Magazine article Risk Management

The End of an Era: Jeff Jarvis, Veteran Journalist, Media Expert and Author of the Book What Would Google Do?, Discusses the Ignored Risks That Brought Down the Newspaper Industry and What This Means for the Future of Journalism

Magazine article Risk Management

The End of an Era: Jeff Jarvis, Veteran Journalist, Media Expert and Author of the Book What Would Google Do?, Discusses the Ignored Risks That Brought Down the Newspaper Industry and What This Means for the Future of Journalism

Article excerpt

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Much is being made of the demise of the newspaper industry. It seems as though print is the first industry being affected by the digital revolution, but it certainly won't be the last. How did the newspaper industry miss these systemic risks so badly?.

I'm coming to see that we're going through more than a transposition of technologies or just a financial crisis--or even a recession or depression. I think we're going through a fundamental restructuring of the economy and industry and, with that, society. Think of the internet and Google as an avalanche. They're hitting what's closest to them first: newspapers and text media. But it's going to hit the rest of media and it's hitting every other industry. The auto industry, the banking industry and retail are all being affected--everyone is going to be affected.

So the question is what can we learn from the newspaper industry. I worked for TV Guide in the mid-90s when all this was happening. When [media mogul Rupert] Murdoch bought it, it had a circulation of 17 million. Twelve years later, it had shrunk to three million--they got rid of their local editions and had tried all new sorts of things. Well, I was talking to my old boss from TV Guide and, rhetorically, I asked her "Why didn't we do all these things back then? We could see this coming back then." And she answered, rhetorically, "Well you know why, Jeff. Because it was a cash cow."

And it occurred to me that TV Guide and the newspapers are the cash cow in the coal mine. The fact that newspapers were monopolies and highly profitable blinded them to the strategic necessity of change. I hold them responsible for that but, then again, I guess it's not at all surprising. Do you really want to disrupt and, indeed, destroy yourself? But then again, protection is no strategy for the future. If you're fearing cannibalization, it means there are cannibals at the door ready to eat you for lunch. And you better do something drastic about it or you will get eaten. But now that the newspapers seem to be operating under a clearly broken model, it seems that people should have seen some of this as a blessing.

Why wasn't the idea that the production and distribution costs could be moved online, virtually for free, seen as great news?

The problem is that they were managing to size, not profitability. There was a scale of the business and they said "We have to maintain that scale." Well, no, actually. No you don't. You can eliminate tons of costs and in the process become more efficient, more nimble and more profitable in the end. But they didn't want to do this because they defined themselves--and this is true of much of American business--on a gross line rather than on a net [profitability].

And that's happening to other businesses too. The auto industry wants to control the whole car and everything in it. What if cars were made like computers and I could add on my options myself?. There are different models to create things, but this is the way it was set up: We have a monopoly in town, we have a big market share and anything that affects that must be bad.

So a lot of this comes down to companies not knowing what their customers wanted from them? I know you have written about the difference between Google and Detroit in this sense and how Google has an "open-source" philosophy where they let their users decide what the product should be.

Right. And part and parcel to this is deciding what business you're in. …

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