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Vertical and horizontal count in the newspaper business too

June 2, 2009 by Mike Shatzkin 2 Comments

For some reason, I had missed the Mark Bowden article in the May issue of Vanity Fair about Arthur Sulzberger, the publisher and chairman of The New York Times. It’s a painful article, really, describing a guy who seems to be intelligent, decent, and ethical, and who is trying mightily to save his family legacy (the article is entitled “The Inheritance”) And not succeeding in the attempt.

Most of the time when you read critiques of legacy businesses: the Times, the networks, the book publishing industry that didn’t digitize before Google, Publishers Weekly, BEA; you get the writer’s assessment of where they went wrong. It’s the “railroads didn’t realize they were in the transportation business” argument, over and over again.

So when the article castigated the Times for its lack of vision for failing to make a deal with Amazon.com to sell the books out of TBR “because Barnes & Noble was a big advertiser”, I see it as 20-20 hindsight. There were very few people in the mid-1990s (when this took place) who would have seen the day coming when B&N would be playing second fiddle to Amazon in many ways. And there is no assurance — none at all — that if the Times had built this kind of relationship with Amazon, blowing off and alienating a big advertiser, that they would have held the position as “the newspaper that connects you to commerce.” Having paved the way, others would have followed. Unless Amazon were loyal, of course. You set your own odds on that.

I usually don’t buy the second-guessing. There is a reason that successful businesses don’t invent their replacements. It isn’t dumb not to see wholesale changes that will disrupt your entire business model. It is normal. Mistakes get made and the Times made plenty, including buying back their stock at peak pricing starting in the 1990s. In Sulzberger’s case, the inability to see the future clearly was compounded by personal loyalty to the wrong people. He might not have had the best judgment in people pinning his hopes on Howell Raines and Judith Miller, but I find it hard (though not impossible) to think less of somebody because they were decent to people whom they thought were decent to them.

Mark Bowden, the Vanity Fair editor who authored the piece, quotes Max Frankel making a cogent (and not frequently-enough made) and then highly-prescient point about how the net disaggregates. The strength of the Times in the 20th century was that it collected quality reporting and editing across a range of subjects in one broadsheet. You might like the sportswriters better in the News or the TV critic of the Post, but you made the choice of what newspaper you bought based on the totality of what they delivered. 

Of course, it doesn’t work that way on the Internet. You can readily read the Times from Baghdad, the News from Yankee Stadium, and the Post discussion of what was on Channel 2. Now each part of the paper has to stand on its own two feet, so to speak.

Vertical takes over from horizontal.

It was truly visionary to see the power of vertical when Max Frankel, who was executive editor of the Times in the 1990s, did. Frankel was asked near the end of his tenure to think about the impact of “computers” (says Bowden, I’d say “digital change”) on the news business. Frankel wrote two memos; one of them would have required the Times to sabotage its old business model (which is what legacy businesses are quite understandably loathe to do). But the other anticipated the vertical message and, had others been able to see around corners the way Frankel did, could have changed things dramatically. The same strategy still applies today, but it would be much harder to make it work.

The first memo Frankel wrote recognized that because computers managed databases, classified advertising in newspapers was doomed. Frankel suggested a Craigslist solution to the Times before there was a Craigslist. That his bosses didn’t buy it is, to me, totally understandable. Classified ads in the 1990s rescued newspapers from a slump in local advertising. Pursuing such a solution would have threatened to cripple an important revenue source.

But the lesson, of course, is this: if the opportunity to cannibalize an existing business is in the ether, do you want to do it yourself or have it done to you? If anybody at the Times took Frankel’s idea seriously enough to think about implementation, then they apparently missed that point. Yes, they could have done it. But, then, so could just about anybody else.

The second memo was the truly prescient one. Frankel saw the power of disaggregation (and, one might say, reaggregation by individuals!) As Frankel is quoted, “It was the totality of the newspaper that was the marvel, not any of its particulars.” Frankel suggested, in effect, that the Times build itself in verticals: be the place to go for sports, for business, for politics. Go after ESPN.com, the Wall Street Journal, and (before they existed) HuffPo and 538.com.

Would the Times be in a different position today if they had established several verticals ten years ago and built them? I think so.

This is an extraordinary lesson for the Big Six publishers. The power of your aggregation is weakening as well. But it won’t be each book that has to stand on its own, but each subject. The Times had an opportunity to work its way past this problem ten years ago.  Big horizontal trade publishers don’t have ten years. They better start to see the need to build up strength in verticals very soon or they will be envying the current position of the Times. Maybe one of them should hire Max Frankel to analyze the situation for them and write a report.

Filed Under: Community, New Models, Publishing, Vertical Tagged With: Arthur Sulzberger, Howell Raines, Judith Miller, Mark Bowden, Max Frankel, The New York Times

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Mike Shatzkin

Mike Shatzkin is the Founder & CEO of The Idea Logical Company and a widely-acknowledged thought leader about digital change in the book publishing industry. Read more.

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