• by Erik Sass  @eriksass1, April 10, 2006

Newspapers will become primarily online products at varying paces over the next decade, according to Ken Doctor, a lead analyst with Outsell Inc., a research and advisory firm that provides market analytics to the information industry. Doctor made this prediction during his discussion of the findings of a survey of major newspaper publishers by Outsell Inc., as well as an earlier survey of 2,800 news consumers, and a report containing Outsell's recommendations for the future.

"It's moving in that direction at different rates for different publishers," Doctor said, confirming that "the basic trend is unmistakable. We've seen in our own survey that the average age of a daily reader is 55 years old, and the group with the strongest preference is 50-plus, while the strongest preference for online editions, as well as online news aggregators, is 25-34."

"If you look at declining rates of circulation, of course, the rate at which this will happen for individual papers is impossible to predict," Doctor cautioned, at the same time explaining that print will never disappear entirely, instead becoming a useful adjunct for targeting niche markets: "I think with print you can see those tables turning for some kinds of publications already, where at some point in the future, online will be the dominant means of transmission, and paper will work for certain kinds of transmission, to certain audiences, at certain times."

Doctor went on: "I think the best way to think about it--and we certainly see some publishers starting to think about it this way, though it's very hard to move these huge steamships--is content companies need to be able to 'publish once and distribute many,' meaning you take the content and distribute it to specific targeted sub-audiences, sometimes through print, sometimes through desktop or laptop, sometimes through mobile."

Although newspapers and content providers generally have already achieved some diversity in distribution methods--for example, adopting both Web site-based and e-mail electronic distribution, while integrating print with electronic products--Doctor said true multi-platform distribution will require an unprecedented level of flexibility in the next five years. For one thing, newspapers will have to radically revise cost structures--those that don't will perish.

One of Outsell's specific recommendations for revising cost structures concerns "production of content," according to Doctor. "Reporters now put content into these very expensive editing and production systems that are oriented largely toward print publishing. What's clearly needed on the cost side is a significant capital investment to replace assets that have not yet depreciated with systems that allow not just on-the-fly, dynamic publishing 24-7, but also photos, audio, and video, handling it very quickly--and getting it distributed to different sets of users."

On this latter topic, Doctor noted, newspapers shouldn't make the mistake of considering readers to be their only "users": "Some of those users may be subscribers--but Google is a user too, since you're feeding different types of content into the Google base"--and newspapers must be able to provide information to Google in an easily sorted format.

The transition will continue to be characterized by an overall revenue squeeze, Doctor said, and the issue of how to monetize content will become all-important: "Does some content get monetized through license fees--does some content get monetized through paid search?" As far as securing stable advertising revenue, Doctor described one promising model in which "publishers can license the content and have an ad that will ride along with it wherever it goes--basically saying, you can do whatever you want with this, but this ad has to be there too."

Of course, as with any major industry shakeout, there will be winners and losers in this game, Doctor said: "This a classic business disruption, and not everyone is going to make it. Again, we feel this is going to start happening over the next three to five years--but we're already starting to see winners and losers."

On this subject: "There are some publishers who spoke very dramatically of a transformation in the business, and they're trying to move their companies in new directions fairly quickly--but there are others who see the changes and believe they're going to be slower and more incremental," Doctor said. This sense of urgency may prove a telling indicator as to who will succeed and who will fail; for example, the latter group might be slower to embrace expensive revisions of cost structures of the kind described by Outsell--a delay that could prove fatal, given the rapid pace of change.

Doctor noted there will likely "also be new companies. Look at Google, which didn't even exist until 1998. Now in terms of newspapers--one thing we're seeing is--people want community content. They want community content--they want travel content--so it's easy to imagine you start up a new company, hire a few people who know this stuff really well, hire some database people; you hire your own advertising staff--or better yet, use the networks that are out there already--and you start over again."