Tuesday, June 9, 2020

Blog #3: I still get my newspaper delivered. Are you surprised?

I still get a newspaper delivered to my door. If that surprises you, the surprise would be warranted. Newspaper circulation has dropped precipitously since 1990. Circulation numbers in the US peaked in 1987 at just over 62.82 million. In 2018, the paid circulation of daily newspapers was 28.6 million [1], les than 1/2 of what it was 2 decades prior. The drop in newspaper circulation can be directly correlated to the rise of the internet. An abundance of free content and substitute news sources, such as Facebook and Twitter, threatened to make newspapers obsolete. 

Circulation of Newspapers in the US

Despite the decline, some newspaper businesses are thriving, including the one I subscriber to, The New York Times. In February 2020, The New York Times hit a 15-year high share price and has the highest number of journalists employed since it's inception [2]. There are now over 6 million digital and/or delivery subscribers [3].

The New York Times has managed to succeed because they have found coherence in their capabilities and have avoided the strategy failures that have closed the doors of more than 1 in 5 newspapers in the last 15 years [4]. According to the HBR article, The Coherence Premium, a capability is something you do well that customers value and competitors can't beat [5]. So what are the NYTimes's core capabilities?

Excellent journalism
Cable news shows and social media content can't compete with the quality of journalism that comes from the NYTimes. In this age of political and social upheaval, readers recognize the value of a reliable and trustworthy news source. For over 150 years, the NYTimes has differentiated itself with quality journalism.

Content that readers want
The NYTimes has always delivered content that isn't strictly news, content like sports, weather, and travel. By adapting to consumer preferences, the NYTimes stays relevant beyond being a journalistic source. Today, the crossword, food recipes, and podcasts all attract subscribers in their own right.

Sticking to these capabilities as the newspaper transitioned from print to digital has provided a coherent strategy. The fact that the NYTimes has remained profitable while so many papers have failed supports The Coherence Premium's assertion that "the data show that coherence in capabilities correlates strongly with greater profitability". 

Additionally, the NYTimes didn't fall prey to the 7 strategy failures outlined in the HBR article, 7 Ways to Fail Big, that took down some of their competitors. Many newspapers made bets on the wrong technology and stubbornly stayed the course by assuming it wasn't necessary to have an online presence. Other newspapers are involved in roll ups and consolidations [6]. For example In 2019, The GateHouse newspaper chain consolidated 50 Massachusetts publications into 18, as the company prepared for a merger with Gannett Co.[7]. 

 By taking risks and adapting to digital newspaper delivery, while also staying true to their core competencies, readers around the world can rest easy knowing The New York Times is here to stay.


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