Tag: newspaper

News: Not dead, but being reborn

This article, on the effort by eBay founder Pierre Omidyar to start a local news service in Honolulu, validates my postion that journalism and the news business are not dead or dying. They are being taken up by a new generation of media outsiders – people who value news and aren’t so burdened by years of “training” in the industry, that they can see new possibilities that may exist. It also helps that they aren’t burdened by an infrastructure built over decades to support old business models.

The article doesn’t say much about Omidyar’s business model – but he intends the service to be for-profit and to generate new contet.

A couple things about this jump out at me – in addition to the obvious fact that it’s at least one more person who’s not willing to give up on the news.

  • New news businesses tend to be local – where there is less competition to provide information, and where the advertising crisis has had the least impact.
  • The goals of new news businesses are modest; the ones I’m hearing about tend to seek primacy in a small area, to have a good impact on a relatively small number of people, and make a little money in the process.

Which strikes me as a pretty good way to rebuild an industry that is in historic transition.

Years from now, there will be big players again, who have figured out how to consolidate the many small for-profit news operations that are popping up. Some of those big players will be the same names that are familiar in media circles today. Others will be new.

And the news business will look very different from the way it does right now.

But it will be a business and an industry.

Somehow.

All the news that’s fit to buy

The New York Times, according to one of its own, is close to deciding whether to try charging for online content. If you assume that the best way to bolster the future of news is to figure out how to get people to pay for it online, then this is important – and a good thing if The Times does, in fact, try charging for content.

The only way to get people to start paying for content is for a few leaders to simply take the leap and start charging. Rupert Murdoch’s News Corp. is implementing a plan to do so. Having The Times follow would only be good for the movement.

Can it work? That’s the big debate in media. Many think content wants to be free. Others, like myself, think consumers want it to be free primarily because they’ve been trained that content comes cheap. What nobody knows is how much people will actually pay, or whom they would pay, for real journalism.

If the news is to find its footing again – that is, if anyone is ever going to figure out a 21st Century business model by which journalism can flourish – the starting point is knowledge of the true value that journalism has to its end users. This is something that’s been obscured for the past 150 years.

Will consumers place enough value on it that they are willing to pay the full, unsubsidized cost of sending  investigative reporters to do what they do (and defending against the inevitable lawsuits that are a byproduct of their work)? It would be nice. It would simplify the quandary of media executives, who are now gathering in solemn charrettes in search of a bew design for profitable media.

But the truth is that nobody knows. We don’t know what a newspaper would actually cost if paid for fully by readers? Or how its mission, staffing levels, range of focus and intensity of reporting might be adjusted over time to reflect the market-based measure of its value. How would it be distributed? How often would it be published? Who would its readers be?

None of these questions can be answered until enough media simply jump in and try to find out. Until now, few (the Wall Street Journal being the only one of any critical mass that I can come up with) have taken that risk. If The New York Times is getting ready to give it a try, desperation in the business may be reaching some kind of tipping point.

I’m fully confident that real journalism has a significant societal value. The problem is that it’s always been paid for indirectly. Once that value is untethered from the indirect means by which media have always monetized it (that is, advertising), then the real work can begin to right-size the industry and focus efforts where they deliver the most value.

There is real risk that the result would be even more “circular media,” in which celebrities are first manufactured and then covered by the same media organizations as if they were of real consequence  (Jon & Kate and Lindsay Lohan represent two train wrecks in which the front of the train has crashed into its own caboose).

But I’m more optimistic than that. I have enough faith left that if news businesses got serious about charging for the news, they would eventually achieve market balance – knowing how much to spend, and optimizing that for the best impact, as defined by consumers.

I’m hoping the Gray Lady of New York is ready to give it a try.

A novel notion for monetizing the news

While newspapers are wallowing in catastrophic circulation losses, their online revenues are falling short of objectives, and more people look to the web for news, Amos Gelb, a former TV guy and now an associate professor at George Washington University’s School of Media and Public Affairs, suggests a new model for profiting from running a serious news operation: cost transference.

In short, the idea is for Internet Service Providers (ISPs) – his example is Verizon Internet – to pay for news feeds on a per-subscriber basis. It’s how CNN works – collecting 37 cents per subscriber from every cable television provider that carries CNN (which is pretty much all of them). While CNN does earn revenue on advertising sales, its most dependable revenue stream is from the cable providers – which in turn simply pass that cost along to consumers as part of the cost for basic service on their monthly bill. And consumers don’t seem to mind – even though there is plenty of market evidence right now that they wouldn’t pay the same 37 cents per month directly to CNN if given the choice.

How does this transfer to newspapers? The largest news organizations (Gelb cites Time Warner, New York Times and Washington Post) would block their content to ISPs, except when paid on a subscriber basis. Those ISPs that make the payments would then pass along the cost to subscribers.

People who care about getting news content online would gravitate toward those ISPs that provide it.

The model strikes me, on its surface, as incredibly complicated given the wide range of business models that exist among ISPs. It also doesn’t include the many smaller news organizations that, one way or another, are going to survive, but will never be large enough to command attention from ISPs.

I don’t ever really expect to see the model play out as Gelb describes it. But I like the out-of-the-box thinking he brings to the discussion, and I agree with his assessment that news is something people want, and something people will pay for – just not directly.

In fact, the way I see it, it’s already playing out on small scale and through a slightly different medium: the burgeoning app store business.

There are now multiple places where smart-phone users can buy applications: iPhone’s App Store, Blackberry’s App World, and soon, Palm’s App Catalog. Each of these offers apps that let you aggregate and read news from various sources. Many are free, some cost money – from a $2.99 one-time download fee to monthly subscriptions (or so I’m told, though I haven’t actually found one on the monthly model in my time at either of the functioning app marketplaces).

So people are paying money to download an app that will deliver the same news they could get for free right now on the Internet? It’s a little different than the model Gelb envisions, but it plays out the same way psychologically: People who buy these apps aren’t actually paying for news; they’re paying for a new gadget on the smart phone. The cost has been transferred.

Gelb’s notion is heavy lifting, to be sure. To achieve the kind of behavior change that he describes, large news organizations are going to have to give up on their most cherished belief: that increased profit necessarily derives from increased distribution. And then they would have to convince numerous other organizations – like Google, Yahoo, Verizon and AT&T – to alter their business practices, all while risking the anger of their paid customers.

It sounds like a long shot at best. But the drastic decline in circulation and revenue that news media is experiencing is, if nothing else, a strong motivator.

Measuring the declining investment in journalism

Rick Edmonds, media business analyst at The Poynter Institute, estimates that U.S. newspapers have reduced the amount of money they invest in journalism by about $1.6 billion a year. His methodology is – by his own admission – back-of-the-envelope.

He has essentially calculated the reduction in total revenue of the U.S. newspaper industry over the past few years, and then multiplied this by the average percent of revenue that newspapers spend on their news operations.

The result is $1.6 billion.

According to an the annual survey by the American Society of Newspaper Editors, newsroom employment took a beating in 2008 – down 5,900 positions, or more than 11%. That follows 2,400 newsroom jobs eliminated in 2007.

And the cuts have continued in 2009. Just last week, the New York Times announced 100 newsroom layoffs. According to Papercuts,  a website by graphic designer Erica Smith who began tracking newspaper layoffs in the middle of 2007, nearly 14,000 newspaper jobs have been cut this year. (Her numbers track closely with those reported by ASNE).

Not all of those jobs are from the newsroom. Let’s be conservative and assume that a third of them are jorunalism jobs; that would put this year’s total at about 4,700. Anecdotally, I think it’s higher. But even at 4,700, that would put total newsroom cuts in the last three years at 13,000  – about 1 in 5 newspaper journalists.

What’s the average pay? According to Indeed.com, it’s $35,000 for reporters and $51,000 for editors. What’s behind those number is vague and I wouldn’t take them to the bank. But my guess would have been an average of a bit over $40,000. So let’s just go with that.

At $40,000 per job, plus 18% for benefits, the total savings per job cut is $47,300. Multiplied by 13,000 and you get a total of $614.9 million in permanent cuts from newsroom payrolls in the last 3 years.

So whose number is right, mine or Edmonds? The truth is probably somewhere in the middle. My calculations are strictly meatball, and Edmonds’ blog says essentially the same.

But also consider that these numbers don’t include cuts from magazines or broadcast channels and the real point is clear: There is a lot less journalism going on today than there used to be. And to drive that point home, all you need are the fairly reliable newroom employment figures from ASNE:

Going into 2009, newspapers across the U.S. employed about 46,000 journalists — a number that next year will show up in the low 40s or high 30s.

There are roughly 88,000 municipalities in the United States. Plus state and federal governments. Plus school districts, businesses and sports teams. Not to mention technology, health-care, religion, legitimate causes, social issues, spammers and scammers, and fascinating work in cosmology, physical anthropology and particle physics. And and even ill-behaved starlets and loose-cannon reality TV stars.

Thirty- to forty thousand journalists just isn’t enough.

I don’t know when we’re going to figure out the economic models that allow these watchdogs to get paid for the necessary and under-appreciated work that they do. But it will happen.

Rocky Mountain News closes for the 3rd time

The Rocky Mountain Independent has closed just two months after it started. The Independent was formed from the ashes of InDenverTimes.com – which actually still exists as a free information site, but not with any of the well-intentioned people who started it five months before the Independent.

Both of these were created by jobless journalists jilted by the February closing of the 150-year-old Rocky Mountain News.

The closing is sad, but predictable. The online-only effort at covering news in Denver was started for the wrong reasons (early-onset nostalgia), it had an implausible business model (premium priced news content), and it was run by the wrong people (journalists).

For the ultimate review on the subject, check out Alan Mutter’s Newsosaur blog. Everything he writes about this episode is spot-on and couldn’t be said any better.

But I will emphasize one point: Once upon a time, the news business might have been about the quality of reporting. And I know that some very strong journalism schools are still teaching that it still is. What else should they teach: mediocrity?

But it’s dead wrong. With the exception of some notable niches, content today is judged on a strictly pass-fail basis. It is either not good enough, or it is good enough.

For most media today, there is no ROI in anything that aspires to be better than good enough.

I’m not saying that great journalism doesn’t have a redeeming social value. Of course it does. It’s the bedrock of democracy; it’s the record of humanity.

There’s just no money in it.

If only print could be more like TV in trying to be more like the ‘Net

An interesting bit of information from the TV world:

The new Jay Leno Show is particularly successful in one area: reduction time-shifting – which is the practice of watching a show at a time other then when it airs – basically through TiVo or other recording devices.

Last year, according to a report in MediaBuyerPlanner, which cites TiVo as its source, 70 percent of viewers watched NBC’s 10 p.m. programming on a time-shifted basis; only 30 percent watched it live.

The good news is that’s improved to about 50 percent watching it live and 50 percent recording it to watch later. What’s amazing to me is that half the audience basically refuses to watch the show on the network’s terms. Given the technology, consumers are telling television insiders exactly what they want and how/when they want to watch it.

That’s not to say the networks are responding like champions. But I have to say, subjectively, that bumping even a couple reality shows in favor of a talk-entertainment show like Leno’s is a step in the right direction. And maybe that’s what the audience is responding to; perhaps the reduction in time-shifting basically means, “If you give me something worth watching it, I’m more likely to watch it when you air it.”

With a blog that’s so heavily dominated by print-to-internet trends, why do I think this is worth noting?

Because it points out a huge difference between what’s happening in print media vs. broadcast. Both are struggling to keep up with the change brought on by online technologies, they’re being impacted from opposite directions.

TV is losing its audience to other activities, and has had to fight and innovate to earn every viewer that it gets. Then it can turn around and sell its successes to advertisers. This is a healthy business model.

Print media, on the other hand, isn’t being pushed by its readers – who have largely made it clear that they prefer a print product. Otherwise, readers might pay for online content; and they would certainly ask for digital editions of their favorite magazines. And if that were the case, there wouldn’t be a problem. Readers would get the product they want, advertisers would know exactly how many people see and respond to their ads, and publishers would be able to cut the Three P’s that represent the largest cost of doing business: production, printing and postage.

The problem for print is that it’s being pushed by the other end: the advertisers, who demand better accountability for the impact of the money they spend. Because you can’t measure the impact of print media as simply or directly as online media, advertisers are draining their print spend in favor of an online spend. So magazines keep trying to come up with online products, and readers are yawning.

In the end, the trouble for print is that it’s not yet figured out how to give both the audience and advertisers what they want. And it’s responding to the advertisers first. And each time, readers yawn and the medium loses more credibility with advertisers.

That’s not a healthy business model.

Newspapers getting closer to a paid-content consensus

In his blog, Reflections of a Newsosaur, Alan Mutter — a Silicon Valley CEO and a former newspaper reporter, columnist and executive — says nearly half of  newspaper publishers don’t believe they can succeed at charging consumers for content.

I think Mutter sounds like a smart guy, and his blog is great; just having stumbled across it I’ve put it on my blogroll. However, what he sees as the glass half-empty looks to me like it’s half-full. I’m pleased and impressed that just over half of newspaper publishers think they can charge for content.

As Seth Godin, another of my blogroll favorites, says: Success is mostly about your attitude. Which means the newspaper business is half-way home to figuring out how and why people are going to pay for their content. I’m not saying it’s an easy task, or that the tradeoff in revenue — advertising and classified for reader payments — is a neat-and-clean one-to-one swap. (It really doesn’t have to be; online content doesn’t come with huge printing and distribution costst, but that’s a digression). Like I said, I’m pleased to hear that half of the U.S. newspaper industry is giving itself a fighting chance at success.

As for the rest of Mutter’s blog, he’s smarter than I am, so you should just take a look at his more detailed analysis, and at the report that directed me to his blog in the first place.

http://www.mediabuyerplanner.com/entry/45119/half-of-newspaper-publishers-believe-online-pay-walls-will-work/?utm_source=mbp&utm_medium=email&utm_content=textlink&utm_campaign=newsletter

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.