Read All About It

I am a devoted fan of The New York Times. I read it every day in its myriad formats: the classic print version, online at and on my Kindle through a daily digital subscription. A world without the Times would be greatly diminished, perhaps even unthinkable, in my opinion.

The newspaper business has been hit from all sides: declines in subscriptions, print ad revenues, classifieds. And online display ad dollars can’t make up for the declines in print, despite the fact that many of these sites get 20 times the audience of their print versions. With all three revenue streams threatened at once, it’s no wonder we see business closures left and right. Paradoxically, this is happening at a time when the overall audience for newspaper content (combining print and digital versions) has never been higher.

There’s another trend happening that most media companies aren’t thinking about: the idea that marketers can “own” media themselves. As marketers build sophisticated digital ecosystems encompassing Web, mobile, emerging platforms, digital signage and in-store technologies, they are gaining reach and frequency with audiences — the very hallmarks of media in the old model. When brands own their own media and aggregate their own audiences, they lessen their need to purchase these eyeballs elsewhere. We have seen this effect repeated again and again by brands that build long-term digital platforms rather than execute episodic campaigns online. These platforms often drive an even greater amount of “earned” media whereby consumers share information about a brand via their blogs and social-network sites. In short, the same digital technology trends impacting newspapers have also lowered the entry barrier for brands that want to become their own media companies.

I believe there is a way forward for newspapers, but it requires a radical rethinking of the core business model. Historically, newspapers thought they were in the news business and people used to think that content drives value online. But neither is entirely true, at least not anymore. The only sustainable business model online is aggregation plus functionality. The most valuable media company on the planet is Google, and its primary product is a search algorithm.
Aggregation plus functionality fuel Google: it has the most aggregated database of everything on the Web, combined with functionality that makes it simple for anyone to access. Aggregation plus functionality fuel Amazon, which has the biggest, deepest inventory of merchandise. Its offerings range from the blockbuster hit to the obscure rarity far down the long tail; moreover, it aggregates data to help guide your purchase decisions: if you like this, you’ll like that, etc. Aggregation plus functionality fuel Netflix, a movie database larger than anything Blockbuster can stock in a brick-and-mortar store, combined with technology to help you discover new “movies you’ll love,” as the Netflix site claims.

Look at just about anything profitable online and you’ll see the pattern repeated: iTunes, Etsy and Zappos-and the list goes on. What they all share is aggregation plus functionality and a business model that extracts a fee for every transaction-not reliant upon display advertising. A new generation of Web 2.0 aggregators has taken the market by storm, employing the same aggregation-plus-functionality business model: Trulia and Zillow in real estate, in financial services, Kayak in travel and so on.

Newspapers think they are in the news business, but they have also historically been in the aggregation business. There was a time when the classified real-estate section of your local newspaper was the aggregation of all real estate currently available in your community. The circulars inside newspapers were essentially an aggregation of all the local retail promotions. The automotive section aggregated all the deals offered by local auto dealers, a key reason that newspapers were valuable to their audiences.