Spoke with Paul Ginocchio of Deutsche Bank, one of the few remaining newspaper stock analysts in the United States, about newspapers and dotcoms on the sidelines of IFRA’s Publish Asia 2008 conference in Macau.Newspapers have traditional strengths- Content: Highest quality and most robust local news and information (by far)- Brand: Almost always the strongest local media brand by a wide margin- Sales: Large local advertising sales force- Cash Flow: Legacy print business still produces cash flow that is significant compared to most online businessesbut also weaknesses.- National: Newspapers are local, which creates issues when bought nationally- Online Traffic: Not good at driving pageviews, industry struggling to create inventory- Technology: Much smaller IT staffs and less digital experience- Culture: Legacy monopoly print culture makes for slower change (US v. UK/Canada)An alliance with a pure online company could help a newspaper overcome some weaknesses- Partner with market leader- Better technology- Strong online brandbut also has inherent dangers for the newspaper.- Potentially diverging interests over time- Signifinant value accretes to online partners (brand building, consumer usage)- Relying on outside companyExamples of alliances:- HotJobs, Monster- Yahoo! Newspaper consortium: Ad platform- Google Print Ads- ZillowAlternately, purchasing a dotcom offers the newspaper some advantages- Total control- Most value accretes to owner- Owner gets product or services fully subsidized by other affiliatesbut full ownership can be onerous.- Clients have not long-term commitment to product, typical client/vendor relationship- Potentially harder to sell product, leading to lower network effectsExamples outright ownership:- Discovery Planet (Gannet’s white label local search business)- RealCities (ad platform/rep firm launched by Knight Ridder)- Town News (Website infrastructure outsourcing owned by Lee Enterprises)What guidelines for newspapers?- Newspapers should focus on what they do best and outsource or partner for the rest- Don’t try to compete via technology, win through brand and content- Local sales is a strength, national sales and self-service is likely a weaknessThe real danger for newspapers:- Building the brand and usage of your online partners (Zillow, HotJobs)- A newspaper’s legacy culture got in the way of partnerships for too long, ceding much of the first mover advantage to online pure-players.- Culture and language of old and new media companies are too wide to bridge.