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The Future of Newspapers

By Clayton M. Christensen, Andrew B. Davis

The Big Three U.S. auto manufacturers. Downtown department stores. Video rental stores. Minicomputer manufacturers. All fell, or are falling, in the face of competitors who used disruptive innovations to change the game. Is there reason to believe that old-school newspaper companies can survive?

After spending a year studying the problem in the course of the "Newspaper Next" project that Innosight conducted with the American Press Institute, our answer is a resounding yes.

Our belief is not an academic one. Over the last five months, we conducted demonstration projects at a handful of U.S. newspaper companies. Although it's too early to point to billion-dollar businesses, we have seen mind-sets shift and managers get excited as they see the massive growth potential that still exists for the industry. But success will not come easily. Driven by shifting customer behaviors, the media landscape is changing at an unprecedented pace. Fundamental changes are reshaping the media environment and are sending waves of disruption throughout the industry.

Newspaper companies do, however, have real assets to bring to the table. Despite declining circulation, the daily paper still produces cash flow that many other industries eye with envy. The core content produced by newspapers is the basis for many of the industry's disruptors. Without newspaper content, there isn't much news for television to report, bloggers would have less to blog about, and Yahoo! News and Google News would be blank pages. Furthermore, newspapers have strong brands and highly skilled employees.

Newspaper companies have only begun to scratch their innovation potential. To succeed, they have to learn to look at markets in new ways. They must invest to create new capabilities and rethink the way they work individually and collectively.

The mind-set shift starts with how they think about consumers. For a long time, newspapers stood by as readership slid. Print executives tried to answer the question, "How can we convince more people to read our paper?" But the question has to be "What indispensable roles can we play in the lives of the consumers we want to serve?"

Just as GateHouse Media New England is doing with WickedLocal.com (one of our demonstration projects) and Cox Communications is doing with Kudzu.com, newspapers must help consumers—especially those that don't read the newspaper—solve the pressing problems of their daily lives. These solutions are likely to require new skills, such as constructing databases of local information, tapping into the "collective wisdom" of people who live in the community and building platforms for communities to form.

Newspaper companies must rethink their revenue equation as well. For generations, display advertising and classified advertising have powered the newspaper business model. The companies that place those advertisements are—not surprisingly—called "advertisers."

Read the full article on Forbes

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