Gannett today announced they would force one week of unpaid leave on most of their US employees for the first quarter. Just a rough estimate would tell you they expect to save 5-7% (less than 1/13th) of their hourly costs in the first quarter after you take in to account the number of people that will get exempted and benefits that will still get paid.
The move raises a number of questions in my mind. The first and foremost is: will they continue the tactic each quarter until they recover? It's a strange method to say the least, but it is an "easy" way to avoid layoffs and spread the misery equally.
The move, by its sheer nature, tells you they can get along with 5-7% less labor. You'll get one less week out of all of the people on vacation, which is about 1/13th of the work product you'd normally expect. They've even made the point that exactly zero work is do be done during the time off. That's better vacation time than most of us get with the constant tether of a Blackberry. The release tells us even the executives are expected to do the same.
So why not just make the cut? Sure they've cut twice in the very recent past, but this tells us they think they can get away with a bit more.
I'm not a fan. It's pretty classic weak management and is another death by a thousand cuts. Hard decisions are just that - hard. Either let people work, or pull the bandaid off.
Wednesday, January 14, 2009
Wednesday, January 7, 2009
Is Newspaper's problem Google's Fault?
Google has been frequently cited as one of the primary contributors to the decline of the newspaper business. Very recently people have even asked Google if they would be part of the rescue of newspapers. Eric Schmidt, wisely, said no.
Schmidt smartly recognizes that the key problem isn't the access or demand for information, it's the business model itself that is the issue.
Twenty years ago, a newspaper ad was they key way to relate complex information about a new product to a broad audience. No advertising medium could come close. Now a website can relate even extraordinarily complex information in a multi media manner to an engaged and interested audience. It's 10 levels deeper than a single print ad could ever be. The best sites allow conversation and questions to emerge about products.
So newspapers have lost on the depth of product information, needless to say. While google is the key way of steering people to these deep information sites, newspapers themselves could have, and often do function, in this manner as well. The key difference is in the scale that a web portal provides. Scale is part of the new advertising landscape, and it's a loss of newspaper competencies. As a response newspapers tried to go "local" which may be the opposite of the direction they should have gone. A local strategy naturally cedes scale.
A second loss is in efficiency. Printed newspapers deliver a bundled product. Even if I only want business news, I have to buy the whole paper. This is naturally inefficient for the delivery of advertising. However it is this inefficiency that leads to outsized profits, or at least used to. Search engine marketing is relentlessly efficient. It can deliver an advertisement to a person as they are in the final consideration set, and lead directly to a purchase. The model of pay per click is also remarkably efficient in delivering cost effective traffic for any budget.
Note that these two strengths of Google (and other search engines) have little if anything to do with content. While I have heard publishers claim that Google "steals" their content and profits from it, this argument has little grounding in reality. What Google has become is a model of advertising efficiency, and it threatens the most inefficient models. That model just happens to be printed newspapers.
I've made the argument in the past that newspapers should band against Google. Let me articulate that more clearly. Local isn't going to win. The Internet isn't local. It is my opinion that the best strategy is to collaborate and deliver scale. It's not about being hyperlocal, it's about delivering EVERY locality.
Schmidt smartly recognizes that the key problem isn't the access or demand for information, it's the business model itself that is the issue.
Twenty years ago, a newspaper ad was they key way to relate complex information about a new product to a broad audience. No advertising medium could come close. Now a website can relate even extraordinarily complex information in a multi media manner to an engaged and interested audience. It's 10 levels deeper than a single print ad could ever be. The best sites allow conversation and questions to emerge about products.
So newspapers have lost on the depth of product information, needless to say. While google is the key way of steering people to these deep information sites, newspapers themselves could have, and often do function, in this manner as well. The key difference is in the scale that a web portal provides. Scale is part of the new advertising landscape, and it's a loss of newspaper competencies. As a response newspapers tried to go "local" which may be the opposite of the direction they should have gone. A local strategy naturally cedes scale.
A second loss is in efficiency. Printed newspapers deliver a bundled product. Even if I only want business news, I have to buy the whole paper. This is naturally inefficient for the delivery of advertising. However it is this inefficiency that leads to outsized profits, or at least used to. Search engine marketing is relentlessly efficient. It can deliver an advertisement to a person as they are in the final consideration set, and lead directly to a purchase. The model of pay per click is also remarkably efficient in delivering cost effective traffic for any budget.
Note that these two strengths of Google (and other search engines) have little if anything to do with content. While I have heard publishers claim that Google "steals" their content and profits from it, this argument has little grounding in reality. What Google has become is a model of advertising efficiency, and it threatens the most inefficient models. That model just happens to be printed newspapers.
I've made the argument in the past that newspapers should band against Google. Let me articulate that more clearly. Local isn't going to win. The Internet isn't local. It is my opinion that the best strategy is to collaborate and deliver scale. It's not about being hyperlocal, it's about delivering EVERY locality.
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