Newsweek just announced it is going all-digital at the end of the year. I’ve been asked by several journalists whether this heralds the end of print. Basically my answer is “no.”
Clearly, the cyclical and structural pressures felt by most of the news industry have played a decisive role in this decision. It is also clear that print is a smaller and smaller (though still significant) part of the overall media environment of affluent democracies, in terms of both audience, sales revenue, and advertising revenue.
But print remains the most important and most profitable part of the news business for most legacy media companies, often accounting for 80%-90% of overall revenues and most of the profit. Digital continues to be at best breaking even or delivering a thin margin, and often continues to make losses even at very prominent news organizations with sizable online/mobile audiences.
Print is shrinking, but it will continue to be a key part of the many, diverse platforms and sources of revenue of many well-run news organizations for years to come. Digital is growing, but still hard to make money off.
Some of the best news magazines around the world, including the Economist operating from the UK, Spiegel in Germany, and to some extent Newsweek’s most direct US competitor, Time Magazine, have managed to build very promising print-digital hybrid models around exactly this basic insight–print and digital typically need to go hand in hand to make things work financially. Born-digital news sites like Politico in the US and The European in Germany and Rue89 in France have all resorted to print products as part of their attempts to build sustainable businesses (and not simply large online audiences drawn by free content). Many of these have so far weathered the ongoing digital transition better than many other legacy media companies. I would be very surprised to see any of the above-mentioned news magazines go digital-only in the near future.
So if Newsweek’s decision to stop printing isn’t the end of print, what is it then?
It is a case to illustrate the point that for legacy print-based media organizations to survive in the vastly more competitive media environment of today, faced with both cyclical and structural challenges, they need—
1) Operational excellence in terms of running eroding legacy businesses to ensure that they continue to contribute to the bottom line and enable investment in innovation and quality content. It is bad enough to lose money on digital offerings. Many companies do. If you lose money on your legacy offerings too, you are in deep trouble. Newsweek has been losing money for years and its print circulation has declined much faster than for example Time’s.
2) A reality-based digital strategy that includes a way of generating revenue of expensively produced content. Free as a money-making proposition works only for a very few, very big sites—the volume game has few winners, and most of them are not content-producers but services. (Last year, Zenith Optimedia estimated that Google gobbled up almost 45% of global online advertising spending in 2010. The top five companies together accounted for more than 60%. None of them are content producers.)
3) A clear value-proposition to one or more clearly defined target audiences and a convincing differentiation between you and your nearest competitors to ensure you can (a) earn people’s attention (and perhaps persuade some to embrace a pay model) and (b) at least ensure you get premium CPM rates for your web traffic.
Newsweek has been a great news magazine and has produced some great journalism. But it had none of the above. In today’s media environment it is increasingly marginalized, an also-ran compared to its main competitors. Second best would have been easily good enough in the most hospitable environment of pre-digital, pre-crisis media. It no longer is.