Times (of London): Let’s do the time warp again

I just said on Twitter:

Times Editor Harding refers to a history he will soon be part of. http://bit.ly/47pu1o Confuses value with cost, and ignores supply.

It’s one of those times when 140 characters really over-simplifies what I’m thinking. Harding is quoted in the Guardian (my day job) as saying:

Harding said newspapers had been undervalued for years, pointing out that when the Times was founded in the 18th century it had cost more than double a coffee or a tumblerful of gin.

“We are going to rewrite the economics of the newspaper, newsgathering and delivery business,” he said. “We have to do that, we are in the fight of our lives.”

What I meant on Twitter is that referring to the media economics of the 18th century to build or justify a strategy for the 21st is clearly ludicrous. Paper in the 18th century was an expensive thing and steam presses hadn’t been invented. Information was scarce and could fetch a premium.

Cover price and revenue in terms of newspapers became de-coupled long ago. The bulk of revenues came from other services, primarily advertising-based, that we sold. I’d really like to hear a lot more honesty from the industry about the recent past of its business, not wistfulness for the 18th century.

General news and information is no longer scarce and according to recent surveys most people say they will simply find a free alternative if asked to pay. In the age of the internet, information is not scarce. Opinion isn’t scarce. People’s attention is scarce. What services can we provide that will pay for professional journalists to do the work that only they will do? We have always cross-subsidised newsgathering with other paid services. There are lots of revenue opportunities for a digital business, but up to this point, we’ve left it to others because information services don’t fit into the idea of the craft of journalism, i.e. they aren’t about writing stories.

I completely agree that paying for professional journalists to cover Iraq, Afghanistan, Sri Lanka and domestic politics and our communities is important. We need to find new ways to support it. I just don’t see how hearkening to a long distant past bears any relevance to the current market. Let’s talk about the economics of content in the 21st century and how we build a business to support quality journalism in this economy rather than pine wistfully for some past bathed in sepia tones and privilege when only the upper classes could afford a paper with their tumblerful of gin. It’s become a battle cry amongst digital journalists: Tradition is not a business model.

When I say that Harding confuses value with cost, I mean that, sadly, the social value of an activity is often not directly related to the compensation for that activity. If our societies operated like that, teachers would make as much as bankers because shaping the next generation’s minds would be as important as funding the next generation of businesses.

As the Guardian piece points out, there is an irony in Murdoch’s empire making the argument that newspapers are undervalued.

Martin Newland, the former editor of the Daily Telegraph and now editorial director of the Abu Dhabi paper the National, said that the Times itself had played a role in the undervaluing of newspapers by slashing its cover price to 10p in the 1990s.

The karmic wheel coming to bite you in the arse Mr Murdoch?

This probably doesn’t come through in 140 characters, but I’m not opposed to paid services online. I also believe that people will pay and, as a consumer, I do pay for value-added services. However, I tend to agree with Mathias Döpfner, chief executive of Axel Springer who predicted mixed models recently at the Monaco Media Forum and who said:

Readers had to be “seduced” with new offerings, not re-educated…

At the end of the day, what I see in News Corp is an attempt to ignore the media economics of the 21st century in an attempt to create a defensive position for a business model better suited when Mr Murdoch was one of a handful of media barons with the resources to bury competitors and bend the world to his will. The sun has set on that empire and it’s the dawn of another age.

Charge yes, in order to continue to support journalism. However, as Döpfner says, it’s about seduction with new services, not re-education or charging for commodity services where free alternatives exist. As to this move by News Corp, I can only say, goodbye and good luck.

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4 thoughts on “Times (of London): Let’s do the time warp again

  1. Great post – good to hear someone standing up for quality journalism, which I sincerely hope will have a place when the dust settles on the current revolution/upheaval depending on your stance.

    If Murdoch can provide high quality journalism that people will pay to read, rather than being reliant upon advertising, I’d argue that’s a good thing. Others have tried before and failed.

    The wonderful thing about now is that the old order is changing. The worrying thing about now is that things have to be paid for but we all want free. But you get what you pay for – or what someone else has paid for, and the snake in the grass is that the new ‘advertising’ may not be as overt as a colourful ad for products and services, but tucked away in the text or lurking in a hidden agenda.

    So whilst I am with you that ‘freemium’ is much more in keeping with the current zeitgeist, if Murdoch can find a high enough quality/compelling enough product to get us paying for it, then all the better for the journalists who work for him.

    People pay for cable and satellite TV when they have mainstream channels free, so it will be interesting to see where this big adventure takes us.

    Murdoch’s not stupid and if the paid content model works for anyone, it will work for him. He has the space and funding to experiment. I personally think they’ll find it hard because one of their main currencies is celebrity, and celebrities can provide that information more accurately -and free – themselves in many cases.

    I wouldn’t be saying goodbye and good luck, but ‘watch this space’. Excuse the expression, but it could just be sh*t or bust time!

  2. Thanks for the comment. Murdoch is a sharp-elbowed businessman. He’ll produce quality journalism if it makes a buck, a pound, a euro, and he can use those billions of bits of currency to buy influence. He’s a classic 20th Century media mogul.

    The odd thing about Murdoch is that he has been a keen adopter of new technology in the past – print technology and Wapping and satellite television, but he doesn’t seem to have the same magic touch with the internet.

    He was late to the dot.com party and only really took it seriously when the bubble was well on its way to bursting. Then, in a pretty messy and costly retreat, he pulled back. He over-paid for MySpace, and the focus on revenue over a wider plan for development means that it’s an also ran. Traffic to the Times website dropped over the summer as its competitors continued to increase traffic.

    I think one of Murdoch’s problems, and he is by no means alone in terms of the media in this respect, is that content is no longer scarce but time and attention are. In terms of media economics, we haven’t really wrapped our heads around the economics of abundance.

    Another disruptive dynamic in terms of media economics on the internet is around distribution. Analogue television and newspapers had incredibly high capital costs in terms of production and distribution. Internet production and distribution costs have decreased over the last decade as computing power costs have declined.

    Digital abundance is even greater than the abundance of choice in multi-channel digital television, and really satellite television still is based on scarcity because the cost of launching such a service still limits competition. It’s an imperfect analogy to the market economics that newspapers are facing on the internet. Murdoch could see off competitors just by taking bigger risks and seizing a first mover advantage in terms of BSkyB. In many ways, whether digital multi-channel cable or satellite, is still an old scarcity-based business.

    This is why I highlighted the irony of pining for 18th century cover prices. We’re not going to solve the challenges of our business by ignoring the economic shift of the last decade.

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