Business reality: markets change, even for newspapers

Remember back in the 1990s when Microsoft seemed unbeatable? That was a time when worries about anti-trust violations began to surface and most pundits figured Apple Computer would soon be out of business. Windows ruled the world.

Remember circa 2001 when just about every newspaper company in the world was trying to figure out how to turn its web site into a portal? The goal was to be the one web site anybody ever really needed. We talked about being sticky and keeping people on our site as long as possible. Where did the idea, and the buzzword, come from? We all wanted to be the local Yahoo!

This week, Microsoft, battered by declining market share and slowing profit growth decided that its best bet to survive was to buy Yahoo! — but not the Yahoo! of 2001, which was worth an estimated $90 billion back then, but a Yahoo! whose fortunes have sunk so deeply, its market cap was about a quarter that price (Microsoft is offering a 62 percent premium on Friday’s share price).

In a little more than a single decade, what happened to these two once seemingly invulnerable companies?

Change happened. Markets shifted. New competitors arose. New ways of doing business and making money were invented.

The names and business models of the competitors doesn’t really matter, because competitive turbulence is inevitable for any business.

Except, of course, newspapers.

No, wait. Newspapers are in trouble now, too.

Twelve years ago, who could blame a newspaper publisher for looking back on nearly 300 years of newspaper industry dominance in the media and think, “we will live forever.”

When you haven’t seen any real change in your lifetime, or whatever change came along (radio and TV, say), made only a marginal difference (“hey, we’re still running at 35 percent profit margins!), why worry?

We now realize, of course, that the same laws of business that change markets and make ensured survival impossible, can kill newspapers, too.

I’ve just finished a great book: The Halo Effect.

It’s a good book to cause a little further reflection on what business survival means.

I’ve known a few business leaders in the industry who have sworn by Good to Great or In Search of Excellence or other business books that promise some step-by-step formula for success.

The Halo Effect, by Phil Rosenzweig, makes a great case that following the management principles in those books is really like chasing unicorns.

For example, the research in Good to Great is faulty and incomplete. Jim Collins and his team failed to account for, among other things, the Halo Effect, which is what you get when you measure performance by post hoc evaluations. Because the performance was good, than the management must have been good, and if the management was good, then the leader must have been good, and if the leader was good, then he created a good work culture, etc. Those attributes add up to a cascade of halos.

Collins also failed to look for companies that did all the things his “good to great” companies did but still failed.

In other words, the book lacked scientific rigor.

The fact of the matter is, the real research, the boring research (not the good story weaved by Collins) is that all of the management rules in the world, if well implemented, can at best only achieve a 10 percent improvement in performance (or so cites Rosenzweig). At best.

And none of that matters if market forces change and the company does nothing to respond. That’s when sticking to what you know best becomes a liability rather than a good business practice.

What’s more important than “having the right people on the bus” and “level five leadership”? How about strategy and understanding competitive advantage, not to mention simply getting the job done once you know what to do?

Of course, When your business is essentially a monopoly, as newspapers were for many, many decades, who needs to worry about strategy?

Our industry hasn’t (collectively) done strategy well, and the worst part is, strategy is scary stuff.

The problem: You never really know if a strategy is going to work. If you know a business plan will work, it isn’t really strategy. Then, it’s merely tactics. Strategy is about taking risk and trying the untried.

We all know how willing newspapers have been to try new things.

That habit is changing, but there is still a big tendency among some industry managers to buy into the “Good to Great” hedgehog theory (which Rosenzeig notes Collins got completely wrong both in mythology and application).

Newspapers can’t simply just “stick to the core business,” as a Collins-like hedgehog would do. Newspaper managers must be more fox like — more nimble, more willing to seek and seize opportunities.

Which, I suppose, raises the question of whether we have the right people on the bus?

Probably at some companies and not at others.

It’s a hopeful sign that many managers have been willing to explore, if not embrace, the API NewspaperNext initiative, which at least attempts to get newspaper executives to dive deep into strategic thinking.

My question is: Are newsrooms willing to learn the lessons of business history and allow the news/journalism industry to evolve. Or will they insist that nothing at all needs changed. That seems to have been Jim O’Shea’s answer, and the journalism world applauded his “principled stand.”

I’m not sure, however, that taking a stand constitutes a well conceived business strategy.

Review: Discovering the News, by Michael Schudson

Journalism — what constitutes a story, the guiding principals and mores of editors and reporters — hasn’t changed much in my lifetime. It’s easy to think that the attitudes, aptitudes and priorities of journalists have been much the same all the way back to Gutenberg.

Of course, people who have studied journalism history know that’s not true.

We don’t spend a lot of time talking about our profession’s history, even though history might teach us a good deal about today.

A great place to start the discussion is a book I just read called Discovering the News by Michael Schudson.

Schudson’s book is thirty years old, but it covers the major changes in journalism through the Watergate era.

The primary theme of the book is that journalism has evolved in response to changes in society.

Schudson’s story begins in the 1820s, when the dominate newspapers where either organs of political partisans or served the interests of the business class. They sold for six cents per edition, but required annual subscriptions. This meant only the wealthiest Americans could afford a newspaper. Few papers sold more than 2,000 copies per day.

In the 1830s, the penny press arrived. Some might think it was technology (steam-driven cylinder presses) that drove the advent of the penny press, but it was really the rising tide of a middle class in America, and a greater sense of democratic rule over gentry rule (voting was now open to more than just land owners). The penny press met the demand for news (something the six-penny papers didn’t have) by reporting actual events, such as murder trials, rather than just political editorials.

The publishers, such as James Gorden Bennett and Horace Greeley, cranked out a lot of news, and a lot of advertising, to a middle class, trained by the six-penny papers, to see newspaper subscriptions as a status symbol. They sold a lot more newspapers.

The papers were not necessarily non-partisan, and while the reporting was informational, it wasn’t necessarily without an agenda, and they were certainly sensational.

By the 1880s, the New York papers of Joseph Pulitzer and William Randolph Hearst took sensationalism to new levels. While the journalist of the day would believe their reporting was truthful, they were not beyond withholding information to shape a story. Consider the career of Richard Harding Davis and his role in reporting the Spanish boarding the Olivette. Davis didn’t quit Hearst not because Davis didn’t support the publisher’s position, but because the particular fictionalization wasn’t his fictionalization. Davis merely withheld facts. Hearst invented new ones.

It would be a mistake, however, to attribute the success of Pulitzer and Hearst to Yellow Journalism. At a time when New York first became a commuter city, and a city of immigrants in need of illustrated papers and simple language, Pulitzer and Hearst met the need.

It wasn’t until Adolph Ochs purchased the New York Times in 1896 that a more non-partisan, less sensational style of journalism began to take hold. Ochs’ style of journalism came along at a time when observational science was beginning to shape cultural attitudes and realism was the leading trend in art and literature. Again, Ochs was meeting the needs of a changing society, not driving innovation in news coverage.

Prior to World War I, the word “objectivity” was not part of a journalist’s lexicon. Reporting was expected to be factual, but objective was not a common news value.

With the unraveling of the world after the Great War, up through the Great Depression, people began to question democratic institution and market forces, and the very idea that facts could be considered neutral came into question. Objectivity became a counter weight to the questionable judgment of individuals, not just in journalism, but in law, social sciences and art, as well.

Walter Lippman and others began to call for and define a greater professionalism in journalism. Schools were founded and awards created. It was in this environment that interpretive reporting — putting the news in context — first gained currency.

During World War II, the U.S. government entered, for the first time, into organized attempts to control the news flow. Press agents were hired and press conferences became widespread. Reporters lost access to government officials. The relationship between press and White House changed radically in the post War years.

The rise of McCarthysm, the Bay of Pigs and the start of the war in Vietnam were all events that helped create within society a greater sense that the U.S. government, now no longer easily accessible, was not always worthy of trust. For the first time, the press began to take on a watch dog role and investigative reporting was born.

This trend reached its apex with Watergate.

The way I read the book, prior to the 20th Century, publishers (not reporters and editors) reacted to changes in society where they saw business opportunities. As the 20th Century has progressed, and journalism has become more of a profession rather than a trade, journalists have had a great say in what constitutes professionalism, but there is still a good deal of reaction to society, rather than journalists simply changing the terms of their jobs.

And now, society is apparently going through its largest upheaval, especially in terms of how it interacts with media, since at least the 1960s, if not the earliest parts of the 2oth Century.

If that’s the case, should today’s journalist react with “we should keep doing what we’ve always been doing” attitude, or figure out how journalism needs to change to meet new demands and new needs?

Book Review: Belardes’ Lords

Bakersfield is a noir town. It is a hard, bitter town. It is the kind of town where any crime is possible, and with enough of a good-old-boys essence that cover-ups and conspiracies are easy to believe.

There are at least 400,000 noir stories to tell in this Kern-river city, but there’s really only one that has to be told: The Lords of Bakersfield.

The Lords mythology, set in a hot, isolated valley town just hours from Hollywood cesspools, defines Bakersfield almost as much as the music of Buck Owens or Merle Haggard. If N.L. Belardes hadn’t given Bakersfield the noir novel it richly deserves, then who would have done it? The only way to write this book is to believe in the conspiracy, fear the conspiracy, and then write it anyway. You’re only bound to make as many enemies as you are to gain readers.

Lords: Part 1 is a good book. It’s not great, and I’ll tell you why shortly, but it is still a book people with an interest in the darker side of Bakersfield should read.

Belardes might like to think of himself as the Bukowski of Bakersfield, but judging by Lords: Part 1, a better comparison might be another Southern California writer: Raymond Chandler. Like Chandler, Lords wallows in psychosis and shadows. Like Chandler, Belardes aims at prose lyricism. To say Belardes is no Chandler would sound like an unfair and cruel overstatement. He’s no Chandler, but his descriptive passages still ring with enough poetry to keep them effective. He is never callow nor maudlin. He is at his best descriptive powers when writing about the winter fog or the dust storm of 1977. The dust storm descriptions are, from a literary perspective, the creative height of the book.

Lords is based on a series of stories by writer Bob Price and published a couple of years ago in the local paper. The alleged lords were (and maybe still are) a group of perverted, powerful local men who lust for little boys and use their positions in the community to protect each other. Belardes takes liberties with the basic story to create what he calls a fantasy novel on the topic.

The book has scenes of hallucinations and dreams that pull in local Native American legends, but mostly it reads like a straight mystery novel.

The Lords myth seems a little too real to allow the reader, or at least this reader, to get taken in too much by the fantasy passages.

Are the Lords real? It’s hard to say. Based on my short life in Bakersfield, I would say that this town breeds enough paranoia to make conspiracy seem plausible. The sun shines brightly in Bakersfield, but always through a haze of smog. Winter fogs make it hard to get around town. In 1977, as Belardes accurately retells the story, Bakersfield was blighted by a dust storm that obscured all sight. Such an environment seems to only invite deception.

This is a town were you see few smiles on the streets or in the stores. The isolation of the town seems to be reflected in many of its citizens. It’s hard not to suspect hidden agendas and secret lives.

My friends thought I was crazy to move to Bakersfield. Now I understand why. I also understand better, especially after reading Belardes’ book, why the streets are littered with glassy-eyed, stringy-haired, leather-skinned homeless wretches. Bakersfield seems to breed those kinds of lives the way canine breeders breed dogs. They are all victims of a hard town that promises more than it gives. That, apparently, is “Life as It Should Be.”

So while Belardes has accurately captured the essence of the town, not all of his characters are equally compelling or reflective of the citizenry.

The major flaw of Lords is one the story’s main characters: Simon Sundale.

Sundale is the publisher of the local daily newspaper, the Tule Reader. He is a murderous megalomaniac who believes he exercises absolute mind control through his paper over the entire population of Kern County. He is pure evil.

Unfortunately, there is not a single thing about him that is believable. This makes passages about Sundale unbearable to read at times.

It just isn’t possible that man such as Sundale could exist in real life. His criminal intent, his unethical practices, his boasting about his omnipotence are so exposed that he simply could not exist.

Unlike what I suspect the real Lords to be like, if they exist, he isn’t even driven by lust. Sure, he has an unusual interest in Joey Minstrel, who is openly a sex toy for the the Lords, but lust never enters into the equation for Sundale. It is all about control and power.

That’s not to say that characters can’t be motivated by control and power, but that is all Sundale is.

A far more compelling character, and more believable, would be a publisher who in most of his working, daylight hours, believes in good journalism, cares about ethics, wants to do right by the community, weeps when people succumb to choking dust, but struggles against his own lusts and his own need to keep even his own reporters from uncovering his secret life and must protect the other Lords in order to also protect himself. Such a character would find that one deception only leads to another, and eventually to murder. He can be lost enough to swing the bat, but guilty enough to be tortured by his lack of self control. Such a character is far more freighting than pure evil, because he’s proven he will do anything to protect his secret perversions.

What makes Lords worth reading is Belardes strong sense of plot, his descriptive powers, his easy to follow prose, and the fully drawn characters of Minstrel, Carol and Ricky Rollins. What keeps Lords from being a great book is Sundale. And that’s a shame, because clearly, Belardes is a good enough writer to have a great novel in him. I hope some day I get to read it.

Read this book

Why should you read Michael Lewis’ Moneyball?

Because Lewis humanizes the sometimes dry subject of sabermetrics, the art and science of baseball statistical analysis?

Or maybe it’s because Lewis helps readers understand how the Oakland A’s have not only used sabermetrics to build a better baseball team, but have extended and innovated the field?

Or maybe you’d like to get a good behind the scenes view of how a major league ball club wheels and deals.

Maybe you’re just an Oakland A’s fan.

Possibly, you’re a less knowledgeable major league GM and you dislike Billy Beane and you figure this book will give you more ammo to ridicule him with.

All of these reasons are good reasons to read Moneyball.

But the real reason you should read Moneyball is it’s a damn good book. In the world of literary journalism, Moneyball must be considered one of the classics. It reads more like a collection of short stories than a non-fiction book on baseball. If this book doesn’t win a Pulitzer Prize this year, they should stop giving out the award because it will be meaningless.

What makes the book great is the stories Lewis weaves about the subjects of his book, from Billy Beane, the all-athlete, all-tools phenom without a clue of how to become a real big leaguer, to Scott Hatteberg and Chad Bradford — cases off from other organizations who play the game at a level of sophistication beyond the reach of 90 percent of other major leaguers.

There are two ways to become a great ballplayer — have great tools and the discipline to exploit those tools, or you play with your head. Hatteberg and Bradford play smart baseball, though Bradford’s head is also his biggest enemy, as Lewis brings out in deep and powerful prose. My favorite parts of the book dealt with Hatteberg and Bradford, especially the way Lewis weaved Bradford’s story around Oakland’s quest last season for 20-straight victories.

This is one of those books that I wanted to read non-stop. If I didn’t have adult responsibilities, I would have read it all within 24 hours of getting it — without sleeping. I haven’t done that with a book since college, and that’s why you should buy this book.