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A Star is Born? NY Times syndicates outside blogs but that's not enough

asib_loRes.jpgRecently the New York Times announced that it will be syndicating content from three well-known blogs, Read/Write Web, Giga Om and Venture Beat. The New York Times is using these blogs as an extra-sensory organ; they can dial into what is happening in the tech sector (and particularly the West Coast with this trio) without allocating a lot of internal resources to it. Smart move.

As newspapers are locked in a desperate bid for survival I get the sense that we are watching the business equivalent of A Star is Born. In this case the iconic, shaggy-maned newsman falls for a feisty blogger with a horrific perm. Two strangers meeting in life’s stairwell; One headed down – the other headed up… Let’s hope this pairing has a better ending.

Syndication seems to have one goal – leverage that content to build online ad revenues. I hope the Times has more up its sleeve because this is just a “more of the same” strategy. Ad revenues for newspapers dropped $3 billion in the first six months of this year. With the Wall Street implosion it looks like revenues will continue to collapse as overall big-spend, ad budgets decline. I say this despite predictions of growth in ’09 online ads because big print newspapers need both online/offline revenue to stay viable. Bumping online ad sales in place of plummeting offline ad revenue will not come close to solving the fundamental problem.

In order to survive newspapers need to:

1. Get better at their core revenue business: advertisting. Use behavioral targeting to maximize ad prices – better user profiles equal higher revenues. Currently traditional newspaper ad networks are outsourced, weak and generic. Understanding these technologies should be a core competence inside a modern news organization.

2. Aggressive online diversification. U.S. Newspapers missed a chance to claim the classified space. Craigslist got there first and locked the newspapers out (in most U.S. markets). Schibsted, a pioneering media company in Europe, has a very healthy online classified business because they got there first. (Similarly Schibsted is competing with Google for search b/c they have huge data assets in content and video etc. that they are using to compete). Online services like this feed off of network effects – leaving precious little for runner-ups. It is too late for US papers to compete with Google or Craigslist but there are other areas that have not been claimed. Newspapers need to move aggressively to create services that deliver value; all-things-local; niche classifieds, local real estate, political polling data, creating decision markets with their readers etc. Newspapers still have assets that are hard to rival: large sales teams with great relationships; top-notch content-creation teams; established brands with public trust and, last but not least an online readership that can help become a pillar of new innovation.

3. Gene Therapy: This is what I call “the harder stuff.” Traditional newspapers require a DNA transplant. Many of the tenets of the social web: innovation from the outside, publish-then-filter, rapid adaptive behavior (fail forward fast) and learning from failure all meet with stiff organizational resistance. If newspapers do not empower their online businesses, take more small risks and get out of the way there will be nothing left in a few years to reclaim.

Newsgathering organizations serve a vital civic function – but without a clear revenue model they will become an artifact of the last millennium. Time is not on their side.

What else do newspapers need to do to save themselves?

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