The Tribune Company, publisher of the LA Times and Chicago Tribune, sought bankruptcy protection last week, despite Sam Zell's attempt to right the ship. Mark Gimein writes in Slate that "cutting-and-consolidating, the model that's worked for Zell before, isn't enough to keep media companies afloat." It's a great piece that echoes what I said a few weeks ago about newspapers outsourcing to India. They need to stop rearranging the deck chairs on their Titanic business model and start innovating.
It's a solid piece, but I disagree with one of Gimein's points:
Advertisers are no longer convinced that there is a value in paying a big premium to attach themselves to major media. Trained to think in terms of the number of "eyeballs" that see an ad, they legitimately wonder if there is a difference if that ad runs on Google, on a billboard in a baseball stadium, on a network of low-cost blogs, or on cable television.
For major media, this is a disaster, because ultimately the premise of a Los Angeles Times, or a Vanity Fair, or a Slate is that their audience is engaged with them in a way that makes advertising with them worth more. If advertisers don't buy into that premise, then there is just no way to pay for the cost structures of major media. If all eyeballs are the same, then all the businesses based on a hypothetical special relationship with an audience are kaput.
While the recession's affect on advertising definitely hastened Tribune's decline, the real problem is that newspapers and other old media have a legacy distribution model that was made obsolete by the Internet. (See another nice slate piece which lists out the other professions that suffered the same fate... typesetters, pimps, yellow pages.)
It's true that "generalist" media are taking a hit because of link sites like the Huffington Post and Drudge, which have untethered their most valuable content from their brands. But for the most part, those sites are aggregators that don't add much value. I can read about someone throwing a shoe at George Bush anywhere if I want the basic facts. If I want to find the stories beyond the headlines, such as why throwing a shoe is such an insult anyway, then I look to the places I like and trust (almost always online now). And the types of advertisers that want to reach my demographic are there.
Slate, obviously, is a case in point. I check it out a few times a week. It's funny, informative and usually right. If it had the same dead tree distribution model as the LA Times or Newsweek, it probably wouldn't have much of a future.
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