Those of us who live in New England and still actually subscribe to Boston Globe woke up Saturday morning to a banner headline on page 1: "Times Co. threatens to shut Globe, seeks $20m in cuts from unions." With newspapers around the country declaring bankruptcy or going out of print, the news really shouldn't have come as a surprise.
The Globe's and other newspapers' struggles have been widely reported. They are on the wrong end of a double-barreled shotgun: the years-long shift in consumer behavior toward the Internet and more recently, the devastating recession. To me there's a strong analogy here: the Internet (an "electronic printing press") is to newspapers what broadband (a new video delivery platform) is to broadcast TV networks. So what can the broadcast TV networks learn from the newspapers' travails so they avoid a similar fate? Here are 5 thoughts:
Keep the product in synch with the customer - it's cliche to say this, but at the root of every successful business is an ability to keep the product in synch with the customer's behavior. But as the world changes, staying in synch is often at odds with traditions, deeply-ingrained cultures and management's skills. The harsh reality is that there can be no sacred cows when it comes to the product. Just because something's always been done a certain way does not make it right.
For TV networks, I think the key lesson here is around program length. By tradition, programs have been 30 or 60 minutes. But online is about short-form content. Broadband delivery provides an opportunity to expand the networks' mission and capture new market share (as some are already doing). That doesn't mean giving up on 30 and 60 minute programs, but it does mean more actively diversifying their attention and resources.
Focus on monetization - If keeping the product right is job #1, then getting paid for it is certainly job #2. Newspapers have experimented widely with ad-supported and paid models, yet they've suffered their own "analog dollars, digital pennies" conundrum, with online users not generating comparable revenues per eyeball as the print edition. There are various explanations for why they've fallen short.
When I look at networks' current online efforts, I am increasingly concerned they're not going to succeed either. Their ad strategy for online programs is not aggressive enough (yes, as a viewer it hurts to say that) to make the online delivery model work. And on the execution side, as NBC.com recently showed, they're often not even capitalizing on what's readily available to them. Both need to change fast.
Partner effectively - Newspapers have grappled for years with how to defend classified categories like help wanted through industry partnerships. Now broadcast networks are rallying around Hulu (and possibly TV.com) as their own partnership vehicles. But these entities mustn't be forced to compete with one hand behind their back. They need rights to choice ad inventory to sell. They need to be free to pursue their own partnerships and not be curtailed as Hulu currently is with Boxee. And they need to be supported financially and strategically for the long run. Even then, none of this guarantees success.
Restructure costs aggressively - There's simply no escaping the fact that businesses with troubled top lines need to restructure their costs aggressively to stay viable. The key is getting ahead of this process, rather than waiting until the last possible minute. This isn't easy with unions and guaranteed jobs and managements that are well-paid. Broadcast TV networks face similar issues: strong guilds rightfully protective of their members' interests and executives who are perceived as overly compensated. Many in the industry have called out the fact that all of Hollywood needs to focus more on aligning costs with market realities. The day of reckoning is at hand.
Prepare to be radical - Painful as it is, sometimes there's no avoiding doing the radical. The free market can be quite ruthless. If Craig Newmark chooses to run Craigslist as a virtual non-profit, then anyone looking to make money out of classifieds is going to get hit. If the Huffington Post can make a business out of repackaging others' content under its own headlines and excelling at SEO then original newsgathering is threatened. And if Google can support YouTube's operating losses, then it will be around to continue to take video market share and attention away from incumbents. These are game-changing forces; the responses to them need to be equally radical.
While Americans have never watched more TV than they do today, there are storm clouds all around the broadcast networks. Hopefully they're studying the newspapers' demise and taking away the right lessons.
What do you think? Post a comment now.
Topics: The Boston Globe