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Feb. 10, 2011, noon

Jason E. Klein: Print newspapers have a place in a tablet-heavy future

Editor’s Note: In the increasingly competitive world of journalism, it’s easy to start declaring winners and losers. The reality will likely be somewhere in between; just as television didn’t kill radio, there’ll be room for lots of different kinds of news outlets in the Internet age.

So today, we’re going to feature two pieces by people whose medium of choice some have recently forecast to come up short: print newspapers (facing threats from tablets) and homegrown local news sites (facing threats from national networks).

Here, Jason E. Klein — president and CEO of the Newspaper National Network — argues that tablets aren’t going to sweep away the print newspaper business any time soon. NNN describes itself as the “primary nationwide sales and marketing network for newspapers, both print and digital” and counts nearly all American newspaper companies as shareholders.

In 1979, an English new wave band called The Buggles hit No. 1 on the singles chart in 16 different countries with its debut single “Video Killed the Radio Star.” Two years later, it was the first music video to be shown on the new network MTV just after midnight on August 1, 1981. After almost thirty years have passed, The Buggles are largely forgotten, and radio is still around.

The new rage is tablets, and many believe tablets mean the death of print, and especially newspapers. Not in 30 years, but very soon. Forrester CEO George Colony recently told a gathering of media leaders that tablets were “the nexus of media” and would overtake e-readers, and ultimately the web. Wow!

Even the most hard-core newspaper junkies envision a world when tablets replace print, but they see that world far off. Maybe thirty years or so, maybe a hundred, give or take. So George and the newspaper junkies see a similar fate — it’s just a question of timing. I’m not sure when George thinks the last tree will go down for newspaper pulp, but I’d guess that he thinks the tipping point is soon, in the next two to four years. Maybe he’ll read this and weigh in.

Let me define what I mean by tipping point. There are still almost 1,400 daily print U.S. newspapers. While circulation and revenue has contracted, very few print newspapers have gone out of business. Since 1980, the number of print newspapers has declined at a fairly steady rate of about one percent per year — far fewer than the number of magazines to fold over that time. At the moment, newspaper companies are coping with the changes to their business. To me, the tipping point is when print newspapers are shutting at a rapid clip and the number of papers drops by half from today. When will the tipping point be?

The most predictable underlying trend is generational. Print readers are dying off, and younger adults read print at half the rate of older adults. But people are living longer, and 60 is the new 50. If the aging of the population is the dominant driver of the demise of print, you can model the numbers to show that print will be around for 30 years, or 50, or more, and George will be wrong.

But print junkies are changing their habits, even if their anti-aging creams, whole grains, and yoga are halting the ageing process. If the tipping point is at hand, as George seems to believe, it will be driven by the conversion of print junkies to tablets and not by Gen Y.

Tablets — which right now really mean just the iPad — are a delightful way to read newspapers. Ask most anyone who is not a luddite, has an interest in current events, and is a regular iPad user and you’ll get the same response. I am in that camp; I even hugged my iPad last week, once. However, there are still many print junkies who see the advantages of print newspapers, and relish their time with newspapers spread out in front of them, a cup of coffee at their side, and a smile on their face. I am in that camp too. From a usage standpoint, each fills a need, and the formats each have reason to coexist. I am a happy camper in both worlds. Even in a pre-tablet world, paid print newspaper circulation is over 40 million at the same time as 100 million people can and do read the same newspaper content on the web — for free.

Keep in mind that the forecast for tablet penetration is explosive, even more so than expectations for MTV in 1981. Tablet prices will come down, and people will have tablets in different rooms, in different colors and flavors. Corning makes the glass for tablets (now that’s a business!) and recently forecast 180 million tablet sales by 2014. With all those tablets around, it’s reasonable to expect that millions of print junkies will hug their iPads and use their newspaper apps. This means opportunities for newspaper publishers for new advertising and subscription revenues. Unfortunately for publishers, newspaper content engines depend on the economics of print since digital dimes don’t replace print dollars.

Will the print junkies jump ship as tablets multiply like rabbits? Is it a foregone conclusion that the tipping point of 700 closed newspapers follows right after Corning sells 180 million sheets of glass?

I don’t think it has to be. Just as radio has found its niche, print has its place as well. As Clay Shirky notes in his recent book, citing research by Clay Christensen and Gerald Berstell, you need to ask: What job are customers hiring your product to do? Print fills a different need; the experience of handling and reading a print newspaper provides an intellectual and leisure experience that offers an alternative to the hours spent on digital devices. With its broadsheet format, print is an ideal vehicle for both scanning and in-depth reading, and reading a newspaper from front-to-back is a complete experience a tablet environment finds hard to duplicate. Our research with dual print/digital newspaper consumers also suggests that consumers still trust print more than digital. While the tablet has invaded print’s turf, it’s not filling all the needs that print does.

How newspapers are marketed will make an enormous difference. It will control (a) the rate at which print junkies adopt the tablet format of newspapers and (b) the rate print at which junkies abandon print. The net of those rates will determine if the tipping point is imminent or a generation away.

Newspaper publishers seem to be headed to a paid model for tablet newspapers. Publishers realize that if tablet newspapers are free, their adoption rate by print junkies is constrained only by tablet sales, which will go through the roof. If tablet newspapers are free, and print newspapers cost $30-40 per month and up, why buy the cow when you can get the milk for free? As the music industry learned, it’s very difficult to compete with free. Nonetheless, some publishers are planning for free tablet newspapers, banking that advertisers’ current infatuation with tablet ads — and premium pricing — continues, and hoping that the print junkies don’t notice.

Most newspaper marketers are sweating the details. To bundle or not to bundle? Pursue a clever mix of free and paid? Extract a premium price at first from early adopters, then lower — or price low at first to encourage adoption, then raise? Vary price by geography, or usage, or time of day, or news cycle? Some publishers favor a bundled pricing plan: one price for access across all formats. Apple is not making the choices any easier as it looks to embed the App Store in all transactions.

So will tablets kill the newspaper star? Tablets are clearly invading the world of newspaper print junkies with long term consequences. But from a consumer standpoint, print and tablet formats can coexist for as long as generational factors allow. Each fills a different set of needs. Print clearly has its core of enthusiasts. It’s up to the marketers — at newspaper publishing companies, and at Apple and other intermediaries — to find the right value equation for each format.

POSTED     Feb. 10, 2011, noon
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