Walter Hussman’s plan to save theArkansas Democrat-Gazette may be a turning point in U.S. newspapering.
The business model is revolutionary, in my mind, because it is not digital-first — it is digital-only.
Here are the main points:
1.The plan cuts production and distribution costs to the point that the Democrat-Gazette is once again profitable.
2.The newsroom is protected and enhanced and remains the premier news-gathering business inArkansas.
3.The newspaper has changed from being a legacy business with a
declining future to a modern company that will grow with technology.
4.The Democrat-Gazette has an extensive, powerful mailing list
composed of loyal customers.
Perhaps most importantly, Hussman’s plan is built on technology that is growing, not declining or static.
As explained in our Page 1 story, Hussman delivers his daily newspaper electronically six days a week with a Sunday print product supported by pre-print advertising. He says the fate of the Sunday print product will depend on the continuation of pre-prints, which he says are in decline.
A successful digital-only product changes everything.
Not only do huge expenses go away, the internal structure of his business will change.
Ad sellers likely will be replaced by data analysts who track consumer tastes and by technicians who understand and operate programmatic advertising and electronic ad exchanges.
Technology potentially will allow publishers to obtain data about how and what content is consumed. Such data can be used to guide newsroom assignments and create targeted advertising products. New products might emerge that we can’t yet imagine.
E-edition technology offers great potential. Video, voice and interactive graphics and advertisements — once the sole province of television — can be published in electronic editions. Successful electronic newspapers – those with a substantial local/regional audience — can more easily compete with television for auto, real estate and other advertising.
In addition, content can be updated through the day. For example, election results don’t have to be updated just once every 24 hours — they can be updated in virtual real time. Day-part advertising becomes available.
Today many newspapers have outsourced their printing to shops many miles away, forcing the papers to have early deadlines that limit coverage of breaking news and night sports. Such artificial deadlines go away with electronic-only delivery.
Fast-developing 5G technology is coming soon. This will greatly enhance bandwidth and downloads and enhance and potentially expand electronic-only products.
Such technology could encourage live streaming of events that can be imbedded in e-editions.Think of looking at a prep sports event, city council meeting, street fair, etc. and other events being a feature within an e-edition at relatively little cost.
While the potential is great, hurdles exist.
Collecting data electronically presents a whole set of problems, mostly around government established privacy policies, such as the European Union’s General Data Protection Regulation (GDPR). More such privacy regulation is coming our way, led by the California legislature, and increasing public awareness about the intrusiveness of data collection.
Most newspapers don’t have a publisher as deeply committed to journalism and his community asWalter Hussman.
Hussman’s business model includes giving away iPads to subscribers who agree to pay $34 a month for electronic delivery of replica editions.
Is giving away iPads critical to the success of such a project?
The Democrat-Gazette will print its last daily newspaper on January 25.The Sunday newspaper — still carrying a dozen or more preprinted advertising inserts — will continue to be printed and delivered.
I chatted at length with Hussman, and he’s convinced that his newspaper will be profitable in 2020 after losing money the previous two years.
The newspaper business has been good to the Hussman family. (So much so that last year, the family was able to give $25 million to the University of North Carolina’s school of Journalism, which has been renamed the Hussman School of journalism and Media. Walter is a 1968 graduate of that j-school.)
At heart, Hussman is a journalist/businessman.
To make his e-edition-only newspaper work, Hussman committed $12 million to buying and giving away iPads to subscribers who agree to pay $34 a month.
The newspaper has given away 27,000 iPads.
The Democrat-Gazette’s newsroom staff is close to 110 reporters and editors.
Walter says there’s no way he can charge $34 a month to 27,000 customers unless he produces a top-notch product with quality and unique content.
So cutting his newsroom staff is not an option.
Cutting your way to profitability is not an option, he says.
“Too many newspapers have tried that, and it’s simply not working,” Hussman said. He also says he doesn’t want to be the publisher of an inferior product.
Every town, he says, needs a police department, a fire department, a water department and a newspaper.
But a poor police, fire, water department — or newspaper — helps no one.
Hussman, unlike most major groups, doesn’t have big debt payments to make, or have hedge fund investors to answer to. He doesn’t live and die with each quarterly financial report.
He says he’s willing to take big risks to save his newspaper.
Not only has he fought off the potential of folding the Democrat-Gazette, he may well have opened the door to a successful product.
The Democrat-Gazette has roots going back 200 years.
Let’s hope for another 200 years of success, and that others can achieve success thanks to Walter Hussman’s vision.
Perhaps Hussman is showing the news industry a path forward.
Marc Wilson is founder and chairman emeritus of TownNews. He has published two books,
"Hero Street U.S.A." and "Kidnapped by Columbus."