Dave Friedman's Soul of Wit

Desperate Dow Jones

Dow Jones, like every other print media company out there, is in dire straits. It doesn't know what to do about the internet, the democratization of information, and, most pertinently, the fact that there is an abundance of free information available about the financial markets. Dow Jones' bread and butter has been pre-empted by any blogger with an MBA and a yen for writing about the financial markets.

So what does Dow Jones decide to do? Separate its Wall St. Journal subscription from its Barron's subscription, and then presume that people who would pay for a subscription to Barrons want a print copy of that paper delivered to them. From an email received from Dow Jones:

You will have uninterrupted access to your Wall Street Journal Online subscription. If you wish to access Barron's Online, you can add Barron's Online to your account now at a special limited-time annual price of $20* - that is 75% savings off the standard price of $79. Plus, this limited-time offer for Barron's Online includes a 52-week subscription to Barron's print magazine** as our special bonus to you. Simply go to My Account to add Barron's Online onto your subscription. Please use the link to My Account provided in this email in order to take advantage of the Barron's magazine offer. You will receive Barron's magazine delivery instructions within 2 to 3 weeks after you add Barron's Online to your account.

None of this makes much sense: printing and delivering physical copies of newspapers is a very expensive enterprise. Media companies would do well to encourage as many subscribers as possible to consume content in digital form.

Short Dow Jones stock.

Knight-Ridder Gets Googled

From the Wall St. Journal's Weekend Edition Editorial Page:

Knight Ridder has been publishing mostly second-rate newspapers for as long as anyone can remember. Its strategy has been straightforward: Leverage de facto monopoly newspaper status in individual cities into ownership of the classified advertising business in those communities. With high-speed broadband and wireless access now a fact for most Americans, consumers are no longer at the mercy of second-rate information providers. They can get better, more reliable information, faster, on their computer or on their hand-held devices. Unsurprisingly, they are abandoning second-rate information providers at an escalating pace.

Newspaper chains like Knight Ridder retain a competitive advantage in classified advertising (and thus remain profitable), but that, too, is about to change. Just 24 hours after Knight Ridder made its for-sale announcement, Google said it was taking aim at the classified ad business. Classifieds are estimated to be a $100 billion market. Is there anyone who thinks that Knight Ridder can really compete with Google, if Google decides to mount a full-scale offensive? On the Google side, the best code writers and software programmers in the world will work on making its classified advertising application as good as it gets. On the Knight Ridder side, they will leverage what they have, for as long as they have it, which won't be long, if the Wall Street talking heads are correct.

Five years ago, all these big newspaper companies had the opportunity to buy Yahoo! for a song and to invest in Google at its inception. Today, Knight Ridder is hoping that Yahoo! or Google or Microsoft will buy it at a premium and relieve its management of the pain of trying to navigate a newspaper company in an Internet world. That won't happen. The only thing Google might buy from Knight Ridder is its stake in the Associated Press. Acquiring AP outright would make sense for Google (and Yahoo and MSN). Buying second-rate information providers makes no sense. The consolidation everyone expects may in fact more closely resemble a break-up of the old order, and the selling-off of its assets, piece by piece.

This is essentially correct. As with GM in a different context, broad changes to America's economy are forcing companies to change. Many companies that we regard as old standbys will not be with us for muchlonger. GM and Knight-Ridder are two of those companies.

This is nothing but good news. In the instance of GM, it means one less set of unionized employees, and in the instance of Knight-Ridder's eventual failure, it means consumers have more information at their disposal than they would have had if technology had not obviated the need for Knight-Ridder to exist.