Long-Dying Medianomics: Kodak, Sears and Newspapers

How are US newspapers doing in comparison with well-known companies using the old business model? The numbers do not console.

None of the inhabitants of the old Olympus is insured. Just a few weeks ago, Kodak and Sears hit the bad news again. How many of these companies are already dying? Yes, once upon a time it was very strange to hear that digital devices compete with Kodak, and that Walmart, Target, Kohl and a little later, Amazon make life difficult for America's largest retail chains.

Would you ask an American in 1990, can he imagine a world without Kodak? Or a simple buyer without Sears. And now it becomes a reality. These are slowly disappearing companies, agonizing day after day. And we, of course, immediately recall about the newspaper industry. And the question is the same: Can you imagine a world without newspapers? But now, when tablets are already two years on the market, it is much easier to do this. I always laughed when I was asked whether newspapers would exist in 2015 or 2020. Papyrus with us for a long time. And the figure simply quickly replaces the press, simultaneously changing the landscape and the rules of the game in the media business and journalism. One or another press will be with us until the end of our days, but the more printers will resign, the more it will be side-lit for the gaining digital media.
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We used to think of changes in the world as a switch. Either one or the other. In fact, the world is changing at the same time, slowly and quickly.

Let's call the slow disappearance of well-known media brands the medianomics of long-term dying. Take for example companies that are deeply imprinted in our culture, habits and in our wallet. Their disappearance from our lives is similar to the slow motion of a glacier. But this slowness does not mean that the disappearance does not occur. The fact that over time the newspapers and partly magazines disappear is a fact. We can bet on how quickly they will continue to fade. By continuing, I mean a 44% drop in the use of the print press (75-80% of them are newspapers) over the past 4 years, according to the report The Reel Time Report . (For additional numbers, refer to Alan Mutter, lead speaker at E & P ).

So there is no doubt - dying is really and slowly. Sometimes, of course, here and there, a title like “Kinograf cuts film production for silent films” flashes like in the recent , silent film “The Artist” . (Maybe someday we'll talk about the "new print"?)

But let us ask ourselves: What is the connection between Kodak, Sears and newspapers? What can be learned from comparison?

As for profitability, see the chart. I showed revenues to Kodak, Sears and all US daily newspapers until 2010. The data for 2011 has not yet been received, but in any case the year was not kind to any of these companies.


The numbers are in millions. Under the newspapers are meant the gross income of all daily newspapers in the United States. Data on the circulation of 2010 are estimated.

The most obvious fact is that the fall in US newspaper revenues far exceeds the fall in Kodak and Sears revenues. Indeed, if Kodak and Sears, as unfortunate heirs of an old business, are doing poorly, then newspapers, judging by their main source of income, are even worse.

Over the period shown, newspaper revenues from advertising fell by 53%, while Kodak’s total income fell by only 49%. Sears fell 31%.

Circulations — the trump ace — that newspapers could always appeal to — have declined relatively — by 6% over the past decade. Circulations continued to plummet, but the continued rise in newspaper prices offset this. Sale of circulation is approximately 30% of the income of all US daily newspapers, that is, it is significant, but not sufficient to compensate for the loss of income from the sale of advertising.

If you add up revenues from advertising and circulation, then in a decade newspapers lost 45% of their revenue base, i.e. only 4% less Kodak.

Stock prices will show about the same when investors who have a poorly understood long-term dying will reach out.

What connects our three heroes? Digital news pioneer Steve Yelvington this week shared similar thoughts about the Kodak-newspaper couple, noting among other things that “brands are decaying,” and “destruction doesn’t happen in one fell swoop.”

Expand the metaphor. Do you remember the signs “Kodak Photo Spots” that called on tourists to take a photo at this place, exactly the same as tens of thousands of other tourists did here before? We put the newspaper owner (or buyer) here, imagining that there has recently been a huge amount of sales, and see what they can say about the surrounding landscape.

The review is extremely important. Why? Because, even though we say that newspapers are dying, at the same time we shout: “Long live the news!” Those who own - buy or create a news franchise - still have time to dodge and get a lesson. History is not destiny. The story of Kodak / Sears is just a cautionary tale from which to draw conclusions, a time-lapse crash.

Based on the foregoing, let me offer five deep practical tips for media managers in 2012:

• Do not believe your own accounting records. Public companies carefully verify the figures, consulting with analysts and shareholders as politicians. But very often they begin to believe in the created image. Talking about the future of megamarkets, photography or the role of the newspaper in people's lives does not solve the main problems. Refer better to those few experts who shout at the top of their voices that time is ticking, and the old business model will fly to hell sooner rather than later.
• Cost reduction ≠ innovation. Just, yes? Nevertheless, Eddie Lampert , Chairman of the Board of Directors for Sears, who was called a magician by the business press when she took office in 2005, lowers, lowers and lowers expenses once more, turning the already ordinary looking area of ​​Sears stores into a lunar landscape. Most newspapers have reduced costs so much that they have no strength left for mobile apps, HTML5 and digital distribution. Innovation means, at a minimum, fast following changes, otherwise you are dead.
• Permanent reorganizations and restructuring do not hide deeper problems, they only distract from focusing on the reader. Kodak is now reorganizing its divisions. Sears did the same thing recently. How many more times do newspapers need to allocate digital editions into independent units or return them back to a single editorial staff, losing time and money instead of truly realizing the meaning and advantages of the actions taken?
• The sale of assets is a temporary fix. Kodak diligently tries to sell the remains of its intellectual property, although much of it is still a big question. The sale will bring some amount of money, but will not solve the underlying problems and undermine the basis for innovation. Newspapers have some intellectual property (they may have more intellectual capital), so they sell their real assets - buildings, land. They gain time, but not as much as we would like.
• And finally, perhaps the brightest parallel: old companies are still stuck in the manufacture of brains. Kodak makes film and goods. Sears sells goods. Newspapers print goods and a much larger number of "print" sites. The new world is not built on goods, but on service. Photos from an iPhone are made simply to capture the moment, for family albums, but more often just as a keepsake, for yourself or a group of people, about a place or an event. They are like the continuation of our brain, to which we then return. Target stores (“Wait for more, pay less”) emphasize price, but do not forget about attitude and service. News is a story about how to get what I am interested in now, and not the product. Of course, to change such a manufacturing approach is very difficult. He brought in income that was allowed to spit for decades. However, it is so outdated, and those who stick to it will go to the bottom with it.

Another fresh victim of the old approach is the Best Buy chain of stores. She built large, expensive megastores, eating CompUSA and Circuit City alive. Now Amazon and hundreds of other sites have made it so that buying and delivering a 62 inch TV to the house is no more difficult than buying a sweater. Looking at the financial results of holiday sales, Best Buy CEO Brian Dunn (as well as the director of Kodak, Sears and newspapers before him), spit saliva said : “This wrong point of view [that the purchase of electronics went online] worries me blatantly ignores the evidence of the opposite. ” His irritation is understandable, but the story is increasingly throwing up examples of those defeated who could not adapt quickly enough.

The Kodak photo was taken by Kevin Stachfield and used under the Creative Commons license.