Are newspapers steak? And online is noodles?
Newspapers haven't had an easy time of it since the internet came along. Globally, circulation figures have trended downwards, while ad revenues have also dropped.
To make matters worse, digital revenues have utterly failed to make up the shortfall. According to the most recent Pew Research Centre's State of the Media report, print ad revenues for US publishers have fallen from $22.8bn to $16.4bn in the last five years. In the same period, digital ad revenues have increased from $3bn to $3.5bn.
The picture is so grim that one US academic has suggested that Newspapers are so bad at digital publishing that they should write off their forays into the internet, and focus all their energies on print. Trial and Error: US Newspapers' Digital Struggles Toward Inferiority is the provocative title of the book from Iris Chyi, an associate professor at the University of Texas. And if the title is hard for some publishers to swallow, the rest of the book will certainly stick in their craws.
Chyi suggests that newspaper executives drank too much of the dotcom Kool Aid. Drunk on digital, they focused on unsustainable online growth and failed to protect their core print product. As a result, they now find themselves in a self-fulfilling vicious cycle, where they are undermining print through cutbacks and lack of investment.
Chyi also posits that publishers have failed to distinguish themselves in the digital age. News outlets worldwide have consistently produced homogenous news content, which is distributed it through a plethora of platforms - apps, websites and social media - to an audience that's already suffering from information overload.
So how did publishers get it so wrong online?
"It's a combination of several things," Chyi says. "But I think the origin of their digital struggles has something to do with the fact that most newspaper people are not good with technology or economic reasoning. They first got impressed with the Internet, then intimidated by its power and misled by consultants, technologists and futurists - they all look very smart.
"To be fair, online publishing is a moving target, so no one could have foreseen its path. But it's 2015, 20 years into the experiment - time to refocus on what readers really want."
But the problems began in the 1990s when publishers first came in contact with the internet.
"At that time their core business was super-profitable, so they were enthusiastic about developing their own digital products," Chyi says. "As time went by, the success of online giants - Google, Facebook etc - provided further support for the unchecked assumption that newspapers must transition from print to digital, despite the disappointing results of their own digital experiment.
"And when the recession hit, the long-term declines in print circulation quickened, providing evidence for another unchecked assumption that print is dying. Newspapers panicked and became more determined to pursue their digital dream."
As time has gone by, and as they have continued to struggle, legacy publishers have ceded control of distribution channels to the online upstarts.
"At first, many newspapers decided to work with Yahoo News - voluntarily," Chyi says. "When Google News came up, indexing just happened. Google did not need newspapers' consent. When Facebook became the most popular social network, newspapers hired social media editors in no time, pumping their content onto social media platforms non-stop. Now it almost feels like an honour when tech giants come up with new ideas, such as Facebook Instant Articles, to help newspapers give content away for free."
One of the most interesting claims in Chyi's book is that online news is an inferior good in economic terms (that is, as consumers' income increases, demand decreases).
"Digital news is perceived by users as an inferior good, like ramen noodles," says Chyi. "While 'digital first' publishers believe their digital products are steak. Thus, unrealistic strategy and disappointing results. Print is the core product, the cash cow, something that many users are willing to pay $300-500 a year for. To change users' perception of ramen noodles won't be easy, especially when factors such as tangibility are involved. Therefore, newspapers should continue serving steak and make it better, despite long-term declines in the number of steak lovers."
So what advice does Chyi offer legacy publishers, struggling with the internet?
She urges them to realise that digital is not their forte, and print is an asset, not a burden. She points out that without content exclusivity, chasing readers across multiple platforms is a waste of time. She also suggests that publishers acknowledge that newspaper companies may not have to die - they are just no longer "wildly profitable".
She also points to the dominance of smaller, local papers in their respective communities as a model to imitate.
"In the US, the average print circulation of nearly 1,400 dailies is about 35,000 only," says Chyi. "That is, the majority of US newspapers are community newspapers serving small markets. These small papers are doing better than large metro newspapers - perhaps because they do not have the resource to focus on digital in the first place. Most of them are print-oriented, and enjoy more market power in the market they serve."
Sunday Indo Business