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Davis, California

Monday, May 27, 2024

Hail to the Chief

Mark Cuban may have come up with a business model to save newspapers, but it’s doubtful anyone will listen. In an Apr. 26 blog post (blogmaverick.com), Cuban lays out an idea that newspapers could use to save themselves, but I’m pretty sure newspaper CEO’s don’t read blogs (judging by their generalLa la la I can’t hear youattitude for the past several years).

Anyway, his idea is essentially that newspapers should become mini-Amazon.coms for their respective cities.

I think most people would agree that buying products from Amazon is pretty convenient. If you were on a newspaper’s website and you read a review for a movie that is now out, decided you liked it and were then able to order it through a link on the same page, wouldn’t you do it? Especially since it could be delivered at 5 a.m. the next morning with your newspaper? Wouldn’t that be nifty?

Cuban notes that one of the primary reasons Amazon is so successful is because once users enter in their credit card information, purchasing is extremely easy (1-click ordering, anyone?). He then says that newspapers should convert all their subscribers to credit card subscriptions; this way the newspaper would already have the credit card information and would be able to make deals with advertisers to offer great deals to local subscribers if they purchased through the newspaper instead of somewhere else.

There are a few problems with this solution (which I have only summarized here; check out the blog entry for the entirety of Cuban’s idea).

For one, it’s not clear that newspapers would have the time to implement something like this. Investing in a business model similar to the one proposed here would require a newspaper to jump through hoops to get Payment Card Industry (PCI) Data Security Standard certification.

The revenue made from subscribers buying products through the newspaper website would have to be sufficient to offset the increased costs of the additional personnel, equipment and insurance they would have to invest in.

Moreover, if the newspaper advertises cheap deals to subscribers on their website, what incentive do they have to continue subscribing to the dead tree version of the newspaper?

Cuban proposes selling special sections at discounted rates to subscribers (e.g. an NFL Draft supplement that you can have delivered with your paper for the low, low price of only $10). This is an intriguing idea, but I’m not sure it would work. This is similar to what ESPN has tried to do with ESPNInsider and the Internet Movie Database has tried to do with IMDb Pro, but as far as I know if people really want the information provided there, they will find a web forum where someone has posted it for free. Also, if you provided a service for $10 and your competitor provides the same deal for $5 (or free), who will your customers go to?

That’s not to say the idea is without merit. Certainly, newspapers would do well to focus their attention on their communities; increased efforts at local coverage and appeal is the only way to re-vitalize the dead-tree newspaper (the problem being that nobody’s come up with an especially good way to do this yet).

Warren Buffet noted this problem at his recent shareholders meeting, pointing out that newspapers were once essential sources of news to readers and consequently essential partners for advertisers and that this is no longer the case.

This would tend to suggest to me that what newspapers need to do is re-brand themselves and somehow make themselves indispensable once again. I don’t think Cuban has solved this, but I like that he’s trying. Hopefully someone will take that idea and work out the kinks in it.


RICHARD PROCTER wouldn’t go see Wolverine again if you paid him $100. Share your pain with him at rhprocter@ucdavis.edu. 


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