Knowledge Bridge

//Kevin Anderson /August 24 / 2012

Newspapers and digital: Looking to the future 20 years ago

To understand the future, it’s sometimes useful to look to the past. Those of us trying to figure out the future of journalism have just been given an amazing insight into how the Washington Post thought of digital 20 years ago. Mark Potts, co-founder of the newspaper’s website, has released a memo from the Post’s then managing editor, Robert G. Kaiser, sent after he had travelled to Japan in 1992 to attend a conference organised by Apple on the future of digital media. A lot of the predictions that Kaiser heard two decades ago have indeed now come to pass.

Kaiser saw the challenge of digital media, even then. “(W)e do find ourselves swimming in an electronic sea where we could eventually be devoured — or ignored as an unnecessary anachronism,” he wrote.

Here are just some of the predictions and visions of the future that Kaiser heard and saw at Apple’s conference which have come to pass:

• “Interactive pay-per-view movies that could decimate the movie rental business.” Last year, DVD-by-mail and streaming media company Netflix was blamed for driving video rental chain Blockbuster into bankruptcy.
• “The prophets also foresee a lot of advertising on this new medium.” This year, digital advertising will surpass newspapers, according to Carat. Digital advertising will now be second only to television in terms of advertising spend.
• Apple was showing off the Newton, personal electronic organiser, which led to the Palm Pilot and today’s smartphones.
•  John Evans of News Corp was at the conference too. “Speaking for the Murdoch empire,” he told the computer people, “you want what we’ve got, including our profits.'” News Corp continues to rail against the ‘computer people’. In 2009, Wall Street Journal editor Robert Thompson branded search engines and aggregators as “parasites”.

Beyond some of these moments of prescience, Kaiser had some incredible business insights. He noted that the revenue from reuse of Post material in databases had almost doubled between 1987 and 1991. He also noted how often the subject of electronic classifieds came up and that it would make perfect sense for customers to want to be able to quickly search electronically for what they wanted rather than have to page through columns of tiny text.

He suggested that the Post launch two R&D projects:

1) Design an electronics classified product immediately.
2) “Design the world’s first electronic newspaper.”

If you want a rallying call for your digital efforts, here is one from Kaiser:

No one in our business has yet launched a really impressive or successful electronic product, but someone surely will. I’d bet it will happen rather soon. The Post ought to be in the forefront of this — not for the adventure, but for important defensive purposes. We’ll only defeat electronic competitors by playing their game better than they can play it. And we can.

As Potts points out, the Post worked on a lot of things that now look familiar and Potts quickly developed a prototype of the “electronic newspaper” that Kaiser wanted. The Post worked with Apple, Microsoft, Oracle and IBM on a number of prototypes “that pointed toward the digital future”. They envisioned local digital news products, services similar to Groupon and versions of the post for devices like the Newton, a very early pre-cursor of the apps that we now enjoy on tablets and smartphones.

Of course, this raises an important question: If the Post saw the future 20 years ago, why were they unable to embrace and execute that vision? Potts said:

Overly cautious newspaper managers, convinced that the print golden goose was immortal and immutable, failed to fully exploit most of the opportunities presented by the new medium. They simply didn’t innovate nearly as much as they should have, leaving the field open to upstart competitors until it was too late. …  The history of the past 20 years of newspapers and digital media is, unfortunately, a legacy of timidity, missed opportunities and a general lack of imagination and guts to leap into the future.

Kaiser and Potts saw the future, but the Post was unable to grasp it and, now, in its most recent results, the Washington Post Company reported:

The company’s cable television division turned in a solid profit, and broadcast television earnings soared 34 percent, buoyed in part by a surge in political advertising in this election year. But the Kaplan education and newspaper divisions were still ailing. Broadcast television was the only Post division reporting higher operating profit than a year ago.

Newspaper revenue fell 15 percent and circulation continues to decline, or as the article says “continued its steep slide”.

Build digital revenue now

The biggest challenge for newspapers, especially in the digital transition, is to realise that at first digital revenues may seem small compared to print, but that it is indeed a slow transition not an instant switchover. For many publishers it doesn’t seem to make sense to dabble in digital when the returns pale in comparison to print, and I’ve certainly heard that argument from news executives throughout the 16 years that I’ve worked in digital media. But Google makes more than 90% of its revenue from advertising. It isn’t impossible to make money online, but news organisations aren’t positioned well enough to capture that kind of revenue.

As the last 20 years in North America and western Europe has shown, if newspapers do not move to develop digital businesses, they will not only miss the opportunity for new revenue but, when broadband or mobile broadband arrives, they will see their print revenue decline. In India, newspapers may be thriving due to rising literacy, but as we noted recently, 40% of the country’s 48m mobile internet users are abandoning print for their handsets.

Audiences everywhere are moving to digital, and you have to be where your audiences are. If you move now before other digital competitors — including search engines, online job sites and classified providers — get there first, you have a chance to defend your position with advertisers and earn the revenue needed to support your independent journalism.

Article by Kevin Anderson