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Oct. 27, 2011, 11:30 a.m.

The path of disruption: Did Newspaper Next succeed in transforming newspapers?

The 2006 report was supposed to be a wake-up call to an industry in turmoil. But its legacy is less than clear.

In any good Hollywood summer blockbuster, there comes a point where someone, usually in a lab coat, warns of a coming disaster for humanity and the need for one last best hope to avoid annihilation. For newspapers that moment arguably came in the fall of 2006, when the American Press Institute published Newspaper Next, a research project that attempted to diagnose the industry’s woes and offer a prescription for the future. Newspaper Next was ambitious, maybe even aggressive in its fervor to shake newspapers out of their decline. It wasn’t simply a report; it was billed as a “blueprint for transformation” and “groundbreaking research into new business models for the newspaper industry: new ways to see opportunities, produce sustainable growth, and reshape organizations for consistent innovation.”

Five years have passed since then, and to return to the movie analogy, you could say the asteroid has hit and now we’re dealing with the aftershocks. Print advertising revenues are still in decline and online dollars aren’t covering the gap. Circulation numbers are either slipping or flat. Healthier newspaper companies are looking to merge; the sicklier ones are in bankruptcy or slowly emerging from it. Newsrooms are smaller, and in some cases just gone altogether.

So did Newspaper Next succeed in its mission to reshape the industry? Not exactly.

We’re still in the thick of uncertain times in the news business, but invention has crept into certain corners. Newspaper companies are experimenting with apps, testing new platforms, and publishing niche products (online and in print) to reach audiences outside the daily newspaper. That’s all straight out of the Newspaper Next playbook — but it’s doubtful newspaper execs would have sat by idly if a report five years ago hadn’t told them to try to develop new products. Publishers, editors, executives, and other journalists involved in Newspaper Next say the project deserves credit for encouraging experimentation inside newspapers. But with all its reach and ambition, the project was stifled by economic factors, including the industry’s near extinction-level event in 2008 that saw massive losses in jobs and revenue. As much as Newspaper Next set out to give news companies the tools to transform, survival may have been a bigger and better motivator.

“There was enthusiasm, the embrace [of Newspaper Next], initial experimentation — then rapid and dramatic retrenchment,” said Andrew Davis, former president and executive director of the American Press Institute, describing how he saw reaction to the project. “But now we’re seeing a re-emergence of embracing innovation.”

Jobs to be done

Here’s how Newspaper Next defined its challenge:

Find a way to help newspaper companies migrate from a fixed and monolithic business model to a diverse and growing portfolio of business models, products and services that engage throngs of new consumers and advertisers.

A portfolio solution is necessary because a newspaper alone, or a newspaper and a news Web site, are no longer enough. These are solutions for a mass audience, but the mass audience is dispersing in many directions, never to return.

At least one of the reasons Newspaper Next made a splash when it debuted was because it brought from the business world a name for what was happening to the media industry: disruptive innovation. It’s the process outlined by Harvard Business School professor Clay Christensen that ties together the fate of automakers, excavator manufacturers, and newspapers, all of whom have had their business challenged by new technology. In the case of newspapers, the disruptor of course was the Internet and all the technologies it enabled, which broadened the channels for news and advertising, splintering newspapers’ market share while giving the tools for publishing to readers. Christensen’s research and his books, The Innovator’s Dilemma and The Innovator’s Solution, provided the framework for Newspaper Next and put the focus on fending off obsolescence by diversifying your business and embracing new opportunities.

“I do feel like the circumstances of the last few years have helped people understand that our culture has to change, that we have to go about our work differently.”

“We didn’t want to look at this as a standalone event or standalone report,” said Carol Ann Riordan, current president of API and vice president of programming at the time of Newspaper Next’s release. “We really wanted to make it the DNA of everything we do at API.” Riordan said they believed Newspaper Next had to be radical in its approach but practical in its strategies for newspapers. The idea was to launch a kind of consultancy with Newspaper Next, using the report as the guidebook with API staff and members of Innosight, a consulting firm founded by Christensen, working with editors and executives to jump start the process in their newsrooms. How big was the whole show? Davis put the price tag for Newspaper Next around $2 million.

“One of the things we knew when we were rolling out in September 2006 is we really needed to have an evangelical period to get out quickly to the industry to spread the gospel of Newspaper Next,” Riordan said. And that’s what led to a barnstorming tour, going to newspapers of all sizes, as well as colleges and other journalism programs to spread the message. “Right after the introduction of it we got on Gannett airplanes, went around talking to Gannett publishers, and they got really excited about it,” Davis said.

It was a new hope, or at least a model to turn things around before the situation got any bleaker. In a way Newspaper Next tried to convince editors, publishers, and their staffs to change, and of the need to both “maximize the core” (i.e. getting the most out of the main print product) and venture into new ideas. Essentially Newspaper Next was asking newspapers to see where they are weakest, where they may have created an opportunity for competitors, and to jump in before someone else beats them to it. “In newsrooms, particularly, culture change — and newspaper company culture change — is not easy,” said Peter Bhatia, editor of The Oregonian, one of the seven papers that created test projects for the N2 process. “I do feel like the circumstances of the last few years have helped people understand that our culture has to change, that we have to go about our work differently.”

To do that, Newspaper Next advocated Christensen’s system of identifying “jobs to be done,” trying to “fail fast and fail cheap,” and developing products that are “good enough” instead of worrying a project to some perfect ideal. “It really forced some critical thinking about what is it that we do in a jobs-to-be-done fashion, rather than, ‘we cover the selectmen meeting, print it in newsprint and deliver it every week,'” said Anne Eisenmenger, who was vice president of business development for GateHouse New England. Eisenmenger was on the team overseeing the development of Wicked Local news sites as part of the Newspaper Next process.

Unsurprisingly, Newspaper Next had its share of skeptics. Some were weary about whether a grand solution for the industry could be executed by the same people who neglected the disruption around them in the first place. In June 2006, Jeff Jarvis wrote on BuzzMachine: “I said to [Stephen Gray, project leader of Newspaper Next] that the project seems to be trying to move a big, old barge five degrees when we need to blow up the barge and pick up the pieces and build new boats. He shifted the metaphor and said he’s trying to big, old cows to move a bit. I don’t think that’s enough. In fact, I think that making small steps — hey, least we’re doing something, you say — is false comfort. It is dangerous.”

Still, the report was already in the wind and the march for newspaper salvation was on. Riordan estimates they were able to reach more than 6,000 people just through one-day workshops throughout North America. Steve Buttry, who helped oversee Newspaper Next training programs for API at the time, summed it up this way in a recent blog post:

I was stunned at the hefty fees API collected for those programs, underscoring the industry’s hunger for some ideas that might lead to a prosperous future. As the person responsible for selling API’s services, I thought Drew was ambitious, if not crazy, when he set the prices. Then I sold more programs than Steve could handle and ended up doing several of the one- and two-day programs myself. I got a valuable lesson in supply and demand. We had a message that a desperate industry needed, and companies were willing to pay for the value we delivered.

“Since 2008, it’s been survival mode”

And then 2008 happened.

It’s hard to imagine a worse year for newspapers. Ad revenue fell by 16.6 percent in 2008 to $37.8 billion; revenue off classifieds dropped by almost 30 percent to $9.9 billion, according to the Newspaper Association of America. Circulation numbers were also plummeting. For the tail end of 2008 through the beginning of 2009 daily circulation dropped 7.1 percent from the previous year. And rounding out the worst of the statistics: An estimated 16,000 journalists lost their jobs through layoffs or buyouts.

“What happened was instead of using it as the opportunity to use the principles of disruptive innovation to take chances and invest and develop new products the industry retrenched.”

And into the thick of it API released a new report, Newspaper Next 2.0: Making the Leap Beyond Newspaper Companies. This was phase two of the project, a follow-up on progress during the intervening years as well as a list of case studies underway at an expanded group of newspapers across the country. (One of the more remarked-upon projects: The Standard-Examiner of Ogden, Utah, opened up Quality Consignments, a reseller located in a warehouse.) “1.0 got huge traction. We went to work and put out 2.0 in 2008. We had solid prescriptions with Gordon Borrell on the opportunities of things like video, search, and crowdsourcing,” Davis said. “For an industry that loves checklists and blueprints, the 2.0 version in ’08 had that. And it got no traction at all.”

Newspapers were either in lockdown or attempting to forecast their survival. For the same publishers and managers that were fired up about Newspaper Next just two years earlier, it was whiplash. At The Oregonian, plans for niche products around moms and young creatives in the Portland area didn’t materialize. But staff reductions did. “Since 2008, it’s been survival mode. We’re all trying to innovate, do new products, and try things that build audience and revenue,” said Bhatia. “We’re trying to do that within our own markets in an era where the focus has been on reducing staff and so on. Reducing cost has hurt some of that.”

Newspaper Next was supposed to be preparing newspaper companies for a future filled with competition, and how to fight it off with iteration. What 2008 did was accelerate the resource decline at the precise time newspapers most needed to transform. “The train started coming off the tracks towards the end of 2008, and by 2009 the industry was in rapid contraction,” Davis said. “What happened was instead of using it as the opportunity to use the principles of disruptive innovation to take chances and invest and develop new products, the industry retrenched.”

Though harsh economics may have raided newspapers of their talent and cashflow, technology continued to erode, if not redefine, their markets. When the first Newspaper Next report dropped in 2006 Google, Yahoo, Craigslist, and MySpace were eyed as some of the biggest disruptors. Arguably Newspaper Next’s biggest blind spots emerged around the same time the report was published. The day before Newspaper Next was unveiled, Facebook was made open to the general public instead of just people at the right schools. Earlier that year Jack Dorsey & Co. created Twitter. In January 2007, Steve Jobs introduced the first iPhone. Social networking and mobile technology each became mutated strains of the disruptions the Internet caused for newspapers. (The word “mobile” gets only five mentions in the 98-page initial report. Social networking gets four mentions; Facebook gets one.)

When you combine all these forces, it’s not surprising many newspapers fell back on what they knew best, shoring up the print business — the “maximizing the core” part of the Newspaper Next message. Then, and today, bleak times provided plenty of cover for postponing experimentation. “I think there is a basic issue here, because of the nature of the economy and the challenges newspapers are facing,” Riordan said. “Even with all the great intentions of innovating and transforming, there is the reality of what we refer to as the ‘sucking sound of the core‘ — as you know, that’s the pull of the core business and its model.”

Reinvention without a blueprint

Five years later, the problems that led to the original Newspaper Next are still buffeting news companies, which asks the question: Does the industry need a new N2? Davis said the industry has become too diffuse for any single report or method to be effective. What he thinks newspapers need is something like Cable Labs, the research cooperative that serves as an R&D arm for the cable industry to explore new technology and set standards. “I don’t think the industry needs a lobbying arm like it once did,” Davis said. “It certainly doesn’t need organizations to put on conferences and things for publishers.”

The key issue for media companies now is “your appetite to take risks and try and really embrace change,” Riordan said. Yes, Newspaper Next had an effect on the way journalists think about the business of what they do, she said. But you can’t pull the same trick twice. “I don’t know if going in with a blueprint for people would really help them at this point,” she said. “I think it’s a basic business issue that these organizations are facing.”

Tom Silvestri, publisher of The Richmond Times-Dispatch, said the tendency for journalists facing innovation programs, reports, or other workshop-bound solutions is either all-in or classic journalistic skepticism. Silvestri would qualify as all-in; he’s the current chairman of API’s board of directors and the Times-Dispatch was a test site for Newspaper Next. He said the benefit of Newspaper Next was that it had an all-hands-on-deck feel — it summed up the threats and helped get your staff on the same page. But there’s a difference between having a plan on paper and putting it to work in your market. “What we discovered through Newspaper Next was that reinvention of our business is not going to come solely in one of our conference rooms — it’s going to come from being out in our community,” he said.

Saving newspapers went from being a macroeconomic, industry-wide issue to an individual, company-based one. Whatever loose confederation existed to gel a “newspaper industry” has now fragmented largely on business interests. Companies like Gannett, McClatchy, and Tribune have fewer commonalities with each other, let alone with smaller chains, family-owned papers, or independents. When one newspaper develops a new content management system, creates a daily deals service, or erects a paywall, they have less reason to share the specs with others than in the days when local newspapers had seemingly impregnable geographic monopolies.

But even without a universal strategy guide like Newspaper Next, ideas are still being shared today. Call it disruptive duplication. Groupon has spawned Deal Chicken from Gannett, Times Limited from The New York Times, and a host of others. The number of newspapers with blogs, sites, or print products focused on parenting — a N2 focus — is too high to count.

And yet, the problems don’t seem far from those of 2006: For all the new creations springing from newspapers, it’s clear the new revenue streams aren’t covering the gap, which means the industry still faces plenty of layoffs and other cutbacks. And retrenchment, even in the most robust newspaper companies, can trigger survival instincts instead of a desire to experiment. Many of the niche ideas that came out of the Newspaper Next period have withered on the vine; this month Gannett announced it was shutting down its MomsLikeMe blog network. And the most common new revenue idea of 2011 seems to be putting up a paywall — an idea Newspaper Next doesn’t broach in its 98 pages, and one that again shows the appeal of maximizing the core business. Newspaper Next may have been pitched as a blueprint — but the structure that’s been built in the past five years still seems far from stable.

At the core of Newspaper Next were the seven demonstration projects at American newspapers — models to test out N2’s ideas in a real-world environment. Tomorrow: How did those projects turn out?

Images by rnv123 and Will Scullin used under a Creative Commons license

POSTED     Oct. 27, 2011, 11:30 a.m.
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