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April 22, 2008

"Where's the Business Model for News, People?"

It’s remarkable to me how many accomplished producers of those goods the future production of which is in doubt are still at the stage of asking other people, “How are we going to pay our reporters if you guys don’t want to pay for our news?”

This was originally published at the Britannica Blog as Newspapers and the Net: Where’s the Business Model, People?, part of a week long forum on the future of the newspaper and whether we care if it dims. I made a few small revisions.

In The Great Unbundling Nick Carr states the problems facing newspapers clearly and well. He has a good grasp of what the Web is doing to the economics of news and advertising, and this is why he’s able to be clear. I liked his ending:

“How do we create high quality content in a world where advertisers want to pay by the click, and consumers don’t want to pay at all?” The answer may turn out to be equally simple: We don’t.

I think he’s right. It’s possible we will lose some of the public goods that newspapers under the old subsidy system were able to bring forward. People ask me about this all the time. When I tell them there’s no answer at the moment a strange look comes across their faces. A social problem with no answer? Is that even allowed?

Of course the historically accurate fact that there’s no answer makes it an exciting moment in news. The fact that we could lose something makes it somewhat urgent.

It’s remarkable to me how many accomplished producers of those goods, the future production of which is in doubt, are still at the stage of asking other people, “How are we going to pay our reporters if you guys don’t want to pay for our news?” Recently I heard one such person say, “Society should be worried about this!”

At many a conference I have attended on new media and journalism, some old pro whose subsidy is fast disappearing will (mentally) place hands on hips and say about the Internet as a whole, “Well, that’s all very nice, very Web 2.0, but where’s the business model, people?” As if that were some kind of contribution. I can’t tell you how disconcerting–and weird–I find some of these performances.

Private news collection

It’s worth going back to the first business model in reportage: the merchants, traders, and other “men of affairs” in early modern Europe who employed letter-writers in cities where the man of affairs did not happen to be located. These letters—the most famous example is the Fugger Letters from the latter 16th century—conveyed much the same news that a trader would want today: prices, conditions for trade and transport, what the local authorities were up to, rumors of war, court news and gossip, natural disasters, and anything the people were seriously buzzed about.

Quality was important, accuracy essential, an ability to interpret and amuse definitely part of the deal. Everything a pro journalist would want an employer to demand, except for one thing. The letters were not intended for public distribution. There was no public then, and “public opinion” was not a phrase in common political use. The news was valuable, at that early data point, because it was current, reliable, relevant to decision-making and because it did not circulate widely– to competitors, for example. The Fugger Letters were a private system of newsgathering within the wealthy House of Fugger. They were hand-written.

This business lives on today in the extremely expensive specialty newsletters that only big firms and rich people can afford. If you make your money in the oil industry you need good information from around the globe and will pay a lot for it. In that (very limited) sense there will always be quality news and paid professionals needed to collect, write, and package it with wit and alacrity. Traders and emperors, ministers and spies will arrange for their news systems.

The question is whether the public at large will be informed by paid correspondents trying to figure out what’s going on and tell the voters about it. What a notion: the public at large! In between the Fugger Letters and the Times of London (1785) a new idea came into the world: public opinion. Now we are at another data point. We don’t know how the general public that is supposed to have informed opinions will in the future try to inform itself. What we do know is that rich and powerful people will always find the means.

New economies of news

New ventures like ProPublica are aimed directly at this problem. It proposes to transfer the subsidy from ads in newspapers to wealthy individuals and foundation donors who don’t want to see investigative journalism die. ProPublica would use the prestige press as a distribution channel, rather than create a new one. It plans to give its work away to news organizations with reputations for quality, like the Times of New York or the Wall Street Journal. Why would they trust in something produced off site? Basically because Paul Steiger, former managing editor of the Wall Street Journal, is running the operation.

For what political reporting in national papers looks like after it’s unbundled from the newspaper and taken online, go see The Politico. The model there includes publishing a specialized daily newspaper only when Congress is in session, distributed for free on Capitol Hill, in order to capture a market in corporate and interest group advertising aimed at members of Congress and staffs. That’s a tiny sliver of the readership online, where regular links from the Drudge Report have led to huge traffic.

The Politico almost qualifies as reverse publishing: web to print. I think there is some promise in this method, though it is not a business model. The local newspaper becomes a photo-sharing site where everyone posts pictures of the Friday night high school football games. The best ones—ten photos from thousands posted—run in the paper the next day. Of course that’s a long way from funding the investigative team once subsidized by classified ads and department store displays. But there’s an idea there that may have legs: intelligently filter the flood of cheap production online, assemble the best parts, package it for sale or distribution in print. (A few other coordinates in the search for the new model.)

Inefficiencies in advertising

In some ways the picture may be worse than Carr portrays it, or at least more disruptive. In the view of Doc Searls—a student of the web—it’s not only that the advertising market is shifting radically and disrupting the subsidy for news. Advertising itself is under pressure from the Internet:

While rivers of advertising money flow away from old media and toward new ones, both the old and the new media crowds continue to assume that advertising money will flow forever. This is a mistake. Advertising remains an extremely inefficient and wasteful way for sellers to find buyers. I’m not saying advertising isn’t effective, by the way; just that massive inefficiency and waste have always been involved, and that this fact constitutes a problem we’ve long been waiting to solve, whether we know it or not.

Advertisers aren’t in business to advertise; they do it to reach customers making a buying decision. If there were some other way of reaching that person, some other way for buyers and sellers to communicate, advertising would become more and more superfluous. He’s not saying we are there yet. “Just don’t expect advertising to fund the new institutions in the way it funded the old.”

Which makes the search for alternatives even more urgent. We need to try all routes: for-profit and non-profit; amateur, pro and pro-am; market-driven, subsidized.

One weakness of the old subsidy system was that it hid the true cost of serious journalism from the people who benefit. Instead of finding new ways to hide the cost, a wiser course might be to increase the number of people who understand that serious reporting is a public good, who have a grasp of the economics. In other words, public opinion might have to come to the rescue.

Scott Rosenberg, a journalist and blogger who writes about the digital age, thinks that one of the benefits of the current crisis will be to destroy the imaginary wall between business and editorial.

I’ve long thought that this beloved wall—for all its ethical value, when it worked—had an insidious side-effect of allowing journalists to pretend that they weren’t working for businesses at all. This innocence (or naivete) has left many of them ill-equipped to do more than rend their garments as their industry undergoes slow-motion collapse.

So true. But should society be worried about this?

* * *

After Matter: Notes, reactions & links…

On April 26, The Capital Times of Madison, WI, will abandon the daily newspaper form and become a breaking news website and a weekly news and opinion magazine. See Marc Eisen in the Isthmus, Madison’s weekly paper: End of an Era.

Good luck, Cap Times. You’ll need it. Converting from a six-day-a-week paid paper to an online news site is like jumping from a very high cliff into a very deep and mysterious pool.

The paper might be killed. Or it might be transformed.

One thing’s for sure: The Capital Times that Madison has known for 90 years will be gone. Online publishing is a fundamentally different proposition for both journalists and readers.

The Cap Times has started a blog where you can keep track of the transformation. Here’s earlier coverage of the decision to drop the daily print edition.

Now this is interesting: Old Journalists, New Plan: “In Saint Louis, distinguished Post-Dispatch vets start their own Web site.” It’s the St. Louis Platform, with investment and inspiration from the Pulitzer family. This is the part that intrigued me:

But rent’s not an issue—the Platform’s been given offices at the local public TV station, KETC, whose CEO, Jack Galmiche, says: “We’re creating a new model between a public television station and an online daily news source.” Adds Freivogel: “We’ll go down the road of doing things together and seeing where it leads.” Staffers will appear on camera, bringing the site to the attention of the public—at least the sliver of the public that watches public television.

Read the rest.

The best moments of the Britannica forum are in Clay Shirky’s What Newspapers and Journalism Need Now: Experimentation, Not Nostalgia. (Include the comments.) “It’s time to get on with the essential task of trying everything we can think of to create effective new models of reporting, ones that take the existing capabilities of the Internet for granted,” Shirky writes. In this connection he mentions OffTheBus. Case in point: its role in the Superdelegate Transparency Project, as explained by Ari Melber of the Nation.

PressThink pal and founder Lisa Williams: Journalism Will Survive the Death of Its Institutions. As she says, “tech” did.

See also my post at Idea Lab: Press Can Survive Newspaper’s Demise.

What was revolutionary about public opinion in the first place: not the inside players but the general public needed to know how things worked, and, for example, who said what in Parliament. Public opinion could not be avoided; therefore it had to be informed. Don’t think that notion can’t be uninvented or beaten back. It can.

Eric Alterman in The New Yorker, Out of Print: The death and life of the American newspaper. It has this about the Huffington Post, courtesy of its 31 year-old tech guy Jonah Peretti.

The Huffington Post’s editorial processes are based on what Peretti has named the “mullet strategy.” (“Business up front, party in the back” is how his trend-spotting site BuzzFeed glosses it.) “User-generated content is all the rage, but most of it totally sucks,” Peretti says. The mullet strategy invites users to “argue and vent on the secondary pages, but professional editors keep the front page looking sharp. The mullet strategy is here to stay, because the best way for Web companies to increase traffic is to let users have control, but the best way to sell advertising is a slick, pretty front page where corporate sponsors can admire their brands.”

Newspaper guy and new media intelligence Daniel Conover in the comments:

…What’s likely is that, at the nadir of layoffs and shutdowns, relatively small pools of money and interest will reorganize different types of media around different types of business models: Intelligence briefings, community outfits, local news bureaus (feeding to multiple sites, channels and pubs), community cooperatives, non-profits funded by donations, large-scale cooperatives between former competitors in multiple formats (magazines, news channels and wire services sharing all sorts of resources).

Competition will be everywhere. But wasteful competition (sinking ego money into poorly run bureaus to claim coverage that’s only marginally better than wire service coverage) is going away. Fail fast, fail cheap.

Definitely worth your time: Jeff Jarvis, The press becomes the press-sphere:

“One problem I’ve had with much discussion about the future of news lately is that it’s too press-centric,” writes Jarvis. “It focuses on the press as if it were at the center of the world, as if it owned news, as if news depended on it, as if solving the press’ problems solves news. That’s not the ecosystem of news now…. So pardon my simplistic drawings, but here’s an attempt to begin to illustrate that new ecosystem of news and media….” With diagrams!

Also see Jarvis again: Newspapers in 2020. “What will newspapers look like in 2020? Well, what’s a newspaper?”

Chris O’Brien of the San Jose Mercury News: Where’s the Innovation in Business Models?

Mark Potts at Recovering Journalist (July 14, 2008):

Editors who came up through the business thinking that the newspaper was the primary source of news and information are dinosaurs. Publishers used to dominating local ad markets with virtually no competition are fossils. But many of them are still in place, unfortunately, and moving as slowly and stupidly as ever, even as the environment they’re operating in is changing rapidly and radically. The traditional newspaper formula has been patently unworkable for years, but too many newspaper leaders don’t understand that. It’s time for them to go.

Voice of America blog: Hey, maybe government-funded news organizations like the VOA will “provide [the] serious news that people ought to know.”

VOA, as we have said here before, is unique in that it has a legal Charter obliging it to present accurate, objective and comprehensive news. In fact, we often tell visitors who come to our offices in Washington that we believe VOA is one of the few remaining practitioners of what one might call “pure journalism” in a media world that is increasingly characterized by commentary, attitude, argument, gossip and celebrity.


PressThink, March 2005: Laying the Newspaper Gently Down to Die. “The big decision today is to go back and fix that error from the mid-90s, to junk ‘re-purposing of content’ as an organizing idea, and organize Web efforts around a new purpose, a new idea. The organizations that want to live will do that. Those that don’t will harvest their profits and give out.”

Posted by Jay Rosen at April 22, 2008 12:04 AM