Digging Into the Abernathy/Foster Report
The latest attempt to summarize the challenges facing newspapers and recommend a course of action is out, with the alarm bells being sounded this time by veteran media executive Penelope Muse Abernathy and former McKinsey director Richard Foster.
The study (linked from Bill Mitchell’s overview as a PDF) struck me as a fairly familiar overview, though the writer/editor in me appreciated that it’s admirably succinct, and written with a welcome bite. (And I laughed out loud at the examination of Hindu and Judeo-Christian demises.) Certainly Abernathy and Foster find the right targets and hit them hard.
For instance, they nail the industry’s major disadvantages in the digital era:
- the high cost of printing and distribution
- the loss of geographically protected market dominance
- the loss of high-margin advertising to online competitors
And their proposed plan of action seems sound as well:
- shed legacy costs as quickly as possible
- recreate community online in an effort to regain pricing leverage
- build new online ad revenue streams
For me the best section of the plan is the one concerned with community, particularly how it’s defined and how it should be approached. A theme of the report is that news organizations keep using new digital tools in an effort to repurpose old models, when they ought to be reinventing things from the ground up. For instance, Abernathy and Foster note that pre-digital newspapers aggregated content and defined community largely based on geographical and political boundaries, but the new aggregators — search engines and commerce sites — do so around special interests. That simple, essential shift may be obvious to Web-business types, but I think it’s a blind spot for newspaper veterans.
Their advice: Rebuild newspapers around specialized audiences and communities (including hyperlocal), instead of continuing to try and reach a single mass audience or community. Start with niche audiences that papers are already serving. Become their aggregators, and customize stories for them — for example, instead of writing one big story about the health-care debate, write different versions tailored for those different specialty audiences. Such reinvented papers, they say, might be able to charge advertisers a premium to reach those communities, and charge customers for unique information.
An interesting point I hadn’t encountered before is that Abernathy and Foster say there’s a precedent for this — magazines responded to the threat posed by television by migrating to serve specialized niches or interest groups and charging advertisers a premium to reach them. Newspapers, on the other hand, have largely reached for eyeballs, putting themselves in competition with better aggregators such as Google.
There are some rather searing quotes in the report. Here’s one: “Unless news organizations simultaneously invest in re-imagining and re-inventing the online edition, there is no transformation of the traditional newspaper and the industry dies with its aging loyal readers, who pay an ever-increasing price to receive the ‘last’ printed copy of the newspaper.”
Ouch. And the report is nicely short on Pollyanna-ism, as this warning makes plain: “[a]n enterprising executive may accomplish all three goals … and not achieve the operating margins typical of news companies in the last quarter of the 20th century, since those profit levels were largely the result of being de facto geographic monopolies.”
Abernathy and Foster are sympathetic to companies that know they need to change, but find those changes difficult to implement. As an example of how to escape that trap, they cite Intel, and its change from making DRAMs to microprocessors. That difficult transition was finally made, they write, when Gordon Moore and Andy Grove asked themselves a brutally simple question: “If we got kicked out and the board brought in a new CEO, what do you think he would do?”
It’s a good question. Here’s hoping it gets newspaper executives nodding, and causes them to take action.