Through Ruth's blog, I just got done reading a New York Times piece on the Tribune planning to cut 500 pages from 12 of their largest newspapers each week.
Newspapers = Toilet Paper
I can't even tell you how insanely upset this makes me… and, as consumers, you should be extremely upset as well. It appears that the Newspaper Industry, in its infinitely shrinking wisdom, is now following the path that the toilet paper industry have taken. They're selling less sheets for more money nowadays.
The problem is that people's toilet habits haven't changed, but their reading habits have. Toilet Paper companies can get away with shrinking rolls for the same price – we still need to buy them. Not so for newspapers.
Reducing the quality of your product isn't necessary
15 years ago I worked for The Virginian-Pilot and we did a lot of analysis of dynamic insertion equipment as well as some complex printing press layouts. Technology, at the time, didn't make it rewarding enough to build a newspaper dynamically nor did it offer the technology to build a household-targeted newspaper.
A few months ago, I was helping out Scott Whitlock out with his blog and he took me on a tour of his company, Flexware Innovation. He showed me a fascinating laser printing mechanism that they were developing that had incredible speed and tolerances, not unlike a printing press or insertion machine.
Creating household specific copy could be a boon for newspapers since they could then offer household-specific targeting based on people's selections. In other words, less ads = more revenue. A Best Buy could cut it's distribution in half but hit every household that likes the Technology section. Would they be willing to cut their distribution and paper costs 50% but pay an additional 10% for the targeting? Uh… yea… it would save them millions!
Not to mention that this could lead to newspapers even competing with the United States Postal Service.
I can't imagine that this day and age, that it's not possible to print your sections and dynamically generate a newspaper based on the household's request. Just think how easy it would be to cut thousands of pages from your newspaper if it didn't have sections that you weren't interested in! If I'm not into sports or the opinions of the editorial page, simply cut them out!
As well, carrier sorting and delivery would make ensuring a newspaper gets to every door much more accurate! A carrier wouldn't need to look at some routing table, they simply just pull the next newspaper out and toss it on the matching doorstep.
The problem with this, of course, is that it's not as easy as just dumping a bunch of pages and the valuable personnel that follow. It requires a change in process and a significant investment in the necessary print and distribution equipment, perhaps hundreds of millions of dollars. That cuts into a 40% margin pretty deep.
Sam Zell's message is clear – he doesn't have faith in his industry to change or rebound. Note to stockholders – dump it.