Scott Lehigh, at the Boston Globe, asked for reader's thoughts on the saving the Boston Globe. here are mine.
I disagree with the commonly accepted idea that the internet is responsible for the demise of newspapers. There is room for both newspapers and internet news; newspapers just have not responded correctly yet.
Content
There are two reasons, IMHOP, people have been turning away from printed news. One, indeed, is the immediacy that the internet –and radio- offer. By the time an article appears in my daily Globe, I have already heard the news the day before and read it online. It is stale. The way to compensate for the loss of immediacy would be to provide greater depth in covering the news item. Instead, and that is the crux of the matter, the news coverage in the Globe tends to be the same AP news coverage I have already read on Google. That is the true failing. Newspapers’ assets are their probing editorial teams. Lately, instead of exploiting these assets, newspapers have been printing the same AP news stories, whether a reader has picked up the Washington Post, NYT, Boston Globe, and International Herald Tribune. Newspapers have lost their voice and their punch. That is why readers are turning away. They have less and less to lose by not getting their news through their local paper.
The Globe has shown leadership and distinction in raising interesting issues on state pensions, corruption, abuse, etc. This is the saving grace of newspapers. This is where investigative journalism shines and is irreplaceable. More of that, and less of the plain vanilla news, and the Globe stays in business.
The other great asset of good newspapers is their editorial talent. My boss in strategic planning at Dow Jones pointed out the impact of serendipity. Serendipity is the reason I was always grabbed by the individual profile articles in the WSJ’s front page, reading them before other news, although if I had been asked, I would have declined to follow news on that topic. Serendipity is the editor’s judgment that a story will interest readers, though they don’t know it yet. Serendipity is what’s lacking on Google news. It’s an editor revealing an article’s newsworthiness. The internet is unbeatable for immediacy and strict relevance. Request articles on known topics (your company & industry news) and you will get them as soon as they are out. Good editors, whether in print or online, will tell you everything else you need to know, but don’t know you want to know.
Advertising
I regret to say there is a good reason for newspaper advertising to continue shrinking over time. Why should I get weekly circulars, car ads, want ads, etc., when I am not interested in them in the least? How can it be cost efficient to print these four-color ads, process the paper, and distribute them to people who are sending them immediately into the recycling can? (At best). I don’t read most of the regular ads in the paper itself, either. On the internet, ads are based on keywords: users show an interest in a subject, and then the ad is shown. That makes sense. It is targeted and relevant. There are cases when an advertiser needs to reach a broad audience: Macy advertising a sale, a national brand launching a new promotion or product, etc., any provider targeting a mass audience for common purchases. For the rest, why doesn’t the Globe send me a monthly email, asking me about planned purchases for the coming month? Car? Fridge? Apartment rental…? Which supermarket & pharmacies am I interested in? Type of clothing stores? Then, they could print targeted ads in my paper during that month. The Globe would have more leverage with advertisers, since it could prove it has a targeted, interested audience. Advertisers would pay more for the ads, more than making up for the lost revenue from ads not printed. The Globe would reduce its printing costs, by not printing the irrelevant stuff. It would help the environment. How would it get my cooperation? I would cooperate if it reduced my monthly subscription cost. It should, since it would generate more income for the Globe and reduce their printing costs. I would also be more likely to receive special offers from advertisers on the items I showed interest in, so it would be in my advantage to cooperate.
The advertising industry at some point will have to change the way it prices ads. Current pricing is based on eyeballs, whether in print (circulation) or on TV (viewership). There is no accounting for whether the eyeballs are closed or open, focused on the ad or looking elsewhere. How can that compete with an internet ad, where the advertiser KNOWS whether someone has clicked on the ad or not? These old pricing mechanisms are bound to change. Sooner or later, advertisers will wake up to the value of a receptive audience. The newspapers that will be ready to offer that receptive audience will come out on top.
The reader-selected advertising approach (reader buy-in) requires a transformation of the printing process, practically printing on demand. (In effect, there might be a limited set of permutations, with maybe 20 different variants of advertising theme sets.) Still, this would require the ability to print different papers and track which subscribers they go to. That is difficult. How does VistaPrint do it? If VistaPrint can profitably print micro-orders, then maybe newspapers can adapt some of the same technology? Especially, if newspapers also change their format to reduce paper size. These changes will require major investments and pushing the technical envelope, but, in my opinion, it is the future of the newspaper industry.
There remains the issue of newsstand sales. These can’t be individually targeted. So, there will remain one standard, default issue. It will be interesting to see how ad sales compare between the subscription and the newsstand versions.
Format:
Many people would rather read a printed newspaper than stare at a screen. Based on my experience, and given the reduced amount of news –and potentially, ads- I think papers should shrink their format so it is less hard on the arms to hold up the paper for a long period of time. The free Metro News format is more user-friendly than the Globe’s. Given the decreasing amount of pages and news, why not shrink the format?
Future
It may be that to pare costs, the future of newspapers relies on a common trunk of national and international news, complemented by really solid local investigative journalism. The common news would be shared AP-style, but reported with greater depth and probing. Local newspapers would then add their local and regional news, occasionally also raising a national issue that would then be shared in the common trunk.
The paper would be printed in a smaller, more convenient format. It would reflect readers’ stated interest in receiving ads on given subjects. People with a particular interest in a region other than theirs could also get the news pertinent to the other area.
Monetizing: I completely believe the future of information on the internet is in micropayments. I know many micropayment solutions have been tried and failed since the early ’90s, but the need has not gone away. It has only increased. The right solution just hasn’t been offered yet. Sooner or later, it will be standard practice for people to pay small amounts for interesting articles, whether they were written by a journalist or a blogger; for recipes; for pictures; for artwork; songs, etc. Then, the internet will be an additional, significant source of revenue for newspaper publishers, only if they have managed to retain their ability to write & publish good stories.
Thursday, April 9, 2009
Monday, April 6, 2009
New pricing for a sustainable economy
Here is a radical suggestion to reduce global warming, over-consumption, the over-use of natural resources, and the excessive creation of detritus and pollution. We should change the pay we price things to reflect what it would cost to return to the point before the object was created. This means including 'replenishment', disposal, and environmental impact expenses in an item's cost. I call this 'comprehensive' pricing.
For example, bottled water would include the cost of re-creating the water (not just extracting more of it), plastic and paper that go into the bottle, the cost of disposing of the plastic bottle, and shipping expenses. Shipping expenses would take into account the cost of replacing the gas consumed and clearing the air pollution created in the process.
Wow! You say. Oil is not replaceable and the water cycle takes years to seep through the earth and come out in a source. Water bottles will cost a fortune. Yes, that's the point. Prices should reflect the fact that a resource is irreplaceable or hard to replace. Prices should also reflect transportation costs. If a bottle of Poland Spring is shipped from Maine to California, it should not be priced the same in both states. Reflecting the true cost of consumption will alter behavior, so that people are no longer indifferent between filling a re-usable water bottle and buying bottled water.
But, this will put the brakes on the economy, which is agonizing enough as it is! Yes, that is true. I'm looking for suggestions on how to deal with this. My first retort is that even if my suggestion were to be widely accepted, it would take a while before it is implemented. By that time, we will hopefully be out of the recession and better able to absorb the shock. The other answer is that since this recession is creating huge economic dislocation anyway, and since the economy that emerges at the other end will be quite different from the one we started with, why not make it better? This suggestion will create a new economy that reflects the true cost of making and selling things. (Quick adoption would be quite a surprise! Unfortunately, if taken seriously, this discussion will keep every lobbying firm in Washington gainfully employed for a number of years-- a completely unintended and unwelcome consequence.)
So, to recap, current pricing reflects the costs of obtaining resources. New pricing would reflect the cost of REPLACING/REPLENISHING/RE-CREATING the resources AND the cost of RESTITUTING the environment to the pre-production phase. The environmental impact also includes DISPOSAL costs. A manufacturing process that pollutes the air or water would have to include the cost of cleaning up that pollution. Anything that is transported would take into account the cost of replacing the energy consumed in transport and cleaning up the environmental impact of the transportation process. Styrofoam plates that clutter landfills should reflect the cost of dumping them, vs. cardboard plates or re-using plates.
The same applies to services. If a service involves transportation, it would reflect the consumption & restitution costs involved. Even storage would reflect the use of the land. From manufacturing to sale, every step in the value chain would reflect, in addition to the normal acquisition costs, the costs of replenishing this product/service and the cost of restituting the environment to its pre-product/service phase. Each step in the value chain would only add the cost of the impact it has created.
How far back do we go when calculating environmental impact? To the original tall tree forests in the Northeast? To the newer forests? We have to be reasonable. For fairness and expediency, I suggest we only look at the state of things before the immediate activity took place. This will reward bad behavior before the change becomes effective, but it is the only manageable approach. We cannot recreate the old growth forests the settlers took down. We cannot decide on an arbitrary historical comparison point. Today, a developer weighs the cost of building vs. the cost of land. I argue the equation should also take into account the opportunity cost of the land being developed. A shopping mall spread out on acres will entail cutting down forests that could have absorbed CO2, furnished shade, filtered water, etc. The price of land should also include the price of what grows on it and what is filtered underneath it.
I have not studied the price of wood, but I would venture to guess that since the founding of this country, the price of wood has been shifting from reflecting the cost of cutting down a tree, to reflecting today the cost of replacing that tree. That is, the many years required to replant & grow the cut tree. That is what I call restitution: returning to the original point.
Similar thinking needs to be applied to coal and the materials used in cement, for example. It is not just the cost of buying the land and extracting the resources that matters, but also the price of replenishing them. And when they are irreplaceable, then the price should reflect that.
Why does this matter? Businesses are rational. They make cost/benefit decisions all the time. If new equipment costs more, but pollutes less, vs. older equipment that costs less and pollutes more, a defensible position is to buy the equipment that costs less and pollutes more. Decisions such as these are made in the immediate shareholders' interest.
Consumers are similarly rational. If they had to pay for the garbage they generate, they would be more wary of disposable items. If it costs me more to wash a water bottle than to buy a new one, I will buy new ones.
If the law changes to require every economic activity to take into account its environmental impact, then every cost/benefit analysis changes radically. More expensive equipment that pollutes less, becomes the right one to purchase. The disposable culture, with all its pre-packaged, single-use emphasis, comes into question. By revealing the real cost of consuming resources, comprehensive pricing would let every one of us make enlightened purchasing decisions. It is the right thing to do on a moral, environmental and economic basis. That is the change we need. Align rational self-interest with our larger interest in making sure our consumption is sustainable.
Questions for further discussion:
For example, bottled water would include the cost of re-creating the water (not just extracting more of it), plastic and paper that go into the bottle, the cost of disposing of the plastic bottle, and shipping expenses. Shipping expenses would take into account the cost of replacing the gas consumed and clearing the air pollution created in the process.
Wow! You say. Oil is not replaceable and the water cycle takes years to seep through the earth and come out in a source. Water bottles will cost a fortune. Yes, that's the point. Prices should reflect the fact that a resource is irreplaceable or hard to replace. Prices should also reflect transportation costs. If a bottle of Poland Spring is shipped from Maine to California, it should not be priced the same in both states. Reflecting the true cost of consumption will alter behavior, so that people are no longer indifferent between filling a re-usable water bottle and buying bottled water.
But, this will put the brakes on the economy, which is agonizing enough as it is! Yes, that is true. I'm looking for suggestions on how to deal with this. My first retort is that even if my suggestion were to be widely accepted, it would take a while before it is implemented. By that time, we will hopefully be out of the recession and better able to absorb the shock. The other answer is that since this recession is creating huge economic dislocation anyway, and since the economy that emerges at the other end will be quite different from the one we started with, why not make it better? This suggestion will create a new economy that reflects the true cost of making and selling things. (Quick adoption would be quite a surprise! Unfortunately, if taken seriously, this discussion will keep every lobbying firm in Washington gainfully employed for a number of years-- a completely unintended and unwelcome consequence.)
So, to recap, current pricing reflects the costs of obtaining resources. New pricing would reflect the cost of REPLACING/REPLENISHING/RE-CREATING the resources AND the cost of RESTITUTING the environment to the pre-production phase. The environmental impact also includes DISPOSAL costs. A manufacturing process that pollutes the air or water would have to include the cost of cleaning up that pollution. Anything that is transported would take into account the cost of replacing the energy consumed in transport and cleaning up the environmental impact of the transportation process. Styrofoam plates that clutter landfills should reflect the cost of dumping them, vs. cardboard plates or re-using plates.
The same applies to services. If a service involves transportation, it would reflect the consumption & restitution costs involved. Even storage would reflect the use of the land. From manufacturing to sale, every step in the value chain would reflect, in addition to the normal acquisition costs, the costs of replenishing this product/service and the cost of restituting the environment to its pre-product/service phase. Each step in the value chain would only add the cost of the impact it has created.
How far back do we go when calculating environmental impact? To the original tall tree forests in the Northeast? To the newer forests? We have to be reasonable. For fairness and expediency, I suggest we only look at the state of things before the immediate activity took place. This will reward bad behavior before the change becomes effective, but it is the only manageable approach. We cannot recreate the old growth forests the settlers took down. We cannot decide on an arbitrary historical comparison point. Today, a developer weighs the cost of building vs. the cost of land. I argue the equation should also take into account the opportunity cost of the land being developed. A shopping mall spread out on acres will entail cutting down forests that could have absorbed CO2, furnished shade, filtered water, etc. The price of land should also include the price of what grows on it and what is filtered underneath it.
I have not studied the price of wood, but I would venture to guess that since the founding of this country, the price of wood has been shifting from reflecting the cost of cutting down a tree, to reflecting today the cost of replacing that tree. That is, the many years required to replant & grow the cut tree. That is what I call restitution: returning to the original point.
Similar thinking needs to be applied to coal and the materials used in cement, for example. It is not just the cost of buying the land and extracting the resources that matters, but also the price of replenishing them. And when they are irreplaceable, then the price should reflect that.
Why does this matter? Businesses are rational. They make cost/benefit decisions all the time. If new equipment costs more, but pollutes less, vs. older equipment that costs less and pollutes more, a defensible position is to buy the equipment that costs less and pollutes more. Decisions such as these are made in the immediate shareholders' interest.
Consumers are similarly rational. If they had to pay for the garbage they generate, they would be more wary of disposable items. If it costs me more to wash a water bottle than to buy a new one, I will buy new ones.
If the law changes to require every economic activity to take into account its environmental impact, then every cost/benefit analysis changes radically. More expensive equipment that pollutes less, becomes the right one to purchase. The disposable culture, with all its pre-packaged, single-use emphasis, comes into question. By revealing the real cost of consuming resources, comprehensive pricing would let every one of us make enlightened purchasing decisions. It is the right thing to do on a moral, environmental and economic basis. That is the change we need. Align rational self-interest with our larger interest in making sure our consumption is sustainable.
Questions for further discussion:
- how to mitigate the impact on consumption and the economy?
- how do we price irreplaceables, like coal, petroleum, minerals; and hard to replace items like water? [for water, the cost of land through which the water has to seep to emerge or to pool at the source; plus the time value of money for the years required)
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