Category Archives: Economics

05.27.09
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Mobile social media can unchain journalists from their desks

I’ve spent most of my career as a field journalist and, like most journalists, I’d rather not be stuck in the office all day sitting in front of a computer. I live for being as close to the story as possible.

When technologies are first introduced, they often have limitations that impose restrictions on what is possible. Initially, internet journalism was desk-based journalism for all but a lucky few. It was mostly production and re-purposing of content from print, radio or television news. For most of us who saw the journalistic possibilities of the internet, using it simply as a repository for content from other media was akin to using a Porsche to haul manure because, like a cart, a Porsche also has wheels. Yes, the internet can be a simple distribution platform for content, but that entirely misses the point, which is one of the reasons journalism is in the predicament it is today. The internet is a highly networked platform to tell stories using text, audio and video that can connect not only content from almost anywhere but, more importantly, connect people.

I was lucky enough to be one of those early few who could use the internet for original, multimedia journalism, and I remember the limits of what we could do in the late 1990s before wifi and mobile data outside of cities. In 1999, I remember running smack into the limitations of the technology of the time when I was covering Hurricane Floyd for the BBC. As the storm rolled through North Carolina, it knocked out power and communications. My mobile phone worked, but there was no way that I could file the pictures I had because I couldn’t get a data connection. Two months later, I got my first mobile data kit: A cable that connected to my phone. I could at least file pictures and copy back to base. It was slow, but it worked.

Many journalists have a very odd relationship with technology and those who use it. It is similar to executives who have their secretaries print out emails for them to read: Not using technology is seen by some journalists as a sign of their position and importance. They have worn (and many still wear) their ignorance as a tribal badge setting them apart for those who must toil in front of a glowing screen.

For me, technology sometimes frustrates, but more often liberates me in the work that I do. I remember a jaw-dropping moment at the US Democratic Party conventions in 2000. I watched as an Indy media journalist streamed live video of the LA police bearing down on protesters. He was peddling backwards, holding a black PowerBook, a webcam and an early high-speed mobile modem from a company called Richochet. He was closer to the action than the TV camera crews.

Our production technology lagged behind as it required a faster data connection than many of the early data modems, which topped out at 9600 baud, could provide. But I could email my copy in from anywhere. I didn’t have to hunt for a phone socket. By 2001, I was totally mobile. Laptop. Wireless modem. Portable printer. The speeds went up to 128kbps, and I could just about use production tools in the field.

Fast forward to today, and not only do we have 500kbps+ wireless data connections in many areas in the US, western Europe and Asia, but we also have a suite of applications that can instantly upload photos, video and text. As I said last week at media140, the technology to produce the content is there, but the production systems and the presentation still need work. But Twitter is a liberating technology, not a technology that “will keep reporters off the streets and in front of their screens”, as journalism professor Edward Wasserman writes.

And if he thinks that mobile phone technology is just for “the young, the hip, the technically sophisticated, the well-off”, he obviously hasn’t travelled to South Asia or Africa or even to most neighbourhoods in the US. He obviously doesn’t understand the prevalence of pay-as-you-go phones, not only for communications, but also for micropayments and information services in the developing world. This isn’t just about kilobits and data, it’s also about SMS and the inventiveness of the human mind that takes a simple tool and carves out a revolution. When I worked on the World Have Your Say programme at the BBC World Service, we were overwhelmed with text messages from people in who Africa wanted to take part in the discussion.

Wasserman’s implication that technology is to blame for the skewing of news to cover demographics attractive to advertisers is a red herring. The idea that Twitter will chain journalists to their desks shows rank ignorance of Twitter’s mobile functions in the US.

There are no links in Wasserman’s commentary to support his views. Professor Wasserman, links are the footnotes of the internet age. They give you authority by showing that you’ve done your research. The internet isn’t killing newspapers. The internet might be killing the US newspaper model of local monopolies, but that’s the death of an accidental business model not the death of journalism.

Twitter can liberate journalists to stay in the field and cover important stories, as we did here at the Guardian during the G20 protests. Technology isn’t the enemy of journalism, but I’m increasingly of the opinion that uninformed commentary is.

04.09.09
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What content will people pay for?

Four years ago, I went to the Web+10 conference at the Poynter Institute in Florida. It was an honour to meet some of the pioneers in digital journalism, many of whom I had corresponded with online for years but never had the opportunity to meet. It was 2005, long before the depth of the crisis in newspapers was obvious to all, but everyone was asking the same question: How do we pay for professional journalism? Contrary to popular belief in the industry, newspaper websites were profitable, some quite profitable, but those profits could not sustain the size of newsroom that big-city metros in the US had at the time, newsrooms that dwarfed the size of the British national newspapers.

The crisis has been coming for years as newspapers have seen circulation declines for decades, but the Great Recession is amplifying pressures on newspapers. You read blog posts and articles from journalists and editors who say that the public should pay, must pay for ‘quality journalism’. We hear arguments that they will pay as content becomes scarce with the decline in the number of journalists and the number of newspapers. Leonard Witt, the Robert D. Fowler Distinguished Chair in Communication at Kennesaw State University in the US, says in this post:

So will people pay for high quality journalism and information? I do think so because I know one person intimately who already has. And trust me that person is very tight with his money.

Keep in mind, I am saying high quality news and information. Run of the mill junk is a worthless commodity. High quality journalism is scarce and will be more so in the future, and that’s when everyone who loves great journalism will begin to pay.

But I tend to agree with David Kohn, of spot.us, who says this in the comments:

I think this is right on Lenn – as you know, I tend to agree with you. But more and more I’m realizing that certain types of news and information that journalists think is priceless have less value than others.

David elaborates on his point back on his blog citing lessons he’s learned from various citizen journalism and crowd-sourced projects.

Increasingly I’m of the belief that the newspaper industry is relying far too much on its values in its estimates of what readers value enough to pay for. We need some solid facts and figures on what people will pay for. I might be hoping for concrete data that just doesn’t exist right now, but I think we as journalists have to move from asserting what people should pay for and do a little reporting and research to find out what people will pay for and the types of services that might be able to subsidise professional journalism.

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03.16.09
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Future of journalism: Uncertain but not hopeless

As a journalist who I am sure has been (and possibly still is) considered ‘barking mad’ by some of my colleagues in the industry, quite a bit of what Clay Shirky wrote in his post about newspapers thinking the unthinkable resonated with me. I’m still digesting it because I think the main thrust of what he said was that the industry is entering a period of great uncertainty. I saw this day coming in August of 1993 when I saw Mosaic, the first graphical web browser, in a student computer lab at the University of Illinois Champaign-Urbana. As I wrote in my first post here on Strange Attractor, I knew that the web would fundamentally change journalism.

It took longer than I thought it would. After I left university and went to Washington DC for my first jobs, it was like taking a step backwards into internet history compared to where the University of Illinois was in 1994. Did I know where it was all headed in 1994? Absolutely not. But I’d say it’s a lot easier to see where the internet is heading now than where we’re heading in journalism.

I’m still digesting what Clay has written, but it seemed to me that he was attempting to move beyond the self-denial that the industry has exhibited for much of the past 15 years.

It isn’t that newspapers didn’t see the internet coming. The problem was that newspaper companies and, to be honest, most print journalists tried to adapt the internet to newspapers rather than adapt the news business to the internet. If most (not all by any means) print journalists were honest with ourselves, we would stop trying to lay the blame entirely at the feet of management and avaricious owners and own up to our own resistance to the internet. Too few of us went running boldly to the embrace the future. There’s still time, and it’s better to move towards the future on your own steam than be pushed as many of us are now.

Clay was trying to turn a page and say we’re in the midst of revolution and have been for a while not. Get over it.

The internet is a disruptive technology, not something that politely challenges that existing order. Now that the revolution has met the worst recession in at least 60 years, we’re entering extremely uncertain times.

As Clay wrote:

So who covers all that news if some significant fraction of the currently employed newspaper people lose their jobs?

I don’t know. Nobody knows. We’re collectively living through 1500, when it’s easier to see what’s broken than what will replace it.

But let’s not confuse uncertainty with hopelessness. Journalists are not in a hopeless situation. Any journalist can now become a publisher, and from my own experience, regaining your voice is liberating, empowering and also professionally beneficial. Not only is the cost of publishing approaching zero, the cost of experimentation is too. We don’t have to pay for presses. We don’t even have to pay for desk-top publishing. You can do broadcast-quality interviews with a person on the other side of the world for free with Skype. Technology can threaten our business model but it can be liberating for our journalism. We just have to do what we always done, great journalism, and build a great community around it. Honestly, since I started blogging and doing social media journalism five years ago, it’s been some of the most gratifying journalism of my career.

As Steve Yelvington wrote recently, “We don’t have a clue where this is going … and that’s OK.” Steve was writing about the launch of the Guardian’s Open Platform (the Guardian being my job). Steve would love to have the resources we have at the Guardian or those of the BBC or the New York Times to launch a platform, but he doesn’t need them. He’s building his sites on the open-source platform, Drupal, and it’s army of users and developers around the world are constantly working to extend it. You don’t need expensive technology to innovate.

We’re entering a post-industrial era in journalism. It’s scary. It’s uncertain for journalists, but just remember, it’s not hopeless.

12.22.08
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Digital versus print and apple and oranges analysis

David Carr at the the New York Times has written a story that must cheer the hearts of newspaper owners as they struggle to find a way to go back to the days of fat returns. Under the headline “Newspaper Shuns Web, and Thrives“, he speaks with a small community newspaper publisher who is enjoying 10% growth by almost choosing to “aggressively” ignore the web.

Ryan Sholin said on Twitter:

Yo, David Carr, apples & oranges is a pretty fricking basic concept, isn’t it? You’re comparing them.

I’d agree. Carr’s analysis is simplistic and just plain wrong. Carr says:

A few caveats before we turn back the clock on publishing history. TriCityNews employs 3.5 people (the half-time employee handles circulation), has a print run of 10,000, and has a top line that can be written in six figures.

A caveat is an outlying piece of data that can be ignored and not threaten the main thrust of the analysis. This is just one piece of data that destroys the analysis that it is the choice of the publisher to ignore the web that has made his business successful. The publisher also has negotiated long term deals with advertisers so that he doesn’t have sales staff, and he has six part-time columnists. I could make a very successful digital or analogue news business on that cost basis.

This isn’t about digital versus print. This is difference between having zero legacy costs, a small building and I’m guessing no print plant. This is a minuscule cost basis versus the high legacy costs of existing newspapers in terms of staff, paper and distribution. As any one knows, US newspapers still make piles of money, just not enough money to cover their costs.

And it’s not just the buildings, printing presses and distribution costs that the newspaper companies are groaning under. It’s the mountains of debt that they accumulated through aggressive, highly leveraged acquisition strategies. McClatchy took on debt to acquire Knight-Ridder. In September, they had to renegotiate a $1.175 bn debt deal to account for their declining revenue. Gatehouse is drowning in debt to the tune of $1.2 bn with a preciptious drop in their stock value, and we know the result of Sam Zell’s highly leveraged buy-out of the Tribune Corporation. To compare a 10,000 circulation start-up print news operation with a media conglomerate like Tribune Corp with $7.6 bn of assets and $12.9bn in debt is ridiculous. It’s about as ridiculous as comparing Digg with a newspaper. They just aren’t comparable creatures in economic scale, business model or editorial mission.

I would argue that the more accurate analysis is that Dan Jacobson, the publisher of the TriCityNews of Monmouth New Jersey has an incredibly lean news organisations with no legacy costs. It has more in common with Nick Denton’s Gawker than the Tribune Corporation. This is not an issue of digital versus analogue but rather the result of Jacobson’s focus on exclusive local content, a recession-proofed revenue strategy and aggressive cost containment.

Newspapers used to be the most efficient way to advertise. Now they aren’t. In the first half of 2007, Google pulled in 39.8% of all online ad revenue in the US. In 2007, Google was 241 in the Fortune 500. In 2008, it leapt to 150. No, Google’s business is not to create journalistic content, but it is competing with newspapers for advertising dollars.

Digital could support a news organisation on its own, if they were willing to radically reduce costs, and I don’t mean simply cutting staff. First, let’s look at the revenue side. There are still too many people running and working for newspapers that believe the 1990s chestnut: The web is great but how do you make money with it? The LA Times web revenue now exceeds its editorial payroll costs. As commenters on Jeff Jarvis’ Buzzmachine point out, that’s not the only cost a newspaper has, but it definitely challenges the view that the web is simply a money pit. The problem isn’t that the web isn’t making money, but that it’s not making enough money at most newspapers to compensate for the decline in the print business, which is still the primary revenue generator for most big city newspapers. (Jeff just got an update from LATimes Editor Russ Stanton on their web success.)

But we also need to look at cost containment. Newspapers can still radically reshape their businesses to take advantage of digital efficiencies. I often talk about when I worked for the BBC in Washington. About 8 years ago, the bureau set up its first digital editing suite with a blue-and-white Power Mac and Avid video processing, storage and software. The total cost was around $80,000. In 2005, they replaced the system with a PowerBook, Final Cut Pro and a portable RAID array for roughly $12,000. Faster, better, cheaper and portable. Expensive equipment and production doesn’t necessarily mean better quality, and a good professional can produce 80-90% of the quality at a fraction of the cost. This may sound odd to people who know me, but invest in the people, not the kit. I’d rather have a job than a shiny new computer any day.

For many large chains neither the web, print nor anything short of selling porn would dig them out from underneath the mountain of debt they have accumulated. Highly leveraged consolidation is the problem and will be the death of some of these chains. This isn’t an issue of digital versus print. Now that the credit bubble has bust, leaner and more efficient will always win the day over highly leveraged and highly costly.

11.17.08
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Disrupt or be disrupted

more about “ Why do people listen to Michael Ros…“, posted with vodpod

Andy Dickinson has a post asking the question: Why do people listen to Michael Rosenblum? Andy thinks that Michael is worth listening to but that his approach doesn’t “work across the board”. At conferences, many in the room may be hearing Michael’s message for the first time, but Andy says:

As suprising as it may be to them, there are people in their organisations who are as knowledgable and passionate about video as he is. They may have more experience of the particular problems in their company and more direct suggestions to help solve them.

They may not give as good a show but they may give as good advice.

Suw sees the same thing in business. She is often called in as a consultant by people who agree with her, often passionately, but don’t have the political capital in their organisation to shake it from its inertia. They need a comrade in arms but have to buy one in.

Returning to Andy’s post, I think another, possibly more important question is: Why do people nod in agreement at conferences and then completely ignore Michael Rosenblum or other digital advocates, especially those in their own organisations? Frankly, Michael, Jeff Jarvis and many of us have been saying the same thing for years now. Digital technology will disrupt the business of journalism, and it presents a clear choice of either adopting and adapting the technology or watching your business crumble. However, we shouldn’t mistake the collapse of some businesses as evidence of lightning fast change. This has been a slow motion train wreck. This is the predictable outcome of the economics of disruptive digital technologies, which is why I’m mystified people continue to ignore this fact, carry on with business as usual and then feign surprise as their businesses implode.

We’ve had decades to watch the digital revolution play out. As Tom Coates wrote in debunking the attack of the snails argument:

So here’s the argument – that perhaps broadcast won’t last forever and that technology is changing faster than ever before. So fast, apparently, that it’s almost dazzlingly confusing for people.

I’m afraid I think this is certifiable bullshit. There’s nothing rapid about this transition at all. It’s been happening in the background for fifteen years. So let me rephrase it in ways that I understand. Shock revelation! A new set of technologies has started to displace older technologies and will continue to do so at a fairly slow rate over the next ten to thirty years!

Tom wrote his post two and a half years ago, and yet journalism and media organisations continue to bemoan the rapid pace of change. In fact, this change is just the logical conclusion of decades-long trends that have been clear to anyone who was actually paying attention.

In some ways, it’s understandable. If you have a wonderfully lucrative business model like television or the de facto monopolies of big metro daily newspapers in the US, the first reaction is to protect the existing business model rather than adapt to meet the challenge of digital insurgents. It’s a perfectly reasonable response.

In other ways, it’s a complete failure of management replicated almost identically across several sectors of the media industry. Newspapers have been suffering declining readership for decades. Television has been facing fragmenting audiences for years under the threat of cable and satellite. This is the failure of vision by media management: They have focused on digital consumption patterns without adopting digital production methods and undercutting their own costs. And as the erosion of audience has accelerated, they have mainly cut costs by cutting staff instead of by adopting digital production and distribution technology.

At this late hour for many media companies the critical question is, when are you going to stop nodding your heads at conferences and get on with it? Not many of us in media will be able to go hat in hand like Northern Rock or General Motors and ask for billions to bail us out. I think that Mindy McAdams raises an important issue in the comments on Andy’s post:

News organizations seem particularly susceptible to “a prophet is without honor in his own land” — people inside the organization who spread Michael’s same message might be completely ignored, but management will hire Michael to come in and do his excellent presentation, and THEN they will ooo and ahh about it, acting as if it is brand-new.

A few things to realise in the age of digital disruption:

  1. Higher costs of production do not necessarily result in higher quality of products.
  2. Quality and brand do not equal media success.
  3. Broadcast=wedding. Anytime you put broadcast near technology in the same sentence, it’s like saying you want something for a wedding. Just triple the cost.
  4. Disrupt or be disrupted. Actively look for ways to disrupt your own business model with digital technologies before someone else does.
08.28.08
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Unconscionable political convention coverage

In May, as part of the Carnival of Journalism, Ryan Sholin asked:

What should news organizations stop doing, today, immediately, to make more time for innovation?

I have another take on that question, and it is one that more news organisations are being forced to ask. What can news organisations no longer afford to do? What is your news organisation doing that is either too costly or provides so little value to your readers/viewers/listeners that it’s no longer justifiable? Or put another way, if it’s not unique and it’s not really uniquely relevant to your audience, is there something else that you should be covering that is? What is the opportunity cost of covering that event that everyone and their dog, cat, sister, brother and third cousin covering? What are you foregoing to cover that event?

Why do I ask this question? I give you 15,000 reasons, which is the number of journalists covering the US political conventions. That is 3.75 journalists per delegate. It might be defensible if those 15,000 journalists was actually doing something unique in terms of coverage. But they aren’t. Furthermore, that is 15,000 journalists covering an event that the New York Times aptly described as “effectively a four-night miniseries before an audience of 20 million people or more”.

During a planning meeting, I was asked what kind of news we could expect. I responded: None. The entire goal of the conventions is not to make news, not to have surprises. They are carefully choreographed, scripted and stage-managed. Yes, the candidates will make an acceptance speech that is newsworthy, but the rest of the evenings are designed to net as much free air-time and coverage as possible to launch the candidates’ campaigns.

Political conventions are like class reunions for American press corps. I’ve covered two, and they are great fun and great theatre, but they aren’t great news events. Ted Koppel left the 1996 Republican Convention early, complaining that it was little more than a picture show. This year, he’s there as an analyst for BBC America. His assessment of the coverage is pretty damning:

Amy Gahran, writing for Poynter, called the numbers of journalists covering the convention an unconscionable waste of news resources in light of the current state of the news business. Mark Potts said:

At a time when news budgets are being slashed because of declining revenue, how can a news organization possibly justify sending a raft of people to the conventions? (I suspect the numbers for the Olympics are about the same-and just as ridiculous.) …

What stories are they going to get that the AP can’t supply? Hijinks of the local delegates? Inside info about what the candidates hope to do for the economy back home? Local color on Denver and St. Paul? It’s really hard to understand the need for this kind of bulk coverage.

And I couldn’t agree more with Michele McLellan of the Knight Digital Media Center who says that news organisations must focus on what is unique to their franchise. As I often say, the danger of Google News for news organisations isn’t that it steals your traffic but that it shows how little is unique in most coverage, how much re-packaged wire copy we re-produce. That’s the real danger, and it’s why the average news website visitor views about 2 pages per month. And Michele echoes my concerns about opportunity costs:

I also am frustrated when I thinking about all the stories that thousands of reporters might be covering closer to home as the conventions unfold. With the troubled economy, mortgage foreclosures, health care, the federal budget deficit and rising energy costs, I don’t think it’s possible for journalists to be developing enough stories about the impact of these issues on their communities and the people who live in them. Not to mention creating and linking to resources for people in trouble and holding officials accountable for their share of the problem (or explaining why they have no share).

At the end of the day, the Columbia Journalism Review lays out the naked truth, of the 15,000 journalists:

7,500 aren’t doing much at all. This isn’t surprising. Only a small number of reporters actually have a reason to be here. The rest are conventioneering—seeing old friends, eating Democratic-themed menu items (“Barack Obama’s Turkey Chili”) in pandering local restaurants, brandishing their press passes at all comers, looking for free things, and spending about 14 percent of their time trying to rustle up enough stories to justify their presence to their editors. These reporters are the ones mostly writing about themselves, or their friends, or their experiences exploring Denver with their friends (“I was enjoying some turkey chili with David Broder yesterday…”). At least they’re open about the fact that they’re enjoying themselves.

And I blame journalists as much as their editors. Yes, trips have always been used by editors to reward good journalists, but there are journalists who have come to treat the profession like their own personal travel bureau. They come up with the flimsiest pretence for extravagant travel that is of little journalistic value and of little benefit to their audience, who in the end are footing the bill.

No journalism organisation has ever had unlimited resources, and now, newspapers are fighting for their very existence. It is not a time for profligate spending, as if it ever were. If we are true to our word that journalism is essential to a healthy democracy, then we have to use our limited resources judiciously and for the benefit of our audience. If we provide them relevant information, then, hopefully, they will support our efforts. If we continue these wasteful ways, then our lofty arguments about our essential democratic role will be seen as disingenuous and self-serving.

Disclosure: Yes, I am taking a trip in October to cover the US Elections. But I am keeping a close eye on the bottom line. The quality of coverage is not directly proportional to the cost. I use digital technology to undercut the traditional cost basis of journalism. It’s what we all need to do. We must use disruptive digital technology to reduce the cost basis of what we do. It will give us more resources to do journalism and to innovate.

I have one prediction that I am reasonably confident in making. In 2012, there will not be 15,000 journalists. Not because news organisations finally come to their senses but because so many have ceased to exist.

08.27.08
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Major and minor reasons for US newspaper crisis

Tip of the hat to Martin Stabe for highlighting this link as he does with so many must-read media stories. Vin Crosbie has a lengthy and thoughtful post, nay essay, on why the US newspaper industry is in dire straits in two parts, see Part 1 and Part 2. Vin’s prediction is this:

More than half of the 1,439 daily newspapers in the United States won’t exist in print, e-paper, or Web site formats by the end of next decade. They will go out of business. The few national dailies — namely USA Today, The New York Times, and The Wall Street Journal — will have diminished but continuing existences via the Web and e-paper, but not in print.

Predictions like this might seem common, but what is unique is the rational argument that Vin presents. He goes through an extensive examination of media history and media economics. The conclusion is that newspapers have violated the principle of supply and demand and failed to adapt its core product.

It is almost impossible to overstate how utterly the supply of news and information available to most Americans has changed during the past 35 years. Within a single generation, the Supply & Demand equation has gone from relative scarcity to certain surplus. People now have so much access to information that some are complaining about ‘data smog‘.

I’ve said this before. So many journalists that I meet still believe that there is something exceptional about what they are doing and producing. They still operate on the assumption that information is scarce, which is why the industry has largely failed to adapt to the information and media-saturated society that we live in.

And for journalists angry with the internet. That anger is misplaced. Half of the newspapers’ decline relative to readership and population happened before 1991, a few years before public access to the internet and awareness of interactivity and multimedia. In the US, readership began to decline in the 1970s. As Steve Yelvington has said, “Even if the Internet had never happened, newspapers — especially big-city papers — have long been headed for a dangerous inflection point at which their market penetration would not be sufficient to sustain a mass-media business model.”

I don’t think that the news business in general and newspapers in particular will make the changes necessary to survive until they come to grips with the new reality of information consumption. The printing presses of newspapers are no longer a licence to print money.

This is not necessarily about the emergence of the internet or the development of multimedia as both Vin and Steve have said. I think that Steve summed it best, when he said, “It’s a problem of content relevancy in an increasingly rich media mix, and not specific to the emergence of the World Wide Web.”

If it’s not about adopting new technologies, then the questions become more fundamental and problematic. They are not questions about platforms and integration but rather about core assumptions about journalism. Newspaper editors select stories based on two criteria, Vin says:

1. Stories about which the editor thinks everyone should be informed.

2. Stories that might have the greatest common interest.

Vin challenges some core journalistic beliefs. Pardon the lengthy quote, but I think it’s an important point:

Newspaper editors’ use of those two criteria to select stories for publication has become so ingrained after 400 years of analog technology that few editors or newspaper executives are able to fathom any other possible or apt practices for story selection.

Moreover, they came to believe that producing a common edition for everyone is their raison d’être, forgetting it arose as a limitation of their technology. Fitting psychologist Abraham Maslow’s statement that “If the only tool you have is a hammer, you tend to see every problem as a nail,” the editorial production limitation of Gutenberg’s technology has led most newspaper editors to believe that they set the ‘common agenda’ for their community and likewise that their community’s readership is somehow homogenous because it reads the same newspaper edition on any given day.

Vin says that newspapers general-interest product has become obsolete. People aren’t going online to consume news and information but to seek out information and entertainment that the generic package of information produced by the news industry doesn’t provide. I’ll leave you to read Vin’s essays and his conclusions.

‘Muted response’, but required reading

I agree with Mark Hamilton. I’m surprised that response to Vin’s post has been so muted. Vin’s two posts are more than just a recounting of the bleak state of the US newspaper industry. We all know the statistics both in terms of media consumption and economic trends. Vin’s posts go further and provide a very clear and cogent analysis of the why.

Why the lack of response? Mark quotes Scott Karp or Publishing 2.0 who said on Twitter:

…(there’s) a lot of searching for a new model that validates all of the old assumptions about the practice of journalism.

Mark expands on Scott’s comment in his own post:

It seems to me, that encapsulate a lot of what Vin is writing about, as well as a lot of the current angst (and blindess) that prevails in the newspaper industry. The idea that things will be all right once the economy picks up, or once someone (else) figures out this online thing is still fairly rampant in a lot of the mediascape. So is the idea that newspapers only need to find a way to keep doing what they’ve always done and everything will be okay.

Vin sees not a Dark Age for American journalism but a “Gray Age”. Amy Gahran, writing at Poynter doesn’t agree.

It seems to me that the nature of news and journalism are transforming. It’s not just about the “news business,” and definitely not just about “newspapers.” It’s possible that the era of traditional journalism may be on the wane — but does that mean that people will do without news or information? As I wrote last week: I don’t think so.

On another post at Poytner, Michelle Ferrier echoes Vin’s call for customisation and greater relevance:

At its core, what Crosbie states is that news values are changing — what used to not be a story now is a story, to someone. It’s this long tail of highly diverse, niche content (often produced by community members) that newspapers should be concerned about, rather than getting the right story mix on a dying page 1A.

It is like the famous comment that if all the deer have guns, you better get into the ammunition business. Most newspapers should radically shift to focus on their unique selling point: Local information, and build a platform (or multi-platform strategy) on which staff and the community can co-create news that suits their needs.

07.24.08
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Local can work, complete with facts and figures

In the recent round of virtual mud-slinging in the ‘curmudgeons’ versus digital journalists, one of the arguments by way of assertion is that hyper-local doesn’t work. It is, of course, a reductionist argument, lumping together a wide range of strategies. A lot of the assertions are short on facts, but Vickey Williams at the Readership Institute highlights two dailies that are succeeding in creating local community. From the Bakersfield Californian:

My thought is that it’s because this paper lives up to its role as an essential connector and network builder. Some stats from Molen this week: 1,192 individual Bakersfield.com blogs launched since the newspaper’s site began hosting weblogs two years ago this month; 314 updated within the last three months. Add in the newspaper company’s nine other sites (including MasBakersfield, NorthwestVoice, NewToBakersfield; and their newest, RaisingBakersfield.com) and the number goes to 2,780 blogs launched, of which 655 have been updated in the last three months.

That community content represents about 18 percent of Bakersfield.com’s traffic and 25 percent of total traffic throughout the local network of sites, Molen said. “It is easily the fastest growing source of traffic for us.”

Another interesting metric is the number of people who have created public profiles in the company’s online social network, and in doing so, essentially endorse its brands. For Bakersfield.com, the number is 16,792; across all 10, it’s 31,868.

I would be curious to see their frequency numbers. What is the average frequency of their visitors? Is it better than the average visit of two pageviews per visitor per month?

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05.14.08
by

Future of News: Economics of News

  • Gordon Crovitz, recently retired publisher, Wall Street Journal
  • Mark Davis, vice president of strategy, San Diego Union-Tribune
  • Eric Alterman, distinguished professor of English, Brooklyn College, City University of New York, professor of journalism, CUNY Graduate School of Journalism

Caveat as before. This is a rush transcript.

Gordon Crovitz. When David told me that this panel was the economics of news, I wondered if this was a yes/no question. We’re 10 years into the digital revolution, and in a deadline driven business, we’re just asking this question.

He told a story. His young son threw sand into the waves for 20 minutes, hoping that that waves would change. They didn’t. Reminds him of news executives. Three things affecting news, not in good ways.

  • Technology changing news consumption.
  • Technology driving new business models but not address high fixed costs of old model such as paying journalists to create content.
  • Changes moving at rapid but unpredictable pace.

The newspaper had a business model that hadn’t changed for three generations. In Silicon Valley, the first law of technology is that we over-estimate change in the short term but under-estimate it in the long term. He pointed to web 1.0 and said that after the crash, many executives breathed a sigh a relief that they had dodged the change. They didn’t realise that the web continued to evolve and consumer behaviour continue to change even after the crash.

He talked about the laying of an undersea cable. It allowed Queen Victoria to send a message instaneously to President Buchanan of the United States. It caused riots in New York.

The Wall Street Journal’s mission wanted to get information of markets to people information about the markets with a level of professionalism.

Why are newspapers in trouble?

Twenty years ago, if you lived in Chicago and you wanted information, you could read Chicago Tribune or the Sun Times. They were great bundles of news. It was delivered to you once a day. Now, you can get better information.

If I were half my age, I wonder if I would read my newspaper on a daily basis. My local newspaper focuses on information from the day before, when we’ve all seen that news on the web or through our Blackberry. Newspaper editors are still stuck telling us news from the day before. We have seen 30-40% decline in readership, and the advertising revenue is even worse reading. There are now people paying to read the Wall Street Journal online than pay to read the paper version of the New York Times.

The advertising is the big problem. Targetable media like online has made non-targetable media like newspapers and magazines very uneconomic. That does not favour mass media like newspapers and magazines. That is married to the fact that technology drives consumer choice and consumer behaviour. Most news companies are totally unprepared to think of new forms of distribution when they have grown up in an analogue world. Circulation revenues do not cover much of the news costs.

I am optimistic that a business that has been so slow in adapting will find a way. We’re in about third or four inning (about half way through) marketers finding the most efficient ways to market. Online revenues are pennies or quarters on the dollar of what we got in print. We’re not at a low point in terms of print advertising, but we’re no where near a high point in online ad growth.

There will be a lot of experimentation. In the end, the business model starts with the high fixed costs of journalism that creates the content that creates the brand. News publishers one way or another will have to figure this out.

Mark Davis

Once a quarter at the San Diego Tribune, we have a meeting of managers. CEO says times are tough, but we’ll make it through. CFO says that times are really tough, you can’t buy anymore pencils.

Statistics of daily readership, in the last five days have you looked at a newspaper?) 1964, 81%, 2007, 48%.

Daily Circulation: 1964, 60m, 2006, 52m.

Population in 1964, 192m, now 400m. Advertising, 49bn, total advertising, down 13%.

Mice in the front door, elephants out the back. Or pennies on the dollar. Monthly uniques, 10 times our print circulation, but revenue one-tenth of print. Online advertising growth has slowed. We upselled advertising from print to online, but we never sold online only. We can sell to smaller advertisers but are losing market share as others such as Google sell to small guys. They don’t want to talk to sales rep. Google is all self-servce. Newspapers need to be self-serve.

In recessions in the past, newspaper advertising bounce back after three years, but it hasn’t since the 2001 slow down. We’re in a sectoral downturn not a cyclical downturn. I want to debunk a myth about margins. The question in 2008, isn’t whether our margins will be 20% but whether they will be positive or negative.

I want to be the glass is half full, five areas of strategic focus:

  1. Revenue – online ad networks such as Yahoo Newspaper consortium. The next generation will have geo-targeting and behavioural targeting.
  2. Organisation – newsrooms are re-organising, integration, bringing together online and offline newsrooms. Re-organised by market segments.
  3. Relevance – quite honestly most of this workshop is about relevance. When you start to look at local news organisations, local becomes really important. You have to begin – difficult for traditional newsrooms – you have to think about what the audience wants. You have to think about utility. Do they want to find a movie? Do they want to find out about local government?
  4. Community – We cannot create community but we can enable it. In San Diego, communities around Padres (baseball team), Chargers (American football team) and surfing.
  5. Distribution – Mobile. Not just WAP site. What do people want to do? TV, radio, RSS feeds. Devices we look at, mobile, computers and other devices. We don’t have to compete with TV.

Eric Alterman

He wrote about Bush administration’s war on the press. He wrote articles in The Nation. He couldn’t get them to pay notice because they were struggling with digital revolution. He saw that they had fat margins, and if they had this beneficence, they had a public responsibility. Even when they were pulling in these margins, their stocks were in free fall.

When Knight-Ridder put up for sale, McClatchy was the only bidder. They paid several billions dollars, and now McClatchy has lost 82% of its stock value.

Why with these incredible margins, why were these newspapers being punished. He wrote a New Yorker article to look at this. Advertising numbers are troubling, but trust numbers are even more troubling. He teaches young people, and they don’t read newspapers.

Average age of newspaper reader in US is 56 and growing. If it was a television programme, it would only have hemorrhoid commercials. These are not people that advertisers want to reach. This has many implications.

Newspapers are losing online because they are not the best vehicles to reach people. I care about the future of the news business because I care about the news upon which our democracy depends. It is hard to see in this world where the support for that kind of journalism. It’s hard to see an obvious market.

Until 35, my career didn’t make any sense. I went back and forth between academia and magazine journalism. I didn’t really fit. He got a doctorate in history. Then the internet was rising. He had this talent to reach a small number of people in a number of ways. He has two professorships. He writes a media column in The Nation. He writes a daily weblog for Media Matters. It was originally begun on MSNBC. He has written a bunch of books. He has about seven jobs, and he thinks he’s speaking to roughly about the same people in all seven jobs.

On some platforms, they pay. On some, they don’t. I have an idea of what is different about each platform. I have this little talent about giving my views on things I care about. I have this one little talent. When I started, there were just about three dozen, but now there are a few thousand.

Some break news, but most just give you an intelligent context to understand the world around you. There is a tiny audience for that relative to the cost of producing. Every one of these news producing or information producing entities is under siege and no one knows where the bottom is.

Molly Ivins said that the newspaper industry solution to the problems facing it is to commit suicide.

He pitched this article to the New Yorker, and he was focusing on the Huffington Post. Huff Post is up to 12m unique readers per month. It’s the eighth or ninth most read news site in the US. He found very little value added to content from mainstream publications like the New York Times, Washington Post and the Guardian. He went back to publications that he had criticised about their coverage in the lead up to the war in Iraq, and he found value there despite his criticism.

I found that there just isn’t the support for the kind of journalism. 1200 reporters at the New York Times. 800-900 reporters at the Washington Post. I would be surprised with advertising going the way it is even at 50%. If we don’t have that news, we will be more open to propaganda and manipulation. I think we’ll move to an elite model where people pay a lot for information like The Ecnomist, where the vast majority will be open to manipulation.

Enormously disturbing that not only is there not support this kind of journalism but he worries that this will erode democracy. (This is a very rough paraphrase of what he said.) He believes that all university students should be required to buy a subscription to a newspaper as part of their education.

Q: Writer for tech policy site. He wonders if news won’t be organised geographically but along other ways such as specialist coverage areas.

A: Gordon Corvitz. He believes that a lot of journalism will go this way. There will be specialised, high revenue areas of coverage. But I fear that this will lead to the world that Eric fears. Information will be very valuable to people but in increasingly specialised, narrow niches. That is not the most efficient system.

Mark Davis: To me what you are describing are communities, both geographical communities but also communities of interest. That is potentially where we will succeed.

Eric Alternman: I have problems with that. When you think of New York Times story on Pentagon flacks and domestic wire-tapping and Saudi dating rituals, there is no business model that will support those stories. You need living and tech section to support those stories. If you take this away, there won’t be something to pay for those long form stories.

The 19th Century model of political parties having newspapers, which is like what you have in Europe, then you have no shared community. It creates a consciousness of citizenship. We are these communities of interest much more than we are geographical communities. We’ll have more fissures of understanding.

Q: Events and engagement have captured a small audience. Is that a profit centre for newspapers?

A: Gordon Crovtiz: In person events has been a booming part of the audience. the more time we spend in front of computers, the more we need contact carbon-based life form to carbon-based life form. The question is how many different areas you can do this with.

Mark Davis: Communities, we are feeling our way through this.

Eric Alterman: In world I live in, friends who do celebrity cruises. The Nation sent me on the National Review cruise. I wrote a piece that I am very proud of called The Heart of Whiteness.

Q: A lot of discussion has been about the cost of production but there is very little about the costs of consuming news online. The cost of buying computer very higher.

A: Eric Alterman: That’s not a media problem but a societal problem. Digital divide is much more geographic problem. You can get a computer for $300, which is less than it costs to the subscribe to the New York Times. About 75% consider themselves online now.

Q: What do you do about coverage of the under-privileged?

A: Mark Davis: When you’re in a business that is fighting for its survival, you’re not in a charitable mode. When you raise the issue of a new product, you always raise the chance of selling to that market segment. It’s a societal problem not a business issue.

Q: Several small or medium sized market have come under control of charitable organisation. Likely to spread.

A: Gordon Crovitz: It does allow families to be uneconomic. That structure can protect those papers for a time. I would be happier if there was a business model behind it.

Q: David Robinson: To what extent are people dissatisfied with news.

A: Mark Davis: If the audience really values this, then read it. I’m going to make a statement. Who are we to decide what people will read? If it’s important to me, then it should be important to all of you.

I don’t think that people are disinterested in news. Kids are informed. They know what is going on in the world. He was talking about a world story with his daughter. She was on Digg. She started there. She bounced around and read the story.

Gordon Crovitz: For a time, there is demand from people for professional media. If you believe that people need and value professionally created content from people who produce this with integrity. Most companies just exiting denial phase of this challenge, then there is optimism that people will figure out a business model.

Eric Alterman: The only way to be optimistic is say something like maybe global warming will be all right. Young people are not buying newspapers. Sorenstein Centre published study looked at how deep young people’s knowledge is from all of these stories and it was bad. They are getting very little information from The Daily Show.

You also have this issue of trust. Three times more people believe that 9/11 was an inside job than believe that the media is telling the truth. You add all these trends together, and I don’t see where this magic bullet will come from. Foundations and universities will have to play a much bigger role.

Q: Ethan Zuckerman said that news suffers not from a supply problem but a deman problem.

Eric Alterman: People don’t know what really high quality news is can’t demand it because they don’t know what it is. I think that everyone would live a richer life if they spent a half hour a day with the Guardian and an hour with The Economist. How in the world could you imagine Americans doing that? The problem has evolved into a crisis.

Mark Davis: I don’t know any manager who talks about demand of a product without talking about the product. How do we get this information out in a way that people want to consume it?

Q: I want Gordon Crovitz to respond to metro newspapers need to re-invent themselves. You have two front page stories that are from the Associated Press on Congress voting for a pay increase for military base and Mexican drug wars.

A: As we look online, we look to becoming a news and information portal. We think about the audience and what they want. We have to get over this link to this competitor. If you can become this portal to serve your audience locally.

Eric Alterman: Linking to competitors, traditional way to run newspapers not way to run digital business.