NEWSPAPER GROUP WILL FUND IDEAS FOR GOOD OF INDUSTRY

Newspaper Next Project Wants to Steer Business to Digital Shores

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WASHINGTON (AdAge.com) -- The Newspaper Next project is asking newspaper companies today to submit unusual, potentially profitable ideas that could advance the industry, and plans to help selected publishers try their ideas with free support services and external consultants.
The project to find solutions to transitioning newspapers from print to digital platforms is underwritten by the American Press Institute, which will produce a report late this year and begin testing its conclusions at a daily newspaper by early 2007.

The proposal caps a two-day meeting of nearly 100 newspaper executives held yesterday and today at The National Press Club here, part of a $2 million, yearlong stab to grab onto some momentum in adopting digital platforms. The project, underwritten by the American Press Institute, will produce a report late this year and begin testing its conclusions at a daily newspaper by early 2007.

“News organizations have to continue their traditional businesses while innovating,” said Thomas J. Kent, deputy managing editor-news services, The Associated Press, during a break yesterday. “That takes a very ambidextrous company.”

Dexterous or handcuffed?
But it is unclear what Newspaper Next can deliver. Dexterity is not usually a quality one associates with newspaper companies, handcuffed as they are to the need to maintain a system that cranks out a daily paper. Observers of the business more often see visions of executives trying to rearrange deck chairs on the Titanic -- only to find that Craig Newmark, founder of classified Web site Craigslist, already used them to ferry all the passengers away.

General apprehension has hung in the air at least since Knight Ridder Co. Chairman-CEO Tony Ridder worried aloud about online classifieds in 1995. That sense warmed into fear during the first dot-com era, particularly after Belo Corp. papers like The Dallas Morning News spent a year failing to convince readers that CueCat bar-code readers were fun accessories for ads.

The fear is now as familiar as terror alerts from Washington, but industry executives these days seem to draw some enthusiasm from the new Net expansion.

While daily paid circulation is flat or falling, for one thing, newspaper audiences online are continuing to grow. Many attendees said papers should expand and reshape their Web operations to establish positions as hubs for community instead of gatekeepers between information and readers.

90% of revenue comes from print
At the same time, executives at the Newspaper Next meeting made clear they couldn't and wouldn't forget the printing presses. “We’re still getting 90% of our revenue from print,” said William Dean Singleton, vice chairman-CEO, MediaNews Group, which operates 40 daily newspapers in nine states.

The meeting devoted most of yesterday morning to other industries that have faced down, or been destroyed by, the arrival of “disruptive innovation.” Many established businesses with high volume and high margins -- like newspapers -- struggle to respond when someone comes along -- like Mr. Newmark -- to deliver people services for less and at smaller margins, said Clayton M. Christensen, a professor at the Harvard Business School and a co-founder at Innosight, the consulting firm retained by the press institute for the project.

“The bigger you get, the less interesting are the small opportunities that will be the big opportunities of tomorrow,” Mr. Christensen said.

But some responses work better than others, he said, citing Kodak as one example. That company initially spent more than a billion dollars trying to develop digital cameras that matched the quality of film, then realized that the resulting products cost so much that their market was very limited.

Meanwhile, digital imaging applications built into toys and mobile phones seduced millions of consumers. Once Kodak decided to go after the small, innovative end of the market, it was able to snare a piece of the digital market.

Targeting non-customers
Companies also need to identify jobs that consumers want done that existing products don't address, Mr. Christensen said. Instead of just struggling to keep existing customers, companies should seek whole realms of non-customers to target. “The market is a heck of a lot bigger than you think it is than when you size it by product category,” he said.

Theory gets a bad rap, as the organizers admitted, but the discussion seemed to encourage some attendees. “It’s inspiring to see that you can innovate your way out of challenges,” said Mr. Kent, the A.P. executive. “Solid business thinking combined with solid journalism can bring real renewal to the business.”

Others remained cautious, like Jonathan Landman, deputy managing editor, The New York Times, and a member of the Newspaper Next steering committee. “You go into these things with a certain level of skepticism,” he said. “But you’ve got to keep your ears open.”

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