When Is It Time To Change Direction?

By Kevin Meyer

Two different articles both appearing yesterday and discussing obliquely-similar industries got me to wondering about business models and commitment to those models.  How long should an organization stay committed to a model?  When should it change?  What should trigger change?  The meat of the articles is nothing new and simply part of a long-term trend, but the data supporting the trend was just updated.

First off, the Wall Street Journal reported the latest figures on U.S. newspaper circulation.

Average weekday newspaper circulation for the six months ended Sept. 30 dropped nearly 11%, the starkest decline in years anda sign of both the industry's deepening troubles and its efforts to purposely pare unprofitable copies.  Nearly two-thirds of the 25 largest papers in the U.S. posted circulation declines of 10% or more.

Wall Street Journal	2,024,269	+0.61%
USA Today	1,900,116	-17.15%
New York Times	927,851	-7.28%
Los Angeles Times	657,467	-11.05%
Washington Post	582,844	-6.40

The guys at the WSJ were probably more than happy to print this data; after all their circulation actually increased and pushed the paper into the number one spot in terms of gross circulation.

Coincidentally The New York Times reported on prime time cable news show ratings.

CNN, which invented the cable news network more than two decades ago, will hit a new competitive low with its prime-time programs in October, finishing fourth – and last – among the cable news networks with the audience that all the networks rely on for their advertising.

Fox News	Bill O'Reilly	881,000
Fox News	Sean Hannity	659,000
Fox News	Greta Van Susteren	538,000
Fox News	Shepard Smith	465,000
MSNBC	Keith Olbermann	295,000
MSNBC	Rachel Maddow	242,000
CNN	Larry King	224,000
CNN	Anderson Cooper	211,000

With the exception of the sharp fall by CNN, these numbers have been relatively steady over the past couple years.  CNN did try to create some positive spin.

CNN executives emphasized that the network continues to draw more viewers than all its competitors except Fox News when all hours of the day are counted.

So now for my question.  If your circulation or prime time programming is falling, what do you do?  Do you stick with the original model, perhaps decades old, or change it?  If the old model represents a fundamental philosophy, a seemingly moral obligation to report instead of profit, how long do you hold out?  Altruism only lasts so long.  If you stay true to your beliefs and your passion, is it enough?

Doesn't look like it.  So then what?

To be fair, both media industries are trying.  The print guys are moving to a focus on niches and paid circulation models.

Publishers say they are concerned less about the total number of copies they distribute than with reaching a smaller but more select audience for the printed newspaper. They say this strategy makes the newspaper more attractive to advertisers and helps publishers generate more revenue for each copy sold.  The Journal also was helped by sales of paid online subscriptions, which few newspapers offer.

The WSJ is pretty much the only paper that has made the paid online model work.  On the television news side of things, Fox has led the pack for many years with the shift to primetime opinion shows after hard news during the day.  Perhaps the inability of other outlets to understand this shift is analogous to why some still complain that O'Reilly and such aren't news.  Even Fox doesn't claim they are and calls them opinion shows.

So what about you?  Are you taking the altruistic path and holding onto something unsustainable?  Or changing and experimenting?

Comments

[Tim McMahon]

I must say I am fan of the FOX News programming. What I would add is that some of these news outlets have lost their way. They don't understand the voice of the customer. Obviously, what the popular media outlets are doing is working and what they are doing is not. Many of the poorly-rated outlets have their own agenda that apparently does not match the consumers need. FOX and the WSJ have added value and the consumer is willing to pay for that. A customer-centric focus is extremely important in all organization.

[Kathleen]

I wonder how WWD (women's wear daily) and similar niche titles fare. Imo, their online subscription model works as well (functionally speaking) as the WSJ's but then, apparel retailing and manufacturing has fallen off in today's economy.

[Kevin]

It really just comes down to value, from the perspective of the customer. Fundamental lean. People find value in the WSJ so a paid online subscription model works well. The same for some niche publications. But the Washington Post, NYT and others can't even get people to do a free registration. What does that say? More importantly, and to the point of the post, how do those organizations react? Forge ahead or try to figure out how to add value even if it goes against the philosophy of the members of the organization? If something is failing... be it ratings, circulation, or sales, it's time to ask the question instead of trying to "regulate success" (the so-called "Fairness Doctrine") or asking for bailouts.

[Jim Fernandez]

Your right on Kevin.!!

These organizations who are in trouble need to sit down and figure out what the public will look like and want they will want in the next few years. Take a lesson from Hollywood. They experiment. How did they know that reality shows would work so well?

By the way, I hate reality shows. So if I had been running things I would have said, "naw, that'll never work. The audience is not that dumb".

[Adam Zak]

"If you stay true to your beliefs and your passion, is it enough?" you ask...

Kevin, my sense is that beliefs and passion should not be confused with business models. Beliefs and passion are the source of the values (not as in "customer value") which we as individuals have come to hold.

The business model, on the other hand, is how we think and execute during the process of serving customers and stakeholders, while at the same time upholding those values. Yes, it is critical that these values somehow manifest themselves in the business model, but they are only a small part of the total picture.

I agree that no business can succeed in the long-run without strong beliefs and passion, but the business model itself must evolve and transform over time. Toyota started out by making and selling weaving looms; Honda began with motorized two-wheeled vehicles; I've had to reinvent my own executive recruiting practice three times during the 15+ years I've been doing this.

So news organizations, just as every other company, should constantly reinvent to stay competitive in their market place. That's not betraying beliefs and passions; it's staying true to them by continually figuring out how to deliver evermore exceptional customer value.

Let's hope they figure out their new future state in the market sooner rather than later.

Adam Zak, http://twitter.com/LeanThinker