Monday, November 20, 2006

Yahoo and MediaNews Group form partnership

Posted by Craig Westover | 9:09 AM |  

You read it first here and then here, and today in the Pioneer Press --
MediaNews Group, which owns the St. Paul Pioneer Press, and six other major newspaper publishers plan to announce today a broad partnership with Internet search giant Yahoo Inc. that intends to deliver employment listings, advertising, Internet search capabilities and news content throughout their respective Web sites.
As the article notes, online operations represent about 20 percent of MediaNews profits and essentially all of its revenue growth.

The biggest decline in newspaper revenue is loss of lucrative classified advertising. The quickest revenue boost of the deal for both Yahoo and newspapers will come from online job listings.

This is a good move for the newspapers involved, but making it work is going to take a real cultural change among newspaper publishers. The cardinal rule of newspapers has always been, don’t dilute the main product – the printed paper. In the Internet age, the paper itself might just become a billboard to push readers to the newspaper’s web site.

If you think about it, it’s a case of Theodore Levitt’s “Marketing Myopia.” Newspapers have to figure out what business they are really in (hint: it’s not publishing a newspaper).

Newspapers have two functions or core competencies. The first is collecting news (the method of dissemination just happens to be a printed newspaper); the second is putting advertisers in contact with customers (which a newspaper does in broadcast fashion – high circulation attracts lots of potential customers with a low conversion rate to sales). The Internet provides a different means of diseminating the news (print, audio and video) and putting advertisers in contact with customers (one-to-one advertising, lower target audience with higher conversion rate).

My prediction: Some smart executive is going to figure out that with the ease of producing video and posting it on the Internet, there is no reason a newspaper can’t produce a video newscast or video version of the daily paper for its website and sell advertising on the broadcast news model.