Stories like Instant Pot’s bankruptcy protection always grab headlines. How can a brand so popular, with almost a cult-like following be going out of business? It’s something we should be better at seeing by now.
Cult-like followings don’t result in sales if there isn’t anything for customers after the original purchase of the product, which is well-made and can be used constantly without replacement.
Why does your favorite band come out with a new album about once a year and then go on tour to promote that album? Because they can only live off the sale of last year’s album and tour for so long before the money runs out, no matter how popular the band is.
The same is true for Instant Pot, and since this is a blog about media, the newspaper industry, as well.
Recently, our newspaper, Harvey County Now, put out a story about how much it costs to produce a paper when you consider how much paper and postage have gone up recently, along with just normal pressures of employment and benefits.
Our conclusion was that it costs $3.03 for every paper we produce each week. We charge the average subscriber less than a $1.50. In other words, that subscriber better be a loss-leader into much better business or our business model is set up for a quick exit as it’s currently set up.
For decades, the model worked, though. Publishers supplemented the paper to readers because they could sell those eyeballs to advertisers who were happy to rent their attention with a well-designed ad while someone was reading about local politics. It was a happy exchange where everyone benefited. The reader received cheap news about local happenings that cost a lot to produce, the advertiser got the eyeballs of engaged local citizens who are more likely to shop in their establishments, and the publisher, who created the relationship, was able to make their money (a lot back in the day) by selling the advertising and facilitating the relationship between vendor and customers.
As Facebook, Google and the Internet in general have brought more and more outstretched hands to the advertising table, newspapers have been able to scrape together less and less of the pie, and the very expensive process of covering news has been cut to the bone at many outlets across the country.
What we decided to do at Harvey County Now, rather than cut to the bone, was start charging our readers more—change the business model and shift who actually pays the bills at the newspaper to produce the news. Unlike newspaper tycoons of past, we aren’t likely to get rich in this industry (we certainly would like to, if the opportunity arises), but we are more likely to be sustainable if we shift where the money is coming from.
Much like the music industry, we need our fans to fork over money for the news, while we still sell other things to make sure journalists are getting paid a fair wage. The days of supplementing news with purely advertising are starting to fade, even if we try to keep that window open (we are still happy to sell ad packages, print and digital, to any business owners interested).
If we don’t manage to find a way to shift this model and we continue to get very little from readers with respect to what it costs to produce the paper, we will be just like Instant Pot—a great product that lots of people love but a company that can’t pay it’s bills because it never found a way to get more than $99 from its adoring fans.
Featured image by: ajay_suresh