Wednesday, 20 May 2009

How to Fix the Newspaper Industry - everybody else is doing it…

NOTE: Don't expect me to be doing multiple posts per day. I don't know what's come over me!

Everyone seems to agree that newspapers are dead. Even here in the UK they're not doing great, although our papers seem to 'get' the web a lot more. One of the things that I hear quite a bit from the pundits is that they should make the physical paper free as well as the online version.

I was just reading a post on Tim Ferriss' blog about Alan Webber and his "RULE #24 - If you want to change the game, change the economics of how the game is played." In it he mentions the free paper theory.

This triggered a thought for me that giving the paper away is nowhere near a bold enough strategy. The problem with the paper is not that it costs too much (except on Sundays - £2! who are they kidding?). For a lot of people, especially the core newspaper market, the cost is not an issue. The issue is having to go get the damn thing, cart it around all day and then filter through the ads just to find a few interesting tidbits.

So here is my "fix": force people to take the paper. Stick it through *everyone's* mailbox every single day. Become *the* alternative delivery provider. I haven't bought a paper in ages but I can *guarantee* that if it came through my door I would look at it.

In the UK (and most of Europe) we have fairly strong opt-out regulation against so-called junk mail. However there is a huge loophole called the "door drop". Marketers are still allowed to put whatever they want through all of the doors in a given area. This allows a lot of room for targeting. Millionaires all live in the same neighborhood right? There is a big business around this. When I was involved (~2yrs ago) it cost about £0.05 per door. Now I get 3 or 4 drops a week, about 20 pieces in total. Hmm… that's sound like £1 of revenue per house minus delivery costs. Seems workable.

Now you wouldn't want to push your paper on literally everyone. You would target the exact slice of the population that already reads you. Plus your economics are now much more predictable. You know exactly how many papers to print and you can streamline your distribution arm. In fact you'd want to buy or partner with someone like DHL or TNT who are already doing alternative deliveries. You also need to get you deliveries done *very* early to catch the commuters.

This is a winner takes all play. There is only room for a handful of players in a market like this. Once they have your paper in their hands why would they buy a competing paper? If you get it right it should pay back in spades.

I don't really see anyone brave enough to make the switch right now. But they'll get more adventurous (desperate) as time goes on and profits dwindle.

Perhaps TNT should think about buying a newspaper group to beef up the delivery pipeline…

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