Changing Economy & Changing Thinking

Yesterday I had a conversation about cars and the increasing cost to drive. The conversation got around to the last gas shortage in the 70's; with gas lines, odd and even full-up days, and how the "more efficient" cars of the 1970's were so incredability bad - unreliable and ugly. That was also when Foreign car manufacturers, like BMW, Honda and Mazda entered into the US Market with new models, like the 2002, Civic and RX2 respectively. These vehicles were more efficient and the car companies were nimble enough to manufacturer models that met the smaller car needs of the changing US market. Eventually, these foreign brands beat-up the US Manufacturers and took their lunch money. Now, to the point they are main-stream in the US; with several models manufactured in the US and competing for the rank of #1 model sold. But it took a change in thinking by the consumers and manufacturers to make this transition happen.

Fast forward to today's newspaper market and sliding print circulation. The industry is looking at a similar situation as the auto industry -- the internet products and communities are beating up the printed newspaper and tying its shoe laces together. Internet revenue for newspapers is growing rapidly, but accounts for only 10% (approx) of total newspaper revenue. It's unfortunate that most 2008 corporate initiatives include few initiatives to change the print products strategy and operations to meet the needs of the consumer. Correct, there will always be a daily print newspaper that people want on the doorstep and news rack; but need to newspapers get creative and rethink their operations! So many resources and strengths of the newspaper are under-utilized and production is tied to inefficient operations.

Take a look at a huge under utilized resource - the newspaper delivery system. Who else goes to every address in the region on a daily basis. The USPS, but they are very expensive - getting paid in the neighborhood of $1-$3 per day to deliver to each address. At .42 cents for a 1st-class letter, just add-up the postage paid when you get your mail today. The newspaper delivery system is more cost effective and can be utilized to deliver address specific materials for the local advertising market. In larger markets, centralized delivery services can further drive down the cost by delivering multiple titles -- which is already happening in several markets.

Also look at Operations. Similar to the changing auto needs in the 70's, the newspaper needs to be much more efficient about print operations - it is extremely expensive to print just 4 hours a day and have idile press equipment. Today's economy requires a newspaper press running at 80+ uptime to maintain profitibility. A 20+ year old press might also be a liability; it's not as efficient as a new newspaper or simi-commercial press running 80K imp/hr. So make a decision, are you going to grow your print business or out-source to another newspaper or commercial printer for your printed product. I can't remember the last EXTRA newspaper that hit the news stand - though I saved one from the 90's. Today, breaking news goes to the website, with an in-depth story printed in tomorrow's paper. And with more newspapers are going to a web and print business model -- it deflates the arguement to have printing equipment "ready and standing by" in the event Britney Spears shaves here head. OK, that already happened, so some other breaking news that must be reported to the world. The win-win here is oursourced print fills the presses in the market, making those operations profitable and driving down their operating cost, and in turn, the contracted cost per copy.

So in conclusion, the Pacer and Gremlin are still the uglyest cars made, foreign auto makers delivered quality to gain market share and there are several opportunities for newspaper operations to be more efficient and cost effective.