Old Media versus New Media
Cry or Take Action
by Adam Hartung
Do you lament “the way things used to be?” I remember my parents using that phrase. Now I often hear my peers. And it really worries me. Success requires constant growth, and when I hear business leaders talking about “the way things used to be” I fear they are unwilling to advance with market shifts.
For five years newspaper publishers have been lamenting the good old days, when advertisers had little choice but to pay high rates for display or classified ads. Newspaper publishers complain that on-line ads are too inexpensive, and thus unable to cover the costs of “legitimate” journalism. While they’ve watched revenues decline, almost none have done anything to effectively develop robust on-line businesses that can offer quality journalism for the future. Instead, most are cutting costs, reducing output and using bankruptcy protection to stay alive (such as Tribune Corporation.) Even as more and more readers shift toward the digital environment.
Source: Business Insider 5/18/10
While most of the “major” newspapers (including Tribune-owned LA Times) have been trying to preserve their print business (Defend & Extend it) HuffingtonPost.com has gone out and built a following. There’s little doubt that with the last 3 years trajectory, HuffingtonPost.com will soon be the largest site. And reports are that HuffingtonPost.com is profitable.
In 2006 the CFO at LA Times told me he couldn’t divert more resources to his web department. He felt it would be jeopardize to the print business. “After all,” he said “you don’t think that the future of news will be bloggers do you?” Clearly, he was unprepared for the kind of model Arianna Huffington was building – and the kind of readership HuffingtonPost.com could create.
Defend & Extend management always “feels” right. It seems like the smart thing to try and preserve the old Success Formula, usually by cutting costs and increasing focus on primary revenue sources. But in reality, this further blinds the organization to market shifts and makes it more vulnerable to disaster. While NewsCorp and others are busy trying to think like newspapers, emerging news market competitors are developing entirely different models that attract customers – and make a profit.
That’s why it is so important to use future scenarios to drive planning (not old products and customers) while passionately studying competitors. Talking to advertisers gave these publishers no insight as to how to compete, however had they spent more time watching HuffingtonPost.com, and other on-line sites, they might well have used Disruptions to change their investment models – pushing more resources to the web business. And had they set up dedicated White Space teams not constrained by old Lock-ins to traditional revenue models and goals of “avoiding advertiser cannibalization” they might very well have evolved to a more effective Success Formula necessary for competing on the internet into 2020.
Adam Hartung, author of “Create Marketplace Disruption“, is a Faculty and Board member of the Lake Forest Graduate School of Management, Managing Partner of Spark Partners, and writes for “Forbes” and the “Journal for Innovation Science.”