As Print Slept, the Web Became Its Nightmare

Newspaper executives, many analysts argue, just don't understand the disruptive effect of the Web on their business and as a result have jeopardized the future of their papers, their companies and the investments of their shareholders. Others take a more nuanced view, claiming the newspaper industry's response to the Web is typical of any mature industry confronted by a new, disruptive technology.

That is, the newspaper lords knew it was important; they just didn't know how to incorporate it into what is, in the United States, a 300-year-old business model. With pressure from stockholders and investors, publishers worried about the bottom line for the coming quarter or year, not about what might happen in five years.

"It was rational self-interest," says Phillip Meyer, a journalism professor at the University of North Carolina who has studied how newspapers have been affected by new Internet technologies. "If their goal was to maximize return on investment, then sticking to [print] and avoiding high-risk [Internet] investments made sense," he says.

Despite the pessimism of those who tally the mergers, layoffs and tanking stocks in the newspaper business, some experts believe newspapers can be saved by using the Web to reinvent themselves and thereby retain their role as a vital institution in society. If they fail, and newspapers begin to fold with the great rapidity many expect, the loss to the populace will be incalculable.

In either case, there will be some valuable lessons other businesses can learn about dealing with disruptive technologies: principally, that one's customer base and competition can change overnight, and a failure to prepare for that change can have catastrophic consequences.

Mistakes Were Made

Jennifer Carroll, vice president of new media for Gannett — America's largest newspaper publisher, with 90 titles, including USA Today — has been working in the industry since 1981. She got her start as a reporter at the Port Huron Times in Michigan. Climbing the editorial ranks, she became managing editor of the Detroit News in 1997, a period remembered as critical (and ultimately regrettable) in the history of American newspapers.

With the dotcom bubble in its infancy and acknowledging the importance of establishing an online presence, Gannett and its competitors began putting their papers online — the news stories, the features, the comics and the classifieds. It was a newspaper you could view in a browser and little more.

"Industry-wide, if there's anything we know now that I wished we'd known then, it was about how to use the Internet and then respond accordingly," Carroll reflects. "But instead we raced to put our print newspaper online."

During this era, newspapers made a mistake typical of companies adjusting to new technologies: They attempted to employ old methods in a new environment. Scott Anthony is president of Innosight, a consultancy started by Harvard professor Clayton Christensen, who was credited with coining the phrase disruptive technology. Anthony says that instead of exploring the Internet's capabilities, newspapers simply replicated their print product on the Web site. "A colleague of mine calls it 'All the news that's fit to pixel'," Anthony says. "None of this was bad, but it wasn't sufficient." Many, however, thought it was.

For a while, doom and gloom forecasts abated and the industry enjoyed reasonable growth. "A lot of print people said this isn't going to be so bad and a lot of this isn't going to come to pass," says Marc Frons, CTO for digital operations at The New York Times. "I think it's only been in the last year or so that a lot of media companies have woken to the fact that not only is the Internet here to stay, but it's really changing and impacting their businesses in profound ways."

In addition to reproducing an old product online, the industry's strategy preserved ancient internal processes in amber. During the late 1990s and the early part of this decade, many papers began to try to merge their online and print departments, believing it would streamline their business to have their staffs working for both mediums, says Vin Crosbie, who runs a newspaper consultancy called Digital Deliverance.

Rather than acknowledge the difference between print and the Web, and the markets they serve, they tried to run both products on the print business model. "There's a whole fleet of people trying to do convergence," says Crosbie, "but the papers that created separate [online and print] departments often did better because they could do what should be done online without having to worry about the legacy content and business models."