write a very favorable review, and Anderson responded today by saying Gladwell didn't understand the book. The majority of Gladwell's review was discussing the newspaper industry and how "free" business model isn't a business model at all.

Many others weighed in with comments here, here, here, here and probably a million others. I don't want to delve into the argument about whether "free" is the future, but I do want to make a point about the newspaper business that I didn't see mentioned in the discussion.

It isn't a big secret that newspapers are struggling, but the wrong root cause is often pointed to. Newspaper readership has been rapidly declining, due in part to the internet and the greatly increased availability of information. However, the big problem is that newspapers are spending lots of money to compete in areas they have no chance at winning. No business can survive if they attempt to compete in markets in which they have inherent disadvantages.

Consider three common sections of any newspaper: Technology, Sports and Arts. The Tech section is competing with a myriad of tech-focused content providers such as CNET, Wired, IGN, etc. The Sports section is competing with ESPN, Sports Illustrated, Rivals, etc. The Arts section competes with Amazon, RottenTomatoes.com, etc. All these competitors are focused on a specific, defined market while a newspaper is trying to provide this information to an undefined readership. There is a reason why there isn't a company out there that makes PCs, cars and clothes...the newspapers are spreading themselves too thin.

If I'm in charge of a newspaper tomorrow, the first thing I would evaluate is where we are providing value. Where is the competetion the thinnest? Think op-ed pages from star pundits and investigative journalism. How many times during the Presidential campaign was the news cycle driven by these two sources? I would then form partnerships with these other content providers that specialize in certain market segments and aggregate that data to a broader population. Finally, I would re-evaluate my advertising models to leverage new technologies: a website that millions of people visit and are registered with has inherent value that needs to be capitalized on.

Sounds simple doesn't it?