Five Questions For... Steve Gray

Five Questions For... Steve Gray
Managing Director, Newspaper Next, American Press Institute

Appearing at Strategic Leadership: Making Radical Change Happen
May 12-15, 2008, in Chicago

API: What's the biggest challenge facing newspaper companies today?

SG: Frankly, it's a double challenge: First, it's learning to think big enough about the possibilities that exist in their communities, and second, it's moving fast enough to capitalize on them before competitors do.

Right now, in the U.S. and Canada, the digital revolution is reaching the local level, after years of developing mainly on the national level. Local consumers are now changing their behaviors, switching from traditional local media (including newspapers, television, radio, the Yellow Pages and other existing sources) to digital sources for local information. The pace of this change is accelerating, and lots of competitors outside the newspaper industry are racing to take advantage of it.

If we make the right moves, our industry can expand to meet a much bigger range of local information needs and community connection needs than a newspaper ever could. In effect, we can expand our franchise, serving more consumers and more businesses than ever. In the new Newspaper Next 2.0 report, we're trying to help newspaper companies see this vision, so they can use the N2 tools, concepts and processes to create new audiences and serve legions of new businesses.

API: Where do you see newspaper companies having the hardest time with the transition?

SG: Quite a few companies are stuck in the year 2000, thinking that if they put enough news content online, with enough variations (like video, podcasts, 24/7 updates and blogs), they'll somehow create the new growth they need. But those offerings mainly appeal to the same customers we already have, and they don't generate much revenue.

So these companies have an illusion of innovation, but they're not reaching the large share of the local population that doesn't use a newspaper or a news website, and they're not reaching the thousands of local businesses that don't advertise in the newspaper. This is a formula for continued shrinkage.

Some newspaper companies are doing better, creating new products and services that reach new consumers. The new N2 report's Casebook section presents 24 case studies of new products, including how they conceived and created them and how they're staffing and monetizing them.

API: Are newspaper companies creating new revenue streams successfully?

SG: There's more than a little success, but not nearly as much as there should be. In example after example all over the industry, even when newspaper companies create new products that reach new audiences, they're mainly trying to monetize them the old-fashioned way - with print ads and banner ads.

The more progressive companies in our industry are seeing and meeting new consumer needs, but they're not making nearly as much progress in seeing and meeting new business needs. That's bad news, because you have to meet business needs if you want to create new revenue streams.

In the new report, we tried to make the path to new online revenues as plain as possible. We partnered with Borrell Associates, Inc., on Section 3: "Maximizing Online Revenues." We pared it down to the basics: What will be the fastest-growing online revenue streams in the next five years (search, email and video), and how can you get started on them? And what are the "best practices" in selling online advertising, which can yield three to five times as much revenue as most newspaper companies generate?

The report also provides an amazing set of data to help each newspaper unit see what its current online market share is, and what categories will grow fastest in markets like theirs - a huge help in planning sales strategies.

API: Is the Web really the future, or is there a future for newspapers and other print products?

SG: There's definitely a future for print products - lots of newspaper companies are creating new printed niche and advertising products that are making good money right out of the box. The Casebook contains several examples.

And there's a future for printed newspapers, but honestly, I don't know how far that future extends. If we keep doing what we're doing right now, it looks as though the newspaper audience will keep shrinking until we're producing a boutique product for a small percentage of the public.

However, I'm much more hopeful about newspapers when I see examples like the Pocono Record in Stroudsberg, Pa. In 2007, their newsroom used the N2 consumer interviewing process to find out how to retool their news coverage and fulfill unmet information needs. It really paid off - they saw higher print sales and large gains, on the order of 50 percent, in both Web traffic and Web revenue.

If all newspapers did that - starting with consumers to find out what information needs aren't being met, and retrenching their efforts to meet those needs - I think we might see a much brighter future for newspapers.

API: The new report calls for a three- to five-year turnaround for newspaper companies. What would that take?

SG: It would take a clear vision at the top of the organization - a vision of what a newspaper company must become in that very short period of time, and a commitment to making it happen. This is a time for strong and courageous leadership, with a message of opportunity and hope.

And, of course, it would take resources, time and effort. As I see it, there's no more important role in this transformation than that of a publisher. We need to make a huge amount of change and progress in a short period of time, in everything from products to structures to technologies to skills, and the publisher is the one individual at most newspaper business units who has enough authority to make it happen. That's why I'm hoping we'll see lots of publishers at our upcoming workshops on the new N2 2.0 report.

The opportunities are real, and they are right in front of us today. I've seen enough examples of creativity, energy and true innovation to convince me that this industry can make the leap into a new era of growth, both in service to communities and in business success. Our goal, from the beginning of Newspaper Next, has been to give the leaders in this industry the tools they need to make it happen.