Joe Wikert's DisruptorFest

Why digital newspapers need to be free

My oldest kids, 26 and 24, don’t subscribe to any print newspapers or magazines and I’ll bet they never will. They also don’t pay for any digital newspaper/magazine subscriptions. There's probably no hope for either of them optining in to one of these anytime soon either.

Most, and in some cases, all of the daily news articles are on the paper’s site anyway, so what exactly are you paying for with a digital subscription? The container?

This recent headline says it all: More Print News Subscribers Plan To Cancel Subs. The age group with the largest likely drop-off? 15-34 year-olds.

Then we have the related news last week that the San Francisco Chronicle is dropping their website paywall. So if that website content can be free, why not make the digital replica edition free as well? Think about how much this would would boost circulation and generate significantly more ad impressions and revenue. Will this result in cannibalization where some print subscribers switch to a free digital replica subscription? Sure, but most of those customers have already left and are getting their news free on the paper’s website or somewhere else. So IMHO there’s little left to lose with a free digital replica strategy.

Ironically, while newspapers are worried about digital cannibalizing print, more and more customers are abandoning print for free access on the paper's website. So why do papers think they can charge for their digital replica editions?

I realize papers make far less on digital ads than print. But as print continues to decline they need a new strategy, and one that should include some radical digital initiatives. Btw, the digital replica edition typically represents a much deeper engagement vs., say, your average web page. So are we undervaluing those digital replica edition impressions? I think so.

The value of these newspaper brands is eroding every year. Let’s face it: Their core customer base is getting older…and dying. So what should they do? For starters, quit thinking it makes sense to charge for digital replica when you're providing free access to to that same content on your website.

As the revenue model shifts so too must the newspaper's expense base. Most newspapers have already gone through major staff reductions, so they’re already on their way to a leaner, meaner model. I figure there will have to be even more adjustments, changing from a high fixed-cost base to more of a variable-cost one (think freelance and crowdsourcing). Nobody wants to hear that, but it’s a reality for survival.

If they don’t take action like this, what does the newspaper market look like in 5-10 years? They’ll still be clinging to the dwindling number of baby boomers who feel compelled to read the print edition. Meanwhile, the vast majority of the population will have moved on, satisfying their new craving with free, ad-supported alternatives.

You can bet Mr. Bezos and his new paper, The Washington Post, will be doing plenty of bold, free content experiments. I hope other papers will do the same.

How will Jeff Bezos disrupt newspapers?

Last week we saw the surprising announcement that Jeff Bezos is buying the Washington Post. Bezos, of course, led the disruption in the book publishing industry and everyone is wondering what he'll do to disrupt newspapers.

Some might wonder how he could disrupt an entire industry by only owning one paper. Make no mistake about this. The changes he'll implement at the Post will force plenty of papers to evole or die. More on that in a moment...

First I'd like to review the letter Bezos sent Post employees announcing the purchase. I thought it would be fun to look at it as a word cloud. Word clouds illustrate which terms are used most in a document. I put the Bezos letter through a word cloud tool and got the image you see in the top left of this article (click on it to enlarge).

Other than "Post", two of the more popular words in the letter are "change" and "courage". If you look at the context of these words in the letter they seem pretty harmless. And while I'm not suggesting there's a hidden meaning or that we need to read between the lines, I'm convinced the team at the Post, as well as those at other newspapers, will need to courageously face the change that's about to come.

Yes, the newspaper industry has been going through change for many years now. And rather than injecting himself in the distribution chain like he did to disrupt books, this time Bezos is instead starting with the content and a well-known, highly respected brand to drive change.

So as a former publisher who endured all the Bezos/Amazon disruption on the book world, I thought I'd look through that lens to predict a few of the more significant changes I believe Bezos will bring to newspapers:

Think "free"

Yep, that's one of the things that makes Amazon so special. Sign up for Prime and get free delivery, free access to the Kindle Owner's Lending Library, etc. For every dollar of print advertising a newspaper loses today they're only gaining pennies of digital ad income tomorrow. That causes many of them to be cautious about cannibalizing print income while they're considering digital initiatives. I'm pretty sure that's one of the fundamental concepts in Clay Christensen's The Innovator's Dilemma.

Even though Bezos spent a fortune on the Post, it's really only pocket change to him and I guarantee you he's willing to give up short-term print income for a bigger chunk of future digital income. Wall Street rewards Amazon for their "short-term loss, long-term gain" approach and Bezos has deep enough pockets to apply the same thinking here.

That means digital Post subscriptions will ultimately become free or an element of a broader package (see Amazon Prime). Today's newspapers almost seem to look at e-subscriptions as nothing more than an annoyance they have to offer to play in the digital game. Bezos will fully embrace the digital subscription and bring it to a much, much larger audience.

Embedded in the Kindle Fire experience

One way of expanding that audience is to make the Post an integral part of the Kindle Fire user experience. If Bezos doesn't make the digital edition of the Post freely available to everyone immediately, look for it to become free for every Kindle Fire owner. (Like B&N needs yet another disadvantage in the digital content/device space...)

This also lends itself to much more than just a free replica edition on your tablet. The Post could easily become the underlying preferred content pipe for all news delivered on the Fire platform. That would huge, representing impression numbers newspapers could only dream about today.

Even more national/global coverage..plus local

In order to implement the vision I've described above, I think the Post must offer even broader, deeper national and global coverage. Yes, they already offer some of that today but it will have to grow significantly. And let's not forget about the most important segment: local coverage. I look for Bezos to either build the infrastructure or partner with local news providers to establish a local news element that's second to none. That's the only way Fire owners will warm up to the services I'm describing; just putting the Post as it exists today on every Fire doesn't really move the needle. These content extensions are a must.

Extending the brand into other types of content

Lastly, why limit this to short-form newspaper articles? We're starting to see more papers extend their brands into longer content as both new original works as well as compilations of articles from the past. Bezos knows ebooks, so it's a no-brainer that he'll get the Post team focused on extending their brand to address these other opportunities. And it certainly won't hurt when those titles get most favored nation status for their prominent placement and treatment on Amazon.

I remember when USA Today launched in the early 1980's. Back then the industry largely scoffed at the notion of a full color paper and how it dumbed-down the news. It turns out the nation was hungry for that dumbed-down content and a star was born.

I think Bezos has an opportunity to create an even more disruptive force with the Post than USA Today was more than 30 years ago. And instead of being a book publisher who was forced to deal with the changes Amazon dictated, I'm now excited about the opportunity to help newspapers learn from what Bezos does with the Post, do some disrupting of our own, and keep these papers from future irrelevance. In order to do so, however, we need newspaper leaders who aren't afraid of disrupting their own existing business and accepting short-term losses for longer-term gains.

The power of "all-you-can-read" models

What happens when the all-you-can-read content subscription model gains momentum? I'm talking about services like Next Issue, where I pay $15/month for access to 90+ magazines. If my experience is any indication I think we'll see some very interesting trends develop from this model.

I've been a Next Issue subscriber for several months now. When I started I still had a handful of active print subscriptions. Over the past few months though I've started letting every one of those lapse. Some of these magazines are in Next Issue, but, more importantly, a couple are not. IOW, I'm starting to let the service dictate which magazines I read, regardless of whether they're part of the all-you-can-read subscription. Why?

First of all, $15/month isn't exactly cheap. If I had the time (and interest) to read all the 90+ magazines I'd feel I'm getting a deal. But since I only care about 6-8 of them it's not that much of a bargain for me. That's $180/year for about seven magazines, or roughly $25 each. I could subscribe to several of those in print for much less than $25/year. The psychological impact is important here as every month I'm wondering if I'm getting my money's worth from Next Issue. Just as some people binge at the all-you-can-eat buffet, I find I'm trying to binge at the all-you-can-read magazine trough.

Next, there are only so many hours in a day. At first I seemed to balance my Next Issue reading time with my non-Next Issue magazine reading time. Now that a few more magazines I like have been added to Next Issue though, all of my magazine reading time is now dedicated to Next Issue.

It's gotten to the point where I don't really even care about a magazine if it's not part of this subscription service. So for me, Next Issue itself has become more powerful than the magazine brands Next Issue carries. Just as Comcast has long determined which TV networks I can watch, Next Issue is now dictating which magazines I read.

If I'm a typical consumer that means Next Issue has some pretty powerful leverage with the magazines that aren't yet part of their program. After all, those magazines can get some portion of that $15/month from me if they join Next Issue, or they can get 100% of nothing from me if they stay on the sidelines.

A service like Next Issue has the potential to become the primary pipe for magazine content consumption. It's not exclusive, of course, but I haven't found any other service like it. It's certainly caused a dramatic shift in my magazine subscription and reading patterns.