Wednesday, December 9, 2009 21:04 - 2 Comments

The Birth of a New Model

Politico’s Success and WaPo’s Fall Proves Smaller Is Better

Newspapers will survive, just a much smaller business, says Michael Wolff, Vanity Fair columnist and commentator of This Media Life for New York Magazine.

Late November Washington Post came out with the announcement to close down the rest of its bureaus outside the nation’s capital, leading to a new round of staff layoffs and a more cost-efficient organization, which, as the paper’s top editor, Marcus Brauchli wrote in an internal memo, was to “concentrate our journalistic firepower on our central mission of covering Washington and the news.”

Unlike many U.S. newspapers from The Boston Globe to Tribune’s Baltimore Sun that have closed bureaus around the country, WaPo’s downsizing seems to have a more calculated strategy at play rather than simply a sign of the time.

“This is part of an ongoing retrenchment and restructuring in which their [WaPo’s] stated strategy is we can no longer be all things to all people. Let’s concentrate on our core franchises which are the Washington metro area and the federal government,”Wolff says.

This reflects how news organizations respond to structural changes within the industry although many expected the change to come sooner. Washington Post, a newspaper that had more than 900 reporters at its peak, now cut to about 500. It was unimaginable even a year ago that the paper would have the courage and vision to say “we are not a national news organization.”

“This is part of the process if the newspapers are going to survive–even that’s doubtful– it’s going to be a much smaller business,” Wolff said.

So far we have some smaller, more concentrated but successful news rooms stealing WaPo’s share of readership and ads revenues.  Politico.com, for example. As competition with Politico.com heats up, WaPo is changing its strategies.

“To see Washington Post closing is a lesson we need to learn. To be a successful journalism right now, you’ve got really stick to your knittings. That’s what Washington Post is trying to do here,” said Eamon Javers, Politico financial correspondent.

As of now Washington Post is still a billion dollar business compared with Politico, a 15-million dollar business. As WaPo is a business with install base and union agreement, it proved hard to get rid of employees once they were hired. The heavy legacy cost rendered it difficult for WaPo to compete with much more nimble organizations like politico.

“You clearly have one organization on the rise and another organization that is in nothing less than a full-blown existential crisis,” Wolff said.

Right now Politico has about 100 staffers and politics is their only focus. It has also proved that it is perhaps the all-inclusive content coverage approach that has caused the slow death of newspapers, rather than the old paper-based platform, as many people may think.

According to Javers, Politico has a newspaper that is its profit leader. The paper gets distributed in Washington DC and goes up to the Capital Hill and the White House. Because the niche content serves a relatively concentrated readership, the paper secures revenues of advertisers, particularly issue advocacy advertising, as Javers put it. Those are the advertisers who have a particular mission they want to push, be it healthcare or defense spending, to reach decision makers’ eyeballs. In lieu of hurting Politico’s profitability, the paper becomes a big piece of Politico’s business model.

The key for the survival of the newspaper industry, thus, seems to be the balance of size and content, not so much with the platform.

“Looking at overall in journalism is this question about whether overall staffing numbers will have to come down to something much smaller than we are used to,” Javers said, “I think we are going to see them continue to narrow their focus and stick to what they are really good at and leave the rest, as important as they are, to the sideways.”

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