An Open Letter to Publishers: New Circumstances Demand New Business Models

MediaWorks Viewpoint: Rebecca McPheters

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Rebecca McPheters
Rebecca McPheters
The economy and the publishing industry are in crisis. Especially imperiled are publishers of news. Readers, advertisers and publishers are rightfully frightened. I am frightened too. I am most frightened by the prospect of a society in which well-funded and independent journalists who identify and explore important issues in depth, regardless of commercial implications, may no longer be around to provide the checks and balances which have for so long allowed our society and our democracy to flourish.

In better times, it made sound economic sense for publishers to shift toward business models where the bulk of the revenues came from advertisers. Now, the confluence of a looming recession and an increasing need to minimize the negative impact that each of us has on our environment may alter long-term purchase behaviors. I am not so pessimistic as to believe that ad revenues will shrivel up and go away -- especially since advertisers will have to work harder than ever to persuade consumers to buy their products. However, it is time for us to aggressively search for new and more readily sustainable business models that are less dependent on advertising and will protect the long-term viability of this essential industry.

Here are the key areas that I believe the industry needs to re-examine or explore:

Pay for content
The time has come for publishers to seriously rethink how they price their content -- be it distributed via newspapers, magazines or online. People value that for which they pay. Unfortunately, they have become conditioned to expect that most content will be available for free or at minimal cost. We need to start swinging the pendulum back toward business models where the value of content is recognized and monetized. Fortunately, there are a few publishers left who have retained their ability to monetize their content regardless of how it is delivered. They can provide much-needed role models.

Deductibility of subscriptions for news
News organizations need revenues to survive. It is ironic that losses in advertising revenues have disproportionately affected many of the journalistic institutions that contribute most to society. Like home ownership, consumption of news is an almost unmitigated good. Like education, it is essential to our form of government. Periodicals are exempt from sales tax in many states. Why shouldn't income-tax exemptions be given for paid subscriptions to publications and services that help maintain an informed electorate?
Rebecca McPheters is a former magazine publisher. Since 1997, she has been CEO of McPheters & Company. The company provides strategic planning and research for the media industry.

Share the work
Let's fight downsizing. Yes, the economy is in dire straits, but every person who is out of work further reduces the likelihood that those who still have jobs will get to keep them. Our economy is dependent on the flow of money -- and publishers, as well as those in other industries, should do their part to keep it flowing. Underemployment is better than unemployment. It is better to keep more people on the payroll and reduce their pay than to have layoffs; for example, instead of laying off 10% of the work force, a company can reduce compensation for all employees by 10%. This approach will not only save on severance, but represents an investment in the longer term. When the economy starts to recover, those organizations retaining a larger portion of their employee base will save the cost of finding and training new personnel. In the meantime, they will be able to provide both their audiences and their advertisers with better service.

Invest in and influence developing technology
The business of publishers is to deliver content for their audiences and audiences for their advertisers. The industry should not passively wait for the technology to be developed that will allow publishers to successfully deliver content integrated with advertising via alternative delivery systems such as electronic readers. Publishers need to be active participants in the development process to ensure that devices offer suitable functionality and that publishers' economic interests are protected.

E-readers have the potential to provide a broadly available delivery mechanism with minimal environmental impact, while also providing a way to monetize content. Current e-readers work well for books, but significantly less well for newspapers and magazines. They must be adapted in ways that facilitate publishers' ability to deliver advertising, as well as content.

What is good for General Motors may be good for the country. What is good for publishers and news organizations is certain to benefit everyone.
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