Larry Kramer. USA Today. Seems like an odd couple.
Since Gannett announced in mid-May that it was turning over its once-prized, now-flagging flagship property to highly respected web entrepreneur Larry Kramer, the news has been a head scratcher in digital news circles. We’ve seen John Paton ask Kramer the “Why” question and a (Staci) Kramer vs. (Larry) Kramer interview plumbing the same territory. Of course, Larry is so far keeping his strategies, smartly, to himself, making the right noises about brand and storytelling.
Why would conservative Gannett offer him the job? Why would Kramer take the job? Does he know something somebody else doesn’t and have a way of turning around USA Today’s fortunes? Can the operation once ridiculed for its colorful re-envisioning of a daily newspaper, then respected for its innovation, make the transition to the fast-onrushing digital future?
Those are just the first questions that tumble to mind. In fact, the future of USA Today — still America’s top circulation newspaper — offers all kinds of resonance for basic survival questions of the press. It’s unique in some ways, certainly, but in its quest for a future, the issues Kramer has now taken on mirror the those of the wider industry here and in the developed world.
As one observer put it, Kramer’s good for the job because he has nothing to lose. (In an interesting parallel, I suggested that as one of the criteria for the The New York Times’ next CEO; in fact, the Gannett hiring of newspaper veteran/Internet exec Kramer is the profile for what we would think to be the Times’ best candidates.) Indeed, this is America’s largest print paper, and it is owned by the country’s biggest (and world’s second biggest) newspaper company, and one in marginally better financial shape than its peers.
Kramer inherits a widely known brand — maybe not really “The Nation’s Newspaper,” but in its hotel and airport ubiquity, a mark seared into the minds of many.
Yet it’s oddly a mid-market, Middle America medium with Flyover Country warmth. Being stuck in the middle isn’t a good place in the niche-loving web.
It’s not in the same league as the Times, the Journal, or the FT, nor of TMZ, the Daily Mail, or HuffPo. It’s got a personality, but not one of this era. With America’s politics badly divided, its let’s all-put-together can-do community spirit seems a vestige of an era, maybe USA Today’s golden one. On the tablet, News Corp.’s The Daily has taken square aim at a new kind of paying mid-market, marrying the old (daily “newspaper” edition) with the new (highly visual tablet-first presentation), and in so doing has so far proven that that market looks small.
USA Today may claim to be America’s newspaper, but in reality it’s neither here nor there. Unlike the rest of Gannett’s news properties, it has no local turf to try to protect or leverage. It’s in digital competition with everyone and anyone.
Ask smart observers of the U.S. scene, which I did, and you hear three priorities, over and over again: brand, mobile, and travel. So as we look at the newsonomics of USA Today, let’s think about possible alchemy of those three, plus a few other questions. A USA Today Top 10 feature seems in order, so here goes:
USA Today, like all newspapers, is less than it once was. Consider:
Overall, it’s in the same boat as the rest of the newspaper industry, though it’s leaking a bit more rapidly in revenue.
USA Today, like all of Gannett’s newspaper properties, have heard many digital-first, reorganize-for-the-future exhortations. Yet talk to people on the inside, and they’ll tell you this transition is still early. Larry Kramer has already been in and out of his new lair, though he hasn’t formally arrived. One early message: The newsroom needs to get real about being digital first. Job one: Moving beyond a five-day-a-week, print-centric thinking that hangs on even as many digital initiatives have moved forward. Kramer has a key hire to make: the next USA Today editor. John Hillkirk moved on from the position in November; who will Kramer convince that his own quixotic quest is worth joining?
Since its inception in 1982, USA Today execs have zealously guarded its independence from dominating Gannett corporate “integration.” USA Today, they said, by its nature of being distinctly different than Gannett’s now-82 community dailies, needed to chart a different course. In its business and editorial activities, it managed to do so for a long time. Now, especially with print advertising in freefall for Gannett and others, we’ve seen real consolidation in business lines, and that has reined in USA Today’s independent resources.
For a change agent like Kramer — who we can expect was promised fairly free rein — his relative independence from the mothership is a key factor in his chance to find turnaround success. Especially in technology, product development, marketing, and sales (and that covers a lot of territory), he’ll need to be able to get stuff done without the additional hurdles “matrixed” organizations often pose.
Gannett, traditionally, is quite an insular company — promoting from within is part of its DNA. It has brought in CNN veteran David Payne to run digital for the company, and several of its recent top hires in marketing, travel, and sports have come from outside. Gannett leadership deserves credit for breaking out of its traditional mold. Still, cultures above, below, and parallel to Kramer won’t budge easily. When push comes to shove, will new Gannett CEO Gracia Martore provide enough support? Even if she does, will the wider culture succumb to Kramer’s charms? Will Kramer and Payne be sympatico, as they both chart digital futures?
The problem: While USA Today had pioneered aggressive (red) sports coverage, consumer-friendly (purple) lifestyle coverage, and your finance (green) business/money coverage, it has failed to build leading positions in those in the digital world. Leadership has talked a good game of being multiplatform and was innovative early on, yet it doesn’t own much.
In sports, where the new USA Today Sports Media Group is newly energized, it faces ESPN, the leagues themselves, Comcast, and Fox. In business, it’s Marketwatch (built out by Larry Kramer), CNN Money, CNBC, Bloomberg, the Journal, and many more. In entertainment, everyone from People magazine to Flixster has taken audience that USA Today might have claimed. In news, CNN, MSNBC, Fox, Huffington Post, Politico, and a host of others can claim similar digital turf.
USA Today is the original on-the-go newspaper. In fact, founder (and then Gannett CEO) Al Neuharth’s vision was serving the more than 1 million Americans in transit 30 years ago. Half of its circulation, at least, has been hotel-oriented over the years. Further, it tries to serve the traveler with strong travel consumer content. Yet it’s not the travel go-to product that readers — especially tablet and smartphones — think of first as we chart their journeys. Some Gannett veterans point to missed opportunities — the company looked at, but passed up opportunities to buy into both TripAdvisor and Kayak and wonder how it missed the travel boat.
Building on the 2011 startup of the USA Today Travel Media Group, Kramer has already strongly signaled the priority of travel, appointing two new travel execs, one from Expedia and one from Rand McNally, within a week of his own announcement as publisher. Those execs will look at the new wifi/portal deal with Hilton, to be launched later this year, and see whether that’s prototypical of a new direction. They’ll try to figure out if it’s still possible to grab a pole position in digital (especially mobile) travel going into 2013. Among the keys here: world-leading travel utilities and smart, curated aggregation of the best travel content and functionality out there. Right now, it’s an app-by-app world, growing impressively week by week, but there’s no single place to go to as The Gateway.
Is it go time for USAT Mobile? USA Today was early on the iPad, but still has but one app there (other than an education product). The untapped mobile potential here is about product. It could be a place where Kramer’s audience-centric thinking can be applied, actually going beyond replicating the print product in tablet form. This thinking may well make or break the next generation of USA Today. Mobile’s still a green field of audience and ad potential, even as the corporate farmers (Google and Facebook) move in.
CEO Martore has promised Wall Street $100 million in added net income in 2013, based on the startup of digital circulation (a.k.a. paywalls) at all its community dailies. So what about its other newspaper, USA Today? On the plus side, it has half to two-thirds the number of unique visitors The New York Times has, and the Times has built a $100 million digital circulation business in less than two years. Alas, USA Today is no New York Times. Much of its news is, fairly, a commodity. It’s been its voice, its presentation, and its packaging of news (and features) that has distinguished it. So if Kramer sets up a meter, have those qualities engendered enough habit and loyalty to get readers to pay? And is there enough of a bundled, overlapped audience, print and digital, to make an all-access pricing play work?
Call it the NOLA diet: Squeeze those remaining print advertisers into fewer days of the week, and cut out lots of printing and home delivery. Newhouse, of course, is conducting the major tests here, in its forced march to digital. For USA Today, the disappearance of its daily, iconic print product seems at first more unthinkable than even other dailies. Print had made it America’s number one paper, and now print — with its huge costs — is its anchor.
The company uses 35 printing plants around the country to enable that hotel door delivery. That compares to 27 for The New York Times. Those costs are hard to support with a rapidly shrinking print ad base, so as unlikely as it first appears, a plan to move off print, if Kramer finds the magic digital formula may well be in the cards within several years. USAT has no Sunday product, à la the Times, to support with digital circulation; its Friday weekend product is the biggest seller among its five-day-printing schedule.
Or as CEO Martore put it in a recent quarterly analyst’s call, “To remind you, USA Today has historically made up less than 10 percent of our revenues and continues to be a small contributor to overall cash flow results, as it has historically been.” Which is another way of saying don’t look here, look there. The upside of a USA Today successful digital transformation could be substantial, but hey, if we can’t pull it off, it’s not a big problem.
Is USA Today today profitable? Gannett financial breakdowns don’t tell us. Ask insiders, and they’ll say there’s long been a question of cost allocation within Gannett, complicating the true profit picture of the paper. Back in 1997, it had a 8 percent profit margin, and in those days, Gannett was pulling in 30-plus percent margins at its community papers.
This, then, isn’t a cash cow to be milked. It’s a digital animal waiting to be named.
Ah, yes, those Snapshots. Those brand-identifying visual factoids are habit-forming — you can’t read (absorb?) just one. Many of those I polled were incredulous that USA Today hadn’t ported them over to web in a game-winning way. They won’t save the franchise, but imagine them as iPhone apps leading to more content, and Kramer may have his first no-brainer identified.
Photo by Simon Q used under a Creative Commons license.
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