The death of the lifecycle.

Have you noticed how as you get older, time passes faster. If I were smarter, I would draw on some relativistic analogy, but since I just had to look up relativistic in my university physics book, I'll just put it down to old age.

At least I'm not as old as the newspaper, though sometimes it feels like I am.

The world's first newspaper was produced in 1605. Newspapers continued to grow in volume and value for nearly 400 years in the West, before they reached the peak of their product lifecycle around 1990; long before the Internet started to take the blame.

In the East, South America and Africa they're still growing. That's 76 percent of the world's population still seeing circulation growth. There are many newspaper brands launched in the 18th century that still exist today.

Alexander Graham Bell - a Scotsman - introduced the telephone in 1875. In its original concept, usage started to decline for the first time in 2010 after 235 years, but of course, mobile services created a second evolution.

Radio was invented by Nikola Tesla in 1892. It is impossible to measure global audience levels but statistics show that radio listening time has been the biggest victim of the digital revolution - though it could be argued that Internet radio, and music downloading, are now radio's evolution.

Then there's television. John Logie Baird - another Scotsman - is widely credited with inventing what is now the technology of television in 1926. Television's traditional terrestrial audience is also in decline, but that fall-off is more than offset by the rise of digital viewing. Significantly, despite the massive growth in the number of local, national and international news stations, overall consumption of TV news has been declining faster than print for nearly 20 years.

Make the jump

Now we jump a mere 86 years into the digital revolution. Tim Berners Lee conceived the concept of the World Wide Web in 1989. Four years later, in 1993, the Internet carried 1 percent of telecommunication information. By 2007 the figure was 97 percent. Today it is generally accepted, in the West at least, that the level of fixed Internet services has reached its peak - both in terms of users and time spent. (Commercial revenues will continue to grow.) Yet European digital advertising growth rates have fallen from a compound annual growth rate of 50 percent-plus in the 2000s to around 12 percent currently. Mobile is leaving a now mature technology behind.

Even as traditional media brands have evolved in response to technological advancement - from letterpress to digital printing - what is most instructive is the performance of the digital brands within their technological lifecycle. Consider:

•Microsoft, launched in 1975, saw its share price peak 13 years ago, after 24 years, or 65 percent of its life.

•Google came into being in 1998. As with Microsoft, its value peaked 65 percent into its life.

•Yahoo's value peaked four years after its launch in 1994, after only 27 percent of its life. Today it is a fifth of its peak.

•When I first visited the offices of AOL - in 1994 - it comprised 24 people. When it "merged" with Time Warner, one New York analyst joked at the time: "Why is AOL merging with Time Warner when Time still hasn't merged with Warner?" Today it's worth less than $2 billion. The combined value of AOL/TimeWarner is now but 10 percent of their combined peak.

•MySpace and Netscape. Nothing more need be said.

I did a comparison of these alleged digital heroes with such well-established fast-moving consumer goods companies such as Nestle, P&G and Uniliver, examining their financial performance since the 2009 trough.

The reality is that these digital high flyers have performed no better or worse than those 100-year-old companies. In other words, these digital companies are mature businesses - and businesses that shot past their peak in very little time.

Now, Facebook

Now we see Facebook heading for its IPO. And I believe all these potential investors are either cynical, short-term opportunists or patsies.

Facebook's visitor level must be reaching saturation. Their time spent on the site is well past their boredom level. What's more, this young, dynamic audience will grow to loath targeted advertising.

Indeed, Facebook is already living on borrowed time, at least as far as my lifecycle-versus-history model is concerned.

Much like myself, Facebook's product lifecycle is probably past its peak. It's going to be downhill from here. By the time the patsies believe they will see their money back, the world will have moved on.

So much for the history lesson. What are the lessons for the future?

The first is that history shows that long-term brands and services have greater sustainability than those in the short-term. A new digital brand may be a patsy attractor, but it's a game of chicken.

Just because you are the "fad du jour" doesn't mean you're sustainable. Facebook and Mr. Zuckerberg have been famous for more than their allocated 15 minutes, and my suspicion is that, ultimately, the site will be as much of a passing fad as Yahoo and MySpace.

Amidst all this disruption, the one thing Facebook does have going for it is its revenue strategy - and it's a brand-killer.

As I've written before, the newspaper brand is our biggest asset. Just like Heinz or Coke or Colgate, we have to begin believing in ourselves, and telling the world we do.

Hole in raft

All these digital services are fickle; in terms of technology, and even more so in terms of brand survival. Our attachment to them is a life raft with a hole in it.

By increasingly relying on social networking and search brands for oxygen, we are further choking our own identity.

Newspapers are great at attracting audiences who don't hang around. Google's doesn't either, but its ad model is highly targeted. Now Facebook is attempting the same strategy, but its model is significantly riskier and unproven.

If the newspaper industry could combine Facebook's level of audience attraction - and stitch that to sophisticated audience database mining - we could massively increase reader involvement while matching advertisers to those readers most likely to buy. The algorithms exist and a few publishers are now realizing the opportunity.

If you believe salvation will come from attaching yourself to Facebook, Twitter or Google, forget it. Gen. Custer longed for the cavalry to come to his rescue. Remember: Pioneers get shot.

Newspapers have more than 400 years of reputation to rely on. True, we need to work harder to get technology employed that will allow us to deliver our brands across multiple channels, but let's not rely on the "here-today, gone-tomorrow" flavors of the month to extract us from the challenges we face.

Agree with Chisholm's analysis? Let us know by dropping an email to cmoozakis@newsandtech.com.

Jim Chisholm is a France-based independent media consultant. He can be reached at jim@jimchisholm.net.

 

(1) comment

johnhill

It would be difficult to disagree with what Jim Chisholm has to say about the survivability of newspapers in our brave new Western world, but there are a couple of issues that could bear some more analysis. The first is the whole question of newspaper lifecycle. It is at least arguable that newspapers' longevity has been because it has been made up of an overlapping series of issue lifecycles, either daily or weekly, and because promotion of the product has generally been very patchy on a continuing basis, some of the inertia which every product needs, is lost. Overlap of the lifecycles has made it difficult to pinpoint the amount of damage done. But surely the answer must lie with enhanced and continuous promotion.
The second point which he might consider addressing is the imbalance in the advertising/copy sales revenue streams. For as long as managements do not seek to remove their products' dependence on advertising to subsidize their reluctance to charge a realistic price for the printed product, there will be problems.

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