Tag: media

Trouble with democracy: It doesn’t pay well

If there’s anything I write about or comment on that is sure to draw a hot and negative response, it’s the insistence that journalists start to get in tune with their true market value. It’s not that I don’t see a huge social value to the work they do. I credit journalists with keeping our democracy alive. But they’ve never been paid by democracy; they get paid by a business model.

My point is twofold:

  1. Journalists have always been part of someone else’s business model. But it’s generally only in times like this, when the business models are under fire, that journalists are compelled to recognize it.
  2. While traditional media models are under siege, journalists themselves are becoming part of the solution — developing new models and new approaches to paying the true cost for news. (For example, check out Spot.us and MedCityNews.)

Today’s e-mail brought an item from one of my favorite blogs, Seth Godin’s Blog. He usually has something insightful to say about the way the world works. But this is the first time I’ve ever seen his blog address the media world directly.

His message (you should read it yourself; it’s short) is simply this: Journalists can be measured for the interest their stories generate — as evidenced by a Washington Post columnist who was let go because his blog posts didn’t generate enough traffic. In every other industry, people’s performance is measured against specific objectives.

It’s happening now with journalists — bringing them into intimate business contact for whatever business model employs them.

Coming face to face with reality can be a painful experience, but in the working world there is really nothing more important.

Even low-cost social media campaigns need to be measured

There is an entire industry of consultants that didn’t exist three years ago, telling people how to collect thousands of followers on Twitter; how to gain friends and fans on Facebook; and how to leverage large networks on LinkedIn. These consultants are writing books, conducting web-seminars and selling services.

The thing that gets too little attention is what all this is worth? Sure, you can grab a small nation’s worth of Twitter followers, but will it make you any money if they aren’t paying attention to your Tweets?

So it was refreshing to stumble across a new series or articles in Computerworld on How to measure the ROI of social media.

It would be nice if there were a few key metrics and some nice neat formulas you could follow, but social media is evolving too quickly and the measurements aren’t that simple.

In the end, if you want to know whether your time with social media is well spent, you need to do the following:

Set a meaningful goal. Is the purpose of your social media outreach simply to gain followers? Then you’ll have an easy time measuring, and a hard time proving that the effort was worthwhile. Instead, set a more specific goal, like this: To generate sales of $XXX (or X number of sales transactions) from members of our social media network.

That way, you’ll not only have a pass/fail measurement, you’ll learn something important along the way: i.e., how many new connections it takes to achieve a sale.

Assign specific tasks. If more than one person is going to be involved in the social media effort, make sure that each person knows his or her specific role. For instance, one person might conduct the outbound communications while another works to convert inbound communications into leads, and still another works to close sales.

This way, the entire job will get done — not just the fun part of blogging and tweeting. Further, when things don’t go perfectly (they won’t), you’ll have a team of experts who can figure out what adjustments to make.

Track everything. Time is money. So while social media programs are astonishingly inexpensive in terms of hard cost, you’ll want to know how much of each day your team members are spending on social media vs. their other responsibilities.

If you do these three things, then measuring gets easy. If you have goals, an organized work effort and good data, determining whether your resources are well-spent will be easy.  Just like the example of Reality Digital, also from Computerworld.

Not-for-profit news is no panacea

In the effort to save newspapers, one idea that’s been passed around is that of the newspaper as a not-for-profit institution. The argument is that its role is so central to the public good that it can be protected as a non-taxed, not-for-profit entity.

While the argument may be compelling, I don’t think you can call it mainstream. Well-known newspaper analyst Lauren Rich Fine says for-profit newspapers haven’t done all they can to adapt to new market realities. I agree; Newspapers in the United States have been for-profit ventures for their entire existence, and just because their business model is being challenged today doesn’t mean their industry is obsolete.

But that doesn’t mean there’s anything wrong with a news organization that does figure out how to succeed as a non-profit.

An increasing number of non-profit news organizations exist, such as MinnPost and the hyperlocal, hypermodest Heights Observer, for which I’m an active volunteer — and which is part of a growing list of other loosely affiliated Observer projects in and around Greater Cleveland. (Not all of them are not-for-profit; they have in common technology platform — Ninth Estate Software — and a singular evangelist, Jim O’Bryan, founder of the for-profit Lakewood Observer).

A not-for-profit trial balloon has been floated (and seems to be losting altitude) for the troubled Boston Globe.

Now, one of the existing not-for-profits is going the other way; Geoff Dougherty, editor of the 4-year-old Chi-Town Daily News (Chicago)  writes in his blog that the non-profit experiment is over. He says the online citizen journalism news organization needs $1-2 million a year in donations to fulfill its mission. With grants running out and grant-sources ready to move on to other projects, Dougherty indicates private donations peaked at only $300,000 — and even that amount is doubtful this year.

“We are talking with local nonprofits that have expressed an interest in acquiring the [Chi-Town Daily News] website and neighborhood reporting program,” Dougherty writes.

“Ultimately,” he continued, “we believe we will be able to fulfill the same mission we set out to accomplish with the Daily News, though with a new name, a new company, and a different business structure.”

What’s the economic value of a journalist?

Journalists are historically thick about the notion that they are part of a business model; that they are employed not so much for the public good but because somebody has figured out how to make more money from their work than it costs to produce. That thickness is part of what makes them good at what they do; good journalists tend to follow the trail of information regardless of how they fit into someone else’s profit motive. It’s also why the outsider complaint — “The reporter only wrote that story to sell papers” — never gets any traction.

But the business model under which  most journalists have always worked is under attack right now, and that’s changing the very basics of the job: who wants to hire them, what the job requires, and how much it pays.

In recent good times, a newspaper would bring in about $1.35 in revenue for every $1 spent to run the place. That includes such inelastic expenses as distribution and printing. If you eliminate those expenses from the equation (which an economist wouldn’t do, but this is a journalist-centric view, in which the value of a newspaper to its readers and advertisers is directly proportional to the quality of its reportage) then the economic value of a journalist is at least 1.35 times salary and benefits.

But in times like this, newspaper profits are down — which means the economic value of  journalists is down too. The work of the newsroom simply produces less profit so, therefore, the value of each person in that newsroom is less.

Media companies deal with this as any business would: When profits drop, you reduce costs. Most media start with manufacturing: production, printing and distribution. (Tips for reducing production costs; 34 tips for cutting costs; United Media cost-reduction strategy.)

But when profits continue to drop, people start to lose their jobs. And despite what journalists like to think about their value, cutting reporters and editors usually stops the bleeding pretty quickly. That’s because producing news isn’t the same as producing, say, cars or other manufactured goods.

If you cut people from the auto assembly line, you can’t make as many cars. Which means you can’t sell as many cars. In a recession, that’s OK because fewer people want to buy those cars anyway; jobs get cut because there’s an imbalance between supply and demand.

But in media, you can cut an untold number of reporters and editors without actually reducing output (Journalism jobs decrease 34% Jan 08-Jun 09). The quality of the reporting might suffer; graphics might not be as well thought-out; typos and errors may increase. But the audience still gets the same quantity of news, and the advertisers still get the same audience.

When a recession ends, a car manufacturer can’t sell more cars unless it hires back workers to increase production. But a newspaper can see advertising revenues increase at the end of a recession regardless of whether it puts more people back into the newsroom. That’s why financial and spreadsheet types like investing in media; the correlation between employment and profit is indirect enough that they can choose to ignore it.

This can go on for a long time, and it has. Eventually, people start saying things like, “That newspaper is just a shadow of its former self.” And any rational explanation about declining profitability should include the long-term effect of decreasing quality and comprehensiveness.

But that’s simply not the entire reason newspapers, magazines, radio and TV are struggling; I’d argue it’s not even a major factor — just a bad symptom.

The real reason is competition. Years ago, a major metropolitan morning newspaper’s only competition was the afternoon paper. (Remember, the competition isn’t for readers; it’s for advertising revenue). Then came radio, television, cable television, city magazines, alternative weeklies, etc. They may all serve readers differently, but their money comes from the same pot of regional advertisers. More recently, add Google Ad Words,  online magazines such as Slate and Huffington Post, bloggers like Matt Drudge,  social networking like Facebook and Twitter, and dozens of other business models I can’t even think of. The one thing all of these have in common is that they demand a piece of the same marketing budgets that are the financial foundation of newspapers.

Many of these newer organizations pay journalists — but none pay as much for as many journalists as did the old-line media. So not only do newspapers have more competition, journalists have more competition.

All of which is a roundabout way of saying I’m not patient enough to calculate the actual economic value of a journalist. But the following items seem clear:

  1. Economic value and social value are separate issues.
  2. Traditional media still seem to be experiencing declining economic value of their journalists. For example:
    Effect of mass layoffs at newspapers
    New news models
    Bloodletting in the newsroom
    Layoff tracker
  3. Meanwhile, types of businesses that didn’t previously value journalists now seem to be the places where the value of journalists is growing. For example:
    This is what you get when you pay for reporters
    The growth of brand journalism
    Best job in the world
    Attention corporations: Hire a journalist
    Winery hires lifestyle correspondent
  4. Entire business models that do away with the cost of journalists are emerging — and starting to attract big money. For example:
    Examiner.com buys NowPublic for $25 million
    www.heightsobserver.org
    www.printcasting.com
  5. Old business models are trying to revive the value of journalists by finding other revenue streams to pay for them. For example:
    How newspapers that charge for content are faring
    Murdoch charges for content
    Electronic newspaper update
    Non-profit newspapers
    AP battles with news aggregators
  6. Old-line business models that see the industry’s decline as merely a function of journalism’s decline somehow seem angry and not very realistic.
    Our Hometown News, Strongsville, OH
  7. The decline in value is related to the recession; when recovery starts in earnest, the decline will flatten out.
    Cox Enterprises hopes for positive earnings
  8. But the decline in value wasn’t caused by the recession; it was caused by huge disruption of traditional business models that involve journalists. For example:
  9. Journalists may be unwilling participants in the dizzying changes taking place. But those who are determined to make themselves valuable will succeed — whether or not it’s through a traditional channel.
    What journalism students need today
    Listen up, old-school journalists
    The future of news is scarcity
  10. I’m pretty sure the economic value of journalists isn’t declining; it’s declined among media that follow traditional business models, but that’s being offset by new models and innovations that are only now starting to emerge.

Will marketers ever learn?

Another concise and dead-on blog from Seth Godin, marketing guru.

His premise: Marketing used to be easy because all you needed to do was find the money to buy a pile of ads and you could be sure to reach your target audience as well as any of your competitors.

Now, however, the Internet requires marketers to bring skill, nuance, strategy and all sorts of other rarities to the table. Will they? A few already are. As for the rest, you can apply the oldest and worstest cliche in the history of the written word: Only time will tell.

BPA Worldwide freezes rates, remains arrogant and irrelevant

BPA Worldwide, a leader in providing third-party circulation audits, has announced that it’s freezing membership dues and audit rates at their July 2008 levels — good through June 2010.

If you’re in the business, you know that BPA is especially strong among magazines with controlled circulation. If you’re not in the business, you need to know that third-party circulation audits are how publications validate their readership claims to advertisers.

BPA is facing obsolescence at an astonishing rate. If BPA is a dinosaur, then the killer meteor has already hit the Earth and the toxic cloud of extinction is on its way. Holding rates will make as much difference to the organization’s future as putting on a sweater.

Am I being a little harsh here? Perhaps. But set aside the fact that for the previous 20 years of my career BPA was one of the most sluggish, obstinate, arrogant and regressive entities I had to deal with. Set aside the fact that — even though it was owned by its customers — it always, without exception, acted as though its role was to prevent me from innovating in my job. Set aside that I don’t know anyone in publishing (though I’m sure there are a few) who doesn’t take some quiet pleasure at seeing BPA suffer.

What BPA faces aside from all that is the fact that its member magazines must find ways to radically reduce distribution costs. That’s required to offset declines in two key performance indicators: advertising pages sold, and cost-per-thousand (CPM) paid for an average page of advertising.

In other words, advertisers are reaching readers less often, and every reader they reach is worth less to them today than it used to be. The only thing advertisers care about is how many people take a measurable action as a result of seeing an ad.

And what is BPA’s ultimate value to publishers? Proof of readers reached. There is nothing that it does, or wants to do, to measure the responsiveness of those readers.

In my last year running business-to-business magazines, I withdrew two of them from membership in BPA. Not because I was so frustrated with the deplorable service BPA provided; but because my advertisers no longer cared about BPA audits. They told me they wanted to know how my audience would respond to their advertising; if I could provide better response per thousand readers than my competitors, nobody cared to see the expensive and painstakingly designed BPA audit statement. (To be fair, advertisers had been telling me that with increasing urgency for about eight years; it just reached a watershed last year — probably brought on by the recession.)

Since that time, I’ve heard of about two-dozen magazines that have terminated their BPA membership — something that used to be as acceptable in media circles as, say, passing gas in an elevator. Entire divisions of media companies have simply walked away from BPA because the organization’s work has ceased to be of value.

I suppose that freezing rates is a reasonable first response. But I don’t give BPA enough credit to understand how inadequate that step will prove to be as its irrelevance grows like a toxic cloud.

A new tipping point in favor of paid content

PaidContent.com reports that the annual media study by media investment banker VSS (Veronis Suhler Stevenson) showed a tipping occurred in 2008: It was the first time people spent more time with media they paid for — such as books and cable TV — than they did with media that is primarily ad-supported. That report raises a few points:

1. Cable TV is not predominantly ad supported? I must be watching the wrong cable stations.

2. It should come as good news to all the ad-supported media that are feverishly looking for ways to monetize their audience. It means people are willing to pay for content if there is enough value in it, and if they are trained over a long-enough period of time that the stuff just won’t come free.

3. By the time that happens, nobody knows how many traditional media will fail — their markets taken over by an upstart that “gets it.” My short answer: plenty.

4. Even those that are succeeding and profiting from paid content will have some struggles. Competition for the audience dollar is only starting to heat up, and over the next few years will become intense and insane. If you, as a consumer, are paying the full cost of content for books, movies, music, etc. and all of sudden you start hearing from newspapers and magazines that you need to pay more for their content too, and what point do you start making hard decisions about which content you really want and need? It’s not safe to assume that everything you’re paying full-ride for right now is necessarily going to be the winner in that evaluation.

A financial plan for the news’paper’ of tomorrow

Peter Kafka, former media writer for Forbes and now blogging his own MediaMemo, asks the question (non-rhetorically), “What happens when your newspaper goes digital?” His immediate conclusion: Most of the staff gets canned.blackberrypd3_4001

In his blog, Kafka channels Outside.in CEO Mark Josephson whose business is to support local news operations with broad-based content as they make the move to digital themselves.

Josephson tells Kafka that his prototypical digital newspaper would have 6 content people (reporters and editors), 12 sales reps and a total staff of 20 (that would seem to leave room for 1 administrative type and one boss type — and no room for a graphic designer, web developer or I.T. person, which already makes me suspicious that his plan is too lean). He even provides a basic P&L spreadsheet for do-it-yourselfers who want to use his math as a starting point.

If the site does 40 million pages views a month (that’s a big number), augmented by twice that much traffic through third-party agreements, he figures it could earn about $2.6 million/year on $6.3 million in revenue. That’s a great margin — 41%. But compared to the kind of revenues daily newspapers are scaled for, it’s a pretty small business.

Plans like this are about 25% experience and 75% assumption, and anybody who would use such a plan would deviate from it almost immediately once into real operations.

But the takeaway is that, while existing media executives may not be able to swallow hard enough to scale down their businesses that much, they are currently being forced by the economy to cast aside lots of sales and content talent. It’s only a matter of time before that talent starts to challenge traditional newspapers companies with startups that aren’t burdened by guild agreements, large buildings, printing plants and boards of directors that demand every old-line revenue dollar to be replaced.

Back in the ’90s, when bookstores were being driven out of business by a previously unforseen competitor, new-age jargon had it that they were being “Amazoned.”

I’m curious what we’ll be calling it in the future. Journaled? Posted? Picayuned?

If you can’t bring journalists to the computer, then bring geeks to journalism

Northwestern University’s Medill School of Journalism is turning out its first group of graduates in a master’s program that teaches computer geeks to be journalists, according to Time magazine. The idea is to combine advanced programming for computer applications and other interactive tools with reporting and journalism — making data and databases an integral part of the news.

Here’s a paragraph from Medill’s master’s degree course catalog:

The Digital Innovation Project (JOUR 435-0, 435-1)
This project challenges students to answer a specific editorial business challenge by inventing interactive solutions, often with a focus on innovative content delivery. Editorial challenges sometimes are posed by partner media organizations, sometimes by faculty or students. Students in this project have explored new ways of designing content for handheld devices, and new ways of creating interactive community, and in one case wrote a new software program to help a news operation engage more closely with its community.

In other words, if the medium is the message, this is huge. It has potential to change the very nature of how journalists work and what they do. Especially since Medill isn’t alone; among other schools starting to turn out journalist programmers are University of Missoure, Georgia Tech and University of California at Berkeley, according to Time.

Imagine an investigative article on government judicial conflict-of-interest, for example, that includes an application allowing readers to conduct their own searches by judge, defendant and plaintiff.

That’s admittedly a utopian view of journalism creating ultimate and constructive transparency — something it’s always strived to do and has rarely, if ever, achieved.

Or, I suppose, it could go the other direction: creating a bunch of people writing about the programming nuances of WordPress v. Blogspot. Which would you rather see?