Last Updated: June 29, 1999
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Technology
Editors must ponder what news is and how to deliver
it best (is it really shoveled newspaper stories?); Andy Grove doesn’t
think we have too much time to find out
Eating grapes and berries and sipping fruit juice, they rode on a comfy
tour bus at daybreak along the coastal California hillside toward the very
place that has helped breed some of the greatest threats ever to the newspaper
industry.
Into the heart of darkness these dozens of newspaper editors rode, to
Silicon Valley, the land of stock options and millionaire secretaries.
The land of the wafer and the chip, silicon and software. A place that
is pretty much a mammoth, pulsating hard drive crammed with technical innovation
and entrepreneurial edge that are helping to wire the country and, by consequence,
perhaps tie a wire around the newspaper industry’s neck.
The horror, the horror? Or is the Valley-centered, Internet-caused gloom
and doom more a case of the hype, the hype?
A little of both, editors concluded during a daylong tour of Silicon
Valley and two panel discussions at the 1999 ASNE convention in San Francisco
in April.
It’s the horror: Intel’s Andy Grove at a Tuesday session warning the
newspaper industry could lie gasping in three years, much like his company
did in the ’80s before reinventing itself as the world’s dominant maker
of microprocessors, which are the silicon-based brains of computers.
It’s the hype: “Editors should feel historically confident that their
service at its best will thrive in this medium,” said James Fallows, former
editor of U.S. News & World Report and now a Microsoft employee. “It’s
a shift in delivery means, a shift in many other parts of modern life,
but what editors have done best will serve them best in this age.”
“We editors are experts in self-torture,” Austin (Texas) American-Statesman
Editor Richard Oppel declared in a post-convention column. “Gone in three
years? Yeah, and the Jetsons and I will fly to work with rocket packs on
my back.”
Even if Silicon Valley doesn’t turn out to be Death Valley for the industry,
it most assuredly will be known as Make Life Difficult If Not Miserable
Valley. That, as editors and publishers try and survive against competitors
who literally didn’t exist 36 months ago and who are pecking away at the
franchise like squawking jays at a birdfeeder, eating away classifieds
and retail, news, sports, business and weather. Competitors whose Wall
Street market caps are stunning multiples of traditional media companies,
despite limited (and in some cases, no) revenues, let alone profits.
On the Internet, competitors give away classifieds, whose lush print
margins have helped keep newsrooms funded for years. Online auction houses
are driving intermediaries, like newspapers, away. The most-trafficked
online sources of national and international news, sports, weather and
stock quotes aren’t necessarily newspaper sites, but the AOLs, Yahoos and
Excites of the new online world.
Newspapers “have allowed companies that were dust three years ago to
own the notion of news aggregation on the Web, where as big brands should
have been owning that space and we should not be there,” said George Bell,
CEO of Excite, a leading Internet portal.
Grove, a founder of Intel and Time magazine’s Man of the Year in 1997,
talked about Intel’s “strategic inflection,” in which it went from almost
complete market share in the memory chip market to 3 percent or 4 percent
share in a matter of a few years. “It was a horrendous experience,” he
said. “We should have known a lot earlier. It’s that famous situation:
Nothing sharpens the awareness of a situation like the sight of the gallows.
The sight of the gallows was pretty bad.”
Newspapers may be facing the same fate in as little as three years,
warned Grove, whose company’s rebound led to $13 billion in profits in
the past two years.
“The way you get people in the tent is being attacked, and what you
have inside the tent is being attacked,” Grove said. “You are where Intel
was three years before the roof fell in on us.”
Enlist “objective observers” as soon as possible to help avoid destruction,
he advised. “The thing that bugs me as I look at is why did it take such
a horrendous situation for us to deal with something that an objective
observer … would have seen coming five years earlier,” he said.
“If in fact you are facing a similar situation now, you will know when
it’s almost too late.”
Three years to doom? “Right,” concluded Oppel of Austin. “When pigs
fly.”
Mary Jo Meisner, editor of Community Newspaper Co. in Massachusetts,
said perhaps Grove was exaggerating to make a point. “Maybe he was just
trying to do a wake-up call with us,” she said.
Meisner said others she talked with after Grove’s talk thought the three-year
figure might have been overdramatic, “but clearly, everybody knows that
we are on a fast track toward some considerable amount of change.”
There has been a “remarkable” change in recent years related to editors’
attention to, and understanding, of online and its implications, Meisner
said. “Five years ago, people would have pooh-poohed a lot of this stuff.”
There may well be lessons from the still-unfolding Intel story. Intel
is now reinventing itself again as its high-volume, high-margin chip business
is under attack from competitors who have cut prices to the bone, leaving
a high-volume, lower margin business. Chips are becoming a commodity. Just
like classifieds, national news, sports data, weather and stock quotes
are becoming a commodity online.
While Intel in the future may make less per chip, it plans to make many,
many more chips as “information appliances” proliferate. Newspapers may
find themselves in a similar high-volume, low-margin position with classifieds
and content, needing to learn to leverage other distribution platforms
(e.g., online, broadband, etc.) to increase volume.
As the complexity of the wired world grows, so will demand for extremely
high-end computers — and chips — to effectively control the cacophony of
the network. Intel plans to serve that lucrative high-end market.
The newspapers’ high-end commodity may well be its perspective, analysis,
insight and local expertise that can be effectively used to mute the cacophony
of information overload online.
Indeed, a recurring theme from speakers on the Monday Silicon Valley
tour and at Tuesday’s conference sessions was for editors to do what editors
do best: Focus on quality content; depth; perspective; local knowledge
and insight. That will provide value and differentiation and, perhaps,
success online.
“You have an extraordinary capital in the people being able to provide
in-depth analysis,” said Manuel Castells, a University of California professor
and author. “Technology will be cheap; you can buy it. Content, you can’t.”
“There are tremendous opportunities for newspapers, especially in the
area of trust and quality of information,” said Jim Spohrer of IBM’s Almaden
Research Laboratory.
“It’s not about computing,” said Currie Munce, also of IBM, “it’s about
information.”
Spohrer’s and Munce’s research and development facility in Silicon Valley
is but one of many that the players in high-technology fund with billions
and billions of dollars each year. Intel alone will spend $3 billion this
year on R&D. All the newspapers in the land will spend a tiny fraction
of that, including for online development.
“The one thing that has been increasing throughout our history has been
our R&D spending,” Grove said.
Replied Jerry Ceppos of Knight Ridder: “There’s a lesson there for our
industry.”
Analysis, depth and expertise — if they are to be the industry’s competitive
edge — don’t come without a price tag. After Grove declared “you can only
invest your way out (of a strategic inflection),” one editor shouted from
the audience: “Tell our publishers!”
Bell of Excite said success online doesn’t have to be expensive. “There’s
a supposition there that you’re going to leak a lot of money out and you
don’t know how it’s going to come back. I want to dispute that.”
He pointed out a recent CBS on-air/online event in which viewers got
to vote online at Excite about who they thought won a skating competition.
They expected 25,000 voters; the system was overwhelmed with 178,000. “One
of the things newspapers can do very well is to engage in one of the organic
strengths of the Web, which is this notion of interactivity.”
Mary Furlong, founder of Third Age Media, also stressed interactivity:
“Think about your readers as part of a community in which you give them
venues to act and react to the things you’re writing about. And based on
the volume of traffic and comments you see, provide more in-depth coverage
about the things that they are passionate about.”
But it’s “very, very hard” for newspapers to grasp the interactivity
themes to which Bell and Furlong referred, said Robert Ingle, president
of Knight Ridder New Ventures. “If you go out tomorrow and look at 50 newspaper-based
Web sites, you’re not going to find very much. It’s just not there because
we’re still in the ‘we print it and you read it’ mode, and that’s not where
the world is going.”
The reason: “We are far too print-centric,” Ingle said. “We think print.
And print business models and print mechanisms and print graphics and print
characteristics for, in my case, decades.”
“You’re still gathering local news like you did 20 years ago,” said
John Morgridge, chairman of networking behemoth Cisco Systems. “You’re
taking what you’ve always done and putting it up electronically and that
doesn’t strike me as very creative.”
Integrating online operations into newsrooms — and into the industry
culture — is another area that needs focus.
“You need to start thinking digitally at the top and not farm that out
to the Web guys,” said Furlong of Third Age. “They need to be integral
to your company.”
Christian Hendricks of Nando Media agreed. “We’ve spent time over the
last four years ... building these stepchildren that handle our online
businesses and we haven’t spent time figuring out how that really translates
back into our core business.”
Snappy retorts about the Jetsons and flying pigs aside, Oppel of Austin
recognizes newspapers need to take heed. “Online services will grow as
important providers of news. The survival of newspapers depends on usefulness
and reliability,” he said.
“The challenge for us is not staying in business, but to take advantage
of the many opportunities that we see to serve better our readers and advertisers.”
The last word goes to Yogi Berra, quoted on a sign in an exhibit area
at The Tech Museum, the mango colored museum/shrine to technology in downtown
San Jose that was part of the Valley tour for a busload of editors.
“The future,” the sign says, “ain’t what it used to be.”
Anderson is executive producer for Tribune Interactive, the central
coordinating group for Tribune Co.’s online initiatives.
