Tag Archives: business models

06.16.11
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The Guardian needs an intervention

The Guardian and its Sunday title, The Observer have just announced a “digital-first” strategy. However, this is not a triumphant announcement. This is a burning platform admission.

Guardian News & Media, the parent company for both newspapers, lost £33m on a cash basis for the year ending 31 March, only slightly less than it’s £34.4m loss for the previous year. Guardian Media Group chief executive Andrew Miller warned that the group could run out of money in 3-5 years if things don’t change. I heard sobering burn rate figures when I was at The Guardian. I covered the dot.com boom and heard start-ups talk cash on hand, but I never expected to hear this from a major media company.

Some things leapt out at me: They reported £47m in digital revenues out of a total of £198m revenues. Digital made just shy of 24% of total revenue. That’s good going, and most newspapers would kill for that percentage of digital revenues. (Apart from the FT, which is making a killing from digital: 30% or revenue from digital now and projected to reach 50% of revenue by 2013.)

This came out from the presentation to Guardian staff:

Unaudited results for the year ending 31 March showed that revenues at Guardian News & Media, the immediate parent of the newspapers and guardian.co.uk, fell to £198m last year compared with £221m the year before, a fall in revenues that reflected a sharp fall in classified advertising. Recruitment advertising has fallen by £41m in the past four years.

The Guardian is seen as one of the most innovative newspapers in the world. It was why I enthusiastically joined them in 2006. They announced they were going web-first in June 2006, but that didn’t and doesn’t change the fact that the newspaper is burning through cash. To future of journalism folks, The Guardian is indicative of challenges facing the industry, but so far it’s not showing the way forward in solving those challenges.

Feel free to give The Guardian credit for being innovative, but everyone in the journalism community has to be more honest and realistic about its business challenges. It’s in the same sinking boat as a lot of other newspapers.

Guardian Editor Alan Rusbridger is saying that not only will they publish first to the web but that they will do less in print. The Guardian’s article says there will be no job cuts, though they have to find £25m in savings. Yet Mathew Ingram at GigaOm quotes Alan as saying there will be editorial job cuts.

Mathew also quotes Alan as saying that they have identified at least ten different revenue streams. That’s comforting. But it speaks volumes that The Guardian’s own article doesn’t mention new revenue, and Alan only mentioned existing digital revenue streams to Mathew.

The Guardian needs an intervention. Digital first will not be enough to save it. It needs to remember that although they are supported by a trust, that is not a licence to completely ignore business realities. Here is my bit of tough love:

1. Building a sustainable business is not evil

The Guardian needs to realise that making money to support journalism is no sin. There is a lot of moral space between being a sustainable journalism enterprise and being a voracious media mogul like Rupert Murdoch. I’d love to see The Guardian demonstrate how to create a financially sustainable journalism business, but it will have to challenge its own anti-commercial culture.

2. Editorial innovation alone is not enough

The Guardian is innovative, but it also shows that technical and editorial innovation are not enough on their own to guarantee a sustainable journalism business. Digital first without a business focus will still leave it in dire straits. If The Guardian is going to devote 80% of its resources to digital, as is implied by Dan Sabagh’s article, it has got to develop new revenue streams to support its digital first strategy.

3. ‘Open’ without a business model is an empty ideology

I love the open web. I think The Times hard paywall is foolish. However, the ideology of open from The Guardian lacks pragmatism. The Rupert v Rusbridger battle makes a good media ding-bong, but neither positions are proving able to solve the problems that face newspapers. (Yes, I’ve seen Guardian digital strategist Matt McAlister’s presentation on generative media networks. Hopefully, some of that strategy will be part of these 10 revenue streams. At the moment, I remain unconvinced.)

4. You’ve got a golden brand. Capitalise on it.

At the risk of sounding critical, I joke with people that The Guardian has the brand of Apple but the business focus of Twitter. Guardian readers are some of the most loyal in the world. When The Guardian recently cut short its well regarded local project, readers offered money to help it continue. Most newspapers would love to have that affection and loyalty. If The Guardian can’t capitalise on its loyal audience, incompetence will be the only explanation.

A friend of mine, who had taken a buyout from a US newspaper, said to me after visiting The Guardian a few years ago:

The Guardian seems like a great place to work when the times are good, but it doesn’t seem capable of making the tough decisions when the times are tough.

The Guardian has time to make some relatively easy decisions to ensure its future, but it needs to get serious, not just about digital but about its business. The Guardian’s often lauded as the future of journalism, but without a sound business model, it doesn’t have a future.

01.12.11
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Prioritisation: How do news organisations decide what they must do?

Since leaving The Guardian last April and striking out on my own, I joke that I’ve become an occupational therapist. I’ve had the chance to speak to journalists, editors and media executives around the world and hear the issues and challenges facing them. Most of them are instantly familiar, but one issue that I first heard about in Norway in 2009 and heard with increasing frequency in 2010 was prioritisation. In digital, there are a myriad of things we could do, but in this era of transition and scarce resources, the real question is what we must do.

In the comments on my last post covering the opportunities for news organisation in location services and technologies, Reg Chua, the Editor-in-Chief of the South China Morning Post, had this insight:

Kevin’s point on prioritization is a critical one. We can’t do everything well; in fact, we can’t do everything, period. I’d argue that we should think about the product we want to come out with first – and then figure out what data is needed to make it work. I realize that leaves some value on the table, but I suspect we all need to specialize more if we’re to really create products that have real value.

For the news organisations that I’m working with now in developing their digital strategies, one of the things that I look at is where they have the most opportunity. I agree with Reg that there are a number of opportunities in terms of creating products using data, and I also think that data is important in determining which products to develop. News organisations need to get serious about looking at what their audiences find valuable, digging into their own metrics. Right now, we’ve got a lot of faith-based decision making in media. It’s critical that we begin to look at the data to help determine what new products we should deliver and how we can improve our existing offering.

For a good start on this kind of thinking, Jonathan Stray wrote an excellent post last year, Designing journalism to be used. He wrote:

Digital news product design has so far mostly been about emulation of previous media. Newspaper web sites and apps look like newspapers. “Multimedia” journalism has mostly been about clicking somewhere to get slideshows and videos. This is a little like the dawn of TV news, when anchors read wire copy on air. Digital media gives us an explosion of product design possibilities, but the envisioned interaction modes have so far stayed mostly the same.

This is not to say that the stories themselves don’t need to change. In fact, I think they do. But the question can’t be “how can we make better stories?” It must be “who are our users, what would we like to help them to do, and how can we build a system that helps them with that?”

Josh Benton of the Nieman Lab says that we have an opportunity to rethink the grammar of journalism during this period of transition in the business. Jonathan and Reg are definitely thinking about rethinking the grammar and rethinking the products that we create. Digital journalism is different, and the real opportunity is in thinking about how its different and how that creates new opportunities both to present journalism and support it financially.

05.22.10
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Al Jazeera Unplugged: Josh Benton of the Nieman Journalism Lab

This is a live blog. It might be a bit rough. I’ll add links as I can and might do it in a second pass.

Josh started by saying that the disruption in the news business that began in the US is now spreading to other parts of the world. He started off with a series of “scary charts” showing the precipitous drop in advertising revenue in the US and the newspaper circulation decline in the US. The decline in terms of newspaper circulation per 100 households has been dropping since the 1940s. He then displayed the time that average internet users spent per month on news sites, 8-12 minutes a month, versus the seven hours they spend on Facebook.

The media industry is fragmenting. The number one album on the charts in the US sold just 60,000 copies last week, but it used to be that to have a number one album you would have to sell hundreds of thousands of copies. TV is fragmenting with greater choice, and Josh pointed to yesterday’s announcement of Google TV.

UPDATE: For the average internet user , 70% of the content that people under 40 consume online is produced by people they know.

Josh sees this not as a threat but as a great opportunity. Newspapers in the US used to be enormously popular. In 1990, John Morton said that it is clear that newspapers will be twice as profitable int he future, but maybe not three or four times as profitable. Those profits made owners very rich, but they also paid for investigative journalism and foreign bureaux.

On the social web, even if it doesn’t look like journalism, it can be an important source of information. People might find out about an important story from their friends on Facebook or Twitter. This is not new. With movable type, new types of information were produced. The rotary press could print much more copies, more cheaply. 1900s came newspapers, 1930s radio, 1950s TV, 1980s cable TV, 1990s internet, 2000s, mobile phones.

Context in country to country is critical. Some countries are seeing gains in literacy so are seeing a dramatic increase in newspaper circulation. Media in non-English countries aren’t seeing the same pressure.

In the US, seeing media adjust. Some are trying to grow in scale. Some trying to produce so many web pages that if they make a bit of profit on each page, they will make money. Demand Media is producing 5000 pages of content a day. Associated Media, just bought by Yahoo, is producing 2000 pages a day. It’s not necessarily news content, but it’s providing a model. We are seeing the growth of niche sites, around subjects rather than geography. Some are building paywalls.

However, I believe that the number of people who will pay will be relatively small. People will have free alternatives.

And then he said something that I’ve thought for quite a while:

News is shifting from a manufacturing industry to a service industry.

Even in the past, only bout 15% of a newspaper budget went to journalism. That’s a fascinating statistic. Service industries don’t try to create demand but rather serve demand.

With an infinite number of content choices, people are now choosing things that aren’t news. How do we (as journalists) create that demand? He sees the big organisations as being OK. He sees non-profit models developing. “I generally think we’ll be OK,” he said. This technological shift will see a huge boon he says.

04.02.10
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iPad app pricing: A last act of insanity by delusional content companies

Looking at the iPad app rollout, you can easily separate the digital wheat from the chaff in the content industries, and you can see those who are developing digital businesses and those who are trying to protect print margins and who see the iPad as a vertical, closed model to control and monetise content.

There are those who believe that they sell content and that they should be compensated for it. Just as with the music industry, they couch this in terms of repaying content creators, when it really is more about wistfulness for the days of double-digit profit margins.

Those who view their primary business as selling content believe that not only can they charge for it but that they can actually charge the same or more for it, just because it is on the iPad. Time, for example, is charging $4.99 a week for their iPad ‘magazine’.

Scott Karp, CEO of Publish2 and editor of Publishing2.0, put it as clearly as it needs to be put on Twitter:

Paying $4.99 for magazine on newsstand includes cost of printing/distribution. Now you pay for iPad instead, so magazine should cost less.

What do you get for $4.99 a week?

Unique interactivity including landscape and portrait mode, scroll navigation and customizable font size

Oh, I’ve never seen that in a mobile web browser, I say with incalculable levels of sarcasm. That’s like morons in the 90s having Java animation that you actually couldn’t do anything with and calling that interactivity. You think that’s insane and delusional, just wait, it gets even better! No content sharing on the app, which I’m assuming means you can’t bookmark or Tweet your favourite stories, and you’ll have to buy and download the app every single week. There is also no indication that they will charge for their now free iPhone app or their website.

Note to Time digital strategists: Sorry caching your site so I can take it with me when I’m on the move isn’t a feature worth your premium pricing. I do that now, and have done it for years, with an open-source app called Plucker and an aging Palm T3. I’m truly sorry. Do you actually use the internet or digital devices or do you just indulge your bosses’ angry fantasies about the good old days?

Let’s look to Rupert Murdoch’s proud paid content pioneer, the Wall Street Journal. What is the Wall Street Journal selling? The past. Alan Murray, deputy managing editor and executive editor, online for the Wall Street Journal, says on MarketWatch:

We have come up with a version of the Wall Street Journal on the iPad that I think is closest you get to a newspaper reading experience on a digital device.

To be fair to Murray, he goes on to say that anyone giving their content away for free on the web won’t be able to convert those readers on the web to paid readers on the iPad. Murray says:

You have these apps, but you also have a web browser. So I don’t see how any newspaper that is giving its content away for free on the web is going to be saved by the iPad because the iPad makes it easier to access that free content.

Unless the Wall Street Journal’s app not only delivers me a ‘newspaper reading experience’ (which I frankly am not missing anyway) but also picks my stocks for me so that I can retire next year, I’m not going to pay $17.99 a month for it when I can subscribe to their website for $1.99 a week. I didn’t work on a journalist’s salary and still manage to be in a financially secure position by giving money away to grumpy old media moguls like Murdoch.

Paul Kedrosky, venture capitalist and private equity investor who writes the blog Infectious Greed, said on Twitter:

Paying $17.29/mo for WSJ iPad app should disqualify you for something important, like being allowed to use money.

As I’ve said before, Murdoch for all of his brash brilliance has no understanding of the economics of digital businesses. I give him props for still having the power to shift the discussion, and I think that his paywall strategy at the Times might help it stem its £250,000 a day losses. However, his paywall strategy is a defensive move, not a long term strategy. Unless he starts building credible digitally-focused businesses as soon as the paywall brings in some cash to stabilise the business, it will be a brief pause on the path to collapse.

Now, let’s look at other strategies for the iPad. Let’s look at the FT. Robert Andrews, UK editor of paidContent, says that the FT secured sponsorship that allows it to offer its iPad app for free for two months, after which time they will shift to subscription model with the promise of additional features. Much cleverer.

Suw and I talk often that one thing really lacking when it comes to digital content is commercial experimentation. The FT securing sponsorship for a free app for two months is a good step at not only experimenting with content but also with payment models. The Economist earlier this year released a report on social networking, allowing users to download it for free and giving sponsor prominent credit for the offer. This is clever. Premium sponsorship opportunities for special content or services.

Look at the development thinking behind National Public Radio’s iPad app. They did market research and found that up to 5% of their audience were planning on buying an iPad. They knew what the opportunity was. They also used iPad development to improve the experience for visitors coming from search or social networking services, explains Kinsey Wilson, senior vice president and general manager of NPR Digital Media.

Compare the strategies and thinking. On the one hand we have a set of pricing models that deliver marginal value for premium prices and show very little that differentiate themselves from the web experience, although they expect to charge more. These pricing models are based on a sense of entitlement to set pricing as it was in the days of print. I won’t even call them strategies because they lack any kind of realistic strategic thinking.

On the other hand we have a set of strategic pricing structures. NPR takes a realistic look at the commercial potential, does market research and develops its app not just for a single device but also as a chance to make improvements to their overall service. The FT experiments not just with content but also with the commercial strategy.

In terms of who is positioning themselves for the future by delivering value to their audiences and experimenting with business models, it’s clear. If any company thinks that the iPad will allow them to rebuild the monopoly rent pricing structure of the 20th Century, then you’ve really fallen prey to the Steve Jobs’ reality distortion field, and you’ve blown yet another chance to build a credible digital business. However, I’ve got a game you might want to check out, Final Fantasy.

10.14.09
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Readers must perceive ‘real value’ to pay

PHD Media, a division of media and ad giant Omnicom Group, has released a new study that feeds into the paid content debate, reports CNBC. Julia Boorstin of CNBC highlights a few ‘surprising factoids’.

  • The bottom line: consumers are reading more print content online, but the only way they’ll pay for it, is if they perceive a real value and when comparable free content isn’t readily available.
  • Another surprising factoid: consumers don’t care about the brand, they care about the content. (Except when it comes to sports)

Frankly, I don’t find the last one that surprising, especially when you factor in the study found that 44% of respondents in the study accessed a publication website through a search engine. Search is a fundamental shift in information consumption. People don’t browse for information but use search to seek it out and also rely on recommendations from friends.

As I’ve often said publicly, my reading habits are voracious and promiscuous. My reading habits tend to be subject led, not publication led. I seek out information. I am a little cautious of extrapolating my behaviour more broadly because I’m a journalist. I am paid to read, research, report and write. I’m also very digitally focused. I get most of my information via the internet or my mobile phone. However, recent studies such as this one show that I’m not unique in my habits.

This study reinforces my view that news organisations need to focus on developing services and products that deliver value to readers and not simply focus on building infrastructure to charge for existing content. Another take away from this study is that “just small a fraction of the 2,400 adults polled, read both the print and online versions of the same publication”. That leads me to believe that the products that we develop must serve the needs of digital audiences, and we should be careful about trying to focus digital development on services to appeal to print audiences.

The debate rolls on

The Great Paid Content Debate of 2009 rumbles on. On Tuesday at the Paley Centre, Stephen Brill on paid content services provider Journalism Online LLC said on Tuesday that people had been paying for print content for decades and that they just needed to get back into the habit online.

However, I tend to agree with Vivian Schiller, president and CEO of US public radio broadcaster NPR, when she commented at the event:

To think that we are so smart that we can retrain the audience, that’s an awfully elitist, condescending, and frankly old perspective.

Trying to bully consumers into behaving a certain way, especially in a way that is contrary to their current habits, doesn’t have a track record of success.

To be fair to Brill, he is not advocating putting all content behind paywalls and is working with news organisations to determine what content will become paid. However, I reject his basic premise, which he has stated over and over, that this is a matter of getting users accustomed to paying for content online. I do agree that to continue to support journalism, news organisations are going to have to develop new sources of revenue, digital and otherwise.

On that point, I’ll just re-iterate something that I’ve said before. In the Great Paid Content of 2009, some journalists and news executives have been playing fast and loose with facts (gasp, shock, that never happens), and one thing that I’m hearing with too much regularity is that newspapers can’t make money online, that digital is just some money pit that will never support quality journalism. I’ve heard this before in the late 1990s. To which I would say, just because your news organisation isn’t making money online, it doesn’t mean that it’s impossible to make money on the internet.

Suw and I were in Norway recently, where media conglomerate Schibsted has an online classifieds joint venture with several local newspapers. In a prescient move, Schibsted launched the site, Finn.no, in 2000. It has grown into Norway’s largest classified site, and it’s a money spinner for Schibsted. The newspapers that will survive will realise that they are in the news not the newspaper business.

Progressive, forward-thinking news organisations made the shift from print to a diversified, multi-platform business before the Great Recession, and there are examples of  information products and services that news organisations could sell to help support journalism. Sadly, most news organisations didn’t make this transition. From the Financial Times:

Alarmingly, the industry has also so far “failed to make the digital transition”, according to a report last month from Outsell, a publishing research firm, which found that news organisations’ digital revenues were just 11 per cent of their total revenues, compared with 69 per cent for the broader information industry, which includes legal and financial data providers such as Reed Elsevier and Bloomberg. 

When we were in Norway, one of the comments that really struck me was a comment from a member of the Norwegian Online News Association who said that there had been plenty of editorial innovation in the last decade but not enough commercial innovation. To support the social mission of journalism, journalists will need to overcome their professional distate for the business side of the operation and lend their creativity to developing products and services that readers value. It’s not only possible but essential that we do this.

05.12.09
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Peering into the future of newspapers at the NYTimes R&D lab

New York Times R&D Group: Newspaper 2.0 from Nieman Journalism Lab on Vimeo.

Suw and I visited the New York Times R&D lab last August when we were in New York. It was an impromptu visit. A friend, Jason Brush, at Schematic put us in touch with Nick Bilton after seeing that we were in New York from our Twitter status updates. (Yet another example of how useful Twitter is.) Nick was kind enough to work around our hectic schedule, and Suw and I were both happy to be able to fit the visit in before we had to dash for the airport. Nick showed us his table of devices including the One Laptop per Child, various e-book readers and the odd netbook.

200905121752.jpg

photo by Scott Beale / Laughing Squid

The Nieman Journalism Lab at Harvard University is running an excellent series of interviews with Nick. It’s definitely worth watching the videos or reading the transcripts.

Nick not only showed us their collection of devices to show people at the Times how their audience might view their site, listen to their podcasts and view their video, he also showed us some of their projects. One that really impressed us was a print-on-demand customised version of the newspaper. However, this isn’t your father’s PDF to print. No, this was much more advanced and showed elements of effortless personalisation married to a future-looking mobile strategy. The system works by users having a card, similar to the Oyster cards used on the London Underground, that is linked to their account at the NYTimes. Based on the stories that you read on the site, it knows what your interests are, adding personalisation without the cumbersome box-ticking that has led most first generation customisation services to fail. Research shows that people say that want customised services, but they will rarely go through the hoops of ticking boxes to tell news sites what they want to read. This is not only customisation, but it also changes with users’ habits instead of being a static set of preferences. After the user swipes the card, they are presented with the top three sections of the site based on their reading habits. They can choose a version with the top story in full from each of those sections or a digest of those sections, similar to an RSS feed view. However, after each story, there is also a QR code or semacode. Using your mobile phone camera, these QR codes are translated to URLs and take you to the full story using the web browser on your phone.
Nick also showed us something that the R&D Team first came up with at a Hack Day in London, which is the idea of content following a reader throughout the day. They created a system with some of the ideas called shifd.com, which is actually a working site if you want to have a play.

The thinking behind shifd.com is actually realising that as we go through our days we actually shift from device to device, from form factor to form factor. Content that might be relevant or accessible on one platform might not be appropriate on another platform. The reader might begin reading a story on their computer before going to work and then want to continue reading that story on their mobile phone on their train ride to work. They might not want to watch a video associated with that story until they can come home. They can mark the video for viewing at home on their flat screen TV at home. This is the kind of user-centered thinking necessary to adapt to news consumption as it is instead of asking readers to modify their behaviour to our platforms and business models.

Nick and the rest of the team at the New York Times R&D lab are doing some great work that I hope drives thinking in the rest of the industry. I think it’s also an opportunity for cross-disciplinary academic research. How do we surround our audience with our content, delivering relevant information to the relevant devices as they move through their day? That’s a service I’d pay for.

05.06.09
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Government support for journalism is no panacea

Today, I had a Twitter discussion with Kevin Garber, an “African entrepreneur in Australia and founder and CEO of spellr.us” an online spellcheck service. As with Twitter conversations, this is actually from two threads that take some joining. It began based on one my response to journalism professor and blogger Jay Rosen who said:

My testimony would have been: No government funding for news; culture war yahoos in Congress will just Mapplethorpe it http://tr.im/kDIb

Jay was linking to a US Senate committee meeting about The Future of Journalism. Jay is referring to the battle over funding for the National Endowment for the Arts (NEA) in the US over support of exhibitions of homoerotic photos by Robert Mapplethorpe. The NEA became a key front in the US Culture Wars.

Journalists in the US who look to the BBC model for funding journalism or want their own government bailout would be wise to remember the Culture Wars. They’ve loved covering it, but if they took state funding, they wouldn’t be just be covering it, they would become embroiled in it, even more than they already are. As I said to Jay on Twitter, “People in US arguing for gov’t support for newspapers forget what a political football arts or public broadcast funding is.”

Kevin said:

the key question is are newspapers a public good that can’t be addressed via normal supply/demand mechanisms …

To which I replied: “No, the question is about about journalism not about newspapers. Public funding for journalism is not a panacea. (says as ex-BBC)”.

I’ll agree with Kevin who said in a follow up comment that “smart capitalism doesn’t rely on mkt for everything”, but I’m not sure that the market is failing in terms of support for professional journalism. Rather, I think we’re in the midst of changing business models and that the dominant print model has given way to a multi-platform model with much greater diversity of revenue streams than the recession sensitive over-reliance on advertising. Newspaper and broadcast journalism are capital-intensive, industrial businesses that rely on advertising rates that were under threat before the recession and are unsustainable during the recession. The market has been sending clear signals to newspapers for 30 years that their business model was under threat, and those trends have only accelerated in the last five years. However, the Great Recession is a rupture in business as usual. Assumptions, business projections and companies are now being swept away as this credit bubble bursts.

Now, like the banking and auto industry, the newspaper industry is looking for a solution, and many journalists share Kevin Garber’s view that newspaper journalism is such an important public good that it merits public funds. You hear it when journalists argue that they play a role essential to democracy.

Even non-journalists make this argument. Suw was at Social Web Foo Camp recently at O’Reilly HQ in California, and she said that many people during a “design the future newspaper” pointed to the BBC as the model that could save journalism. Public service broadcasting is a funding model for journalism, but even in the UK, it hasn’t been extended to newspapers. And I doubt it will be. I think journalists also need to realise that such a model probably couldn’t roll back the job cuts that are hitting US newspapers. This shouldn’t be seen as some full employment act for journalists. Also, let’s get real. As an American, I think it’s safe to say that we would have to be living in some Star Trek-variety parallel universe to even contemplate significant public support in the US for a $200-plus annual licence fee payment to watch live broadcast television (either other-the-air or down a cable of some description). It ain’t gonna happen. Seriously. Also, while many other state broadcasters benefit from a licence fee, the UK is unique in the level of funding, and I think a poll of senior executives at the BBC would find most of them preparing for a dramatically reduced level of public funding in the future.

But apart from the political feasibility of a publicly funded journalism institution at the level of the BBC, let’s take a look at some of the cons stemming from public funding. And I say this coming from the point of view of having worked for Auntie for eight years. I love the BBC, and I was very proud to work there. However, public funding doesn’t come without its downsides (and strings attached, just ask the banks or Chrysler for that matter).

  1. What one administration giveth, another can taketh away. And the cuts might even come from an administration that you think will like you. Bill Clinton didn’t really like the press when he left, and Labour, while it might seem would have much more kinship with the BBC and public broadcasting, has not exactly been a supporter of the BBC. Just ask Director General Mark Thompson who thought he was going to get a much more generous licence fee settlement than he got.
  2. Your commercial competitors will spill tankers of ink, pay lobbyists and rant endlessly on air (cough, Fox News) to make sure that your funding will be as low as possible. Just ask the Corporation for Public Broadcasting in the US. (Maybe you should take a page out of NPR’s books and start subscription drives.)
  3. You’ll have to subject new ideas to a ‘public value test‘ and make sure that it doesn’t distort the commercial market. In other words, you can be successful, but not too successful.
  4. Public funding won’t insulate you from job cuts. As I said, I worked for the BBC for eight years. There were cuts four out of the eight years I worked there. One year, the cuts were 18%, which was a blessing because the Head of New Media at the time, Ashley Highfield, had asked for 25%. And the cuts continue. This year, they are looking to find £400m of savings.

There are pros, of course, and the BBC is a great journalistic institution. But it’s not in the ruddy health that most American journalists assume it is. Like much of the media, it reached a high water mark in the early part of this decade, and it’s now swimming against the tide. This is not to say that public funding shouldn’t play a role in journalism, but it already does in the US in the form of NPR and public television. Also, based on the experience of Sweden, state support might help for while, but it’s not a long-term solution.

I’ll be interested to see what if anything comes out of the US Senate hearings today, but if it’s government support you want, be careful what you wish for.

UPDATE: A timely example of what I’m getting at. If journalists are anxious over a sense of powerlessness from market forces, it’s no different when the government can change your budget by fiat. See: (Conservative Party leader) Cameron to force vote to halt increase in BBC licence fee. He might not get his way now, but he might when he’s prime minister.

04.19.09
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What’s missing from the Google/newspapers discussion

It seems to have become fashionable recently for members of the media to rail against Google, claiming that the search giant is significantly to blame for the demise of newspapers. The arguments appear to include:

  • Google is a parasite that makes money off newspapers content through aggregating it
  • Google, by acting as a middleman, deprives newspapers of control and therefore income
  • Visitors from Google are of low value because they do not stay to explore a site and therefore are not exposed to enough ads to make their visit worthwhile to the news outlet

In my opinion, these arguments are all wrong, but rather than debate them here (other people are already doing it), I’m curious to ask why two key parts of the problem are being utterly ignored.

Google enables existing behaviours
Before newspapers started publishing on the web, newspaper readers had a limited number of choices if they wanted to read what the paper had printed: read someone else’s copy, or buy and read their own. Once someone has bought a paper, the tendency is to read substantial portions of it, or even read it cover-to-cover including the bits one doesn’t really care about.

I am sure that there are psychological forces at work here, perhaps cognitive biases such as ownership bias. After all, who hasn’t felt the desire to get the most value for money out of a newspaper or magazine purchase by reading as much as one can manage, even when one has run out of any real interest?

That behaviour, and the forces that encourage it, is absent online. Instead of feeling obliged to oneself to make the most of a newspaper purchase, people are now searching for only the information that they need or want. They become promiscuous browsers, instead of dedicated readers.

Google facilitates that behaviour, a behaviour which was present before Google existed, and which will continue after Google is gone. The news outlets, however, are fixated on the idea of a dedicated reader and I’ve heard some journalists get positively indignant at the suggestion that promiscuous browsing is not just a normal behaviour, but rapidly becoming the default. They think that dedicated reading is the one true way to absorb news, and look down upon anything else.

This prejudice is damaging the news industry badly, because if your whole revenue generating mechanism, not to mention your metrics for success, is built upon the idea of people spending lots of time on your site, reading lots of articles, then your business is built on sand. Instead of working from a set of assumptions that are no longer valid, how about the news industry learns how their readers’ lives, attitudes and behaviours have changed, and uses that as a basis for developing a more robust business model. After all, people aren’t going to go back to their old habits. Ever.

Advertising innovation can be done by companies other than Google
Whilst Google News runs no adverts, news content does make its way into the general search results where advertising does very well for Google. This, for reasons unclear to me, is seen by some in the news industry as a grave assault, to be fought and destroyed.

Yet Google, alongside Craigslist, Gumtree and their brethren, are ripe for advertising disruption. The sites that were the disrupters can themselves be sideswiped, by the very sort of clever innovation that appears to be almost entirely lacking in the news industry. Why have news outlets not put together their own versions of TextAds and AdSense, allowing advertisers to buy text ads on certain topics, categories, or keywords? Can I go to a major news website and buy a keyword directly from them? Why are news organisations, who have been in the advertising game forever, relying on third party tools to spread excess ad inventory across their extended blog network? Why give away that slice of the pie to someone else?

Where is the advertising innovation? And no, annoying pop-ups, rich-media ads and irritatingly loud audio ads do not count. They are about as innovative as a slap round the face with a wet haddock – they are old school, scattershot, relying on interruption instead of relevance, and worst of all, they infuriate the visitor so much that even if the ads had been of interest, their childishness is terminally off-putting.

It feels like the news outlets have abdicated responsibility for finding new and better ways for their advertisers to buy space, time and keywords, to manage their own accounts, make their own decisions on where they want their ads to appear and manage their own budget.

It’s time for the news outlets to reclaim advertising, to learn from Google, Craigslist and Gumtree and beat them at their own game. Railing away at Google or any other site that’s eating their lunch is, however, a waste of time and a distraction that the industry can ill afford at the moment.

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.