Following the publication of Johnston Press’ results, Michael Mendoza, CEO of Lineup Systems, and former Global IT Director of newspaper publisher Metro International, shares his views on the print vs digital debate.
We are seeing a painful adjustment period as the previously huge profits of print publishers are shrinking faster than the businesses can innovate. Those publishers that are innovating the fastest across all aspects of their business (processes, systems, people), will survive, and eventually thrive!
Almost every newspaper publisher is feeling the pressure from the dramatic changes in the advertising market. Only those publishers that make radical changes will continue as successful businesses. Profits will be restored to those publishing companies that understand the need to reduce their cost base, as well as improving their processes and customer service.
The market changed quickly and will continue to change. Publishers need to move quickly to catch up to the new print advertising market. It can still be a cash cow if a company innovates to streamline processes and reduce cost. And then they must continue to innovate!
The tough market facing publishers requires them to respond with radical changes across the whole business. This will include not just more digital content and online readers. They need to strengthen their print products and delivery, including changes across the whole business including revamping the skills of their people, changing their distribution, changing their marketing and most importantly, innovate faster than the competition. Vendors need to play their part too. Most publishers operate on technology that is effectively over 20 years old, so change is long overdue at all levels.
Just as with radio when TV appeared, the total market is increasing. Publishers, who are slow to change, still hoping that print advertising will recover, will be the big losers.
The decline in print advertising was inevitable. But the loss of profit for the publishers is felt most by those that have lost the ability to innovate. 20+ years of easy money has made many publishers lazy and slow. Every industry changes over time, it is the companies that fail to innovate faster than the rate of change of the industry that decline. This is true with EVERY industry.
Companies that are making radical changes, such as Johnston Press, are doing the right thing and are in a strong position. It is worth noting that the world’s largest international newspaper publisher is Metro International – it gets all its revenue from advertising and its profits are growing.
To those that say that “print is dead“; look at the typical revenue line for digital. Excluding the outlier (early movers) in digital, I would say that digital has not been born yet. We are still figuring out how to make money on digital and until we do, we must focus on making the most of the print cash cow!