retail news in context, analysis with attitude

by Michael Sansolo

It’s been widely said that the best lessons come from defeat—in life, sports or business. With that in mind, the New York Times this week provides a billion good lessons in one shot.

Let me preface this with two points: first, in hindsight we are all geniuses. Keep that in mind as your read about what happened to the Times because the newspaper’s tale of business woe is one we can only laugh at in hindsight. And second a personal note: I’m a huge fan of the Great Grey Lady of journalism. If I had one career goal that never came through it was to work at the Times. Luckily, I get to write for MNB.

As Kevin reported here yesterday, the Times announced that it is was selling the Boston Globe and its related New England media properties to the owner of the Boston Red Sox for $70 million. That may be a tidy sum, but it also represents a staggering business failure because in 1993 the Times purchased the Globe for $1.1 billion. (That’s Billion, with a B.)

In other words, in 20 years the Times managed to lose more than 90% of its investment in the Boston newspapers. Not surprisingly, we can find a lot of business parallels to consider in this.

First, the pace of change today is like nothing we have ever seen. The Times is widely considered America’s best newspaper. It has won the most Pulitzer Prizes by far and the reporting on a wide range of subjects is wonderful. (Anyone doubting how fast that change is taking place need only consider Monday’s startling news that Amazon’s Jeff Bezos bought the Washington Post, another pillar of American journalism. Clearly, more change is to come…and quickly.)

Likewise, the paper has a pretty solid business model. Over the course of the past century newspapers endured the explosive growth of radio, television and then cable television. Throughout the 1900s countless newspapers closed, yet the Times kept growing. In the early 1990s its circulation hit record highs of over one million copies sold every day and more on Sunday.

Yet with all that brainpower, the Times couldn’t see how the world was about to change. Just 20 years ago no one - clearly not even the nation’s premier newspaper - could have predicted the explosive power of the Internet and the impact it would have on how America consumes news. Subscriptions are down across the board, countless newspapers have ceased operations and once proud and profitable publications like the Globe, are now shadows of their former selves.

It’s a stark reminder to all of us to recognize the volatility of the times and to understand that even the most solid business model can be turned upside down by the new forces of business. Plus it’s a reminder that what we know about the past can be rendered meaningless like never before.

But there’s one last lesson in this story and that’s in the willingness to move on. Sure, the Times took a big financial hit and it’s very likely that a management bloodbath would have followed if the paper wasn’t so strongly controlled by a single family. Yet it is still admirable to see how this great American institution is trying to find a way to make its business model relevant for the future.

Over the past few years, the Times has been at the forefront of building a new business model for newspapers by hunting for a way to monetize online readership. The newspaper has approximately 650,000 subscribers for its digital subscriptions and revenue tops $110 million annually. Needless to say, other publications are now trying the same method.

So yes, the best lessons may come from losing, but sometimes the better lessons come from those who rebound after a loss.

Michael Sansolo can be reached via email at msansolo@morningnewsbeat.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available by clicking here .
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