Gimmicks Are Not a Sustainable Business Model

by Ronald C. Burkhardt

Crossposted at my site.

I’m impressed by Philadelphia Media Networks’ bold push into the tablet-consumed digital content space, but dismayed as well.  This is a solution to A problem, but not the problem.

PMN will be selling a subsidized Archos ANOVA 10 G2 (similar to this one on Amazon), bundled with applications and subscriptions for the Philadelphia Inquirer and Daily News.  The tablet will have a 10″ and has contemporary technical specifications (though not quite equal to the iPad).  The launch is scheduled for Black Friday.  From Philly.com:

Customers who sign up for a two-year subscription to the package of apps for $10 per month will pay $99 for the tablet, for a total price of about $339, a 65 percent discount. Customers who agree to a one-year subscription will pay $129 for the tablet plus $13 per month, for a total price of $285, a 53 percent discount.

The package includes replica-edition apps of The Inquirer and Daily News, in which tablet users can view digital images of every page of the newspapers, or click on headlines to see enlarged versions of each article or column. Subscriptions to those apps, initially developed for owners of Apple’s popular iPad tablet, each sell for $13 a month.

The offer also includes a newly developed multimedia app that expands on The Inquirer’s content with photo galleries, video, social-media links, and other new features, the company said. Separate subscriptions to the new app will eventually be sold for $45 a year, the company said.

The problem that print publications have had to deal with is two-fold.  First, billions of items of content are available online, for free.  Secondly,this  has conditioned the reader to not pay for content.  Neither of these gets to the real problems.  

Paid circulation in terms of readersof dead-tree editions has been dropping.  This has been undeniably true for years, with the trend having started with Cable-TV news.  The internet is just the latest to siphon-off eyeballs.

Gimmicks such as digital fascimilies and subsidized tablets may be necessary, but they are not sufficient.   Cutting staff, editions, and closing bureaus weakens your product while strengthening the bottom-line and creating a viscous-downward cycle.  Aping Cable-TV with tabloidization or showcasing political shockjocks devalues your product.  Gimmicks are not a sustainable business model.

The place that is in desperate need of innovation is advertising.  The daily deal space may ultimately prove to be a loser, but this is an innovation that SHOULD have come out of the newspaper industry.  If you can’t get more readers and more advertising, make the readers you have more valuable.