Economics & Research Blog
Without Print, Will Online-only Newspapers Suffer? ... and Other Stuff
MediaWeek had a short article about the Seattle Post-
By Dr. Joe Webb
Published: April 22, 2009
MediaWeek had a short article about the Seattle Post-Intelligencer's web site traffic going down now that they have discontinued their print edition in mid-March. Its traffic was down 23% compared to March 2008. Its competitor, The Seattle Times, registered a 70% gain. What does this mean?
When a local newspaper goes online only, it no longer competes with its print competitors, it competes with virtually every other news web site online. It's not like there are needs for “local” classifieds in a Craigslist and eBay world. The lack of space advertising online, and even inserts, may be a reason to no longer be loyal to the site. But how about the fact that the news of the paper's demise may have led people to believe that the entire property was closing, or that their favorite features were gone? The brand may have been so tainted, and the audience may have been so disgruntled that they left. After all, if the print property had been able to retain its readers and its rate base, its fortunes online might be turning out better. The paper was dying because the brand was dying; a dying brand can't just be shifted online and reverse its trend.
Can we really say that online newspapers can only be successful if they remain in print? I don't think so. But staying in print as long as possible probably matters.
Not many newspapers will be able to make the transition to web-only publishing without significant investment in promotional marketing. Readers need constant reminders that the site is worth visiting. When a newspaper was delivered, people actually had to pick it up whether they intended to read it or not. Online, the pressure to get the attention of readers is greater. Local newspapers may need billboards, signage, broadcast and cable ads, and other efforts, to keep site traffic up.
In a larger context, it does come down to branding. Just taking a print newspaper and putting its content online does not take advantage of the strengths of the Internet format. If a newspaper wants to cut its print edition and go online, it would probably be better off starting a separate online competitor, with a separate name, and distinct editorial thrust, long before the decision to cut print is made, perhaps years. Many newspapers can see the inevitability of this decision today, even though today will not be the time of the decision. It's all the more reason to start today to develop that separate online presence.
This is much the same advice that I have had for printers in my columns (and my book) that they need to start with that clean sheet of paper. That clean sheet does not have the baggage of the old business. But the person writing on the paper has experiences of the current business and ever reason to do something different. Why make transitions when you can start fresh? Transitions don't leverage experience. Transitions are an attempt to make old baggage new. Better to start fresh, as much as possible. The market is changing, and it's smarter to make the change as a leap forward, even though it seems riskier. Assuming that things can be business as usual is actually riskier than it seems.
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The Wall Street Journal had an article about the use of statistical models for forecasting and how they can cause problems. I use statistical forecasting methods regularly, and have built forecasting models, and I wholeheartedly agree with their assessment.
In our forecasting process, the statistical models are indispensable because they help us organize confusing data about business and economic situations. But all forecasting models are based on history, not about the future. Long range models are forecasts of forecasts, which make them even worse.
This is why good forecasting always includes statistical models only as a springboard, and still demands an immersion in the qualitative nature of businesses and markets, and an understanding of likely future scenarios, accompanied by a sense of the workings and interactions of technologies, economics, and social change. To be a good business planner, it seems that you have to watch almost everything, and absorb as much as you can.
When you read in newspapers or online, or hear on business television that certain economic data were above or below expectations, those expectations are generally created by forecasting models. Most of those models are some form of moving average. Averages lag what's happening. Statistical forecasting models can rarely predict turning points in a marketplace, and when they do, it seems more like luck or accident. Why speculate on a number, like the business press does, when the real one will be available in just hours? Even the real one will be revised again and again.
What is the right role of statistical models? In my mind, scenario building. We do that in our monthly printing shipments forecast report where we present our five year outlook, updated every month, for commercial printing. There are some models that I have grown to prefer, just because they challenge the current expectation. As a business planner, you want to know what the challenges and responses might be before you have to face them.
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I've enjoyed the outrage over the paper industry finding ways to qualify for alternative fuel credits. It's a reminder that there is such a thing as political entrepreneurship, which only creates a poor use of scarce resources. It's just like the great scene in Casablanca about gambling. It's not just the amusement of watching the outrage of unintended consequences of tax laws being used by “evil multinational corporations,” it's that people have the expectation that things can actually improve economically without the creation of new goods and services. Spreading money around is supposed to be the great panacea. Unfortunately, credit is not capital. Capital only comes from hard-earned investment deployed to create goods and services people will want to buy either from need or desire. Money is something that should be created by the productive actions of real people, not by actions of banks or tax committees.
To this end, I highly recommend economist Robert Murphy's just published The Politically Incorrect Guide to the Great Depression. For a preview you can go to a recent blog post he made.