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Feb. 7, 2013, 11:54 a.m.

The newsonomics of pressing innovation

In Ohio, The Columbus Dispatch is finding returns on reinventing its oldest platform — print.


Technology changes everything, right?

We’ve seen that truism restated as iPads reignite longer-form reading, as smartphones and tablets increase minutes of news usage, and as Kindles increase the number of books bought by as much as 4x.

Against that digital backdrop, place a burning hunk of 20th-century (and far earlier) technology: the printing press. In Columbus, Ohio, a heart of the proverbial Heartland, the “three-around” is the technology du jour. Last week, the family-owned Columbus Dispatch started rolling its presses with the new three-around addition. The move won some industry ink for what the 3Volution press conversion service from Pressline Services can do: more color, more compact paper, more flexible sectioning, and faster throughput — moving papers through the press 50 percent faster than the old configuration, while saving as much as 33 percent on newsprint cost. “Three-around” means that the press’ cylinders are designed to print three, rather than two, sheets in a single revolution. For press nerds, check out a demo here; in short form, it’s an innovation of folders and rollers that makes the new process possible.

(One patent neither Google nor Microsoft is likely to buy: Patent No. 8,220,390 to Pressline Services for its 3V conversion methodology, issued July 17th, 2012.)

All that’s true, but the story behind and around the Dispatch’s three-around introduction is a more interesting tale of reinvention. It’s a story that tells us a lot about how the tired old daily is in the midst of reinventing itself, against all apparent odds. In Columbus, it’s a reinvention of both business model and of editorial product for a 141-year-old paper. Its daily print product has been reinvented page by page, section by section, all based on reader research and continuous loops of reader feedback.

The Dispatch initiative is by no means a revolution, nor is it a sexy Silicon Valley tale. It shows us that the current struggle and reinvention of the local daily press — hugely important to the democracy — encompasses lots of nitty-gritty change.

The root of the Dispatch evolution is familiar: money. Gannett, owner of the Cincinnati Enquirer, liked the new three-around concept. But its presses weren’t a great fit for the three-around adaptation technology. So Gannett approached its neighbor 100 miles northeast. (Rick Edmonds well describes the history here.) How about using the Dispatch’s presses (they are what the industry calls “newer” — bought in the ’70s) to print both the Dispatch and the Enquirer? A deal was born. So 10 days ago, the Columbus Dispatch became the first paper anywhere to roll off presses in the new three-around, compact format. It’s now 14.6 inches tall and 10.5 inches wide, Slim-Fasted from its former 22″-by-11.5″. Bigger than a tabloid, smaller than a broadsheet.

Broadsheets are an old tradition. Dispatch CMO Phil Pikelny notes that it, too, was birthed by financial considerations: taxes. In 1712, the British taxed newspapers on the basis of how many pages they printed, and the big, broad sheet was born. (Ironically, this very week a new government initiative to tax newspapers as part of “information services” is stirring controversy in Minnesota.)

The Gannett/Dispatch deal, in and of itself, marks one big evolution in the newspaper business model: Smart publishers are either outsourcing their printing to someone else, saving significant costs, or insourcing printing, paper handling, and distribution business. Either minimize a major cost center, or turn your Big Iron ops into a profit center. While I’ll cover that in more depth in a future post, consider that this three-around deal was born on that concept. The Cincinnati Enquirer, a paper that’s seen a lot of cuts, is the only remaining daily in its city since Scripps shut down the Cincinnati Post six years ago. Within the next month, it will be printed by the Dispatch and trucked to Cincinnati. The Enquirer outsources its printing. The Dispatch picks up some new profit, which justifies its investment in the three-around. And now the Dispatch is on the hunt for other new customers.

Rationalizing the old printing business is one significant part of what’s going on in Columbus. Let’s look, though, at the deeper and wider newsonomics of the press-led innovation. The three-around change both supported the Dispatch’s new emerging, reader-focused business model and offered editor Ben Marrison the opportunity to reimagine the daily.

The business model

The Dispatch, like smarter dailies around the world, redoubled its reader focus in the last two to three years. Reader revenue now runs at about half of Dispatch’s total revenue, a percentage up markedly in the last five years. Its strategy: satisfy those remaining core readers — and charge them appropriately. So seven-day subscriptions now cost $28.99 a month, roughly double the price of 2009. The quick math: double the price and lose seven to eight percent of subscribers. It’s a math that works, and results in circulation revenue going north, as ad revenue heads southward.

Like other dailies employing the strategy, the Dispatch also now spends less on discounting subscriptions to bring in new customers, reducing print “churn.” That’s in part due to the Dispatch’s digital paywall. It went up last July. “Hundreds” of people told the paper they subscribed in ensuing months because digital access was no longer free. The Dispatch closed the loop between $360 paid print and $0 free digital. That, too, is a math pervading the wider paywall revolution. (Today’s New York Times Co. earnings report is a data point in figuring out how long growth in digital circulation revenue can persist.)

The Dispatch’s philosophy is to charge readers more for more. On the print side, that means you’ll pay a bit more for Sunday home delivery (a rather nice 20th-century convenience that endures) than if you buy the Sunday paper at Starbucks. On the digital side, that means, seven-day subscribers have to pay $2 a month extra for digital access; Sunday-only subs pay $5. Web digital access is $9.95 a month; its e-edition product costs the same as a print subscription.

Importantly, the multi-headed new pricing strategies of the Dispatch are not determined the old-fashioned seat-of-the-pants way. They are data-driven. The numbers roll off the tongue of the Dispatch’s Phil Pikelny:

  • 23 percent of 18-plus adults in the one million-plus Columbus DMA say they prefer a newspaper as a means of keeping up with the news (“traditional subscribers”). Another 11 percent (“media sophisticates”) are both web and print oriented, according to the Dispatch’s own research. That’s the bullseye group for print marketing.
  • Through the end of 2012, about six months into the paywall, 13,625 people paid something extra for digital access. The Dispatch had sent a goal of getting about 4 percent of its Sunday circulation (252,091) to pay for extra for digital within a year; it’s at 5 percent six months in. (Its daily circulation is 135,988; both Sunday and daily, as with most metro dailies, are down significantly over time.)
  • As the Dispatch doubled its subscription prices — serving that large, if reduced, set of core customers — sure, it may have lost 8 percent of subscribers. But its gain in circulation revenue outdistanced its loss of revenue from those readers by as much to 5 to 1.

It’s easy to pick apart individual Dispatch strategies here and there, but the point is they are based on research and ongoing analytics. Newspapers like the Dispatch that work with data have lots of flexibility to twist and turn as they learn more about reader behavior. The t-shirt of the moment for Pikelny’s team features a numerical pricing formula with this tagline: “This really is rocket science.”

For Pikelny, the business utility of going to the three-around press configuration is also about growth: “We now have the ability to take the printing plant and fill up all its hours.” That’s insourcing as a new business line to join resurgent circulation revenue, even as ad revenue struggles. An added production savings: The Dispatch now enjoys Gannett’s lower cost of newsprint. The fact that the paper’s chief marketer also got a new editorial product out of the press change is turning out to be a big bonus.

The print product

When Ben Marrison, the Dispatch’s editor since 1999, heard about the proposed change in the size of the paper, he saw it as a chance for reinvention: “We decided to do something pretty radical, to snip the paper down to the nubs and rebuild it based on research.” The Dispatch, like many dailies, has used panels of readers for ongoing feedback for years. Like most papers, it had made tweaks here and there.

The new printing process allowed the newsroom to completely reconfigure the paper. They could run six daily sections, create supplemental sections (for sports), run more color, and try to make wholesale sense of the feedback they’d long gotten. So for an intense 15 months or so, they prototyped and tested with focus groups. First, they showed readers models with some generic nameplate; only late in the process did they put the Old English masthead of the Dispatch masthead atop the test product.

The final product is markedly different than the old one. When the broadsheet disappeared into history, it has been replaced by a paper that is the size of an iPad when folded in two. Readers have remarked on the new portability, on planes or in purses. Older readers like its ease of use, as do test groups of Ohio State students. Reader response within the first week is running 2 to 1 in favor of the redesign. That’s a remarkable feat for any redesign.

The space devoted to news has remained nearly constant, says Marrison. So even though Pressline touts a potential newsprint savings in the use of 3V, the Dispatch has opted to maintain its newshole as part of the renewed reader focus.

The new daily offers six sections: A, Nation/World, Metro, Sports, Business, and Life & Entertainment, a feature section that rolls through different niches during the week. The separate sectioning of Nation/World and Business is a giveback to readers. The new Insider feature gives readers new handles on the topics they have said they care most about.

Despite the great availability of national, world, and business news on other platforms, the research consistently showed that Dispatch readers — those now paying that doubled price — appreciated the editors’ packaging of news in that section. That may seem counterintuitive in the news-anywhere age, but it’s a reality many newspaper publishers are figuring out anew: Print and digital audiences may overlap, but they retain distinct differences in reading preferences 20 years into the Internet revolution.

In part, it’s the content, says Marrison. In part, it’s applying other media’s lessons on branding and packaging. Marrison said the paper has always run an assortment of national and global stories, “but they weren’t displayed well. We didn’t get credit for it.” Packaging and sectioning have been two of the quieter casualities of the daily decline. As broadsheet pages have been cut, the old more-is-more philosophy of separate sectioning has gone out the window at many papers. Here, the marriage of technology and re-invention have allowed, a new kind of sectioning for these loyal print readers.

Those readers are still getting used to the new Dispatch, of course. “We told readers: Be prepared to spend more time inside the paper,” says Marrison, of the consequence of featuring less news on the section fronts. Marrison thinks his readers are open to that, as long as the paper keeps it promise to readers. That social contract: “They told us whatever you do, don’t lessen your content.” So the newsroom of 160 (which saw a loss of about 45 in the great industry downsizing of 2009, but has remained fairly steady in size since) is newly aimed at fulfilling that promise.

We can note that the big change here is to the print product. Marrison says the company is now beginning a new look at its digital products, and will have a native iOS app in the market this year to join its Olive Software-produced e-edition product. Such a sequence may seem anachronistic in 2013, but there is a certain logic. The Dispatch, like most dailies, still depends on print for more than 90 percent of its revenues. That’s where most of the money is driven.

In fact, in the all-access digital circulation/paywall era, print subscriptions now support the digital business, in an odd way. It will become increasingly difficult to separate circulation revenue into print and digital buckets for many companies, as one price buys the access. Even in Columbus — which upcharges its print subscribers $2 a month for digital access — the paying reader’s satisfaction is largely based on the print product.

That’s 2013. It makes sense for dailies to solidify their base first, as Obama did in 2012. All-access, and investments in the news product (“The newsonomics of Aaron Kushner’s virtuous circles”) do that — but that’s only step one. Growth is dependent on acquiring new readers (and advertisers). We believe that most of that growth will be digital. So the kind of reimagination that Marrison and crew did with the print paper is required of the digital products as well. That’s tougher; it’s outside the comfort zone of many newspaper people. For the Dispatch and hundreds of dailies going paywall, that’s the next big challenge. There’s no time to enjoy a mild plateau reached; the job of delighting new, local readers, probably digital-mainly ones, to pay for news must also top their agendas.

Photo by Gabe Taviano used under a Creative Commons license.

POSTED     Feb. 7, 2013, 11:54 a.m.
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