What Are We So Afraid Of?   

Newspaper publishers seem convinced that the computer age is about to gobble them up. Instead, says a pioneer in media technology, they should harness it.

By now, almost every executive has heard the thesis that American railroads failed because their owners mistakenly assumed they were simply running railroads when they were actually in the business of providing mass transportation. Not wanting to make the same mistake, newspaper executives in the 1980s examined their own missions. Unfortunately, once they concluded they were in the business of providing information for mass audiences, most of the industry's leaders breathed a sigh of relief and went back to business as usual.

Their complacency, however, was abruptly shaken in July 1991 when federal Judge Harold Greene freed the seven regional telephone companies, formed by the 1984 breakup of AT&T, to develop and deliver their own electronic information services. What the phone companies will do with that freedom is still uncertain even to them, but they have the resources and clout to give newspaper publishers, as well as magazine publishers, broadcasters and cable operators, the greatest competitive challenge they have ever faced.

Even if Greene had not lifted his prohibitions on the Baby Bells, newspapers would still be facing serious challenges from a host of new electronic media companies, one or more of which could turn out to be as formidable as the Bells. Rather than the anticipated frontal attack by a few large and visible entities, the newspaper industry is more likely to find itself being worn down from all sides by many smaller entrepreneurial enterprises.

Battling the Baby Bells and other challengers in the courts and Congress is not the solution – it only delays the inevitable. Newspaper companies will not regain their once predominant position by sticking with the status quo.

Dabbling in audiotext and fax news or tinkering with content and format are not solutions either. Nor will expensive color presses and low-rub inks rescue the industry. What newspapers desperately need is a new vision for the 21st century – a vision not dependent on ink-on-paper printing. The traditional printing press is dying – and much more rapidly than anyone realizes.

In recent years, business schools have put a new twist on the railroad thesis. What you'll hear today is that most railroad executives understood they were in the transportation business. The problem: They loved trains.

A similar case can be made for today's newspaper executives. While most accept that they are in the mass communication business, they love ink-on-paper too much to seriously consider alternatives. Consequently, all electronic media are still considered threats rather than opportunities.

While no one expects printing presses to die any time soon, their role in mass communication will be greatly diminished in the next 20 years. This will come about because of new technologies and social changes such as greater concern for the environment, the aging of the American population, the increased mobility of readers and the globalization of media and politics. If newspapers continue to tie their fate to the Industrial Age, their fortunes will be deflated as well.

There is another lesson in the demise of railroad companies that newspaper publishers and readers alike would do well to consider. As the huge profits of the industry turned into equally vast losses, the executives who had a passion for trains were replaced. The new hires consisted of managers with no emotional attachments to the business. Their job was to create profits. The result is that many of the once-proud railroad companies no longer run railroads.

My concern is that we will see a similar trend among media companies over the next two decades. A strong economic recovery could temporarily mask the declines in readership and advertising that have plagued the industry, but not for long. Few expect profits to return to what they were in the 1980s, when 30 percent to 50 percent margins were not uncommon. There is a growing belief among some executives who anticipate a decline in ink-on-paper journalism that newspaper holdings should be reduced in favor of more profitable business information services.

No one denies that newspapers must make money to survive or that some diversification is necessary, but we must also remember that newspapers are not railroads. They are vital institutions in our free society, protected by the Constitution, and require responsible management. A passion for newspapers is a necessity of publishing; to abandon newspapers for short-term financial gains would be tragic and shortsighted.

Instead, the industry should realize that newspapers will always be an effective filtering service for readers, no matter their form, and begin considering new technologies. In the next few years, we will see an explosion of innovative devices called personal information organizers and communicators. Apple has already introduced a prototype of the first, the "Newton" electronic notepad, a pocket-sized appliance that operates with a pen rather than a keyboard. The preliminary belief is that these devices will be used to send and receive handwritten messages, to hold personal calendars and journals, and to receive information such as stock updates or sports scores.

Whatever uses develop, these new communicators will be information hungry. To satisfy that hunger, businesspeople are already seeking alliances with newspapers, news wires, information services and databases. And while devices such as the Apple Newton may seem insignificant now, they represent only the first wave of products that will emerge from today's rapid convergence of computer, communications and information technologies.

By the end of this decade, an array of far more powerful computer appliances will transform the concept of media convergence into commercial reality. They will range from "smart," flat-screen televisions that can hang on walls to lightweight, pen-based computers that will be commonplace. These devices, known as "flat panels" or "tablets," will combine the readability and convenience of paper with the technological abilities of computers and compelling qualities of video and sound. In the same way that ink-on-paper printing has defined the present era, it now appears certain that electronic "presses" and multimedia publishing will define the new one.

Contrary to what many believe, the newspaper industry is in a better position than the Baby Bells to profit from these technologies. Fiber optics and "electronic paper" will transform mass communication into an interactive, multimedia format, but it will be content, not technology, that determines its success. And content is what newspaper publishers know best.

Many newspapers – even smaller ones – already have innovative technology for gathering, processing and packaging information. They have access to global networks and vast information resources. They have well-established infrastructures for marketing their product. All that now stands between newspapers and their customers are their mechanical presses.

For three centuries publishers have thought of the press as their greatest asset. Its expense kept competitors out and its versatility provided extra income from job printing. Today, rather than a barrier to entry, the press may become a barrier to exit. While modern presses are engineering marvels, they require a king's ransom to purchase. For large dailies, a new printing plant can cost hundreds of millions of dollars. And once installed, they are expensive to operate and maintain. More than half the cost of publishing newspapers is now attributed to manufacturing and distribution.

Electronic publishing will have few of these capital outlays and operating costs. The transition may be painful, but the rewards could be far greater than anything the industry has ever known. But such opportunity won't wait. Instead of devoting so much effort to battling change, the newspaper industry must prepare to embrace it. If it doesn't, someone else will. l