Last week, WAN-IFRA said what many of us in digital journalism have known for a while, that we’re losing the battle for attention. They said that digital news audiences lack the same “intensity” of print audiences. Put simply, digital audiences are less loyal and spend less time with each digital news source. WAN-IFRA CEO Christoph Riess has put the problem this way:
We are not losing readers, we are losing readership. Our industry challenge is engagement. Because someone is a subscriber does not make him a loyalist.
Several people in the industry have been trying to raise the alarm for years now. Two years ago, Ken Doctor pointed out that audiences were spending 7 hours a month on Facebook versus 20 minutes a month on the New York Times or 8-12 minutes on the average US newspaper site. US digital journalism pioneer Steve Yelvington has been talking about this for years, speaking about the problem with audience frequency. As Steve said earlier this year:
Forget all the newspaper industry puffery about how we’re reaching more people than ever. Frequency and time spent are the important metrics.
And the reality is dismal.
From a business standpoint, this has meant that while digital advertising spend has increased dramatically, news organisations’ share of that digital revenue still remains piteously low. As WAN-IFRA noted:
Overall digital advertising market rose from US$ 42 billion to US$76 billion from 2007 to 2011. Only 2.2 per cent of total newspaper advertising revenues in 2011 came from digital platforms.
What you will continue to hear over and over and over, from the likes of former Guardian editor Peter Preston, is that print still pays the bills. They will tell you that you can’t make money online. Preston cherry picks figures from the recent Journal Register bankruptcy filing in the US, pointing to that fact that print revenue is down 19% but still represents 50% of the group’s revenue. However, he conveniently leaves out that digital revenue at the news group is up 235% from 2009 to 2011. Yes, they probably started from a low base, but it is pretty impressive growth. Many news groups in the US have seen their digital revenue growth slow or stall this year, and at least the Journal Register team can point to 32.5% growth this year alone.
The reality is that you can make money online but that newspapers are not competing effectively for digital advertising. As WAN-IFRA noted, “Search advertising accounts for 58 per cent of all digital advertising and 13 per cent of all advertising expenditure”. US news analyst Alan Mutter noted in April:
The share of the U.S. digital advertising market garnered by newspapers shrank to the lowest level in history in 2011, according to newly published data.
With the growth of digital formats like highly targeted search, mobile and social advertising vastly outpacing the ability of publishers to develop competitive new products, newspapers sold only 10.3% of the $31.7 billion in digital advertising purchased in 2011.
When the Newspaper Association of America first started counting online sales in 2003, newspaper websites carried 16.7% of all the digital advertising in the United States.
There is money to be made online, but newspapers aren’t the ones making it. That’s the problem and, unless newspapers focus on creating not just large audiences but loyal audiences, that problem won’t be solved. Newspapers also need to build up knowledge about those audiences to better serve them journalistically and to provide better targeted advertising. Those are the challenges we need to meet, and we need to ignore the voices in journalism that say we can’t make money with digital. They have ruled the debate for far too long and have delayed us from meeting the real challenges of digital.
Every once and a while reading comments on a good blog is rewarded. I’m an avid reader of Alan Mutter’s Reflections of a Newsosaur. His recent post on Big Data is well worth reading.
To date, publishers have applied the same business model to everything from print and the web to the latest mobile and social platforms: Build the biggest possible audience.
This approach, unfortunately, is exactly at odds with the point of Big Data, whose goal is to connect individuals with information specifically tailored to them.
The quicker Big Data applications develop, the faster the large but un-targetable audiences traditionally delivered by newspapers will become an anachronism, thus limiting their utility to consumers and value for advertisers.
However, read the first comment from Pat Scanlon, the director of digital strategy and Business Development at Pittsburgh Post-Gazette. It shows a publisher actually embracing data, and no I don’t mean embracing data journalism. Scanlon outlines how some newspapers are embracing data to deliver better, more targeted content to audiences and better results for advertisers. He writes in his comment:
At the beginning of this year we adopted a “DataFirst” digital strategy. Being DataFirst means: “Collecting, analyzing, understanding and using data to create better customer (users, readers & advertisers) experiences – and improve our business insights.”
More and better data means we understand our customers better. If we understand our customers better, we can deliver more relevant content – both Editorial and Advertising.
If we deliver more relevant Editorial and Advertising… We will make more money via increased traffic, more effective advertising and being relevant in the lives of our customers.
If we make more money we will save journalism and be employed.
Amen. This is one to watch and most likely to emulate.
Editor & Publisher interviewed US humourist and syndicated newspaper columnist Dave Berry after he won 2013 Ernie Pyle Lifetime Achievement award, and the interview was excerpted on the blog Newspaper Death Watch. When asked why newspapers have cut down on their humour columns, Berry responded:
Newspapers have had a consistent problem over the past 30 to 40 years that whenever they are offered two options, they always pick the one that is more boring and less desirable to readers.
Personally, I attribute the modern failure of newspapers to English majors. We let our business be run by English majors, but since the model was a foolproof way of making money and the only place for Sears to buy and print a full-page ad, they could do whatever they wanted. This created the notion that whatever they were doing had huge market demand, and when the Internet came along, we found out that wasn’t necessarily the case.
That’s an incisive comment, not because English majors were running the business, but because we’ve had a shift from a time when newspapers had almost a licence to make money to a much more challenging environment. This shift from a pretty lazy business model to one where we had to be creative about how to sustain journalism is still playing out. To make enough money to support a news operation approaching the scale that we have now we’ll need to work smarter and harder to rebuild the business. I also think it would be realistic to cede that it’s probably not possible to retain the size of organisations that we currently have in the US and western Europe. What’s the optimal size to provide quality coverage for a community? I don’t know, but we’ve got a lot of work to do to find out.
Professor Chris Frost, the Head of Journalism at Liverpool John Moores University, has testified before the Leveson inquiry “in in his role as Chairman of the National Union of Journalists Ethics Council, alongside NUJ General Secretary, Michelle Stanistreet”, and I think he raised a point that is important not only with respect to the press corruption scandal in Britain but also in a lot of other debates that we’re currently having in terms of rights and responsibilities in democratic societies. I’ve heard a number of times recently people confuse freedom of the press with freedom of speech or of expression. These are different rights.
Frost drew a distinction, and I think an important one, between freedom of expression and freedom of the press. Just as important in terms of making distinctions between these freedoms, he also speaks about limits with respect to these freedoms.
Clearly other people have other freedoms which may come into conflict. The obvious ones are reputation, privacy, fair trial and so on, all as mentioned in the Human Rights Act, and clearly journalists need to balance their – and indeed everybody needs to – balance their right to freedom of expression against those other rights.
This becomes particularly important for the media, which is in a particular position of power, so that whereas the kind of freedom of expression you and I enjoy when talking to other people can have a little more licence, when it’s driven by a media which is talking potentially to millions, there needs to be much more concern about the rights of others, such as privacy and so on.
The difference between the rights of the individual to expression and the rights of journalists as members of the press and media are different. The individual right of expression versus the institutional right of freedom of the press have a different relationship to the democratic process. I’ve made the point before that the press, the Fourth Estate, is an institution with power. It needs this power to hold other institutions and other holders of power to account. However, power corrupts, and in the case of the British tabloids, in particular, they not only became corrupt but also had a corrupting influence on public officials. When other institutions, whether they are in government or in the private sphere, we call for reform.
Recent attacks on the process of the Leveson inquiry by powerful interests of the press worry me. The British press is in need of reform, not to protect the powerful from being held to account but to protect ordinary British citizens whose reputations have been smeared and whose right to privacy has been trampled by an unaccountable tabloid press. Leveson is about stamping out corruption in an important democratic institution, the press. It is not an attack on freedom of speech.
As I’ve often written here, I feel very blessed by how rich and rewarding my career has been after taking a buyout from the Guardian in 2010. I’ve travelled the world, working with journalism organisations and journalists to help them seize their digital future, and that prepared me for my current as the editor of Knowledge Bridge, a project of the Media Development Loan Fund, to help news organisations in emerging democracies make the transition to digital media.
With all of the turmoil in the industry, I often speak with former colleagues and friends in the business who are facing their own decisions. For those who didn’t know what I was doing during my freelance years, I often simply replied, “I’m doing things to support my journalism habit.” My digital skills paid the bills, allowing me to accept the going rate for freelance journalism jobs. I still love journalism, and for most journalists, what we do is more than just a job. For many who practice it, it is an all-consuming passion, which makes it very difficult to transition to another profession.
However, if you want some inspiration on what comes after journalism, check out the excellent blog, NewspaperAlum. The site says:
What you WON’T read about in this blog: Firings, layoffs, dwindling circulation figures, and embarrassing headlines. What you WILL read about in this blog: Reports on the whereabouts and activities of those who have left U.S. daily newspapers and have blazed a new path for themselves outside of the newsroom.
On this rainy Monday here in Britain, if you need a bit of inspiration for when you are coming to a fork in the professional road, take a stroll through these personal stories. It is an important reminder: There is life after journalism.
As Twitter users, we all find ourselves occasionally saying: This is a > 140 character discussion and, over Friday night, I found myself in one with Dan Pacheco, a fellow digital journalist in the US whom I know by reputation but have never met. I know of Dan through some of the great work that he did at Bakersfield California developing a very excellent social media platform, Bakomatic, and the online-to-print service, Printcasting now Bookbrewer.
We got into a discussion on Twitter about the recently announced cuts at the Times-Picayune newspaper in New Orleans. Its parent company, Newhouse Newspapers, is cutting the print run from daily to three times a week and reportedly slashing up to one third of staff. Newhouse is reportedly rolling out a model that it tested in Ann Arbor, Michigan, (in part using a regional news site that I worked on for a year from 1997-98, MLive.com).
Dan asked on Twitter:
The Times-Picayune is moving to 3 days/week print. Why not 1 day/week magazine and pure digital focus? http://t.co/QMy9TQXo
First off, I want to clearly lay out where I’m coming from because I got the impression that Dan assumed I was coming from a print-focused position. I wasn’t. My working assumptions:
The present of content is digital, but most newspapers in the West squandered early opportunities to make a painless transition to digital.
Many, if not a majority, of newspapers won’t make it. Digital distribution erodes the advantage of geography, and digital economics simply won’t support the volume of newspapers we have now.
That said, we still know very little about what a purely digital local news business looks like. We only have a few examples and many are very small and focus on specific niche coverage.
There is a lot of work to be done to develop digital products and related revenue streams to support a local digital news offering at scale. It’s a worthy challenge, but we digital journalists, editors and sales teams have a lot of work to do.
I wasn’t trying to say that newspapers should cling to print, rather that while print is a burning platform, there isn’t yet a digital lifeboat to take news organisations to safety. While digital advertising has boomed over the past decade, taking only a brief pause during the financial crisis to decline slightly, US newspapers have only managed to grow their digital ad revenues slightly. Digital ad sales grew from $7.3bn to a staggering $31.7bn in the US between 2003 to 2011. But newspapers there have only grown their digital ad revenues from $1.2bn to $3.2bn, according to Alan Mutter. Newspapers actually capture a lower percentage of digital ads now than they did in 2003. Many US newspapers in the unenviable position of having a radically deteriorating print business and a still nascent digital business.
As I said on Twitter, I had just read news business analyst Ken Doctor’s assessment of the News Orleans strategy. He described it as “shock therapy” and a “forced march to digital”. As Ken points out, the hope is that the paper in New Orleans can retain the vast majority of their print revenue while also cutting some of their print related costs, although he is sceptical. They might retain 80 to 90% of their print advertisers but not 80 to 90% of their print advertising revenue by going to three days a week.
The newspaper will also most likely be consolidating some administrative costs so hopefully the operation will be more efficient in other ways as well. Printing three days instead of one makes some amount of business sense, but if you cut the print run to one day, would the loss of revenue wipe out some, or all, of the advantage of the print cost savings? Are any US newspapers actually in the position digitally to shift to one-day-a-week print without cutting staff not by a third but something even more drastic, maybe 70 to 80%?
Just like Ken, I wasn’t making a pro-print argument, I was making the observation that the paper and its parent company’s digital business isn’t well positioned for this transition. Ideally, they would have laid this groundwork years ago, but they, along with most newspapers, haven’t. Ken writes:
I’d call it a forced march because it doesn’t look like the Times-Picayune, or its new successor, the NOLA Media Group, is yet ready for the digital transformation. It has been making a digital transition, and there’s a big difference between the two. It doesn’t have a digital circulation strategy yet in place; though about a fifth of U.S. dailies do. Digital circulation is key to making this work, so that core print readers become more likely to transition with the enterprise — and keep paying their monthly subscription bills.
Like many newspaper groups, there are few good, easy answers for Newhouse Newspapers. Dan believes that the time for half moves is over, and I can understand that line of thinking. He said:
@kevglobal Newspapers tend to focus on how to preserve staff for an outdated print model rather than meeting local needs in any medium.
Yes, the culture of newspapers needs to be shaken up. It needed to be shaken up a decade ago but the industry thought it dodged a bullet with the dot.com crash, which it viewed as a fad that it was lucky not to have invested too much money in, and sat on its laurels. I agree that newspapers need to stop talking and move purposefully in the direction of digital, but I also agree with Ken Doctor that Advance’s approach looks like shock therapy than a strategic embrace of the future.
My big fear is that by cutting print runs from seven days a week to one would necessitate traumatic cuts to editorial staffing, leaving such a small editorial staff that it would have difficulty attracting sufficient digital revenue to sustain it, even in its leaner, digitally focused form. Everyone points to the pure digital Seattle Post-Intelligencer which went from a newsroom of 150 to 20. When you make cuts that deep, you lose good people and you lose capacity. Twenty people just can’t do the work of 150, no matter the efficiencies possible with digital tools.
Digital may be the future, but the vast majority of revenue still comes from print, and we need to see more innovation in both print and digital products that will reinvigorate income streams. It can’t be all about the shiny; it also has to be about financial sustainability. For example, mobile is a huge opportunity to reach audiences, but if Facebook’s revenue is threatened by the shift to mobile because it haemorrhages ad dollars, how will news organisations make money from it?
All journalists, whether print or digital, should understand the news business and be constantly thinking of ways that they can add value, not just for their audiences but for the business. We need more innovation, more experimentation, and smarter thinking about how we fund news. This isn’t about the culture wars anymore, it’s about making the difficult transition to a digitally-focused, multi-platform future.
Here is the entire conversation that Dan and I had on Twitter for context:
For years, I’ve thought that 24-hour news channels were actually just a technical kludge. Most of the time, there just isn’t enough news to fill 24-hours so many of the channels are little more than a very expensive tape loop, with the stories running on repeat every 15-minutes on some channels. Sure, 24-hour news channels really shine during big events, during wars, elections, disasters or historic events like the Arab Spring. CNN really broke through during the first Gulf War. That being said, I remember watching the same cruise missile fired from the same frigate over and over and over. Well, to be fair, the cruise missile launches were punctuated by the similarly repetitive footage of a carrier-based aircraft taking off (I believe it was an F-14, but it’s really beside the point).
When elections and explosions happen, people tune in to CNN, the same way they hurry to a hospital when they think they are having a heart attack. But people tend not to linger in either place — a reality that was reaffirmed for CNN this week when Nielsen ratings showed that April was the channel’s lowest-rated month in 10 years.
Domestically in the US, CNN is being outflanked by the partisan noise machines of Fox and MSNBC, which like the tabloids in the UK know their constituency and serve it well. I wonder how long it will take for a cable TV version of the Daily Mail, Mail 24, heavy on celebrity, skin and manufactured outrage. I’m sure someone is already cooking it up somewhere. It would certainly be a money spinner. I digress, and poynter has a good round-up of CNN’s ratings woes and various suggestions on how to solve them.
Personally, I don’t really care about the political angle. Globally, CNN seems to be performing much better. It’s brand of more level-headed news playing well to international audiences who don’t know and don’t care about the partisan battles of the US. While CNN’s prime time US ratings might be suffering, financially it’s doing well. It’s set to make $600m in operating profit, a record, Brian Stelter reports. Will CNN reach a tipping point where the ratings start to undermine its ability to generate this kind of income? Is CNN where US newspapers were in say 2004, right before they started to fall off a cliff financially? Possibly.
In the longer term, I simply wonder about the cost of running a 24-hour news channel versus running a news website with video-on-demand and the ability to go live digitally on multiple platforms when big events happen. This especially gets interesting when you think of smart TVs and the blurring of the internet and TV that’s now possible (although not being used by consumers as much as they can yet).
CNN’s primary differentiation is the ability to connect multiple screens. More than 80 percent of our advertisers buy both TV and digital. That’s unlike virtually any other service out there.
For now, having a 24-hour news channel works, and it works in part because CNN is paid by cable and satellite companies to carry the channel. However, as TVs get smarter and consumers move to video-on-demand with greater tools for video discovery, I wonder if having a rolling channel will make economic in the future. I don’t think so. We’re not there yet, but the future looks less like a tape loop and more like an app.
Reuters Institute fellow Rasmus Kleis Nielsen has a great post on the blogs at Reuters warning European journalism start-ups to avoid surviving on advertising alone. He backs up his warning with some stark examples of start-ups who have failed due to meagre revenue they were able to earn on ads:
Advertising-supported online news production did not work for Netzeitung in Germany (which in 2009 shut down its newsroom after nine years of consecutive losses), did not work for Rue89 in France (impressive and innovative as it was, the site never broke even and was bought by the weekly newsmagazine Le Nouvel Observateur in 2011), and is not working for Il Post (widely considered one of the most promising startups in Italy, the site generated revenues of just 35,000 euros in its first year of operation, resulting in an operating loss of more than 150,000 euros out of a total budget of little more than 200,000 euros). Why should we expect it to work for other startups when all these widely praised ventures, and many more besides, failed to pull it off?
Ouch. Nielsen makes the broader point that the journalism start-ups are simply mimicking US models, when the US market is massive both in terms of population and ad spend compared to European markets, but he also makes some excellent points about how a glut of digital content has pushed down ad rates and kept them low. Those low rates aren’t just hitting start-ups but even established players.
A lot of journalists are trying their hand at start-ups as they leave or are pushed out of the stable of big media. When I left The Guardian two years ago, Suw and I thought about pursuing a journalism start-up. We decided not to do it for several reasons, with the major one being, our start-up dreams were over-taken by media consultancy work. However, we thought long and hard about the revenue streams that would fund our start-up. We knew that ads alone wouldn’t cut it.
Nielsen suggest that journalism start-ups look to how other non-content start-ups are diversifying their money mix by adding “digital subscriptions, donations, consultancy services, live events, event planning and e-commerce”. Honestly, I think for certain types of content, you could even mix consulting and content, although I know from personal experience that gets sticky. Journalism quickly meets the requirements of client confidentiality.
Regardless, if you’re launching a journalism start-up, make sure your content dreams are leavened with some thoughts of business reality. If you don’t have business planning experience, get some. Freelancers have always had to learn about marketing and the business side of journalism. It might feel a little weird at first. Just remember, you’re not working for the Man. You’re fighting for your own survival.
As I start my new job, I feel a deep sense of gratitude. I owe a lot of people a lot of thanks for their support over the last two years.
As I go back to full-time work, I first want to thank the managing director of Y Ffynhonnell, Suw, for being such a great boss. 😉 Seriously, Suw helped me navigate this leap into independence, which was truly terrifying for someone who had always held a full-time job. She has also been really supportive about my new job, although I’m sure she will miss me as a valued employee. She’ll still have to deal with me as an office mate.
I also want to thank all of the clients I’ve worked with over the past two years. Like the Oscars, I can’t thank you all here. I especially want to thank Mohamed Nanabhay and Riyaad Minty for the amazing opportunity to work with Al Jazeera. Thanks to Durga Raghunath at Network18 in India for inviting Suw and me to help with the launch of FirstPost. Strategy meetings in February to launch in May! Wow, what a ride. Thanks to John Thompson at Journalism.co.uk for inviting me to participate in the News Rewired conferences and for giving me the opportunity to share my passion for data journalism with other journalists. Thanks to Karl Schneider of RBI (and Adam Tinworth, now available to help you take your digital editorial projects to the next level) for giving me the opportunity to do training with staff on data journalism and beat blogging. Thanks also to the Norwegian Institute of Journalism and Transitions Online also for giving me opportunities to train journalists in a wide range of digital skills. Thank you to Send a Cow for an amazing opportunity to go to Kenya and see how mobile technology might help the farmers they work with share information. Suw and I had the opportunity to work with many other clients. Thank you all.
After two years of very successful and satisfying professional independence working alongside Suw, I’ve decided to accept an exciting new, full-time position with Media Development Loan Fund.
Who will I be working for?
Who dat, you ask?
The Media Development Loan Fund is a mission-driven investment fund for independent news outlets in countries with a history of media oppression.
Last summer, I was invited to an MDLF board meeting to talk about media developments in the Middle East, based on the work that I had been doing with Al Jazeera. The board was also keen to discuss developments in digital media. When I attended the meeting, MDLF’s CEO Harlan Mandel described the fund as a unique organisation. Yes, the fund focuses on funding news outlets in countries with a history of media oppression, but the goal is to grow the news organisations into self-sustaining, sustainable businesses.
That impressed me. In 2012, I don’t see a crisis in journalism in the developed world as much as a crisis with the business model of journalism. In 2012, we need not just collaboration between hacks and hackers, coders and content creators, I also want to see collaboration between editors, ad departments and business and product development folks. I think you can maintain editorial independence while thinking of the key question of how we create economically sustainable news organisations.
Most of my work has focused on the US and the UK, developed media markets with news businesses under intense pressure. MDLF has been working with clients often facing not just the challenge of creating sustainable businesses but often facing the political pressure of operating in emerging democracies. Despite these challenges, MDLF has had some amazing results:
After one year of working with MDLF, client reach grew by an average of 33%, and after 5 years by 71%.
From 2009 to 2010, individual client sales grew by an average of 11%. After 5 years of working with MDLF, client sales increased by an average of 213%, and after 7 years by 345%.
Again, this impressed me. Independent media not only doing good but doing well. We need a lot more of this.
What will I be doing?
MDLF wants to help the news organisations it works with make the digital transition. To achieve this, MDLF will be launching the Knowledge Bridge project. (No link because it’s not launched yet. Another digital initiative they have already launched is their Digital News Ventures fund. If you’re a digital news entrepreneur, you’ll want to check it out.) The Knowledge Bridge is both a platform (a blog, a digital resource centre and newsletter) to capture the best in digital business and editorial strategy and a capacity building concept, which will provide digital editorial and business skills training and consulting for clients. MDLF has worked in 27 countries, from Guatemala to Indonesia, and the Knowledge Bridge will be focusing on the digital media business needs in those countries, although we will definitely highlight the best digital thinking in the US, Europe and elsewhere. I’ll be the editor for the Knowledge Bridge and also helping to manage the training and consulting for clients. It took a challenge this big and an organisation this interesting to lure back to full-time work.
I’ll keep it relatively brief because we’ll be talking a lot more about it when it launches next month. Watch this space! (And your inbox. I’ve got a lot of emails to a lot of you about exciting opportunities to collaborate on the Knowledge Bridge project.)