Newspapers can be saved and they can get back to delivering a consistent return on capital to investors, but this can’t be achieved using old methods. At CRG Partners, our experience working with newspaper companies in the U.S. and U.K. has shown us that publishers and their executive management seem to believe that traditional cost-cutting methods of layoffs, smaller and thinner papers and lower salaries represent all of the savings that they can generate out of their operations. That’s not the case.

One of the myriad problems facing publishers and editors is that, while their resources have been halved or more and they have drastically cut staff and operations, they still face the need to create valuable, compelling and most importantly, local news and features.

One publisher told our firm, “In order to survive we have to be able to generate non-commodity hyper-local content that is relevant and at a cost that allows us to remain competitive and profitable.”

Content costs represent between 35 and 45 percent of the cost of producing a newspaper, so the question becomes: How can we cut costs in content and still deliver quality? In order to approach the question correctly, publishers need better information about how they source content — which content comes from what sources, how it is used, and how much it costs. Content sourcing is one of the area where newspaper publishers and other content-driven organizations can realize real cost savings and prepare their organizations for the new world of publishing.

Maintaining Quality Amid Economic Realities

In reality, publishers and CEOs have little understanding about what their editors are doing. Publishers don’t know the relevance of the cost of staff-produced content, paid content from syndicates, wire services and shared or free contributed content and associated editing costs. If they can get a handle on this, they can do a better job figuring out the cost/quality equation for print, online and beyond.

Without change, the opportunity to reduce costs without impacting quality is probably limited. How to build a better model? When you are working towards more efficient content sourcing, you have to ask the right questions:

  1. Is there an alternative content gathering model or a more efficient model that will help to reduce costs without negatively impacting quality?
  2. Can we improve our content gathering model without any need for change?
  3. How good are we at sharing content?
  4. How much copy is rewritten?
  5. Can we increase pro bono content and is there a strategy in place to facilitate this?

Metro dailies spend large sums on Associated Press and wire content while also maintaining significant local staffing levels. Based on our experience working with these types of publishers, the problem is that the expenditures often don’t match the way content is used. Additionally, the way content is used varies wildly by title. A content sourcing analysis can reveal sometimes startling mismatches between editorial expenditure and the way content is used.

Some content is national or international in nature and, in our view, don’t need to be staff-produced. Those cases include national and international reports, movie reviews, celebrity news, travel and many lifestyle features. Staff photography can be moved to the first few pages of a section and wire service or contributed photos used further inside. Layers of copyediting can be reduced.

Free or contributed content is a small but growing source of the newspaper offering. Metro dailies have so far rejected the large amount of free content that is available due to concerns about quality, editorial independence and ethics. In this day and age, however, it is wrong to believe that the quality of content you can get from free or archived material or bloggers is unusable.

I’m not advocating that companies move to relying upon citizen journalism as a solution to the metro daily content sourcing puzzle. But certain areas — high school sports, local government and education, for example — can rely upon content produced by unpaid contributors who work within specified editorial policies. They can fit into the overall editorial sourcing solution. The best-producing, most popular journalists still have roles in the new model by producing relevant, non-commodity local news that differentiates the metro daily. They are needed now more than ever. New media still stands on the shoulders of old media.

Content Sourcing Data

Over the past year, our firm analyzed four newspaper chains representing 300 titles.
The below graphic illustrates what we found when we looked at how a group of U.K. newspapers were sourcing content (I share some U.S. data below it). Each letter on the left hand side represents a newspaper in the U.K. that has experienced downturns in circulation and revenue. The percentages illustrate how papers within the same chain use content in very different ways:

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At a different newspaper company, we found that 125 papers published an average of 37 percent staff-written articles and 29 percent wire service material. What we called “reworked content,” or content that had to be rewritten or heavily edited, accounted for 14 percent of what was published. Shared content from sister publications was just 8 percent, while free, or contributed content, represented 5 percent of published content.

These papers had already undergone extensive staff reductions. In the conventional sense, all the costs had been wrung out. But newspapers have to change the way they think in order to survive. If you’ve wrung out all the costs you can from the existing content creation model, then it’s time to change the model itself. One paper printed 8 percent of its material from free content. If that number moved up to 20 percent, the savings can be measured and monetized. In the case of this client, a reduction of the use of 16 percent of staff-produced material led to a savings of 28 percent in staffing costs.

Although the program has been implemented for 2010-2011, actual results aren’t in yet. At this point, the editorial changes have been accepted and circulation is holding steady. If all goes according to plan, a total of $4.3 million more in savings will be realized. None of that could be accomplished by an editorial system that doesn’t understand what it costs to produce a newspaper. It’s high time for a content sourcing change in this industry.

As part of New York-based CRG Partners, Neil Heyside (neil.heyside@crgpartners.com) has more than 20 years of experience in process improvement, change management and operational reengineering in the U.K., U.S., Europe and South Africa. CRG Partners received the 2010 Turnaround Management Association’s (TMA’s) Mega Company Turnaround Award and was named Turnaround Consulting Firm of the Year by M&A Advisor. He can be reached at 212.370.5550.

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