MoyerWallace Communications

Considering the critical success factors and other key issues that were laid out in Part I of our analysis, we propose three strategic options that have been developed through our research, observations, and conversations with people in the community. This week’s post will only detail our first option.

1) Phase-out print products and move to an online only business model

In 1829, when ——– was first introduced it was efficient, economical, and profitable to print and deliver the news to peoples’ doorsteps. A lot has changed since then and this method is no longer efficient, nor economical. Peoples’ doorsteps have become virtual and print represents a vital, yet shrinking market. The 55 and older age group is currently the mainstay of the print version; however, once the baby boomer generation begins to shrink and the next generation hits the 55 and older age group, this market will no longer be relevant. News is just as important, if not more, than in 1829; however, how most people consume their news, especially younger consumers, has changed drastically.

We propose evolving to a daily Express version while keeping a full print run for the Sunday editions. This option is a cost-saving strategy. Part of our reason for offering this option is evidenced by the rapidly increasing costs to print and deliver newspapers. Paper stock has recently increased by almost 20% and it is only a matter of time before gas prices again spike to $4 per gallon. According to The Krugman Paradox, operating costs can be reduced as much as 35% if the print product is eliminated.

Beyond the operational and distribution issues involved is the fact that peoples’ consumption of news is constrained due to increased professional and personal commitments. Offering an Express edition will provide a quick snapshot of top news and special-interest stories. If so inclined, readers will be able to go online to read the full-articles in order to gain a more comprehensive understanding of the material.

In addition, offering the Express editions either by email or print will provide another outlet to develop awareness for the PMH brand and to possibly target more specific audiences. Advertising space can also be sold in the Express edition, but the current rates will have to be revised. Finally, there is the potential to capture the non-reader, such as busy mothers, youth audiences, and non-native English speakers.

Shifting to an online focus will still involve a learning curve for many readers. This gradual phase-out is not an overnight solution; however, as this switch begins to take effect, cost-savings will be realized through reduced production costs. Part of these savings should be devoted to increasing online journalistic endeavors by focusing on what matters to subscribers. Two areas that are extremely relevant in this region are healthcare and investigative reporting, both in the public and private sectors. Creating niche markets online will be much easier because space is not limited. As WSJ and The Washington Post have shown, people will pay for good journalistic writing, whether it’s in print or online.

There are a couple of drawbacks to implementing this solution. First, assuming that The Krugman Paradox is real and there is an absence of online advertising innovations, pursuing an online-only growth model will make it difficult for ———- to achieve economic sustainability. According to our calculations, the break-even could require as much as a twenty-six fold increase in unique monthly visitors. Second, we run the risk of alienating the current consumer base. Beyond this, there is the potential for national competitors to penetrate the local market for the daily print paper. While we feel that this risk is somewhat mitigated by the fact that the Express edition will have a local focus it is nevertheless an issue that needs to be addressed if this option is pursued.

Tags: custom publishing research and development, newspaper publishing, publishing

This entry was posted on Sunday, February 21st, 2010 at 15:24 and is filed under Case Analysis: Newspaper's Business Model. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.