Who’s buying newspapers and why?
October 10, 2013
What does the Oracle of Omaha, Warren Buffett, have in common with Amazon founder Jeff Bezos? What does Boston Red Sox owner John Henry and businessmen Eric Spitz and Aaron Kushner share?
All are bullish on newspapers and used their own money to buy newspaper publishing companies. Why would they do this despite the crescendo of Cassandras predicting the demise of print? Because they see a profitable business opportunity and a community need that only newspapers fill.
None of these wealthy men have newspaper management experience. But none of them got where they are by making stupid decisions, especially about money.
Why is this important?
There’s an important lesson here for community newspaper owners such as you and me. Spitz and Kushner bought Freedom Communications, which publishes three dailies in California.
These include the Orange County Register, the 14th-largest U.S. daily and three-time Pulitzer winner.
Spitz describes himself as an iconoclast who, as derived from the Greek, “smashes idols.” He says newspaper publishers live with two idols that must be smashed.
• The fallacy that digital advertising, news and information must be free.
• The belief that the newspaper business can only be saved by going digital.
What should we charge for news?
One of our most important decisions is how much to charge advertisers and subscribers. Most newspaper owners make the mistake of giving away the digitally delivered news.
How many industries can survive giving away their core products?
Ten years ago, we made the same mistake. It cost us 1,500 subscribers but not readers. They simply read us online and let their subscriptions lapse. We set up a paywall.
How can newspapers charge for news, Spitz asks, when competitors give it away?
His answer: The old-fashioned way with better content and making it essential to your community.
Amazon, FedEx, HBO, Sirius Radio, Starbucks and Walmart figured this out. Why not us?
The Wall Street Journal has never given away its digital content. It continues to gain subscribers.
What about online advertising?
Advertising that pays 80 percent of our bills is trickier. How much should we charge for it?
Most digital ad sellers are struggling because their ads don’t work as well as those in other media. Try asking the next 10 people you see when was the last time they clicked on a digital ad?
In hopes of connecting with buyers online, advertisers are shifting dollars to online and mobile.
This need not come at our expense. Despite a shrinking audience, TV advertising continues to grow.
TV delights in reporting shrinking newspaper readership and advertising—but not its own.
Spitz argues that newspaper ads, not TV, are the most efficient way to sell to local consumers.
Why innovation is vital to us
By focusing on value, Spitz’s Orange County Register has attracted more ad and subscription revenue. You can bet Bezos and others new to newspaper ownership will have innovative ideas.
Our business isn’t as broken as the Cassandras say it is.
Our readers here in South Carolina are willing pay for news that matters to them and their families. All of us share a common belief that community newspapers are vital to a democracy.
We are the glue that holds communities together.
October takeaway: If you would like a copy of my “Why advertising fails … and what you can do about it” CD, e-mail me your snail mail address and I’ll send you one with my compliments. It will give you the reasons your prospects need to become your advertisers.
Next: How to make your writing come alive. © 2013 The Bellune Co. Inc.
Jerry Bellune teaches newspaper owners the strategies that have made his family’s book, newspaper and digital publishing businesses successful. You can write to him at JerryBellune@yahoo.com.