Dow Jones Recognizing It Needs To Keep Diversifying Away From Newsprint

from the where-the-world-is-headed dept

It's no secret that many in the newspaper business have struggled with figuring out how to adapt their business models into the digital age. That's unfortunate, but not too surprising. Dow Jones has had its own struggles in this area, at times making its own publication less relevant by locking up the content... and then complaining that its competitors weren't doing the same. However, lately, it appears that the company is really making a big effort to be more relevant. It's been opening up more and more content as well as experimenting with new and different offerings. Thus, it's not a huge surprise to hear Dow Jones' CEO say that the company's goal is to have less than half of its revenue coming from traditional print operations by 2009. Of course, there are two ways to look at this. If you want to view it positively, it's a publisher recognizing that the times are changing and it needs to adapt to those times and stop trying to protect a cash cow who's getting squeezed. However, on the flip side, this seems to be focusing on the wrong thing. The goal shouldn't be to focus on what percentage of revenue comes from what channel -- but on how to deliver the best overall product that helps maximize revenue.

Think of it this way (and I'll simply make up numbers for simplification in the illustration): In scenario A, the publication makes $60 million off its print operations and $40 million off the rest of the business. In scenario B, the publication makes $40 million off the print operations and another $40 million off of the rest of the business. Scenario A is clearly superior, but if the goal the company is focusing on is making sure that print operations are less than half the revenue for the company, then scenario B is what you target -- even if it makes the company worse off. That's not to say that diversification is bad, especially in a rapidly changing market. But if you're going to diversify, the strategy should be on maximizing revenue and mitigating some levels of risk through diversification, rather than just diversification for the sake of diversification.