What happens when atoms are turned into bits?
Hurricane Dorian is looking increasingly dangerous and could impact the northern Bahamas or Florida as a Major Hurricane (Category 3+) as early as this weekend. My thoughts to my friends in those areas. Get your preparations finalised today!
On to the update:
After the announcement that the long-standing newspaper of the FWI was in real financial difficulty, I thought I’d take a look at the business model and why it failed, what can be done and how it should be a cautionary tale for newspapers throughout the Caribbean. As ever, this is my opinion and you’re more than welcome to challenge and discuss directly with me. Join me on the Slack discussion group.
France-Antilles in serious trouble
From the Martinique site of franceinfo.tv (the national television news chain) dated the 12/08/2019:
L’équilibre financier misé sur 3 ans lors de la reprise du groupe en juin 2017, n’est donc pas à l’ordre du jour. La nouvelle propriétaire du journal, Aude-Jacques Ruettard (patronne de la holding AJR Participations et petite-fille par alliance du défunt magnat de la presse Robert Hersant), s'était aussi engagée à maintenir l'emploi de tous les salariés "au moins durant deux ans".
Translated:
The financial bet over 3 years, when the group was taken over in June 2017, is therefore not on the agenda. The newspaper's new owner, Aude-Jacques Ruettard (patron of the holding company AJR Participations and granddaughter by marriage of the late media mogul Robert Hersant), had also pledged to keep the employment of all employees “for at least two years."
The reality is, however, far from that, and sadly, there are currently 282 employees that are set to lose their jobs throughout France’s three Départements in the Caribbean, Guadeloupe, Guyane and Martinique.
On the 2nd of August a tender was issued to find a buyer for the failing media business, and its close date is in less than two weeks. Currently there are no offers on the table and there may not be any serious long-term buyers either. For what its worth, I think they’ll find a buyer, but it’ll be a short-term, utterly-ignorant-of-the-reality-in-the-digital-world benefactor that will continue to (try to) sell what is essentially free information printed on dead trees.
What got France-Antilles here
Three major factors have led to the current situation; ads have become easy and cheap to set up using the online platforms — with feedback obtained from the online platforms out-manoeuvring what a static mass-market ads could ever achieve —, the distribution of bits rather than atoms became essentially free and the targeting and the quality of information naturally decreases with abundance.
Easier, better and cheaper will always win out over difficult, inferior and expensive. The ad market for newspapers was completely disrupted and was only noticed by the industry when it was too late.
These two images tell us everything we need to know:
Source: mondaynote.com
Throughout the Caribbean, this scenario is likely to play out many times in many territories, if it's not already happening, and the experience in the FWI should be a warning sign to those not yet affected.
Unnecessary Costs
In printed newspapers, there are many fixed costs that render the finances difficult to balance. Printing presses cost phenomenal amounts of money and require trained and dedicated staff to operate them. When you are competing against virtually free digital distribution to get the same information out to your audience, these extra costs are a major burden, and I would suggest, unnecessary now.
Not only that, but the costs of the raw materials required to physically print — i.e., paper and ink — add to the operating budget in a non-inconsequential way. Paper, by the way, is not getting cheaper either due to environmental concerns. Ink is expensive and it is also toxic. Atmospheric fumes from inks are noxious and large costs associated with the handling, processing, usage and disposal of ink are apparent.
Then there is distribution. Without going into any detail, it’s obvious to conclude that distribution of reams of paper has associated costs. Those costs being elevated by the fact that, as a newspaper and the importance on getting to the outlet early in the morning, entails higher-than-standard-hours wages.
I was astounded when I learnt that France-Antilles invested in a brand new, huge printing press, at a cost of multiple millions — money better spent on restructuring (see below) and building out digital-first products (see below). Not only did they encumber their financials with this burden, but France-Antilles decided to redesign the layout of the physical newspaper and massively advertise it over several weeks, with “sneak preview” adverts that hinted at big changes a coming. Rearranging the deck chairs on the Titanic in my view.
The Flawed Business Model
“Information wants to be free” a phrase attributed to Stewart Brand who founded the Whole Earth Catalog in the 1960’s. He argues that technology could be liberating instead of oppressing and at the first Hackers Conference in 1984, he apparently told Steve Wozniak (one of the three co-founders of Apple):
On the one hand information wants to be expensive, because it's so valuable. The right information in the right place just changes your life. On the other hand, information wants to be free, because the cost of getting it out is getting lower and lower all the time. So you have these two fighting against each other.
The prescient point of his argument was that information’s cost was getting “lower and lower” and that is the situation most publications find themselves in today. Much of the information provided in newspapers today is widely available online from multiple services, and here’s the sting in the tail, for free in many cases.
But what is most important in the statement above, is the fact that he identifies that information has value and is hence, “expensive”, and it is precisely here that most newspapers fail in their strategy. Much of the information is provided in “filler” articles that have been scraped up from wire services such as AP (Associated Press). These articles have literally no value virtue of the fact that every news outlet prints what is, for all intents and purposes, the same article.
Newspapers are a business built on assumptions from a bygone era. Firstly, the sales and advertising arms of the newspapers require a lot of staff. There is Sales, there’s Account Management, there’s Graphic Design and of course Operations Management. Those are huge fixed cost to deal with for just a pretty advertisement, and only profitable for premium advertising (of which there is less and less as outlined above). Newspapers also operate on the assumption that the bundle of services, is in and of itself, valuable. That was true, but is no longer relevant for readers.
Couple this with the very real fact that the Business Model of the newspaper business took a serious hit when Facebook and Google cornered the market for advertising, with very grave effects on the price and availability of advertisers willing to spend on printed ads. The protected environmental factors have prevented newspapers from listening to reality. I find it all the more surprising given that here, in the FWI, there is no real competition, which proves the point about external factors playing the central role in killing these businesses.
What would be a more appropriate Business Model?
It’s true that I am writing this from the point of view of a concerned party, but I believe that there is scope for local newspapers in the Caribbean to develop sustainable and profitable businesses, but the change in mindset is stopping them from seeing this. The successful publication and business model should address the flaws I’ve outlined above; reduce unnecessary costs and provide information that is valuable.
Firstly, today’s technologies allow publications to remove and reduce much of the fixed costs associated with sale and distribution (digital). Wordpress with a Memberful and Stripe integration is enough for all but the biggest of publications. Tag on Social Media Managers such as Buffer, and the job to be done (promotion) is made that much easier.
In order to provide valuable information, newspapers need to stop publishing widely available drivel they scraped from the wire. In practice that means no international news, virtually no national news and god forbid, lifestyle and fluff articles. They have their place, but it is not in newspapers. Writers and editors need to be set free to write in-depth and interesting articles with a local impact, and impact that is felt by the readers. That is, the readers need to feel a sense of connection and sharing of feelings with the newspaper. Focusing on the feelings generated by users and not filling pages with regurgitated wire articles would go a long way in developing this relationship.
This is not a traditional newspaper business model. That is because the traditional business model is dead, or at the very least, dying.
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