The boss walks into your office and shuts the door. Sits down. Looks you solemnly in the eye. "We're buying a bunch of newspapers from Knight Ridder (KRI)," he says. Tilts back in his chair. "We know there's something to be done with them, but we don't know what. Your new job is to figure that out. Which functions can go, which stay, what must be expanded, where the new revenue is. We -- well, you -- will remake the local newspaper for this century." He holds your gaze, nods twice, and exits.
At which point, judging from the reactions of those to whom this scenario was suggested, you put your head down and weep. Even among other still-profitable-yet-challenged media, newspapers have an especially bad case of cooties. "The components of what we historically know as the newspaper have become unbundled," says Warburg Pincus managing director Mark Colodny. Google (GOOG) and Yahoo! (YHOO) can offer sharply targeted local ads, craigslist has free classifieds, news is free everywhere, and next-generation news aggregators such as topix.net and inform.com are creeping in.
What's to be done? One recent blogger notion involves seeking federal assistance, but PBS can tell you how well that works. Absent extracting newspapers from investors' profit demands, your to-do list likely includes the following:
STEAL FROM GOOGLE. Make your ads hyper-accountable. Identify the top advertisers in your local market and figure out what it would take to grab 100% of their ad budgets. Give them unlimited pages, on paper and online, until they reach their goals. You're the biggest guy in town. Your per-page cost of newsprint is cheap -- and your per-impression cost online is even cheaper. Leverage that to cut off your rivals' oxygen.
BIFURCATE. Take what the The Washington Post (WPO) and Chicago Tribune (TRB) are doing a step further: Offer a free news-digest daily aimed at your least committed readers. Then price up a more elite daily newspaper, so the old $1 ceiling becomes the new floor for single-copy prices. Goodbye, daily paper. Hello daily papers -- one mass (free) and one premium. And given the elite daily's audience, charge more for its ads.
REDEPLOY MERCILESSLY. Save pages and dollars: Put all stock and TV listings online. Rethink everything and ask hard questions: Do you need a Washington bureau if you're not The Washington Post or The New York Times (NYT)? How much international news do your readers want -- can you pick it up from other sources, or run it online? Do you need a Saturday edition? Send a blogger, not a phalanx of reporters, to the news-free Republican and Democratic conventions. Which critics and columnists are crucial, and which won't be missed? Can you outsource the phone sales of your classifieds?
INCREASE LOCAL COVERAGE. An old saw, but local is newspapers' last unique attribute. It also provides the lens through which you view the larger world. What foreign reportage matters most to your readers? Find out which countries receive the most money from local residents.
REDESIGN YOUR PREMIUM PRODUCT. Production values for other media are higher than they've ever been. Do your pages have to look so newspaperish? A classier environment attracts richer advertisers.
USE YOUR READERS. Building communities and businesses around community-created content was not invented by MySpace.com. One bright spot for the Reader's Digest Assn. (RDA) is Reiman Publications, which runs a host of homey, ad-free titles that lean heavily on reader-written contributions. Is there a sufficient subcultural pulse in your city to pull off a mini-myspace? Are locals writing hobbyist blogs that you can build about.coms around? There have always been more talented content creators than full-time jobs for them; the platform of the Net makes them visible. Do you want them inside your tent as partners or outside it as competitors?
To discuss the daily paper of tomorrow, go to Fine's blog at www.businessweek.com/innovate/FineOnMedia
By Jon Fine