Thursday, December 07, 2006

Disruptive Innovation

Will the Internet put newspapers out of business?

That's a question that's been at the top of mind for me these last few days. My husband has worked in the newspaper industry for roughly ten years and I have made moves very recently to get into the business too (I even had an interview yesterday). But, given that newspaper circulation and readership have been reliably declining and even the best papers with the most name recognition have been losing money, it hardly seems like a intelligent career move.

Why? The Internet can be considered a disruptive innovation - a new way of getting a job done that renders the previous way obsolete. Consider what effect it's had on the travel industry. Now, you can search online for cruises, airline tickets, hotels, car rentals, and even villas to rent for a week in Tuscany. You no longer need a travel agent.

Craigslist is a perfect example of a disruptive innovation, and, it's one that spells demise for the classified advertising wing of newspapers, a major source of revenue. Why pay for an ad in the newspaper when craigslist will do it for free?

When it came time to collect data for my dissertation, I set my study up online. What's more, I could have hired the newspaper to help me recruit participants but elected not to. I recognized that people would not go online after seeing my ad, but they might participate if they were already online. So, I placed ads in a different city each week for a year through craigslist. I paid nothing and have 4,000 participants to show for the small investment of time. If my local newspaper had a newsletter it emailed to subscribers, I would have considered placing an ad.

Unfortunately for the local paper, craigslist arrived in the nearest city within the last month and should be in Walla Walla very soon. Then what?

As much as a might consider myself a depressive realist, I am at my core an optimist. I think newspapers can turn things around.

The most exciting ideas for how to do this come from Newspaper Next, a product of the marriage of the American Press Institute with Innosight, a consulting firm.

One of the recommendations that comes out of this report (and I unabashedly admit I am a biased reader here) suggests that hiring bright, creative outsiders will keep newspapers from becoming dinosaurs. It will be interesting to see what develops!


Anonymous said...

My wife, who works in recruitment advertising, could have a whole long discussion with you. She left the Chicago Tribune a year ago-- they were cutting back in droves, and are selling off big parts of themselves, including, probably, the Chicago Cubs. In her field, Craigslist doesn't cut it. When a company needs to hire 45 electrical engineers to work at power plants, there are very specific places to advertise for them, including both internet sources and print sources. Yes, there's a shift, and yes, newspapers are going through a transition, but there'll still be a place for them at the end of it all, according to her.

For my part, I get the New York Times delivered every day. There'll never be a substitute for having a newspaper in your hands.

Holly said...

It seems we're both optimists with regard to newspapers. Of course, we both have spouses who worked for one, so that's got to have something to do with it! What I wonder and worry about is what will happen when the generation raised on instant messaging, iPods, cell phones and the like becomes our age - will they still want to have a tangible newspaper in their hands? I don't think the newspaper industry can assume they will.

Anonymous said...

Yeah, I think they're probably nervous. Three of the four large to medium papers in the Chicago area have started publishing little "McPapers"-- abridged versions, full of articles that they suppose will appeal to younger people.

I have trouble grasping that people any age wouldn't love newspapers. My nose has been in one since I was a young kid.

Anonymous said...

Well, thank god for people like you two.

As for me, I'm a dyed-in-the-wool news guy, but I would trade the print edition for a usable electronic version.

But I'm severely picky about how it looks/works/etc.

My big worry is that the people (aka Holly) who can envision disruptive innovations aren't the ones sitting in the corner offices...

At my place of employment we have advantages (forward-thinking publisher, small cadre of news managers (the publisher, editor and city editor (me)) who are interested in progress), but I have only run into a few news execs who I think fully appreciate the situation.

Anyway, short story: Thank god for people like you two. :)

Anonymous said...

Geek perspective:

Print media is reasonably safe as long as electronic media doesn't offer the same *mobility* and *resolution*. For example, no one wants to read a whole lot on a Palm, because it is just too darn tiny. But busting out the laptop to have large, crisp text isn't super convenient either.

On the other hand, it's very easy to read a magazine or newspaper ANYWHERE, any time.

That won't always be the case, but you've got at least a decade probably.