Selling Eyeballs, or the Self-Inflicted Death of Newspapers

I’m sitting in Starbucks, about to write this post about the news that The Huntsville Times is among several newspapers that are about to change from seven-day dailies to three days a week. And across the way from me, a couple of 20-somethings randomly start talking about it. “The news is going to be old by the time we see it!” “I know everybody has smartphones, but I still just like the actual newspaper.” “Man, I’m gonna move.”

It’s sad news. I worked at The Huntsville Times 20 years ago, and it remains the largest paper I’ve ever worked for. As of this fall, however, it will be published less frequently than my college paper. How the mighty have fallen.

I spent the bulk of my newspaper career at weekly newspapers, and I am proud of the work done by weekly newspapers and believe in the community function they perform. However, I was not unaware of a perceived status difference that went with publication frequency. The more often a paper is published, the “higher-status” it, and, correspondingly, the community it serves, are. Huntsville’s paper just tumbled a notch or two. I find it a little sad that Decatur can support a daily but Huntsville cannot.

A friend whose son works in newspapers was commenting on the shift this week. The news came as his son found out the paper he works for in Texas will be closing down. At least, my friend said, the papers in Alabama realize the importance of adapting to the modern age and going digital. And while that’s a great thought, I’m not sure that I buy that’s what’s happening. I fear this is less an evolution into the future as it is a way to squeeze a little more blood from the turnip before its dry. There is more required to adapt than simply printing fewer papers and calling that “going digital.”

You don’t go digital by investing less in print. You go digital by investing more in digital.

And this has been one of the two biggest problems the newspaper industry has been facing — picking the wrong wars.

First, there was television, and then cable, and now internet. “The enemies.” And to rise to these challenges, newspapers changed their strategies to fight them. And in a move that the worst military tactician could have told them was a bad move, they chose to fight the battles on their enemies’ battlegrounds.

Television news excels at immediate, constant and universal news. CNN became a major player when it brought home the original Desert Storm war in Iraq in a way that newspapers never could.

And newspapers responded not by fighting on their on home turf, the things they do that CNN never could, but by trying to win an impossible battle of winning by being a not-as-good CNN.

The internet exists. There is news there.

Trying to save newspapers today by “going digital” would be like if, at its worst, Apple tried to sell itself by selling Windows computers. You thrive by doing well the unique things only you can do, not by turning to the things that others already do well. The Huntsville Times is the big fish in a small pond in the local print news arena. It’s backing off of that to become a smaller fish in a very big pond. Again, it doesn’t take a military genius to know that you don’t win battles by sacrificing your strengths and fighting on your opponent’s terms.

There’s a bit of irony here. It’s obvious to the outsider that the newspaper industry is on the decline. And yet, the newspaper industry has, at great length, decried its own impending death, and provided evidence after evidence that there’s no reason they can’t survive — interest in newspapers remains high, for example, they say, even among Millennialls.

So which is true? Are newspapers declining, or is demand still there.

The answer is both.

The demand is there, but newspapers are declining. Not because the changing world is killing them, but because they are killing themselves.

And this is the other biggest problem that newspapers face, a two-prong issue.

Newspaper owners are making the fatal mistake of focusing on margins instead of revenues, and are doing so because they fail to understand exactly what business they are in.

If I’m a kid with a lemonade stand, and I want to make more money, I can do that one of two ways. I can cut how much I’m spending compared to how much I’m bringing in, or I can increase how much I’m bringing in compared to how much I’m spending. I can use cheaper sugar and less lemon and more water, and sell a cheaper cup for the same amount. I can use the same materials, but charge a nickel more per cup. Or I could sell more lemonade at a smaller profit per cup.

Newspapers, as a rule, are going the former route. Cut costs to increase your margin, and thereby increase your profits. It’s a death-spiral — when you cut costs, you produce a lower-quality product. If you have a lower quality product, you’re going to sell less of it. If you sell less of it, your revenue drops. When your revenue drops, to maintain profits, you have to cut costs more. And on and on, until one day there are no more costs to cut, and you shutter the business.

A big part of the problem is that newspaper owners have no idea what they are selling. Are they selling news? Newspapers? Advertising?

All of those are part of the business, but none of them are the business newspapers are in, financially.

News has no value in and of itself. You can’t sell news. I can go cover a story, but as a media outlet I can only make money off it if I can charge for my means of distribution.

But even those aren’t my focus in business. Newspapers do make money off of subscriptions and single copy sales, but not much. These basically exist to offset the cost of production. Putting news on paper costs something, and newspapers that charge for their print product generally do so only to cover that cost.

Saying that newspapers are in the business of advertising is a bit closer to the mark, but still isn’t quite right. Newspapers are not ad agencies. You’re not going to go to the paper for a high-quality ad design. They are not marketing agencies, that can tell you how best to get your message to your audience. You might get a paper to build an ad for you, but, if so, it’s because your focus is not on the design. If newspapers sold advertising, then the cost of the ad would be based on the quality of the ad, and that’s not the case.

The truth is this —

Newspapers sell eyeballs.

What newspapers sell advertisers is not advertisements, but rather an audience for advertisements. The product that the newspaper makes its money from is being able to go into a potential advertiser and promise them a number of people that will see their message if they pay the newspaper money.

And newspapers sell eyeballs in bulk. As a general rule, you can’t say, “well, how many eyeballs can I buy for a certain amount.” The question is how much space you’re going to by in front of all of the eyeballs the newspaper can offer. The cost of that space is determined by how many eyeballs that is.

So, newspapers increase their revenue by being able to sell an advertiser a larger number of eyeballs. If you have a message, you want to get it in front of as many people as possible as effectively as possible and as affordably as possible.

So the challenge then is to increase the eyeball supply. If you want to make more money, you have to increase the number of eyeballs you can sell.

Do to that, you have to give the eyeballs something they want to look at.

A newspaper cannot — CANNOT — succeed by any means other than creating a product that gives people a reason to look at it.

You cannot do that by cutting cost and quality. That reduces your eyeball supply.

You cannot do that by offering eyeballs something they can see somewhere else. That reduces your eyeball supply.

You have to provide eyeballs something they want to see, that only you can provide.

That means quality products, and that means unique products.

Newspapers have a niche. Even in this electronic, cable TV, internet, online, instant, digital age, newspapers can still provide an in-depth local focus that no one else can.

It’s the one battlefield — the only battlefield — on which no one can beat newspapers. On which newspapers will win every single battle they fight.

It’s the one battlefield that newspapers seem least willing to invest in fighting on.

And it does mean investment. It means reporters, with notebooks, with cameras, on the streets, in the schools, at city hall and the courthouse and the churches and the ball fields and the new restaurants in town and the scene of the crime. It means the people in the community seeing the faces of those reporters enough to recognize them. It means the people of the community seeing their names and their faces and their kids’ names and faces in the local newspaper.

Because CNN can’t do that. Google News can’t do that.

The local newspaper can.