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Wednesday, January 27, 2010

Rumors of demise, once again exaggerated.

A great interview with Henry Blodget of The Business Insider on the New York Times’ conversion to a modified paywall for their online news service.

Much has been written about the death of the print news industry. (Enough that it makes me wonder if it would have been as well covered if it were impacting, say, teachers, rather than journalists.)

While the final outcomes remain to be seen, I’m more interested in how the New York Times is shifting their business model around their product / service mix to retain value in the offering:

Most of the value in the tangible good, the newspaper itself, is going or gone. The tangible product was only ever a source of value for a few, and those customers will continue to buy print versions of anything as long as they can.

The content is also a good, and while it’s value is somewhat diminished due to the ubiquity of free content via the web, there is still value in quality content, or at least content a specific audience perceives has higher quality than what they get elsewhere. The New York Times has the benefit of both, as do a handful of other print publications. (The Wall Street Journal, The Economist, The Washington Post have proven this as their subscriber base has actually increased through this period)

Where it gets really interesting is in the less tangible, service aspects of the offering.

The value that comes from conveying knowledge through information still exsists. It may be somewhat diminished because of free content, but again, the quality content is still a source of value overall, and particularly for the dedicated core.

The value to advertisers may not be diminished at all, as they get high-quality, segmented impressions from the loyal subscriber base, and large volumes of eyeballs from the casual readership. As quality content is often a reference point, they may find advertiser value actually grows as more sites point back to them as a proovider of quaity content.

It is the value in the delivery aspect of the service (that makes the content or physical good available & timely) that is most diminished. Internet delivery is much easier to execute and done in near-to-real time. On the flip side, the cost of physical delivery is also removed, making the distribution model efficiencies available to the New York Times every bit as much as they are to an Internet-only publication. With little incremental cost to distribution, this may turn out to be a long run advantage, if a distribution network with a wider range can built on the backbone of their quality content.

Only time will tell whether this is the right strategy for The New York Times. It wouldn’t likely be for a number of their lesser peers.

Still, good service businesses (or good anything businesses) will continue to thrive by knowing their customer & the value they provide through their offering. By using the components of the services and products they provide to make a promise that is based on that value, and consistently keeping it.

1 comment:

Barry Dalton said...

Seth Grodin has addressed this same topic in the book publishing industry. While many authors and publishers have suffered or are suffering the same fate as many newspaper publishers, it cant be blamed on the social web.

He has been extremely successful by weaving both on line and print into his book marketing mix. He has bucked the stodgy system and is single handedly turning the book publishing biz on its head.

One of the concepts that he has used to actually sell more books by first giving a way or selling the book on line is the concept of the book as souvenir. Like the missed opportunity in the music business, he recognizes that some people will read the content on line but still want the book, to share, to get signed by the author, whatever.

Lack of creativity and resistance to changing consumer preferences will break newspapers, not web 2.0