Aalto, Helsingin Sanomat: Super stats on digital subscribers and mobile from #wpe13

John Thompson of Journalism.co.uk has tweeted some great stats about paid content and mobile from World Publishing Expo 2013. In particular, a string of recent tweets highlight some fascinating numbers from Finland’s largest daily newspaper, Helsingin Sanomat.

The conversion figure, the stat that 42 percent of all subscribers pay for digital content, is pretty incredible, and I hope that John provides some more detail. With a lot of paid content strategies, you hope for between 5 to 10 percent conversion. How do they achieve that?

ProPublica, This American Life and acetaminophen: $750,000 to state the obvious

ProPublica and This American Life, both which I love, are making some waves for a story highlighting the risks of taking too much acetaminophen (known as paracetamol in the UK). They found that “taken over several days, as little as 25 percent above the maximum dosage – or just two additional extra strength pills a day – has been reported to cause liver damage”.

In a more than 10,000 word piece, they say that over the past decade 1,500 people have died from accidental overdoses of the drug in the US. The story is very critical of “McNeil Consumer Healthcare, the unit of Johnson & Johnson that has built Tylenol [the brand name of the drug in the US] into a billion-dollar brand and the leader in acetaminophen sales”. The story claims that:

McNeil opposed even a modest government campaign to educate the public about acetaminophen’s risks, in part because it would harm Tylenol sales.

They also criticise the FDA, the US drugs regulator for not taking tougher action, but the agency said:

FDA officials said the agency saw the benefits of keeping acetaminophen widely available as outweighing the “relatively rare” risk of liver damage or death. Some patients cannot tolerate drugs such as ibuprofen, and for them acetaminophen may be the best option, said one agency official.

I do appreciate that the story gave a bit of context in quoting the figures for accidental deaths of ibuprofen, another non-prescription pain killer. The article says deaths due to ibuprofen overdose are negligible.

Massive coverup? Hardly

But is the fact that acetaminophen can cause liver damage being hidden by an avaricious company with complete disregard for public safety or by an over-stretched US drugs regulator? Hardly. Google “acetaminophen risk”. The first result in the US is WebMD. See risks:

When taken incorrectly, however, acetaminophen can cause liver damage. And your risk of liver damage may be increased if you drink more than three alcoholic drinks every day, take more than the recommended dose (overdose), or if you take any additional drugs that also contain acetaminophen at the same time.

Read a little further along under the next subhead, How to Use Acetaminophen Safely.

Make sure to use the correct dosage. Don’t take more acetaminophen than directed or take it more often than directed. Taking more than recommended can damage your liver — and won’t provide any more pain relief.

We’ve got a couple of bottles of acetaminophen that we have bought in the US. One bottle from US pharmacy Walgreens says, “See New Warnings Information”. It has a specific liver damage warning. It has in bold: “Overdose warning: Taking more than the recommended dose (overdose) may cause liver damage.” Both bottles warn not to take with other drugs that contain acetaminophen or if you drink three or more alcoholic drinks per day.

Ok, I thought. Maybe McNeil is trying to protect their brand, Tylenol, as the story says over and over again. I went to the Tylenol site, the official site for McNeil’s acetaminophen brand, and at the bottom of the page, granted not prominently displayed but there, is a link called: Tylenol labeling change.

New Dosing Instructions: Beginning Fall 2011
Acetaminophen, the active ingredient in TYLENOL®, can be found in more than 600 over-the-counter (OTC) and prescription medications, such as TYLENOL®, SUDAFED® Triple Action™, NyQuil®, Percocet® and Vicodin®.* Acetaminophen is safe when used as directed, but when too much is taken (overdose), it can cause liver damage. Some people accidentally exceed the recommended dose when taking multiple products at the same time, often without realizing they contain acetaminophen or by not reading and following the dosing instructions.

To help encourage appropriate acetaminophen use, the makers of Extra Strength TYLENOL® have implemented new dosing instructions lowering the maximum daily dose for single-ingredient Extra Strength TYLENOL® (acetaminophen) products sold in the U.S. from 8 pills per day (4,000 mg) to 6 pills per day (3,000 mg). The dosing interval has also changed from 2 pills every 4 – 6 hours to 2 pills every 6 hours.

Emphasis mine. Was McNeil against educating the public because they worried about damaging sales of their flagship brand? It would seem not.

Education Campaign: Get Relief Responsibly™
In addition to the new dosing instructions on the OTC label, the makers of TYLENOL® launched Get Relief Responsibly™, an initiative designed to educate consumers about the appropriate use of OTC and prescription medications, particularly those containing acetaminophen, and the importance of reading and following medication labels. As a part of this initiative, the makers of TYLENOL® have created a new website www.getreliefresponsibly.com. The site includes an interactive Acetaminophen Finder tool to help consumers identify products that contain acetaminophen and build a personal acetaminophen medication list to share with their healthcare provider or pharmacist.

I don’t know how prominent the campaign was, as I live in the UK. And I thought that maybe they launched this quietly in response to the ProPublica investigation. Nope, the date on the page is autumn 2011. This would be consistent with the “See New Warnings Information” label on our bottle of Walgreen’s Pain Reliever PM. It undermines all the assertions in the investigation that McNeil has resisted efforts to reduce dosages or engage in public education.

Stating the obvious in thousands of words

These are facts hidden in plain view: Don’t take too much acetaminophen, especially with alcohol. Taking more than recommended won’t do you any good, and it could wreck your liver. As a matter of fact, we’re going to recommend taking less of our flagship product.

It took me 30 seconds to find the relevant info on WebMD, and another 30 seconds to quickly scan the Tylenol site. How long did it take ProPublica and This American Life? TWO YEARS AND $750,000. 

As an editor, I keep saying to myself: Where’s the story here? The headline, anodyne even by American standards, is “Use Only as Directed”. My response: No shit. I mean, really? If you use a drug above the recommended dosage, there is a risk. If McNeil has ruthlessly tried to cover up the idea that if you take too much of the drug it will wreck your liver, they’re doing a really poor job.

Labelling on US acetaminophen bottles undermine repeated assertions in the investigation that the FDA has resisted calls for clearly labelling about overdose risks, especially with respect to liver damage. It is clearly listed under Warnings, in bold, on both bottles of acetaminophen we have.

Where is the breaking news? Has the FDA covered up the fact that if you take too much of the drug you can die? No, it hasn’t. Easily available information, both online and on the packaging, is clear about the risks of taking an overdose. But the key thing is that if you take too much of anything, even water, it can kill you. In technical terms it’s called LD50, the median lethal dose.

Whist Pro Publica’s piece does remind the reader to be more careful about taking other medications that might have acetaminophen and to more carefully monitor dosage, it isn’t revealing any new information, nor is it exposing a cover-up.

The story includes a clock, counting how long it has been since the FDA created an expert panel to evaluate the safety of over-the-counter pain relievers. The agency has not yet completed its work. This is about as damning as the revelations gets:

From 2001 to 2010, annual acetaminophen-related deaths amounted to about twice the number attributed to all other over-the-counter pain relievers combined, according to the poison control data.

In 2010, only 15 deaths were reported for the entire class of pain relievers, both prescription and over-the-counter, that includes ibuprofen, data from the CDC shows.

If acetaminophen, at roughly 150 deaths per year, is twice the number of all other over-the-counter and prescription pain relievers combined, then doesn’t this undermine the entire assertion that the there is a pressing need for the FDA to have this expert panel deliver its findings? It doesn’t seem that pain killers as a class of drug are particularly dangerous at all.

Back to acetaminophen, in 2010, the last year the article has figures for fatal accidental acetaminophen poisoning, 166 Americans died. The CDC reported that 2,468,435 Americans died that year. The number who died from acetaminophen poisoning is 0.007 percent of total deaths in the entire country. Tragic? Yes. Common? Hardly. Ibruprofen deaths are negligible, especially compared with the 32,788 Americans who died in road traffic accidents. Journalists are incredibly poor at communicating relative risk, and this over-the-top investigation only serves to reinforce that. What pressing public health crisis has been identified at a cost of $750,000?

I don’t mean to dismiss the suffering of the nearly 150 people who died or of their friends and loved ones, and I think that this story is worth reporting, but in the right terms. For stories like this, I can even see the need to remind people every few years, just to drive home the point that taking too much acetaminophen is risky, especially if you drink a lot. However, I don’t think this story comes even close to rising to the standard of a two-year investigation costing hundreds of thousands of dollars.

Opportunity costs

Peter Osnos at The Atlantic praises the story and asks who will pay for expensive, investigative coverage. The piece seems to be equating the cost with impact. To me, as I said in a comment on the piece, this is not a piece for which we should be getting out our “yay investigative journalism” pom-poms. It proves that investigative journalism can be expensive, yes, but is it going to have an impact? This story will have no more impact than a run-of-the-mill public service piece that could have been bashed out in an afternoon.

Not all investigations lead to publication, and I know that some investigations take time to develop, but I cannot see why this story took two years and three-quarters of a million dollars to reveal information that can be found with a quick search online. As a journalist and editor, I have to ask what is the opportunity cost? The opportunity cost is:

The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.

In this era of scarce resources, it is even more important to ask what opportunities are foregone because resources are deploying elsewhere. It’s Econ 101, but it is an incredibly important question that we need to ask. Two years and three-quarters of a million dollars is a huge investment. It’s the kind of resource that most journalists would give their spare kidney for, but if we’re going to sink that kind of time and precious coin into a story, that story better be worth it.

When I started this post, I thought this was simply about an overly expensive investigation. It took me almost no time at all to undermine the core elements of this story with basic online research. McNeil, if they trying to bully the FDA into inaction, appear to have failed. If a minimal bit of online research calls into question key elements of this story, there are even bigger problems than the excessive cost and time.

UPDATE: I did originally post this under the headline “30 seconds to debunk”, which in retrospect is a bit harsh. ProPublica has meticulously documented their points to the point where I think they completely diluted the impact of the piece. If as a journalist, you want to draw attention to the dangers of the drug, the piece should have been much, much shorter, highlighted the low margin for error in taking more than the recommended dose, especially with alcohol and been done with it. The story has problems, and one of the biggest is that it is incredibly self-indulgent. It fails the most basic commandment of a good piece of journalism: Get to the point.

UPDATE 2: To clarify, the $750,000 is only the amount that ProPublica spent. I was just listening through the The American Life (TAL) report thoroughly, and ProPublica and TAL found that 86 percent of Americans know that acetaminophen can cause severe liver damage and two-thirds know that it can kill you. Yet, Ira Glass said that although many of his listeners already knew this, they were still going to spend an hour on the story.

Clay Christensen @RSAInnovate: Why the spreadsheet is killing job creation

Clay Christensen at the RSA in London
Clay Christensen at the RSA in a talk titled “The Capitalist’s Dilemma”.
Photo by Kevin Anderson, Some Rights Reserved

Disruptive, or empowering innovations, create jobs, but they take time to pay off, while efficiency innovations eliminate jobs and free up capital (save money) in the short term, Harvard Business School professor Clay Christensen said in a talk entitled “The Capitalist’s Dilemma” at the RSA in London last night. The problem he sees is that management has become a conversation almost entirely focused on spreadsheet-driven financial targets and short term efficiencies rather than longer term value creation, which also creates jobs.

If you’re not familiar with Christensen, he sums up the focus of his work in the preface of The Innovator’s Solution, a book he wrote with Michael Raynor. He says:

It is easy to explain why poorly run companies fail; but many of history’s most successful and best-run firms have lost their positions of leadership, too. Why is so hard to maintain success?

Christensen looked at disruptive innovation, or what he called empowering innovation last night, and why incumbents were overthrown by upstarts. In some industries, such as the case with newspapers, they recognised the disruption but were still unable to adapt. I’ve written two pieces for The Media Briefing, looking at Christensen and his former Harvard colleague Clark Gilbert‘s advice for the newspaper industry and how they can adapt.

Last night, Christensen was talking about innovation in much broader terms and looking at the affect of focusing on short-term cost-saving innovation versus longer term empowering innovation.

What he wanted to understand was why unemployment has been taking longer to return to pre-recession levels since the recession in 1990. What was interesting is that he was looking not just at unemployment but more precisely the “lag from when real GDP returns to the pre-recession peak to when employment returns to the pre-recession peak”.

Clay Christensen at the RSA in London
Click to go to Flickr for the full-size image. Photo by Kevin Anderson

As you can see from the graph, looking at recessions in the US from 1948 until now, the average lag was six months, but then the lag began growing from 15 months to 39 months to the current lag after The Great Recession. Sixty months after it began, and we still don’t know when unemployment will return to pre-recession levels. What is causing these jobless recoveries?

To put it succinctly, he blamed a short-term focus driven by the financial models easily run in spreadsheets by “26-year-old analysts”. He summed it up the theories and the practice of finance that is leading to this short-termism in this table.

A theory of finance Tools of finance
pre-eminence of returns on capital spreadsheets – Visicalc, Lotus, Excel
calculus needs something to maximise measurement via ratios
Milton Friendman gave the target NPV (Net present value)
Guided by Delaware courts, not legislation ever since Management becomes the assembling, optimising and shipping of numbers.

Created with the HTML Table Generator

Just to look at the power of spreadsheets, he said that they were the biggest recent development, adding:

A 26-year-old can build the financial models of companies and effortlessly test the impact of different inputs onto outcomes that matter.

He said that business is now driven by “the church of finance”, in which finance becomes a religion both in terms of how it is taught and the level of belief of its adherents. With the true believers of finance driving management, decisions are boiled down to measuring the efficiency of deploying capital.

Christensen explained the effect of this finance-driven focus through his framework of innovation. He sees three types of innovation:

• Empowering, which make the expensive and inaccessible, cheap and accessible.
• Sustaining, innovation that simply replaces an old model with a newer model
• Efficiency, “These reduce the cost of making and distributing existing products and services,” as he wrote in the New York Times.

Clay Christensen at the RSA in London

Empowering innovations create jobs but they use capital, and they are longer term investments, often taking five to 10 years to see a return. “Efficiency innovations pay off in a year or two. Instead of using capital, they save it,” Christensen said, but instead of creating jobs, they eliminate them.

The problem he sees in the US (and the UK, although he wasn’t ready to say that will full confidence) is that he estimates there is now a third of the empowering innovations being created as there were in the 1950s, 60s and 70s.

Why is the US economy so anaemic? It isn’t weak corporate balance sheets. He said they were “pristine” and stronger than they had been in years. The problem also isn’t lack of capital, and he said over and over that the US is awash in capital, which is why private equity and hedge fund managers say that so much money is chasing so few deals these days. The problem is that the “finance mechanism hijacks capital and recycles it unto itself”, Christensen said.

That’s the problem, and he did point to a few solutions. For one, he said that capital needed the will to invest in longer term, empowering innovations. He pointed to the US tax code that punished short-termism by charging the personal rate of tax on investments of less than a year, which for top-bracket income earners would be 35 percent. However, if you hold that investment just one more day, 366 days instead of 365, then the tax rate drops to 15 percent. He said that 366 days is not the kind of long-term investment that will spur empowering, job creating innovations. Instead, he recommended low or zero taxes on money invested five to eight years.

He also criticised the solutions spun by the Democrats and Republicans, the two dominant parties.

I think the Democrats and Republicans are both wrong on this redistribution issue. In the US, the top 1 percent own 28 percent of disposable income. The Republicans say that we have to let them keep their money to invest in jobs. Most of them don’t invest in jobs but use their capital to create more capital.

The Democrats are wrong as well.

If we don’t have empowering innovations, the solution isn’t to redistribute wealth in the other direction, which is in line with the Democrats efforts to increase taxes on higher income brackets. I like how Christensen put this in the New York Times:

If the I.R.S. taxes their wealth away and distributes it to everyone else, it still won’t help the economy. Without empowering products and services in our economy, most of this redistribution will be spent buying sustaining innovations — replacing consumption with consumption. We must give the wealthiest an incentive to invest for the long term. This can create growth.

Of course, one of the great debates in our current politics is how to deal with rising debt in our societies. Christensen is pro-growth, and when asked whether “we can say definitively that austerity doesn’t promote prosperity”, he said very quietly, “yeah”. However, Christensen seemed to nicely get around the gridlock of the current debate on how to deal with the debt. However, he does admit in his article in the Times that the issues are complicated.

Innovation and journalism

For me trying to think about how innovation affects journalism, I had one take away. When a product becomes commoditised, it opens up opportunities both above and below the commoditised project. I do believe that the over supply of information has commoditised much of breaking news such that as Christensen pointed out in a 2011 study:

The wealth of information available almost instantaneously has lowered the value of the general interest news story such that it’s often less than the cost of production. General interest and breaking news reporting comprised of answering the “who, what, when and where” has become commoditized. It cannot create enough value to sustain a news organization in the long term.

The question becomes what opportunities exist above and below the commoditised “general interest news story”. What could those products be? It’s a good question, and it’s one of the reasons why I bought a copy of The Innovator’s Solution after the talk. I managed to get a few seconds with Christensen after his talk, and I thanked him for his research in 2011 and asked what he would recommend in terms of how to work within a traditional news organisation. His answer was sobering, but that will have to wait for another blog post.

Ken Doctor digs into the economics of HTML5

Ken Doctor who writes the excellent Newsonomics blog says of the FT’s HTML5 web app:

We first heard of HTML5 as an alternative to Adobe’s Flash as Apple excluded Flash from its products. HTML 5, though, has proven to be a strong foundation for next-generation digital product development (“The Newsonomics of Apps and HTML5?). HTML5 is also the basis for web apps, and it is web apps — those browser-based apps the FT is trumpeting today — that are now providing tech and business competition to native apps.

via FT Declares Independence (from Apple) Day | Newsonomics.

Ken continues on to dig into the FT’s digital business and why they might be in a unique position with respect to other publishes due to their decade-long strategic development of their digital business.

When people and clients ask to me about good models for digital news operations, I first point out that having good digital content offerings isn’t enough. You can have amazing, world-beating editorial, but if it isn’t supported by a sustainable digital business, that’s not a model to emulate.

Journalists: Create your own future

There is good advice from Andy Serwer, Fortune magazine’s managing editor, in the summary of a talk that he gave business journalists in Canada. Dana Lacey writes for the Canadian Journalism Project:

Serwer’s advice for journalists in the digital age? Build a brand, work for a start-up, be the “baddest-ass investigative journalist” you can be, work for the New York Times and help that paper figure out what the next business model will be (think beyond the paywall). In other words: don’t be victims of the change washing over print journalism.

News of the World: 1995 is calling, it wants its digital strategy back

Not to beat a dying horse, but the News of the World doesn’t have a digital strategy for 2010. As I said yesterday, sometimes I’m willing to be generous about News International’s paid content strategy. The Times had to do something. They were losing £240,000 a day last year, and by their own admission, those losses were unsustainable. However, when you hear things like this from News of the World’s Digital analogue editor Rachel Richardson:

The majority of our content will be published on a Sunday. We will update our exclusive stories as they develop through the week. We also offer a comprehensive sport service and update match reports etc frequently. A lot of our content is timeless. Fabulous [celebrity magazine] is a great example of this, so we’re confident our site will be appealing mid-week without constant updates.

You have to wonder what planet she is on. Seriously. Now, it would be interesting to unpack what she means by ‘constant updates’, but this seems like a strategy from another age. The type of gossip that News of the World peddles is a constant stream of whispers coursing through the internet. It’s not something that pauses politely for a print driven publishing cycle. Yes, the News of the World thinks it has exclusives, and too many people living in the silos of newspapers believe it’s not old until it’s told by them. In terms of exclusives, with a few notable exceptions (the Telegraph’s MP expenses reporting being one of them), an exclusive in the online era has a shelf-life shorter than a Z-list reality TV star, possibly shorter. I don’t read celebrity gossip, but I actually don’t feel the need to. It’s so utterly ubiquitous that I absorb it through osmosis. There are so many choices. It’s everywhere. Are they really going to be able to charge to catch up on Sunday’s shock headlines by Wednesday? They already will seem tired by 5pm Sunday night.

Reading excerpts from the transcript of an interview with Richardson what comes through is that this isn’t a business strategy, it’s a sense of entitlement. Yes, it costs you something to make the News of the World, and you think that it has a value that should cost a set price. If everyone was able to price their products at what they thought they should be paid for instead of what people are willing to pay for them, we’d have a much different world.

Bravo for having a launch partner, but their other ads are supplied by ad networks?!? If your content is as exclusive as you say it is, surely there has to be value in building up your own premium ad services. Of course, no one will know whether it is successful because we won’t know the traffic. Murdoch has pulled out of the ABCes, leaving others to speculate. News International isn’t even being forthcoming with their advertisers about their numbers, and their advertisers are punishing them. That’s not strategic. It’s arrogant, or fearful.

There are times when I wonder if News International’s digital strategy is actually designed to fail. I often wonder if Murdoch in a fit of pique will actually just shut down the digital offerings once they have failed to meet his targets. It seems outlandish, but no less so than some of the non-strategic nonsense coming out of News International wrapped in PR assertions as being bold visionary thinking.

Honesty in the age of the paywall

After months of discussion and speculation, The Times and The Sunday Times have disappeared behind a paywall or have asked their readers to pay for the journalism that they value, depending on which side of an almost religious divide you fall on. Like a lot of commentary, I find the punditry and posturing around paywalls uninformed, over-simplistic and, frequently, disingenuous.

It is often said that people paid for journalism in print so they should pay for journalism online. If ‘they’ value journalism, they should pay for it.

No. As many people have pointed out, the cover price of a newspaper really just paid for the high capital costs of printing and distributing a newspaper. To put it bluntly: People paid for the platform, not for the content.

As the OECD said in its recent survey of the newspaper industry in 30 countries:

On the cost side, costs unrelated to editorial work such as production, maintenance, administration, promotion and advertising, and distribution dominate newspaper costs. These large fixed costs make newspaper organisations more vulnerable to the downturns and less agile in reacting to the online news environment.

For every newspaper journalist who moans about how much money their publication spends on running their website, I would ask them if they know how much the outlay is for printing the newspaper. Business Insider calculated that for the cost of printing and distribution the New York Times was twice the cost of sending every single subscriber Amazon’s Kindle e-reader.

Google’s chief economist Hal Varian looked at the US industry and found that in terms of core costs, only 14% of costs as a percentage of revenue went to pay for editorial. Production costs were 52% of newspaper costs by revenue. (Varian has sourced all of his statistics from the US Statistical Abstract, the Newspaper Association of America, the Pew Foundation and academic sources.)

Newspaper revenue and the great digital divide

However, here lies the conundrum for newspapers, which commenters point out on Business Insider. For most newspapers, the printed newspaper brings in roughly 80% of their revenue. With the current revenue mix, shutting off the presses is simply not an option without dramatically cutting the editorial staff. One example of this is the Seattle-Post Intelligencer, which went online only in 2009. Hearst laid off 160 employees and retained 20 “news gatherers”. It’s not necessarily a recipe for success, with traffic declining by 20% after the shift.

Digital must and can make up more of the revenue mix at newspapers. In its report, the OECD found that “online advertising only accounted for around four per cent of total newspaper revenues in 2009, and fell strongly in 2009”. However, and this is key, the report said:

In general, the online revenues of newspapers are miniscule in comparison to total revenues and online revenues of other digital content industries.

Many will say that it’s not possible to make enough money online to replace the revenue that used to flow to print. We have traded dollars in print for pennies online, they say. This is not an iron-clad law of digital content. Yes, digital margins are lower, but many content companies make money online.

In a recent Folio profile of Justin Smith’s turnaround of The Atlantic. Smith pushed for a digital first strategy, which to many in the newspaper industry probably sounds like heresy in 2010. The simple rebuttal to that would be Smith’s record of success. The Atlantic had seen declining circulation and revenue since the 1960s. In 2010, they project a turn to profit, with digital representing 39% of their revenue mix.

Innovating on the commercial side

The problem with newspapers’ digital strategies has been that they have largely been content strategies without effective commercial strategies. For too long at too many publications, digital advertising has simply been a sweetener bundled in with the print ad sales. For too long, we have not done enough to know our audiences online, understand their needs and adjust our strategies accordingly.

Those who have succeeded online often have innovated in terms of commercial models as much as they have in content creation. Google’s main revenue engine is advertising, serving up ads to people based on what they are searching for. Without that commercial innovation, Google would not be the billion-dollar company it is today if it’s business model was based solely on undifferentiated ads supporting a search service.

Indeed, I agree with this post on ExchangeWire that the publications that will benefit the most in the future “will be able to leverage that audience to generate more revenue from targeted ads or data trading” and goes on to say:

But if they are to have a commercial future, pubs will need to be become absolutely obsessed about their data and how it can be best used to unlock new revenue.

We’ll have to re-think print and digital and the revenue streams that support journalism on those platforms. We’ll need to re-think advertising and have commercial strategies that reflect differences in audiences and in editorial approaches.

Oversimplifying an issue is something that media excels at, and now, its lack of sophistication in dealing with issues is hitting closer to home. This is not simply an issue of free versus paid, not simply an issue of jettisoning freeloaders and extracting value from those who value journalism enough to pay for it. Creating such false dichotomies makes a good column in which complex issues are transformed into black and white choices for easy consumption, but simple analyses often lead to simple and simply ineffectual solutions.

Newspapers must end their dependence on the revenue from print or face continuing decline leading for many to total collapse. The industry has been having this civil war over paid versus free. Surely, the argument should be profitable versus unsustainable? We didn’t need Murdoch to build his paywall to prove a point, we already have examples of newspapers and magazines realising that they are in the news business not just the paper business.

For those labouring in the digital side of the business, once you’re making the majority of the revenue, you’ll not just have a seat at the table, in many cases, you’ll be at the head of it. It’s achievable. It’s necessary. There is no time to waste. The future of journalism (as opposed to the future of newspapers) depends on it.

NewsRewired: Marc Reeves, TheBusinessDesk.com

I had to dash out for a lunch meeting, but I was happy to make it back for Marc Reeves keynote. He is the editor of TheBusinessDesk.com West Midlands. I found myself applauding over my morning coffee when I read his recent speech to the CBI. His frankness and lack of sentimentality was refreshing. He started that speech with this statement:

Journalism has no God-given right to exist and journalists are owed a living by nobody.

Here is summary (not word perfect and and many places paraphrase) of his keynote at NewsRewired. It was nice to hear his lack of sentimentality in person:

Three main points, in a niche not enough to be a journalist, have to provide other stuff too. Need to provide more than just information. Niche audience needs a niche approach not a mass market approach. Why has this subject risen up the agenda?

The internet didn’t create this. We publishers forced them into buckets because it was more profitable for us. By lassoing 100 interests, we deluded ourselves into thinking they were a unified whole. It actually created some ineffectual and inefficient advertising models.

Not all niches created equal. Football readers deliver half of the audience. Most of the advertising wasn’t on those football pages. Many readers online bypassed the home page and went straight to football pages.

Now, the internet has revealed the niches in the mass. Financial model is there. Can’t talk about journalistic approaches to serving audiences without talking about how the businesses are organised and how they relate to their audiences, and I include advertises as an audiences.

Are you going to hope that by sitting back and writing about what they do in those niches? No. You have to produce other content that is relevant to their lives. In business terms, it’s always been about the relationship you have with your audiences. You turn acquaintances to transactions. Once you have attracted them, you need to think of other ways to interact with them. Events, get them to sell things to each other, get them to interact with each and sell services to them.

To people who say that I’m just a journalist and I don’t do events, he said: “Tough. That’s the way it is now.” By putting the noisy people called advertising in one room and the studious in another room was a big mistake. Just giving the audience journalism alone is not enough in the long term.

They now have 40,000 registered users across their regions. They hit their target of registered users in Birmingham in four and a half months. They have a daily email in the morning that drives 80% of their traffic.

We ignore the CPM race and refuse to become SEO tarts

At the centre of their business is the intelligence that they have about their users. He tries to personally review every new sign-up. He calls up some and thanks them for registering.

As a small business, we avoid waste. I reject things that don’t deliver audience, revenue or attention.

He says that this might be a way to support journalism in the future.

Q: Do newspapers not get the ‘net?

A: Yes, I’m afraid so. That is not because there aren’t brilliant individuals and editors who do get it. Structurally, I don’t think they can turn themselves around to make money on the internet.

I asked him to follow up with that. It is said you loose a pound in print for a penny online. That’s often true, but he said that the high fixed costs of newspapers – print plant, pensions, staff costs – make it almost impossible to ‘turn that super-tanker around’ and sustain their business with a digital revenue.

He uses Google Analytics to monitor his traffic and track the performance of their morning email.

Q: What is there that helps you re-engineer the cost base?

A: I’m not dragging behind a 100 ton press behind me or having to manufacture the most perishable product daily. Taking that cost out of the business makes all the difference. When we launched in February, it was me and my deputy in a serviced office with two laptops. In terms of when we scale up, we’ll keep on that trajectory.

One thing that stands out is their focus on keeping costs low and developing multiple revenue streams. They hold physical events. They do mail shots for promotion.

Journalism’s future: ‘Silver bullets are the talisman of the desperate’

I will admit that it’s a bit cheeky quoting myself, but as I was watching the flow of posts and conversation on journalism blogs today, and specifically in response to Adam Tinworth’s excellent post Complexity is the New Reality, I wound up Tweeting “Silver bullets are the talisman of the desperate”. Adam was commenting on a good rant by Paul Bradshaw titled Let’s stop this ‘Curation is King’ crap right now.

…if curation is king in online journalism I guess I missed the coronation. Curation is a usurper, here to distract us from the bloody mess we’re in with the message ‘Business as usual’.

The future of journalism and publishing will not be curation, aggregation, the iPad OR mobile. It will be a strategic mix of these things and more depending on the market and the audience. As Adam says:

There is no easy answer, otherwise we’d have found it after over a decade. Complexity is the new reality. Clichés are just a crutch.

Clichés are much worse than that. Seemingly easy answers too often win internal debates, especially as Paul points out, some of these messages convey that ‘business as usual’ is an acceptable course of action.

Earlier this week, I wrote a post about multi-facted digital strategies that are generating growth for both the print and the digital for forward-thinking publications like the Christian Science Monitor and The Atlantic. The first comment on that post was “one word – iPAD!” The commenter isn’t alone: Mathias Döpfner, the head of German power publisher Axel Springer had this recommendation for his colleagues in the corner office:

Sit down once a day and pray to thank Steve Jobs that he is saving the publishing industry.

That’s the problem. Senior leaders in the industry aren’t looking for strategies, they are looking for a saviour. They want some supernatural – or in lieu of that, legislative – power to turn back the clock, put the genie back in the bottle, tax the internet and go back to the good old days when money just fell from the sky into their coffers. News flash: It’s too late. The good old days aren’t coming back. Anyone who tells you that you can continue doing what you’ve always done and that the solution is easy is lying. They care more about their current position than they do the future of journalism.

Comparing non-profit news org models in the US

Alan Mutter is one of those rare creatures who has both editorial and business sense and writes lucidly, analytically and rationally about the business of news. Alan says this about himself:

Alan D. Mutter is perhaps the only CEO in Silicon Valley who knows how to set type one letter at a time, just like his hero, Benjamin Franklin.

He has a great post comparing the different funding and business models of non-profit news organisastions in the US. Several have started in the last few years to address the decline in traditional reporting capacity due to the turmoil in the US newspaper industry. Some are boot-strapped, scrappy operations that operate very leanly. Others, such as ProPublica and the Texas Tribune have very substantial foundation support.

The MinnPost in Minnesota is definitely in the lean and scrappy camp. Alan thinks that the MinnPost might just have a successful model for non-profits looking to operate without major foundational funding. That kind of funding can come with strings attached. How is the MinnPost succeeding:

First, by keeping costs low. Second, by raising money almost continuously through such diversified initiatives as advertising, NPR-style user contributions and even an annual gala featuring organic-vodka martinis.

From my point of view, the MinnPost as opposed to the Texas Tribune and  ProPublica are different editorial propositions, different funding models aside. The Texas Tribune is much more like a Politico for Texas.  Both the Texas Tribune and ProPublica are intended to support the high-end Porsche of public interest journalism: Investigations. Investigations are expensive,  time-intensive projects often with very little commercial return, and ProPublica currently gets “$10m a year from a single benefactor”. Investigations are the height of public service. They garner awards and attention but often are difficult to get a return on investment alone from a strictly business point of view. ProPublica is definitely doing good work and has just won its first Pulitzer.

The MinnPost is much more of a traditional news site, covering a range of issues including politics, sports and arts, just to name a few.

Alan points out a major difference between the big foundation-funded non-profit news operations and the MinnPost: Pay.

Although Kramer and his wife, Laurie (of the MinnPost), have worked tirelessly on the project since they launched it in 2007, neither ever has drawn a dime of pay. Their commitment, which includes personal donations in excess of $120,000, contrasts to the hefty six-figure salaries paid at Pro Publica, where editor Paul Steiger makes $570,000 per year; the Bay Citizen, where CEO Lisa Frazier earns $400,000 annually, and Texas Trib, where editor Evan Smith gets $315,000 a year.

Alan points out the the another foundation supported site, Bay Citizen just leased “stylish offices in downtown San Francisco” even before it publishes a single story.

Pay for journalists

Putting aside for a moment the different models at these non-profits, I have to admit that I’m really of two minds here about the pay at these large foundation funded non-profits.

I’ve never made a lot of money being a journalist. My first full-time reporting job was at a small newspaper in western Kansas, and I made $2000 less than a first year teacher in the town I lived. Fortunately, the cost of living was pretty low. Although I have written for newspapers and done radio and TV reporting and commentary, my main income has been as a digital journalist and editor. The pay has been low compared to my colleagues focused on the traditional media. I’ve managed to make a living wage, but there have been times when it took efforts to make ends meet even though I was employed full time. The idea of making six figures is just a completely foreign concept to me, as I’m sure it is for most journalists. (There is a myth that journalists make a lot of money. That’s only for TV anchors and well paid columnists. Most of the rest of us, especially those in local journalism, are paid poorly.)

When I started out as a journalist in the mid-1990s, I complained on a mailing list that I wouldn’t be able to pay my health care bills if I was injured. (I am a American, although I’ve worked for British journalism organisations for more than a decade.) I was told by senior editors and journalists on the list that ‘you didn’t get into journalism to make money’. No, I didn’t, but I also didn’t take a vow of poverty.

There is only so much foundation funding to go around, and I have applied for foundation funding in the past (largely through the Knight News Challenge). I have to say that it makes me feel more than a bit uncomfortable about some of the pay levels at these non-profits.

Whether in the non-profit or for profit world, I feel like one of the few journalists to care about costs. My view has always been that a every pound or dollar I save on travel costs, tech or accommodation is another pound or dollar we can spend on journalism. I care deeply about journalism and public engagement, and I have always sought ways to do that as inexpensively as possible while having the greatest impact.

I take on board that to get the best investigative journalists you have to pay a premium, and I’m pleased that the editors at these well funded non-profits have the resources to pay themselves well and pay for talented journalists. However, I do wonder if the foundation funding cannot be sustained at these levels whether these heavy cost structures at these non-profits can be supported in any other way.