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I was reading an article that linked off of Drudge Report today because I’m very interested by Jeff Bezos’ purchase of the Washington Post when I was dumbstruck by a comment from a newspaper industry veteran, Chris Tolles, CEO of Topix, one of the leading news communities on the Web:

Amazon’s core competency is driving other companies out of business.

Mike Elk, economics and business writer says:

There is a demonstrated history of preferring part-time and temporary workers at Amazon’s fulfillment houses.

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I just stopped dead in my tracks when I read this. Really?  That’s what you think Amazon’s core competency is?  Or maybe it is a fantastic shopping platform which allows me to find just about any product on the planet, easily purchase it at the lowest price (and get very useful recommendations for other things I’d like) and it shows up on my doorstep with free shipping sometimes in about 24 hours.  Could that maybe not be Amazon’s core competency?  Unbelievable awesome customer experience from start to finish?

Why are billionaire’s picking up newspapers for pennies on the dollar? Because they have been run completely into the ground.  Let’s take a little glimpse of this head on collision as we drive by shall we?

Revenues are down.

Newspaper ad revenue dropped another 5.9% in 2012; magazines, overall, were off 10.4%.  According to the Newspaper Association of America (NAA), for every $16 in print advertising lost, only $1 of digital advertising is added.  Why?  Because Google and Facebook are eating up all the digital ad dollars by attracting local advertisers over to their eyeballs.

Figures from Google, NAA, and Publishers Information Bureau indicate Google’s ad revenue last year surpassed the combined revenues of the United States print media industry, newspapers, and magazines combined.

Digital disruption, competition for ad dollars, disinter-mediation?

Knock, knock…hello newspaper leadership…anybody there?

Quality is poor.

What happens when you have a revenue problem?  Well you cut expenses, don’t you? And then what happens to the quality of your product?  It starts to totally suck.

Research from Ofcom in October 2011 demonstrated that nearly 50% of respondents disagreed with the statement that they “trusted what they read in the newspaper”. News websites scored significantly better with around 20% disagreeing with the statement.

In American newspapers the number of newsroom staff has dropped 30% since 1989.  And in reality it probably should have dropped even more.  What happens to a business when it cuts to the bone?  Readers leave.

Over 30% of respondents to a Pew Report survey said they had deserted a news outlet because it no longer provided them with the news and information to which they had grown accustomed.

Well that’s really going to help win over more ad revenue next year, isn’t it?  Ooh, I know, pull more stories over from AP word for word.  Or better yet, pull them directly from other people’s blog posts (trust me this happens) and also it would be great if you do more really fluffy pieces of journalism that don’t take too long to produce. Then, oh this is a really great idea, we’ll go back to a subscription model because we have such worthy content that readers should want to pay for it.

Does this seem at all sane to you?

Technology is relentless.

Along came a tablet and sat down beside her.  This industry is, how shall we put it, technologically incompetent?  Too harsh?  Maybe.  But certainly not keeping up with what, for everyone, is a breathless pace of change.  Consider this fact.

Among IT and tech employees with mobile devices, 62% indicate that tablets have replaced their newspapers. [Source: IDG, August 2012]

Okay so now you’ve lost your channel because people don’t really want to download a different mobile app for each newspaper.  So they use….drum roll please…Flipboard wins.

Speaking of apps, this interesting little tidbit puts things in perspective. StepLeader, a mobile technology company, did a survey and found that 47% of the respondents said that they used Local TV broadcast as their primary source of local news. The next highest source was Local TV mobile apps (at 17%) which were followed by newspaper websites (7%) and local newspaper print (6%).

So despite our collective love for the printed word, people want to see video now.  Or at a minimum have a collector/aggregator curate the content for them.

Whammie.  Lost their distribution advantage (but still have all their print expenses and capital equipment oh joy).

Printed newspapers will be a thing of the past in 20 years.  I’ll keep a few copies along with my princess phone, fax machine and Apple Newton just to prove to my son that they did used to be quite popular.

But there is hope.

Okay, it looks pretty fatal as we drive by.  But here’ a fact that you must leave stuck in your head.  Yesterday 41% of adults 18+ in the United States reported either reading a newspaper story in print or digitally. That’s still a huge audience.  Why?  Because people still want to know what’s happening in their local markets.  Because the content/aggregator sites and apps link over to them.  And because they are still putting out important information despite their many overwhelming challenges.

Even more importantly, local marketing is hot right now and the ability to reach even broader audiences is ripe.  My team did a story recently on the higher time spent and engagement in local media sites.  This is a great place for advertisers to be.

When it is all said and done, I’m rooting for the newspaper business to comeback.  I think that if Jeff Bezos applies the same operational and customer experience excellence to The Washington Post, they may have a shot.  It certainly wasn’t going to go well for them if he didn’t buy them so I’ll drink (my non sour grapes) to that!

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