Industry, scholarly and policy discussions about the future of the news industry in North America and Europe continue to focus on how news enterprises can sustain themselves in the 21st century. Publishers keep asserting that things will be fine if they can erect pay walls and charge for news online and they argue that governments should provide legal protections for online news so they can make news a viable digital business product.
Their approach is wrong and ignores the fundamental reality that news has never been a commercially viable product because most of the public has been, and remains, unwilling to pay for news. Consequently, news has always been funded with income based on its value for other things.
Historically, the first collection and dissemination of news was funded in ancient times by emperors and kings, who used governors and officials throughout their realms to collect news and information and send it to the seat of power. Emissaries, consuls, and ambassadors collected foreign news and information in places important for trade or seen as potential threats to the realms. In this Imperial Finance Model, news and information were collected and shared with officials throughout the realms to assist in governance activities. This revenue model was based on official financial support because it served the interests of the state.
In the Middle Ages, a Commercial Elite Finance model developed in which wealthy merchants hired correspondents in cities and states with which they traded to collect information about political and economic developments relevant to their trade. Linen, porcelain, sherry, and spice merchants used the news for commercial advantage and held it in confidence rather than sharing it with others.
In the 18th and 19th centuries a broader Social Elite Finance Model developed to support newspapers that served the needs of the aristocracy and widening merchant class. Even with high cover prices, this model news was not viable and newspapers were subsidized by commercial printing activities and income from other commercial activities, governments and political parties, and merchant associations.
The Mass Media Finance Model appeared in the late 19th and 20th century, made possible by the industrial revolution, urbanization, wage earning, and sale of finished goods. In this model news was provided for the masses at a small fee, but subsidized by advertising sales. Because most of the public was uninterested in day-to-day events and “hard” news, the bulk of newspaper content was devoted to sports, entertainment, lifestyle, and features that increased the willingness of the public to spend pennies for the product.
This mass media financing model remain the predominant model for financing news gathering and distribution, but its effectiveness is diminishing because the “mass” audience is becoming a “niche” audience in Western nations as those less interested in hard news continue abandoning newspapers for television, magazines, and the Internet. This is creating a great deal of uncertainty how society will subsidize and pay for journalism in the twenty-first century.
Focusing on news as a commercial product appears futile and commercial news providers would do well to put their efforts in creating other commercial activities that can subsidize news provision, such as events, education and training, bookstores, travel agencies, and a variety of merchandising activities. Many publishers subsidized news activities with these types of activities a century ago and some continue to do so. It is likely that news providers will rely on a far wider range of revenue streams in the future than merely on the consumer and advertising streams upon which they depend today.
Showing posts with label news media. Show all posts
Showing posts with label news media. Show all posts
Wednesday, March 17, 2010
Saturday, February 27, 2010
HONOLULU JOINS THE RANKS OF NEWSPAPER MONOPOLY CITIES
I was sorting through some of my father’s belonging recently and came across the 1941 souvenir edition of the Honolulu Star-Bulletin (Jan 8, 1941), “The March of Hawaii.” Its lead story was the reorganization and strengthening of the Pacific Fleet and the appointment of Admiral H.E. Kimmel to head it.
My father acquired the paper while stationed in Hawaii with the Army Air Corps. Eleven months later the U.S. was at war, with Kimmel taking heat for having the bulk of his capital ships anchored in Pearl Harbor during the Japanese attack.
I was reminded of the find this week while reading the news that Gannett has agreed to sell the Honolulu Advertiser to the Star-Bulletin. The two have a 130-year history of competition, somewhat muffled until they escaped their relatively difficult marriage in a joint operating agreement between 1960s and the millennium. Now the smaller paper is buying the bigger paper, if it can comply with or skirt antitrust provisions.
We are now in the last throes of consolidation of the newspaper industry, brought on by audiences shifting to television, cable channels, and the Internet for news and information, and advertisers following audiences. The consequence is the newspapering has become a monopoly business in more than 1360 cities and towns and big city papers—even when they are monopolies—are having difficulties competing for advertising dollars. Only two percent of cities have competing dailies.
This change calls into the question the traditional view that a competing press is the foundation of democracy. If competition among perspectives on news and information is necessary for democratic functions, we have to think of it beyond the printed press and begin recognizing the important functions provided by other providers of news, information, and commentary.
Rather than constantly challenging their abilities to carry out functions in the same way as the press once did, we need to find ways to support and improve their activities—whether they be broadcast or Internet based. And we need to find ways to ensure that the papers remaining in place reevaluate their democratic functions and find ways to provide service to the spectrum of observations and ideas that has been diminished by the newspapers monopolies that now dominate our land.
My father acquired the paper while stationed in Hawaii with the Army Air Corps. Eleven months later the U.S. was at war, with Kimmel taking heat for having the bulk of his capital ships anchored in Pearl Harbor during the Japanese attack.
I was reminded of the find this week while reading the news that Gannett has agreed to sell the Honolulu Advertiser to the Star-Bulletin. The two have a 130-year history of competition, somewhat muffled until they escaped their relatively difficult marriage in a joint operating agreement between 1960s and the millennium. Now the smaller paper is buying the bigger paper, if it can comply with or skirt antitrust provisions.
We are now in the last throes of consolidation of the newspaper industry, brought on by audiences shifting to television, cable channels, and the Internet for news and information, and advertisers following audiences. The consequence is the newspapering has become a monopoly business in more than 1360 cities and towns and big city papers—even when they are monopolies—are having difficulties competing for advertising dollars. Only two percent of cities have competing dailies.
This change calls into the question the traditional view that a competing press is the foundation of democracy. If competition among perspectives on news and information is necessary for democratic functions, we have to think of it beyond the printed press and begin recognizing the important functions provided by other providers of news, information, and commentary.
Rather than constantly challenging their abilities to carry out functions in the same way as the press once did, we need to find ways to support and improve their activities—whether they be broadcast or Internet based. And we need to find ways to ensure that the papers remaining in place reevaluate their democratic functions and find ways to provide service to the spectrum of observations and ideas that has been diminished by the newspapers monopolies that now dominate our land.
Saturday, January 2, 2010
THE BIGGEST MISTAKE OF JOURNALISM PROFESSIONALISM
Efforts to professionalize journalism began early in the twentieth century as a response to the hyper commercialization of newspapers and the “anything goes” approach to news that emerged in the late nineteenth century as a means of increasing street sales through sensationalism, twisting the truth, and outright lies.
The impetus for journalistic professionalism originated among publishers who wish to counter the trend and it gained support of journalists who saw it as a means of improving their working conditions and social standing. Journalism training and higher education programs, professional societies for journalists and editors, and codes of ethics and conduct emerged as part of professionalism. These promoted the core values of accuracy, fairness, completeness, and the pursuit of truth.
These efforts improved industry practices, pushed out the worst journalists and publishers, and creating some trust in the content of news. They also created environments in which advertisers were willing to promote their wares in newspapers and made news organizations more financially sustainable.
This is where journalistic professionalism took a wrong turn, however.
It did so in two ways. First, professional journalists were taught and accepted the idea that they should worry about the journalism and leave the business to itself. Second, journalists, along with other employees, decided to seek improvement to their compensation and working conditions through unionization—thus becoming adversaries of management rather than partners in the management of news organizations.
Both developments clearly improved journalism and lives of journalists; however, they also separated journalists from business decisions and removed them from any responsibility for the organization’s actions and sustainability.
Although some protests over editorial interference, owner avarice, and the corporatization of the news industry were heard in the 20th century, few efforts to alter the situation developed because the enterprises were willing to share a sufficient portion of the riches generated with journalists and because companies employed more journalists, improved newsrooms, built networks of bureaus, and provided resources to undertake interesting reporting activities.
That has all changed. The reporting resources are gone, the networks of bureaus are being dismantled, many enterprises can’t afford their own facilities, and journalists are being widely laid off. All of this is being done with little input and influence from journalists and editors precisely because they spent nearly a century denying responsibility and involvement in business decisions.
Today, many journalists are arguing for the creation of new types of news organizations—primarily not-for-profit enterprises—and they are repeating the same mistake. Most are suggesting, or already setting up, organizations in which journalists still have little say on strategy and business matters. Many are content merely with the idea that the new enterprises won’t be profit driven. That, however, is not enough.
Journalists need to be equally responsible in ensuring they produce news and information that has value. They need to be responsible for ensuring their new organizations create the revenues and organizational strength needed to carry out high quality journalism. They need to ensure that organizational decisions make the organizations and the journalism offered viable.
If journalists continue to deny responsibility for the operation and survival of their news enterprises, it will be impossible to create sustainable news organizations for the future.
The impetus for journalistic professionalism originated among publishers who wish to counter the trend and it gained support of journalists who saw it as a means of improving their working conditions and social standing. Journalism training and higher education programs, professional societies for journalists and editors, and codes of ethics and conduct emerged as part of professionalism. These promoted the core values of accuracy, fairness, completeness, and the pursuit of truth.
These efforts improved industry practices, pushed out the worst journalists and publishers, and creating some trust in the content of news. They also created environments in which advertisers were willing to promote their wares in newspapers and made news organizations more financially sustainable.
This is where journalistic professionalism took a wrong turn, however.
It did so in two ways. First, professional journalists were taught and accepted the idea that they should worry about the journalism and leave the business to itself. Second, journalists, along with other employees, decided to seek improvement to their compensation and working conditions through unionization—thus becoming adversaries of management rather than partners in the management of news organizations.
Both developments clearly improved journalism and lives of journalists; however, they also separated journalists from business decisions and removed them from any responsibility for the organization’s actions and sustainability.
Although some protests over editorial interference, owner avarice, and the corporatization of the news industry were heard in the 20th century, few efforts to alter the situation developed because the enterprises were willing to share a sufficient portion of the riches generated with journalists and because companies employed more journalists, improved newsrooms, built networks of bureaus, and provided resources to undertake interesting reporting activities.
That has all changed. The reporting resources are gone, the networks of bureaus are being dismantled, many enterprises can’t afford their own facilities, and journalists are being widely laid off. All of this is being done with little input and influence from journalists and editors precisely because they spent nearly a century denying responsibility and involvement in business decisions.
Today, many journalists are arguing for the creation of new types of news organizations—primarily not-for-profit enterprises—and they are repeating the same mistake. Most are suggesting, or already setting up, organizations in which journalists still have little say on strategy and business matters. Many are content merely with the idea that the new enterprises won’t be profit driven. That, however, is not enough.
Journalists need to be equally responsible in ensuring they produce news and information that has value. They need to be responsible for ensuring their new organizations create the revenues and organizational strength needed to carry out high quality journalism. They need to ensure that organizational decisions make the organizations and the journalism offered viable.
If journalists continue to deny responsibility for the operation and survival of their news enterprises, it will be impossible to create sustainable news organizations for the future.
Monday, December 21, 2009
IMPLICATIONS OF CHANGING DEFINITIONS OF MEDIA MARKETS
An important contemporary development is the shift of media market definitions from traditional platform-based definitions to functional definitions. This is occurring because media product platform definitions are losing their specificity and uniqueness due to digitalization and cross-platform distribution developments.
Newspapers are becoming news providers, delivering news and information via print, online, mobile, and other platforms; broadcasters are moving off the radio spectrum, exploiting not only other streaming and video-on-demand opportunities, but also text-based communication on web and mobile platforms.
Although functional definitions clarify what companies actually do, they obscure wide differences in audiences, business relations, and revenue sources on the different platforms and give some the mistaken impression that a functionally defined operation can be successful operating the same way across the different platform environments. The functional definition is also confusing some policy makers and regulators concerned with effects of cross-media activity, consolidation, and concentration who do not carefully sort out the different elements of product and geographic market definitions among the platforms.
From the business standpoint, the fundamental problem of the functional definitions is that it leads many content providers to believe they can simply repurpose existing content across platforms. They are happy to do so because the marginal cost is near zero, but they ignore the facts that it also commoditizes the content, that the content losses uniqueness, and that similar presentation may not be appropriate on other platforms. Consequently, the repurposed content can produce only a small marginal increase in revenue.
To ultimately be successful in functional markets, companies need to offer a good deal of new content and launch new products on the new platforms rather than merely reusing what is already there in the traditional ways. Leading cable channels, for example, early in their development relied on motion pictures and syndicated programs previously shown on network television, but soon realized that they needed original programming to attract better audiences and gain additional revenue. Financial newspapers have begun to get it right on the Internet, offering more content and tools than in their print editions and establishing specialized niche products for different types of industry and business readers.
We are all watching to see who among general content providers manages to get their functional approach to markets right using the Internet, Mobile, e-Readers, and other platforms.
Newspapers are becoming news providers, delivering news and information via print, online, mobile, and other platforms; broadcasters are moving off the radio spectrum, exploiting not only other streaming and video-on-demand opportunities, but also text-based communication on web and mobile platforms.
Although functional definitions clarify what companies actually do, they obscure wide differences in audiences, business relations, and revenue sources on the different platforms and give some the mistaken impression that a functionally defined operation can be successful operating the same way across the different platform environments. The functional definition is also confusing some policy makers and regulators concerned with effects of cross-media activity, consolidation, and concentration who do not carefully sort out the different elements of product and geographic market definitions among the platforms.
From the business standpoint, the fundamental problem of the functional definitions is that it leads many content providers to believe they can simply repurpose existing content across platforms. They are happy to do so because the marginal cost is near zero, but they ignore the facts that it also commoditizes the content, that the content losses uniqueness, and that similar presentation may not be appropriate on other platforms. Consequently, the repurposed content can produce only a small marginal increase in revenue.
To ultimately be successful in functional markets, companies need to offer a good deal of new content and launch new products on the new platforms rather than merely reusing what is already there in the traditional ways. Leading cable channels, for example, early in their development relied on motion pictures and syndicated programs previously shown on network television, but soon realized that they needed original programming to attract better audiences and gain additional revenue. Financial newspapers have begun to get it right on the Internet, offering more content and tools than in their print editions and establishing specialized niche products for different types of industry and business readers.
We are all watching to see who among general content providers manages to get their functional approach to markets right using the Internet, Mobile, e-Readers, and other platforms.
Sunday, October 25, 2009
JOURNALISM AS CHARITY AND ENTREPRENEURSHIP
Many journalists pursuing new online initiatives are learning that good intentions are not enough for providing news.
The latest group to do so is former Rocky Mountain News reporters who started rockymountainindependent.com this past summer using a membership payment and advertising model. The effort collapsed Oct. 4 with them telling readers, “We put everything into producing content and supporting our independent partners, but we can no longer afford to produce enough content to justify the membership.”
There problem is hardly unique. The conundrum facing many journalists is whether to pursue the noble work of journalism as unpaid charitable work or to become engaged as journalistic entrepreneurs with a serious attitude toward its business issues—something many despised in their former employers.
If journalists want pay for their work, if they want to provide for their families, and if they want to pay mortgages, they need to spend more time figuring out how to provide value that will extract payments from readers and advertisers. To do that they have to construct organizational structures and activities that support the journalism; they will have to ensure that startups have sufficient capital; and they will have to engage staffs in marketing and advertising activities, not merely news provision.
One of the most difficult issue for these new journalism providers—as well as existing print and broadcast providers—is that journalists tend to overestimate the value of news for the public. What the public actually wants is less, not more, news.
It is not that the public doesn’t want to be informed, however. It is just that journalists spend so much time, space, and effort conveying commodity news that provides little new and helpful information for readers and cannot generate sufficient financial support. By commodity news I mean the simplistic who, what, and where stories about what happened yesterday. Those kinds of stories are readily available from many sources and provides readers little for which they will pay.
Instead, in a world of ubiquitous commodity journalism, successful journalists need to be spending time exploring the how and why of events and issues and helping readers understand and cope with what is expected next. Effective journalism in the new environment needs to focus more on today and tomorrow than on yesterday.
Success in the contemporary journalism environment it is not merely about providing news, but about providing helpful and advisory news explanation based on solid values and identity to which readers can relate. It must be part of entrepreneurial journalism or new ventures will fail.
To get there, however, journalists starting up new enterprises will need to develop resources and entrepreneurial motivation to sustain their efforts more than a few months. Most new commercial and noncommercial enterprises require 18 to 36 months of operation before they develop a loyal audience and achieve a stable financial situation. Unless journalists are willing to work for free during that time, they will have to raise capital to survive; and if they want their new organizations to thrive and develop they will have to provide a different kind of news than most are used to creating. It will need to be unique and better than what is already available.
The latest group to do so is former Rocky Mountain News reporters who started rockymountainindependent.com this past summer using a membership payment and advertising model. The effort collapsed Oct. 4 with them telling readers, “We put everything into producing content and supporting our independent partners, but we can no longer afford to produce enough content to justify the membership.”
There problem is hardly unique. The conundrum facing many journalists is whether to pursue the noble work of journalism as unpaid charitable work or to become engaged as journalistic entrepreneurs with a serious attitude toward its business issues—something many despised in their former employers.
If journalists want pay for their work, if they want to provide for their families, and if they want to pay mortgages, they need to spend more time figuring out how to provide value that will extract payments from readers and advertisers. To do that they have to construct organizational structures and activities that support the journalism; they will have to ensure that startups have sufficient capital; and they will have to engage staffs in marketing and advertising activities, not merely news provision.
One of the most difficult issue for these new journalism providers—as well as existing print and broadcast providers—is that journalists tend to overestimate the value of news for the public. What the public actually wants is less, not more, news.
It is not that the public doesn’t want to be informed, however. It is just that journalists spend so much time, space, and effort conveying commodity news that provides little new and helpful information for readers and cannot generate sufficient financial support. By commodity news I mean the simplistic who, what, and where stories about what happened yesterday. Those kinds of stories are readily available from many sources and provides readers little for which they will pay.
Instead, in a world of ubiquitous commodity journalism, successful journalists need to be spending time exploring the how and why of events and issues and helping readers understand and cope with what is expected next. Effective journalism in the new environment needs to focus more on today and tomorrow than on yesterday.
Success in the contemporary journalism environment it is not merely about providing news, but about providing helpful and advisory news explanation based on solid values and identity to which readers can relate. It must be part of entrepreneurial journalism or new ventures will fail.
To get there, however, journalists starting up new enterprises will need to develop resources and entrepreneurial motivation to sustain their efforts more than a few months. Most new commercial and noncommercial enterprises require 18 to 36 months of operation before they develop a loyal audience and achieve a stable financial situation. Unless journalists are willing to work for free during that time, they will have to raise capital to survive; and if they want their new organizations to thrive and develop they will have to provide a different kind of news than most are used to creating. It will need to be unique and better than what is already available.
Tuesday, October 13, 2009
CAN PUBLIC BROADCASTERS HARM COMPETITION AND DIVERSITY?
This is not trick question and it is being increasingly asked as public broadcasters grow larger, offer multiple channels, move into cross-media operations, and increasingly commercialize their operations.
The Federal Communications Commission will have to consider that question shortly when it considers the effort of WGBH Education Foundation—operator of WGBH-TV, the highly successful Boston-based public service broadcaster—to purchase the commercial radio station WCRB-FM.
WGBH is the top ranked member of the Public Broadcasting Service in the New England and produces about one third of PBS’ programming. It operates a second Boston television station, WGBX-TV, and WGBY in Springfield, Massachusetts. In addition it operates FM radio stations WGBH (Boston), WCAI (Woods Hole), WZAI (Brewster), and WNAN (Nantucket) and is a member of National Public Radio and Public Radio International. It operates two commercial subsidiaries involved in music rights and motion picture production.
This month it announced it was planning to purchase WCRB-FM, a classical music station that serves the Boston area. The purchase would allow it to alter its WGBH-FM format to compete more directly with WBUR-FM, the leading public radio station in Boston that is operated by Boston University.
WGBH Educational Foundation is an enterprise with $580 million in assets and revenues of $280 million annually. It has more than 600 employees who are paid more than $50,000 annually and has 5 paid more than $225,000. Its president and CEO is paid about $340,000 and 2 vice presidents about $250,000 annually. This is not a small, poor charitable enterprise.
Were WGBH a commercial broadcaster, those who hate big media would be howling in protest, arguing that it puts far too much control of the airwave in the hands of one organization and that the concentration will create market power that harms competition. But they are strangely silent.
However, in deciding whether to permit the purchase, the FCC will have to consider whether the expansion of the public broadcaster harms competitors and plurality and diversity.
Similar questions are being asked elsewhere as well. Across the pond, the British Broadcasting Corp. has recently been the target of a good deal of criticism because of its increasingly commercialized operations and because its expansion of public service operations in TV, Radio, and Internet at the local, national, and international level are seen as affecting commercial firms and competition.
The BBC is one of the largest broadcasting companies in the world, operating on revenues of £4.7 billon ($7.4 billion) and it has assets of £1.5 billion ($2.4 billion).
Many commercial broadcasters and publishers in the U.K. have criticized the growth of the BBC operations and the debate became especially heated recently when James Murdoch, the News Corp. head in Europe and Asia, made a public speech charging the BBC was engaging in a “land grab” and that its ambitions were “chilling.”
“The expansion of state-sponsored journalism is a threat to the plurality and independence of news provision, which are so important for our democracy," Murdoch told the Edinburgh International Television Festival. Whether you agree with him or not, you have to give him credit for co-opting the language of critics of big commercial media.
News Corp. and the other commercial firms competing with the BBC obviously have self interests at heart, and some commercial firms have certainly behaved in ways that harmed public interests in the past, but their arguments should not be casually dismissed.
If competition among commercial firms, between commercial and non-commercial firms, and among non-commercial firms is good for pluralism and diversity, cannot concentration and reductions in sources of news and entertainment due to acts of large not-for-profit firms also harm competition, pluralism and diversity?
The Federal Communications Commission will have to consider that question shortly when it considers the effort of WGBH Education Foundation—operator of WGBH-TV, the highly successful Boston-based public service broadcaster—to purchase the commercial radio station WCRB-FM.
WGBH is the top ranked member of the Public Broadcasting Service in the New England and produces about one third of PBS’ programming. It operates a second Boston television station, WGBX-TV, and WGBY in Springfield, Massachusetts. In addition it operates FM radio stations WGBH (Boston), WCAI (Woods Hole), WZAI (Brewster), and WNAN (Nantucket) and is a member of National Public Radio and Public Radio International. It operates two commercial subsidiaries involved in music rights and motion picture production.
This month it announced it was planning to purchase WCRB-FM, a classical music station that serves the Boston area. The purchase would allow it to alter its WGBH-FM format to compete more directly with WBUR-FM, the leading public radio station in Boston that is operated by Boston University.
WGBH Educational Foundation is an enterprise with $580 million in assets and revenues of $280 million annually. It has more than 600 employees who are paid more than $50,000 annually and has 5 paid more than $225,000. Its president and CEO is paid about $340,000 and 2 vice presidents about $250,000 annually. This is not a small, poor charitable enterprise.
Were WGBH a commercial broadcaster, those who hate big media would be howling in protest, arguing that it puts far too much control of the airwave in the hands of one organization and that the concentration will create market power that harms competition. But they are strangely silent.
However, in deciding whether to permit the purchase, the FCC will have to consider whether the expansion of the public broadcaster harms competitors and plurality and diversity.
Similar questions are being asked elsewhere as well. Across the pond, the British Broadcasting Corp. has recently been the target of a good deal of criticism because of its increasingly commercialized operations and because its expansion of public service operations in TV, Radio, and Internet at the local, national, and international level are seen as affecting commercial firms and competition.
The BBC is one of the largest broadcasting companies in the world, operating on revenues of £4.7 billon ($7.4 billion) and it has assets of £1.5 billion ($2.4 billion).
Many commercial broadcasters and publishers in the U.K. have criticized the growth of the BBC operations and the debate became especially heated recently when James Murdoch, the News Corp. head in Europe and Asia, made a public speech charging the BBC was engaging in a “land grab” and that its ambitions were “chilling.”
“The expansion of state-sponsored journalism is a threat to the plurality and independence of news provision, which are so important for our democracy," Murdoch told the Edinburgh International Television Festival. Whether you agree with him or not, you have to give him credit for co-opting the language of critics of big commercial media.
News Corp. and the other commercial firms competing with the BBC obviously have self interests at heart, and some commercial firms have certainly behaved in ways that harmed public interests in the past, but their arguments should not be casually dismissed.
If competition among commercial firms, between commercial and non-commercial firms, and among non-commercial firms is good for pluralism and diversity, cannot concentration and reductions in sources of news and entertainment due to acts of large not-for-profit firms also harm competition, pluralism and diversity?
Saturday, September 26, 2009
PUBLISHERS URGE MORE PUBLIC AID FOR NEWSPAPERS, BUT H.R. 3602 WON'T SOLVE THEIR PROBLEMS
The push for government support for newspaper continues and this week publishers and their supporters—including the Newspaper Association of America—went before the House Joint Economic Committee detailing how the current economic climate has harmed their finances and arguing for preferential changes to tax and pension laws. They asked to be allowed to extend application of the net operating loss provisions from 2 years to 5 years and for changes in laws to allow them to underfund pension funds for a greater period of time. Both would improve their operating performance and balance sheets.
This is a case of the newspaper industry seeking long-term business benefits to solve a short-term crisis caused by poor management decisions and the recession. The leading newspaper firms and their representatives are making concerted efforts to dupe legislators and the public into believing their troubles are part of the general trends in the industry, rather than the result of management decisions and the financial crisis that is diminishing. If the provisions are passed, the public treasury will be diminished for years to come and risks for employee pensions will be increased.
Newspaper executives and other witnesses were sympathetically treated at the hearing this week, but it is unclear whether they will be able to achieve the policies they advocated.
Another proposal that the commercial firms are uninterested in themselves, but expressed sympathy for, would broadening laws regarding charities to include not-for-profit newspapers. Their support was astute because the House Joint Economic Committee’s chair, Rep. Carolyn Maloney (D-NY), has introduced her own bill (H.R. 3602) to allow newspapers to become tax exempt under section 501(C)(3) of the tax code. Her bill somewhat mirror Senate bill 673 by Sen. Benjamin Cardin, D-Md., that was discussed earlier in this blog (Analysis of the Newspaper Revitalization Act, http://themediabusiness.blogspot.com/2009/03/analysis-of-newspaper-revitalization.html). There are some differences in Maloney’s bill that need to be highlighted.
Under Section (b) of H.R. 3602, companies would qualify for tax exempt status through a 3-part test.
First, companies would have to be “publishing on a regular basis a newspaper of general circulation” to qualify. This provision stipulates no periodicity so it does not limit qualification to dailies, which are experiencing the greatest economic and financial difficulties. This language provides the exemption only to established papers and would thus exclude startups until after they were regularly publishing, requiring startups to initially obtain financing through other than tax-deductible donations.
The language in this first test requires that publications be “a newspaper of general circulation” and this will lead to questions whether it applies to newspapers focused on specific audiences in a community—such as African Americans or senior citizens—or papers providing more focused content—such as news and information for a specific neighborhood or devoted solely to politics or crime. This ambiguity could be used by IRS examiners against some papers and could be used by some publishers to take advantage of a policy not intended for them.
The second provision requires that qualifying papers publish “local, national or international stories of interest to the general public and the distribution of such newspaper is necessary or valuable in achieving an educational purpose.” The provision regarding type of coverage is better than the Senate bill because it does not require publication of all 3 types of news—something not done in many local papers.
The third provision requires that content preparation “follows methods generally accepted as educational in character.” This provision is exceedingly vague and its application is unclear because it does not deal with the content of the paper, but with the preparation of the paper. How “the preparation of the material” follows accepted educational methods would seem to require that the papers be part of an educational activity, such as being linked to training in schools or universities. This would highly limit the applicability of the bill to existing newspaper operations.
Like the Senate bill, Section (c) permits papers to carry advertising “to the extent that such newspaper does not exceed the space allotted to fulfilling the educational purposes of such qualified newspaper corporation.” This would require papers to publish no more than an equal amount of editorial and advertising content. This is lower than the limit of postal service limit (75%) and would force most existing papers to drop about 1/3 of their existing advertising or incur damaging costs by printing more news pages than they do now. This would cripple the finances of any daily paper.
Finally, Section (d) of the legislation permits qualified companies to accept tax deductable charitable donations to support their operations.
This bill, like its Senate predecessor, is likely to have limited affects on the newspaper industry because it will not interest newspaper owners because most of their papers are producing profits and it will preclude their abilities to benefit from greater profits when the advertising recovery occurs.
There is a place for not-for-profit media and journalism, but H.R. 3602 S. 673 will not do much to improve coverage or the overall condition newspaper industry. It is likely to continue to gain support from the commercial newspaper industry, however, because it can be used to provide cover for government policies that they really want.
This is a case of the newspaper industry seeking long-term business benefits to solve a short-term crisis caused by poor management decisions and the recession. The leading newspaper firms and their representatives are making concerted efforts to dupe legislators and the public into believing their troubles are part of the general trends in the industry, rather than the result of management decisions and the financial crisis that is diminishing. If the provisions are passed, the public treasury will be diminished for years to come and risks for employee pensions will be increased.
Newspaper executives and other witnesses were sympathetically treated at the hearing this week, but it is unclear whether they will be able to achieve the policies they advocated.
Another proposal that the commercial firms are uninterested in themselves, but expressed sympathy for, would broadening laws regarding charities to include not-for-profit newspapers. Their support was astute because the House Joint Economic Committee’s chair, Rep. Carolyn Maloney (D-NY), has introduced her own bill (H.R. 3602) to allow newspapers to become tax exempt under section 501(C)(3) of the tax code. Her bill somewhat mirror Senate bill 673 by Sen. Benjamin Cardin, D-Md., that was discussed earlier in this blog (Analysis of the Newspaper Revitalization Act, http://themediabusiness.blogspot.com/2009/03/analysis-of-newspaper-revitalization.html). There are some differences in Maloney’s bill that need to be highlighted.
Under Section (b) of H.R. 3602, companies would qualify for tax exempt status through a 3-part test.
First, companies would have to be “publishing on a regular basis a newspaper of general circulation” to qualify. This provision stipulates no periodicity so it does not limit qualification to dailies, which are experiencing the greatest economic and financial difficulties. This language provides the exemption only to established papers and would thus exclude startups until after they were regularly publishing, requiring startups to initially obtain financing through other than tax-deductible donations.
The language in this first test requires that publications be “a newspaper of general circulation” and this will lead to questions whether it applies to newspapers focused on specific audiences in a community—such as African Americans or senior citizens—or papers providing more focused content—such as news and information for a specific neighborhood or devoted solely to politics or crime. This ambiguity could be used by IRS examiners against some papers and could be used by some publishers to take advantage of a policy not intended for them.
The second provision requires that qualifying papers publish “local, national or international stories of interest to the general public and the distribution of such newspaper is necessary or valuable in achieving an educational purpose.” The provision regarding type of coverage is better than the Senate bill because it does not require publication of all 3 types of news—something not done in many local papers.
The third provision requires that content preparation “follows methods generally accepted as educational in character.” This provision is exceedingly vague and its application is unclear because it does not deal with the content of the paper, but with the preparation of the paper. How “the preparation of the material” follows accepted educational methods would seem to require that the papers be part of an educational activity, such as being linked to training in schools or universities. This would highly limit the applicability of the bill to existing newspaper operations.
Like the Senate bill, Section (c) permits papers to carry advertising “to the extent that such newspaper does not exceed the space allotted to fulfilling the educational purposes of such qualified newspaper corporation.” This would require papers to publish no more than an equal amount of editorial and advertising content. This is lower than the limit of postal service limit (75%) and would force most existing papers to drop about 1/3 of their existing advertising or incur damaging costs by printing more news pages than they do now. This would cripple the finances of any daily paper.
Finally, Section (d) of the legislation permits qualified companies to accept tax deductable charitable donations to support their operations.
This bill, like its Senate predecessor, is likely to have limited affects on the newspaper industry because it will not interest newspaper owners because most of their papers are producing profits and it will preclude their abilities to benefit from greater profits when the advertising recovery occurs.
There is a place for not-for-profit media and journalism, but H.R. 3602 S. 673 will not do much to improve coverage or the overall condition newspaper industry. It is likely to continue to gain support from the commercial newspaper industry, however, because it can be used to provide cover for government policies that they really want.
Friday, August 21, 2009
THE TRANSACTION COST PROBLEM OF NEWSPAPER MICROPAYMENTS
The desire to monetize online news is leading some to enthusiastically promote micropayment systems. A number of the leading newspaper sites are leaning toward a cooperative payment system that will allow readers to use a single account to access material at the leading papers. Such a system will not be technically difficult to implement, but getting the price right will be a significant challenge because of transaction costs and significant differences in the economic value of articles.
To create the best industry wide effects, a micropayment payment system would need to include as many papers as possible (see "The Challenges of Online News Micropayments and Subscriptions" http://themediabusiness.blogspot.com/2009/05/challenges-of-online-news-micropayments.html). The fact that a consortium is currently being sought only among the major players illustrates, however, that such a system would be cost inefficient because content from smaller papers would attract fewer transactions and be more expensive to service.
A widely inclusive system would encounter the problems of small payouts that have plagued collecting rights societies for authors, composers, and performers. Those systems have found that the costs of managing transactions, accounting and auditing, and conveying funds to rights holders incur higher expenses than the payments due many rights holders and that such a system is possible only when the rights holders and content that generate the most transactions subsidize those that generate the least.
This occurs because each right must have a separate account, uses of all rights must be monitored and recorded, funds must be collected, expenses for accounting, auditing and other administrative costs paid, and funds must be transferred to recipients. These activities incur significant transaction costs.
Even a cooperative system limited to newspapers that attract the largest number of customers will encounter transaction cost challenges.
In single content sales systems, for example, the cost of making transactions takes up the bulk of the price. In the sale of mobile telephone ringtones, for example, the composer, arranger, and performer get only about 20% of the price. For digital song downloads everyone associated with the content--songwriter, arranger performers, and record company--receive less than half. This occurs because merchant and financial transaction costs are very high. The cost for using a credit card adds 5 to 7 percent to merchant costs and the expense for bank processing of each transaction is a minimum of about 25 cents. Even electronic fund transfers between bank accounts incurs about 30 cents in transaction costs.
These realities will affect the structure and pricing of newspaper article micropayment purchases. The most efficient system for users and firms will require the use of prepaid customer accounts to reduce the number of bank system transactions. This will allow users to transfer funds to their accounts and then purchase articles at pennies a piece. Funds collected would be then periodically transferred to papers. Such a system could also include the option for occasional users to make credit cards purchases of articles, but the price would have to be $2 to $10 per article to make it worth the effort.
The biggest pricing challenge, however, is that some articles will be more valuable than others and will be most sought after by consumers. This means newspapers will have to figure out BEFOREHAND which stories fall into those categories and they will have to decide what prices to charge for them. Papers will have to hire personnel to try to figure out before publication which are the most economically valuable stories--something that will be extremely hard to do--or they will have to set prices based on the costs invested in creating each story (something current newspaper accounting systems do not support). In either case, increased costs will result. The only other reasonable option is to set prices per article based on the overall average cost of producing an article or a column inch of editorial copy. This, of course, over and under prices content simultaneously.
Moving to a micropayment system is not merely a matter of starting to charge for content online, but involves changing the fundamental business model of papers. Newspapers have historically bundled all content into one product available at a single price. In retailing, bundling has always worked best for getting consumers to buy more of the product at a lower price than if bought individually. With this tactic the producer gains profit because the costs of distribution and sales are collectively lower. A second tactic involves bundling products of unequal or uneven value that are sold together to achieve a joint price that is higher than would have been obtained individually.
Newspapers have historically benefited from such bundling by filling pages with relatively inexpensive news agency and syndicated content and by including huge amounts of information culled from public sources that did not require significant investment of resources or added value. Unbundling and selling individual articles with a micropayment system will produce little consumer willingness to pay for this type of content--a significant problem because it is the bulk of editorial content in most newspapers today. Unbundling will also increase transaction costs, thus reducing profitability. This will force higher prices on consumers that will affect demand.
Disaggregating the newspaper and making more money off some individual articles will also create pressure for additional payments from journalists who write the most valuable articles. This will also increase costs of the micropayment system.
Making money from online journalism is, thus, not just a matter of saying "Let's all start charging." It will require fundamental rethinking of the value chain, what content is offered, and how it is produced. It will also require significant thought about what's in it for consumers--something that is glaringly missing from current discussions of starting online payments. The consumer challenge is especially salient because most online news readers do not currently buy newspapers. If they are not willing to pay for news in print, why will they suddenly be willing to pay for that same news online? If papers can't figure that out, no decision to implement micropayments will end happily.
To create the best industry wide effects, a micropayment payment system would need to include as many papers as possible (see "The Challenges of Online News Micropayments and Subscriptions" http://themediabusiness.blogspot.com/2009/05/challenges-of-online-news-micropayments.html). The fact that a consortium is currently being sought only among the major players illustrates, however, that such a system would be cost inefficient because content from smaller papers would attract fewer transactions and be more expensive to service.
A widely inclusive system would encounter the problems of small payouts that have plagued collecting rights societies for authors, composers, and performers. Those systems have found that the costs of managing transactions, accounting and auditing, and conveying funds to rights holders incur higher expenses than the payments due many rights holders and that such a system is possible only when the rights holders and content that generate the most transactions subsidize those that generate the least.
This occurs because each right must have a separate account, uses of all rights must be monitored and recorded, funds must be collected, expenses for accounting, auditing and other administrative costs paid, and funds must be transferred to recipients. These activities incur significant transaction costs.
Even a cooperative system limited to newspapers that attract the largest number of customers will encounter transaction cost challenges.
In single content sales systems, for example, the cost of making transactions takes up the bulk of the price. In the sale of mobile telephone ringtones, for example, the composer, arranger, and performer get only about 20% of the price. For digital song downloads everyone associated with the content--songwriter, arranger performers, and record company--receive less than half. This occurs because merchant and financial transaction costs are very high. The cost for using a credit card adds 5 to 7 percent to merchant costs and the expense for bank processing of each transaction is a minimum of about 25 cents. Even electronic fund transfers between bank accounts incurs about 30 cents in transaction costs.
These realities will affect the structure and pricing of newspaper article micropayment purchases. The most efficient system for users and firms will require the use of prepaid customer accounts to reduce the number of bank system transactions. This will allow users to transfer funds to their accounts and then purchase articles at pennies a piece. Funds collected would be then periodically transferred to papers. Such a system could also include the option for occasional users to make credit cards purchases of articles, but the price would have to be $2 to $10 per article to make it worth the effort.
The biggest pricing challenge, however, is that some articles will be more valuable than others and will be most sought after by consumers. This means newspapers will have to figure out BEFOREHAND which stories fall into those categories and they will have to decide what prices to charge for them. Papers will have to hire personnel to try to figure out before publication which are the most economically valuable stories--something that will be extremely hard to do--or they will have to set prices based on the costs invested in creating each story (something current newspaper accounting systems do not support). In either case, increased costs will result. The only other reasonable option is to set prices per article based on the overall average cost of producing an article or a column inch of editorial copy. This, of course, over and under prices content simultaneously.
Moving to a micropayment system is not merely a matter of starting to charge for content online, but involves changing the fundamental business model of papers. Newspapers have historically bundled all content into one product available at a single price. In retailing, bundling has always worked best for getting consumers to buy more of the product at a lower price than if bought individually. With this tactic the producer gains profit because the costs of distribution and sales are collectively lower. A second tactic involves bundling products of unequal or uneven value that are sold together to achieve a joint price that is higher than would have been obtained individually.
Newspapers have historically benefited from such bundling by filling pages with relatively inexpensive news agency and syndicated content and by including huge amounts of information culled from public sources that did not require significant investment of resources or added value. Unbundling and selling individual articles with a micropayment system will produce little consumer willingness to pay for this type of content--a significant problem because it is the bulk of editorial content in most newspapers today. Unbundling will also increase transaction costs, thus reducing profitability. This will force higher prices on consumers that will affect demand.
Disaggregating the newspaper and making more money off some individual articles will also create pressure for additional payments from journalists who write the most valuable articles. This will also increase costs of the micropayment system.
Making money from online journalism is, thus, not just a matter of saying "Let's all start charging." It will require fundamental rethinking of the value chain, what content is offered, and how it is produced. It will also require significant thought about what's in it for consumers--something that is glaringly missing from current discussions of starting online payments. The consumer challenge is especially salient because most online news readers do not currently buy newspapers. If they are not willing to pay for news in print, why will they suddenly be willing to pay for that same news online? If papers can't figure that out, no decision to implement micropayments will end happily.
Friday, August 14, 2009
JOURNALISM STARTUPS ARE HELPFUL, BUT NO PANACEA FOR NEWS PROBLEMS
One of the most exciting developments in journalism is the widespread appearance of online news startups. These are taking a variety of not-for-profit and commercial forms and are typically designed to provide reporting of under-covered communities and neighborhoods or to cover topics or employ journalistic techniques that have been reduced in traditional media because of their expense.
These initiatives should be lauded and supported. However, we have to be careful that the optimism and idealism surrounding these efforts not be imbued with naïveté and unbridled expectation. All these initiatives face significant challenges that require pragmatism in their organization and sober reflection about their potential to solve the fundamental problems in the news industry today.
We need to recognize that these online initiatives are not without precedent. We can learn a great deal about their potential from other community- and public affairs-oriented media endeavors. Community radio, local public service radio and television, public access television, and not-for-profit news and public affairs magazines have existed for decades and provide some evidence about the potential of the startups. Most rely heavily on the same types of foundation, community support, and membership financial models that startups are employing and this gives them a head start in the competition of those resources.
Despite sharing fundamental objectives and goals, these existing news and public affairs enterprises exhibit wide differences in the services they provide and their effectiveness in offering them. Many suffer from precarious financial conditions.
For the most part, such initiatives are highly dependent upon volunteer labor, individuals with the best of intentions who contribute time and effort. Those who manage the operations must expend a great deal of effort to train, coordinate, motivate and support these volunteers. This incurs cost and takes time from other activities.
Most of the organizations operate with highly limited staffs of regularly employed personnel and this is especially true in news operations. Professional journalists working in these organizations tend to be poorly paid; few have health and retirement benefits; most do not have libel insurance that protects aggressive and investigative reporting; few have access to resources to invest time and money in significant journalistic research. The consequence of these challenges is that there tends to be high turnover because the operations typically rely on young journalists who use the organizations to gain professional experience and then move on to better funded or commercial firms.
The community and public affairs operations also exhibit widely disparate size and quality in their journalistic activities. Even most affiliates of National Public Radio—which is generally considered the most successful of non-commercial news operations—tend to have small and relatively undistinguished news operations. Most rely upon the exceptional content of the national organization, large metropolitan affiliates, and the best of the content collectively produced by other local affiliates. Affiliates with larger news staffs and quality tend to be limited to those linked to university journalism programs or in the best-funded metropolitan operations.
The challenges faced in these organizations should not deter the establishment of new online initiatives or keep the rest of us from supporting them. We need to be realistic about their potential, however. In the foreseeable future these startups will tend to supplement rather than to replace traditional news organizations. They may be part of the solution to the problem of news provision, but they alone are not the remedy.
These initiatives should be lauded and supported. However, we have to be careful that the optimism and idealism surrounding these efforts not be imbued with naïveté and unbridled expectation. All these initiatives face significant challenges that require pragmatism in their organization and sober reflection about their potential to solve the fundamental problems in the news industry today.
We need to recognize that these online initiatives are not without precedent. We can learn a great deal about their potential from other community- and public affairs-oriented media endeavors. Community radio, local public service radio and television, public access television, and not-for-profit news and public affairs magazines have existed for decades and provide some evidence about the potential of the startups. Most rely heavily on the same types of foundation, community support, and membership financial models that startups are employing and this gives them a head start in the competition of those resources.
Despite sharing fundamental objectives and goals, these existing news and public affairs enterprises exhibit wide differences in the services they provide and their effectiveness in offering them. Many suffer from precarious financial conditions.
For the most part, such initiatives are highly dependent upon volunteer labor, individuals with the best of intentions who contribute time and effort. Those who manage the operations must expend a great deal of effort to train, coordinate, motivate and support these volunteers. This incurs cost and takes time from other activities.
Most of the organizations operate with highly limited staffs of regularly employed personnel and this is especially true in news operations. Professional journalists working in these organizations tend to be poorly paid; few have health and retirement benefits; most do not have libel insurance that protects aggressive and investigative reporting; few have access to resources to invest time and money in significant journalistic research. The consequence of these challenges is that there tends to be high turnover because the operations typically rely on young journalists who use the organizations to gain professional experience and then move on to better funded or commercial firms.
The community and public affairs operations also exhibit widely disparate size and quality in their journalistic activities. Even most affiliates of National Public Radio—which is generally considered the most successful of non-commercial news operations—tend to have small and relatively undistinguished news operations. Most rely upon the exceptional content of the national organization, large metropolitan affiliates, and the best of the content collectively produced by other local affiliates. Affiliates with larger news staffs and quality tend to be limited to those linked to university journalism programs or in the best-funded metropolitan operations.
The challenges faced in these organizations should not deter the establishment of new online initiatives or keep the rest of us from supporting them. We need to be realistic about their potential, however. In the foreseeable future these startups will tend to supplement rather than to replace traditional news organizations. They may be part of the solution to the problem of news provision, but they alone are not the remedy.
Monday, August 10, 2009
OMG! NEWSPAPERS MAY NOT BE DEAD!
Success in businesses is not the result of highly mysterious factors.
To be successful an enterprise must offer a product or service that people want; it must provide it with better quality and service than other providers—or at a lower price than competitors; it must change with the times and demand; and it must never forget to focus on customer needs rather than its own. And a limited number of competitors helps. Duh.
Many journalists have trouble understanding these principles, however, and we were treated to 2 classic stories in which journalists breathlessly announced this discovery over the weekend.
The New York Times told us about the “resurgent” Seattle Times. The Times is starting to reap the fruits of monopoly caused by the demise of the print edition of the Post-Intelligencer and the stabilizing economy. It has picked up most of the print readers from the P-I, raised its circulation prices, and been able to keep the higher ad rates that were charged when ads were put in both papers. http://www.nytimes.com/2009/08/10/business/media/10seattle.html
The Associated Press told us “Small is beautiful” and that local papers do not feel competition for big players like CNN, metropolitan television, and Craigslist because they focus on local news and advertising not available elsewhere. “Less competition means the print editions and Web sites of smaller newspapers remain the focal points for finding out what's happening in their coverage areas.” http://tech.yahoo.com/news/ap/20090809/ap_on_hi_te/us_small_newspapers_1
Journalists are also starting to discover that the industry might not be as dead as they have been portraying it to be. A number of stories have reported that the drop in advertising due to the recession appears to be near bottom, that profits and share prices are rising, and there is no wholesale rush to the web by print newspaper readers.
These “surprises” are developing, I believe, because journalists have never covered their own industry with the same interest and vigor that they have covered other industries. This is partly true because they have adamantly and publicly expressed distain for the business side of the news industry and because they tend to accept and endlessly repeat the views of publishers without critical fact checking or seeking better understanding of the business dynamics of news. Whatever happened to the old journalism adage "If your mother says she loves you, check it out!"
Perhaps they will learn.
To be successful an enterprise must offer a product or service that people want; it must provide it with better quality and service than other providers—or at a lower price than competitors; it must change with the times and demand; and it must never forget to focus on customer needs rather than its own. And a limited number of competitors helps. Duh.
Many journalists have trouble understanding these principles, however, and we were treated to 2 classic stories in which journalists breathlessly announced this discovery over the weekend.
The New York Times told us about the “resurgent” Seattle Times. The Times is starting to reap the fruits of monopoly caused by the demise of the print edition of the Post-Intelligencer and the stabilizing economy. It has picked up most of the print readers from the P-I, raised its circulation prices, and been able to keep the higher ad rates that were charged when ads were put in both papers. http://www.nytimes.com/2009/08/10/business/media/10seattle.html
The Associated Press told us “Small is beautiful” and that local papers do not feel competition for big players like CNN, metropolitan television, and Craigslist because they focus on local news and advertising not available elsewhere. “Less competition means the print editions and Web sites of smaller newspapers remain the focal points for finding out what's happening in their coverage areas.” http://tech.yahoo.com/news/ap/20090809/ap_on_hi_te/us_small_newspapers_1
Journalists are also starting to discover that the industry might not be as dead as they have been portraying it to be. A number of stories have reported that the drop in advertising due to the recession appears to be near bottom, that profits and share prices are rising, and there is no wholesale rush to the web by print newspaper readers.
These “surprises” are developing, I believe, because journalists have never covered their own industry with the same interest and vigor that they have covered other industries. This is partly true because they have adamantly and publicly expressed distain for the business side of the news industry and because they tend to accept and endlessly repeat the views of publishers without critical fact checking or seeking better understanding of the business dynamics of news. Whatever happened to the old journalism adage "If your mother says she loves you, check it out!"
Perhaps they will learn.
Friday, July 17, 2009
ONLINE AGGREGATORS AND NEWSPAPER STRATEGY
Google, MSN, and Yahoo and other aggregators are cited by newspaper executives are harming newspapers. But what have they actually done? It is important to have a realistic understanding of their effects if one is to fashion strategies for the future of newspapers and news organizations.
Aggregators carry news stories from major news services and thus make international and national public affairs, entertainment and sports news widely available. The headline news on the aggregators’ home pages is becoming the primary news provider for those less interested in news and the online sections are well-used by news consumers who want more news or more timely news than appears in their daily newspaper.
Aggregators and others sites carrying content from news services are now contributing about 20 percent of the revenue of Associated Press, for example, taking some financial pressure off newspapers to fund the cooperative on their own. Other news services are also gaining income from online operators, thus helping them keep prices lower for newspapers as well.
So how do aggregators news harm newspapers? They harms papers to the extent that some less committed newspaper readers are willing to substitute their local paper with a news sources that don’t cover their cities. Some are willing to do so and this is taking some subscribers and single copy purchasers away from newspapers. U.S. newspapers have lost approximately 6 million circulation since 2000, but about half of that was circulation of the 70 competing newspapers or second editions papers that have been closed since the millennium. So one can thus say that at least 3 million people have decided to use other news sources.
Aggregators are also accused of STEALING value through their search functions and links to newspaper sites. Certainly the aggregators are CREATING value with the technique but are they taking value in violation of copyright or norms of content use? The answer is “no” because they do not represent the material as their own and direct those searching to the newspapers own sites, where they are exposed to advertising sold by the online newspapers.
Newspapers are now getting between 7-10 readers online for every reader they have in print. This plays an important role in making their sites attractive to advertisers, a development that generated the $3.2 billion in online advertising revenue that newspapers received in 2008.
Newspapers, of course, could stop the aggregators from linking to their content by putting it behind walls and charging for its use. If they did so, the aggregators could not link to it legally or technically without users encountering a pay or registration wall. So why haven’t newspapers done this until now? Frankly, because they get more readers and more advertising income by offering the material free.
Publishers are increasingly arguing that they should turn newspaper sites into paying sites and they have been holding joint discussion about how that might happen and whether it would be beneficial to do so simultaneously. This has raised some antitrust concern, but it raises real and significant questions of what such a strategy would accomplish.
In my estimation it is not as easy answer to the challenges newspapers face and has some elements that put its effectiveness in doubt. This is primarily because it is uncertain what existing readers will do. Will they subscribe to print AND online? Will they stay with print only? Or will they drop print?
The first option would be financially beneficial, but is likely to attract a limited number of readers unless the joint pricing is so attractive that it produces little new income for the newspaper firm. If that is the case the benefit of the strategy is reduced. The latter option would be very damaging to papers because print advertising creates more value than online advertising and prices for print ads would decline more than would be gained online.
It also needs to be recognized that people who do not currently buying newspapers are unlikely to buy subscriptions to online news sites. Thus, creating a paid model will likely reduce the boosted audience that free online news currently provides. This would have a negative effect on online audience and the increasing revenue that is being obtained from online advertising.
But what of heavy news users? As I have written in other entries in this blog, heavy users tend to be promiscuous and move between many online news sites. A commonly used system for micropayments would be necessary or these heavy users will reduce their use of multiple sites if each requires separate payment registration. Even with such a system in place, it is unlikely that more than 5-10 percent of the newspaper purchasing population would regularly use such a system.
Moving to a paid online model will not be as easy as agreeing that everyone should switch to paid on January 1 next year. It will require considerable strategic thinking and providing new types of value for consumers if it is to be successful. Even then, the benefits for newspapers will vary significantly depending upon the size, location, and competitive situation of individual newspapers.
Aggregators carry news stories from major news services and thus make international and national public affairs, entertainment and sports news widely available. The headline news on the aggregators’ home pages is becoming the primary news provider for those less interested in news and the online sections are well-used by news consumers who want more news or more timely news than appears in their daily newspaper.
Aggregators and others sites carrying content from news services are now contributing about 20 percent of the revenue of Associated Press, for example, taking some financial pressure off newspapers to fund the cooperative on their own. Other news services are also gaining income from online operators, thus helping them keep prices lower for newspapers as well.
So how do aggregators news harm newspapers? They harms papers to the extent that some less committed newspaper readers are willing to substitute their local paper with a news sources that don’t cover their cities. Some are willing to do so and this is taking some subscribers and single copy purchasers away from newspapers. U.S. newspapers have lost approximately 6 million circulation since 2000, but about half of that was circulation of the 70 competing newspapers or second editions papers that have been closed since the millennium. So one can thus say that at least 3 million people have decided to use other news sources.
Aggregators are also accused of STEALING value through their search functions and links to newspaper sites. Certainly the aggregators are CREATING value with the technique but are they taking value in violation of copyright or norms of content use? The answer is “no” because they do not represent the material as their own and direct those searching to the newspapers own sites, where they are exposed to advertising sold by the online newspapers.
Newspapers are now getting between 7-10 readers online for every reader they have in print. This plays an important role in making their sites attractive to advertisers, a development that generated the $3.2 billion in online advertising revenue that newspapers received in 2008.
Newspapers, of course, could stop the aggregators from linking to their content by putting it behind walls and charging for its use. If they did so, the aggregators could not link to it legally or technically without users encountering a pay or registration wall. So why haven’t newspapers done this until now? Frankly, because they get more readers and more advertising income by offering the material free.
Publishers are increasingly arguing that they should turn newspaper sites into paying sites and they have been holding joint discussion about how that might happen and whether it would be beneficial to do so simultaneously. This has raised some antitrust concern, but it raises real and significant questions of what such a strategy would accomplish.
In my estimation it is not as easy answer to the challenges newspapers face and has some elements that put its effectiveness in doubt. This is primarily because it is uncertain what existing readers will do. Will they subscribe to print AND online? Will they stay with print only? Or will they drop print?
The first option would be financially beneficial, but is likely to attract a limited number of readers unless the joint pricing is so attractive that it produces little new income for the newspaper firm. If that is the case the benefit of the strategy is reduced. The latter option would be very damaging to papers because print advertising creates more value than online advertising and prices for print ads would decline more than would be gained online.
It also needs to be recognized that people who do not currently buying newspapers are unlikely to buy subscriptions to online news sites. Thus, creating a paid model will likely reduce the boosted audience that free online news currently provides. This would have a negative effect on online audience and the increasing revenue that is being obtained from online advertising.
But what of heavy news users? As I have written in other entries in this blog, heavy users tend to be promiscuous and move between many online news sites. A commonly used system for micropayments would be necessary or these heavy users will reduce their use of multiple sites if each requires separate payment registration. Even with such a system in place, it is unlikely that more than 5-10 percent of the newspaper purchasing population would regularly use such a system.
Moving to a paid online model will not be as easy as agreeing that everyone should switch to paid on January 1 next year. It will require considerable strategic thinking and providing new types of value for consumers if it is to be successful. Even then, the benefits for newspapers will vary significantly depending upon the size, location, and competitive situation of individual newspapers.
Friday, June 12, 2009
SALARIES RISE BUT JOURNALISTS DON'T BENEFIT
Salary data from the annual newspaper compensation study done by the Inland Press Association underscores the points I made in a lecture at Oxford University recently on why journalists deserve low pay.
According to the salary study, average newspaper wages in the U.S. increased 2.1% between 2008 and 2009, but that result was skewed because hefty increases went to producers of interactive (online) content and editorial personnel involved in new business development. Journalists on the average received no or marginal increases depending upon their category.
My lecture, which was carried in a significantly reduced form in the Christian Science Monitor , and redistributed by multiple online sites and blogs, produced shock, anger, and invective by many journalists who missed its point. The text of the full lecture can be found at the website: http://www.robertpicard.net/files/Why_journalists_deserve_low_pay.pdf
Journalists today create very little economic value and are having a difficult time getting people to pay for the social value they create. The fact that newspapers are rewarding those who help create new businesses and revenue streams far above traditional journalists accentuates this point.
I admit that the title of my speech was deliberately provocative. It was meant as a wakeup call from a former journalist who loves the news industry. The reality is that no one deserves either high or low pay. The level of pay is EARNED. Journalists deserve pay based on the economic value they create (evidenced by what the public is willing to pay for news) or on the willingness of the public to support social purposes contributing funds to foundations or non-profit news operations.
In today’s world—in which the mass audience for newspapers and its business model are disappearing—continuing to provide the same types of coverage and content in the past will not create economic value and earn good pay. I do not believe that Internet news aggregators, community journalism, and blogging will ever replace the functions of good journalism and it will not replace the functions of most newspapers in the short to mid-term. There is hope for journalism.
If journalists want to promote good journalism and value creation that makes them earn more pay, they will have to take more responsibility for coverage decisions and content choices so that journalism becomes more valuable. Journalists have shown unusual willingness to leave those decisions to publishers and editors who have stopped acting like journalists. But it need not be that way.
According to the salary study, average newspaper wages in the U.S. increased 2.1% between 2008 and 2009, but that result was skewed because hefty increases went to producers of interactive (online) content and editorial personnel involved in new business development. Journalists on the average received no or marginal increases depending upon their category.
My lecture, which was carried in a significantly reduced form in the Christian Science Monitor , and redistributed by multiple online sites and blogs, produced shock, anger, and invective by many journalists who missed its point. The text of the full lecture can be found at the website: http://www.robertpicard.net/files/Why_journalists_deserve_low_pay.pdf
Journalists today create very little economic value and are having a difficult time getting people to pay for the social value they create. The fact that newspapers are rewarding those who help create new businesses and revenue streams far above traditional journalists accentuates this point.
I admit that the title of my speech was deliberately provocative. It was meant as a wakeup call from a former journalist who loves the news industry. The reality is that no one deserves either high or low pay. The level of pay is EARNED. Journalists deserve pay based on the economic value they create (evidenced by what the public is willing to pay for news) or on the willingness of the public to support social purposes contributing funds to foundations or non-profit news operations.
In today’s world—in which the mass audience for newspapers and its business model are disappearing—continuing to provide the same types of coverage and content in the past will not create economic value and earn good pay. I do not believe that Internet news aggregators, community journalism, and blogging will ever replace the functions of good journalism and it will not replace the functions of most newspapers in the short to mid-term. There is hope for journalism.
If journalists want to promote good journalism and value creation that makes them earn more pay, they will have to take more responsibility for coverage decisions and content choices so that journalism becomes more valuable. Journalists have shown unusual willingness to leave those decisions to publishers and editors who have stopped acting like journalists. But it need not be that way.
Thursday, June 4, 2009
THE END OF JOURNALISM?
The question of whether we are witnessing the end of journalism is perhaps the most common topic at contemporary gatherings of journalists and journalism scholars. Although hushed and apprehensive conversations about it have taken place in recent years, today’s discussions are open and filled with alarm and fear.
Many of the voices and opinions, however, misunderstand the nature of journalism. It is not business model; it is not a job; it is not a company; it is not an industry; it is not a form of media; it is not a distribution platform.
Instead, journalism is an activity. It is a body of practices by which information and knowledge is gathered, processed, and conveyed. The practices are influenced by the form of media and distribution platform, of course, as well as by financial arrangements that support the journalism. But one should not equate the two.
The pessimistic view of the future of journalism is based in a conceptualization of journalism as static, with enduring processes, unchanging practices, and permanent firms and distribution mechanisms. In reality, however, it has constantly evolved to fit the parameters and constraints of media, companies, and distribution platforms.
In its first centuries journalism was practiced by printers, part-time writers, political figures, and educated persons who acted as correspondents—not by professional journalists as we know them today. In the nineteenth century the pyramid form of journalism story construction developed so stories could be cut to meet telegraph limits and production personnel could easily cut the length of stories after reporters and editors left their newspaper buildings. Professionalism in the early 20th century emerged with the regularization of journalistic employment and professional journalistic best practices developed. The appearance of radio news brought with it new processes and practices, including “rip and read” from the news agencies teletypes and personal commentary. TV news brought a heavy reliance on short, visual news and 24hour cable channels created practices emphasizing flow-of-events news and heavy repetition.
Journalistic processes and practices have thus never remained fixed, but journalism has endured by changing to meet the requirements of the particular forms in which it has been conveyed and by adjusting to resources provided by the business arrangements surrounding them.
Journalism may not be what it was a decade ago—or in some earlier supposedly golden age—but that does not mean its demise is near. Companies and media may disappear or be replaced by others, but journalism will adapt and continue.
It will adapt not because it is wedded to a particular medium or because it provides employment and profits, but because its functions are significant for society. The question facing us today is not whether journalism is at its end, but what manifestation it will take next. The challenges facing us are to find mechanisms to finance journalistic activity and to support effective platforms and distribution mechanisms through which its information can be conveyed.
Many of the voices and opinions, however, misunderstand the nature of journalism. It is not business model; it is not a job; it is not a company; it is not an industry; it is not a form of media; it is not a distribution platform.
Instead, journalism is an activity. It is a body of practices by which information and knowledge is gathered, processed, and conveyed. The practices are influenced by the form of media and distribution platform, of course, as well as by financial arrangements that support the journalism. But one should not equate the two.
The pessimistic view of the future of journalism is based in a conceptualization of journalism as static, with enduring processes, unchanging practices, and permanent firms and distribution mechanisms. In reality, however, it has constantly evolved to fit the parameters and constraints of media, companies, and distribution platforms.
In its first centuries journalism was practiced by printers, part-time writers, political figures, and educated persons who acted as correspondents—not by professional journalists as we know them today. In the nineteenth century the pyramid form of journalism story construction developed so stories could be cut to meet telegraph limits and production personnel could easily cut the length of stories after reporters and editors left their newspaper buildings. Professionalism in the early 20th century emerged with the regularization of journalistic employment and professional journalistic best practices developed. The appearance of radio news brought with it new processes and practices, including “rip and read” from the news agencies teletypes and personal commentary. TV news brought a heavy reliance on short, visual news and 24hour cable channels created practices emphasizing flow-of-events news and heavy repetition.
Journalistic processes and practices have thus never remained fixed, but journalism has endured by changing to meet the requirements of the particular forms in which it has been conveyed and by adjusting to resources provided by the business arrangements surrounding them.
Journalism may not be what it was a decade ago—or in some earlier supposedly golden age—but that does not mean its demise is near. Companies and media may disappear or be replaced by others, but journalism will adapt and continue.
It will adapt not because it is wedded to a particular medium or because it provides employment and profits, but because its functions are significant for society. The question facing us today is not whether journalism is at its end, but what manifestation it will take next. The challenges facing us are to find mechanisms to finance journalistic activity and to support effective platforms and distribution mechanisms through which its information can be conveyed.
Wednesday, April 22, 2009
DOES ONLINE NEWS STILL NEED OFFLINE TIES?
When the Seattle Post-Intelligencer ceased publication in mid-March it continued www.seattlepi.com as a web-only publication. It employs 20 persons, making it one of the largest online staffs of any local Internet news organization.
Although it has a much smaller staff than the print edition did, the site continues to cover local news and sports, provides national and international feeds, and features local bloggers. In many ways it is what many observers have called the future of post-print journalism. It is well recognized that print is an expensive way to convey news, information, and commentary so observers argue that the Internet is the answer for community informational needs because the public is increasingly getting their news there anyway.
It is still early days for forming a definitive view of how dropping print may affect online demand, but the P-I’s situation gives a unique opportunity to observe effects. In February—before the print edition closed—the website had 1.8 million unique visitors. In March, that number dropped to 1.4 million unique visitors. If these initial results hold true over time, it would indicate that print still provides some important reputational and marketing benefits to online activities.
Those interested in the online future of journalism should be watching the Seattle situation with interest in the coming year.
Although it has a much smaller staff than the print edition did, the site continues to cover local news and sports, provides national and international feeds, and features local bloggers. In many ways it is what many observers have called the future of post-print journalism. It is well recognized that print is an expensive way to convey news, information, and commentary so observers argue that the Internet is the answer for community informational needs because the public is increasingly getting their news there anyway.
It is still early days for forming a definitive view of how dropping print may affect online demand, but the P-I’s situation gives a unique opportunity to observe effects. In February—before the print edition closed—the website had 1.8 million unique visitors. In March, that number dropped to 1.4 million unique visitors. If these initial results hold true over time, it would indicate that print still provides some important reputational and marketing benefits to online activities.
Those interested in the online future of journalism should be watching the Seattle situation with interest in the coming year.
Wednesday, March 25, 2009
ANALYSIS OF THE NEWSPAPER REVITALIZATION ACT
The Newspaper Revitalization Act introduced by Sen. Benjamin Cardin, D-Md., would permit newspapers to operate as not-for-profit entities under the tax code and is being heralded by some observers as a means of saving newspapers, much as was the Newspaper Preservation Act of 1970. Good purposes aside, it is useful to study the act to determine whether it will actually accomplish the goals that are stated as its rationale.
The bill is a small bill, about 435 words, that would amend the IRS Code of 1986 to permit newspapers to be given 501(c)(3) status, thus obtaining tax exempt status and the ability to accept charitable contributions. Currently tax laws do not permit newspapers to be operated tax exempt, but they do have mechanisms that permit foundations to own them or support them financially.
Paragraph (b)(1) of the bill would allow general circulation newspapers “publishing on a regular basis” to establish themselves as tax exempt organizations. The language does not limit periodicity so daily, bi-weekly, weekly, monthly, and other combinations would be possible. It would thus permit a range of neighborhood and community non-dailies, as well as dailies to use the mechanism.
Paragraph (b)(2) stipulates that the newspaper contain “local, national, and international news stories.” This section is somewhat problematic because non-dailies, particularly neighborhood and community papers, do not typically carry national and international news and nationally oriented dailies do not typically carry local news. The bill contains no provisions that require local creation of content, thus allowing publishers to fill a paper only with syndicated material or other content produced elsewhere.
Paragraph (c) permits advertising, but limits it “to the extent that the space allotted to all such advertisements….does not exceed the space allotted to fulfilling the educational purpose of such qualified newspaper corporation.” This provision is apparently intended to ensure advertising does not dominate the content and effectively limits advertising to 50 percent of the content. This provision, however, is problematic because daily newspapers and most non-dailies currently contain two-thirds to three-quarters advertising. Indeed the regulations governing Post Office (USPS) distribution limit advertising to 75 percent.
The bill does not require that newspapers have paid subscriptions or even requests to receive the paper, as do USPS regulations, so it would apply free circulation papers.
By giving not-for-profit status to newspapers, the bill would also make the paper eligible for USPS not-for-profit rates, which would permit lower postal delivery rates for such papers than those afforded for-profit papers. This might raise issues regarding the fairness of competition if commercial publishers exist in the market
It should also be noted that the bill makes no provision to limit payments to publishers and editors. This creates the potential for some abuse. A small commercial publisher could use the mechanism to become “non profit” to avoid company taxes by not taking compensation from profits but taking a higher salary instead—effectively letting tax payers subsidize his/her income.
One drawback of using 501(c)(3) status is that entities are not permitted to engage in direct political activities, such as endorsing candidates for local, state, or national office or possibly even taking positions on governmental proposals. This would somewhat limit the scope of content and could lead to IRS investigations if complaints were made to the IRS that a paper was taking sides, was too conservative or liberal, or evidenced some other kind of agenda that was deemed political activity.
It appears that the overall effect of the bill would be limited. It will be appealing to very few dailies and most neighborhood and community papers will have difficulties complying with its content and advertising requirements. Even with tax exempt status, the costs of creation, publishing, distribution of a newspaper probably can not be covered by many publishers with a 50 percent ad limit, unless they are especially effective at raising charitable contributions over time.
The bill appears to be well intentioned, however, it can not solve the problem it purports to address in its current form and creates potential for some abuse.
The bill is a small bill, about 435 words, that would amend the IRS Code of 1986 to permit newspapers to be given 501(c)(3) status, thus obtaining tax exempt status and the ability to accept charitable contributions. Currently tax laws do not permit newspapers to be operated tax exempt, but they do have mechanisms that permit foundations to own them or support them financially.
Paragraph (b)(1) of the bill would allow general circulation newspapers “publishing on a regular basis” to establish themselves as tax exempt organizations. The language does not limit periodicity so daily, bi-weekly, weekly, monthly, and other combinations would be possible. It would thus permit a range of neighborhood and community non-dailies, as well as dailies to use the mechanism.
Paragraph (b)(2) stipulates that the newspaper contain “local, national, and international news stories.” This section is somewhat problematic because non-dailies, particularly neighborhood and community papers, do not typically carry national and international news and nationally oriented dailies do not typically carry local news. The bill contains no provisions that require local creation of content, thus allowing publishers to fill a paper only with syndicated material or other content produced elsewhere.
Paragraph (c) permits advertising, but limits it “to the extent that the space allotted to all such advertisements….does not exceed the space allotted to fulfilling the educational purpose of such qualified newspaper corporation.” This provision is apparently intended to ensure advertising does not dominate the content and effectively limits advertising to 50 percent of the content. This provision, however, is problematic because daily newspapers and most non-dailies currently contain two-thirds to three-quarters advertising. Indeed the regulations governing Post Office (USPS) distribution limit advertising to 75 percent.
The bill does not require that newspapers have paid subscriptions or even requests to receive the paper, as do USPS regulations, so it would apply free circulation papers.
By giving not-for-profit status to newspapers, the bill would also make the paper eligible for USPS not-for-profit rates, which would permit lower postal delivery rates for such papers than those afforded for-profit papers. This might raise issues regarding the fairness of competition if commercial publishers exist in the market
It should also be noted that the bill makes no provision to limit payments to publishers and editors. This creates the potential for some abuse. A small commercial publisher could use the mechanism to become “non profit” to avoid company taxes by not taking compensation from profits but taking a higher salary instead—effectively letting tax payers subsidize his/her income.
One drawback of using 501(c)(3) status is that entities are not permitted to engage in direct political activities, such as endorsing candidates for local, state, or national office or possibly even taking positions on governmental proposals. This would somewhat limit the scope of content and could lead to IRS investigations if complaints were made to the IRS that a paper was taking sides, was too conservative or liberal, or evidenced some other kind of agenda that was deemed political activity.
It appears that the overall effect of the bill would be limited. It will be appealing to very few dailies and most neighborhood and community papers will have difficulties complying with its content and advertising requirements. Even with tax exempt status, the costs of creation, publishing, distribution of a newspaper probably can not be covered by many publishers with a 50 percent ad limit, unless they are especially effective at raising charitable contributions over time.
The bill appears to be well intentioned, however, it can not solve the problem it purports to address in its current form and creates potential for some abuse.
Wednesday, March 18, 2009
THE OVERBLOWN JOURNALIST EMPLOYMENT CRISIS
Journalists keep raising the crescendo of the chorus that journalists are losing their jobs and journalism is suffering. They point to the fact that about 10 percent of journalists have disappeared from newspapers since the millennium when U.S. newsroom employment reached a peak of 56,373.
It is true that cutbacks are pandemic these days, and that these employment reductions hit close to home for journalists, but some context is usually useful when considering the numbers and their impact. Let’s take a look at the U.S. numbers.
The American Society of Newspaper Editors has conducted a newsroom employment census for 3 decades and it presents a telling story. According to the latest ASNE newsroom employment figures, there are 22 percent more journalists in newspapers than there were in 1977 (43,000 in 1977; 52,600 in 2007). Even granting employment losses of 2,000-4,000 since the last census, employment is still about 18 to 20 percent higher than it was in the 1970s. That doesn't seem like an industry employment CRISIS, except for those who unfortunately lost their jobs.
If mere numbers of journalists are considered an indicator of quality, the growth of journalist employment from 1970s to 2000 should have made journalism extraordinary in the 1980s and 1990s. No one should have been surprised by the savings and loan debacle, the Soviet Bloc collapsing, the international debt crisis in developing nations , U.S. aid to governments in central America and the Iran-contra affair, child labor in the developing world, the explosive growth of Chinese economy, or rising domestic and international terrorism. But we were surprised and journalists didn't forewarn us. Obviously, the attention of the rising number of journalists was turned elsewhere.
If you look at newsrooms you can see the problem. Most journalists in newspapers do everything BUT covering significant news. They spend their time doing celebrity, food, automobile, and entertainment stories. Look around any newsroom, or just the lists of assignments or beats, and you soon come to realize that 20 percent or fewer of the journalists in newsrooms actually produce the kind of news that most people are concerned about losing.
It is not the mere number of journalists that matters; it’s the choices that editors and publishers make about how to use the journalists available to them. Journalists are a crucial resource and how they are utilized has a significant influence on quality. Few newspapers have cut sections or types of coverage, choosing instead to cut throughout the newsroom and not to reassign journalists to the kinds of journalism that matters most to society.
It should also be noted that decisions where to cut employment in newsrooms have not been equally spread among employment categories either. According to ASNE statistics the number of newsroom supervisors has declined only seven tenths of one percent since 2000; copy editors 1 percent, photographers and artists 10 percent, and reporters 11 percent. There may be reasonable rationales for that, but the numbers seem unusually lopsided to me. If there are fewer reporters and photographers to be supervised and edited, one would expect that fewer editors and supervisors would be required and warranted.
Maybe it’s about time that journalists stop whining about their troubles and initiate some internal discussions about how their own newsrooms are structured and operated.
It is true that cutbacks are pandemic these days, and that these employment reductions hit close to home for journalists, but some context is usually useful when considering the numbers and their impact. Let’s take a look at the U.S. numbers.
The American Society of Newspaper Editors has conducted a newsroom employment census for 3 decades and it presents a telling story. According to the latest ASNE newsroom employment figures, there are 22 percent more journalists in newspapers than there were in 1977 (43,000 in 1977; 52,600 in 2007). Even granting employment losses of 2,000-4,000 since the last census, employment is still about 18 to 20 percent higher than it was in the 1970s. That doesn't seem like an industry employment CRISIS, except for those who unfortunately lost their jobs.
If mere numbers of journalists are considered an indicator of quality, the growth of journalist employment from 1970s to 2000 should have made journalism extraordinary in the 1980s and 1990s. No one should have been surprised by the savings and loan debacle, the Soviet Bloc collapsing, the international debt crisis in developing nations , U.S. aid to governments in central America and the Iran-contra affair, child labor in the developing world, the explosive growth of Chinese economy, or rising domestic and international terrorism. But we were surprised and journalists didn't forewarn us. Obviously, the attention of the rising number of journalists was turned elsewhere.
If you look at newsrooms you can see the problem. Most journalists in newspapers do everything BUT covering significant news. They spend their time doing celebrity, food, automobile, and entertainment stories. Look around any newsroom, or just the lists of assignments or beats, and you soon come to realize that 20 percent or fewer of the journalists in newsrooms actually produce the kind of news that most people are concerned about losing.
It is not the mere number of journalists that matters; it’s the choices that editors and publishers make about how to use the journalists available to them. Journalists are a crucial resource and how they are utilized has a significant influence on quality. Few newspapers have cut sections or types of coverage, choosing instead to cut throughout the newsroom and not to reassign journalists to the kinds of journalism that matters most to society.
It should also be noted that decisions where to cut employment in newsrooms have not been equally spread among employment categories either. According to ASNE statistics the number of newsroom supervisors has declined only seven tenths of one percent since 2000; copy editors 1 percent, photographers and artists 10 percent, and reporters 11 percent. There may be reasonable rationales for that, but the numbers seem unusually lopsided to me. If there are fewer reporters and photographers to be supervised and edited, one would expect that fewer editors and supervisors would be required and warranted.
Maybe it’s about time that journalists stop whining about their troubles and initiate some internal discussions about how their own newsrooms are structured and operated.
Thursday, February 19, 2009
Why We Won't Pay for News
I recently forged my way the myriad of news reports on networks, papers, and web sites and discovered lots of attention-grabbing stories:
- Reuters had a story about the death of Mickey Rourke’ 18-year-old pet chihuahua.
- CBS News reported on cart that transforms into a sleeping tent for the homeless.
- Associated Press told me that Twitter was limiting message length and intending to start testing ways to make money.
- The New York Times informed me about people walking and running in stairwells as a means of keeping fit.
- CNN reported that Lance Armstrong’s stolen bicycle had been recovered.
- The Los Angeles Times reported on a city council candidate criticizing a rival for being defense attorney that represented a client who was accused of shooting a sea lion four years ago.
- ABC News carried a story on its website about efforts to produce cola containing cow urine in India.
- MSNBC reported that Starbucks is increasing the products its offers in offers as part of an effort to improve its performance.
Interesting? Yes. Significant? Hardly. Economically valuable enough to get people to pay for the news? Never.
Therein lies the problem. Most news organizations are still stuck in the get-the-attention-of-audiences, entertain-them-with-some-news-in-hopes-they-will-attend-to-serious-news-that advertisers-pay-for mode. They complain about declining audiences and use of news, but they are doing little to add value that makes it worth consumers paying for it themselves or spending time with it.
News as commodity; news for the masses; news that is fleeting; news that doesn’t provide significant intrinsic and extrinsic value will never induce readers, viewers, and listeners to pay for it. We are already paying what it is worth—little or nothing.
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Friday, August 1, 2008
DISSAPEARANCE OF A FINANCIALLY GOLDEN NEWSPAPER PERIOD
Voices in and around the newspaper industry would have us believe the industry is falling apart and taking its last gaps. Investors are fleeing newspaper companies, publishers are decrying the lack of newspaper advertising growth, debt challenges are plaguing many companies, and there are layoffs and buyouts everywhere.
If one rationally looks at the industry, however, one sees that it is fundamentally sound, but that a unique, financially golden period in its history is ending. It is that change which is creating the bulk of the turmoil in the industry, but the biggest problem is that those working in the industry have short memories about the newspaper business and don't remember it any other way.
The generation leading newspapers and newspaper companies today has only experienced a period in which extraordinary growth of advertising increased newspaper revenue across the nation. That growth, combined with the development of local monopolies, created a period that enriched papers highly. This, of course, created great interest in investors and produced capital that allowed public companies to grow and acquire papers, driving up newspaper prices and the value of newspaper assets.
Today, the conditions that drove the growth of the past 3 decades are ending, wealth is being stripped from the industry, investors are losing interest, and publishers are struggling with negative and low growth.
Things are terrible, right? They are worse than every before, aren’t they?
Those views are only true if one takes a limited historical perspective and conceives the industry as a way to riches, something few newspaper owners did in generations past. With the exception of a few major cities, one could not get rich being a newspaper owner. Publishers nationwide could make a living in newspaper, but much of their reward came from being socially influential in the community. Before the extraordinary profitability of the last quarter of the 20th century, newspapers were relatively unprofitable and breaking even was the primary financial goal of most publishers.
Contemporary developments are taking us back toward that situation, but even with the u-turn in the business, we need to recognize that newspaper revenue today is better than it was in 1950s, 1960s, 1970s, 1980s, and 1990s. In fact, adjusted for inflation, newspapers in 2007 had two and a half times the advertising income that they had in 1950. In terms of employment, there are still twenty percent more journalists working in newspapers than in the highly profitable years that fueled the growth of corporate newspapering.
Those working in the newspaper industry need to be realistic and understand what the effects of contemporary changes mean. They don’t mean disaster, but they mean changes in the business of newspapers, the way the industry has operated for the past three decades, and how they need to perceive the industry.
If one rationally looks at the industry, however, one sees that it is fundamentally sound, but that a unique, financially golden period in its history is ending. It is that change which is creating the bulk of the turmoil in the industry, but the biggest problem is that those working in the industry have short memories about the newspaper business and don't remember it any other way.
The generation leading newspapers and newspaper companies today has only experienced a period in which extraordinary growth of advertising increased newspaper revenue across the nation. That growth, combined with the development of local monopolies, created a period that enriched papers highly. This, of course, created great interest in investors and produced capital that allowed public companies to grow and acquire papers, driving up newspaper prices and the value of newspaper assets.
Today, the conditions that drove the growth of the past 3 decades are ending, wealth is being stripped from the industry, investors are losing interest, and publishers are struggling with negative and low growth.
Things are terrible, right? They are worse than every before, aren’t they?
Those views are only true if one takes a limited historical perspective and conceives the industry as a way to riches, something few newspaper owners did in generations past. With the exception of a few major cities, one could not get rich being a newspaper owner. Publishers nationwide could make a living in newspaper, but much of their reward came from being socially influential in the community. Before the extraordinary profitability of the last quarter of the 20th century, newspapers were relatively unprofitable and breaking even was the primary financial goal of most publishers.
Contemporary developments are taking us back toward that situation, but even with the u-turn in the business, we need to recognize that newspaper revenue today is better than it was in 1950s, 1960s, 1970s, 1980s, and 1990s. In fact, adjusted for inflation, newspapers in 2007 had two and a half times the advertising income that they had in 1950. In terms of employment, there are still twenty percent more journalists working in newspapers than in the highly profitable years that fueled the growth of corporate newspapering.
Those working in the newspaper industry need to be realistic and understand what the effects of contemporary changes mean. They don’t mean disaster, but they mean changes in the business of newspapers, the way the industry has operated for the past three decades, and how they need to perceive the industry.
Tuesday, June 24, 2008
CHANGING FORMS AND FUNCTIONS OF NEWS MEDIA
Fundamental social and technological changes are altering the functions of news media for audiences and advertisers and significantly altering the situations of specific forms of news media.
Most of us recognize that form and function are linked together, with the form of objects influenced by their use, economics, and technology (Something architects and designers have recognized for more than a century). Contemporary technology has broken the connection between the traditional forms and functions of news providers and made it possible to serve the functions of legacy news organizations and news distribution in many different forms. This development is undermining the consumer and financial bases of long-established news media.
Because they have been in place for so many decades, it is easy to forget that established news media developed their forms within specific economic and technological environments. The form of newspapers and radio and television newscasts developed when new technologies allowed creations of mass audiences, distributed news to them at specific times, and supported the delivery of low priced and free news because advertisers of general consumer products paid to reach those audiences.
Today, the underlying elements of that business model, which was highly successful in the twentieth century, are decaying. Mass audiences are disappearing, technology is providing new ways to reach audiences, individuals are becoming active, integral participants in the communication process, and advertising are seeking more effective ways to reach potential customers.
These changes are significantly altering the functions previously played by metropolitan daily newspapers and network and local radio and television newscasts as primary creators and distributors of news and information. The dominance they once had has been replaced by ubiquitous distribution technologies that provide a continually updated stream of news through cable channels, Internet portals and news sites, social networking sites, mobile devices, and news screens on buildings and in public transportation.
It should be no surprise, then, that the form of legacy news provision is no longer as successful as it was in the past. Those who own and work for legacy organizations see the changes as cataclysmic, but the shifting of functions to more forms is natural and provides significant benefits to those who want news and information.
We have seen this type of displacement before, even within our lifetime. Life magazine, for example, played significant roles in conveying news and features on social life from the 1930s to the 1970s, but lost its functions with the arrival of new technology and changes in social life. As the foremost visual presenter of photojournalism, the magazine once garnered 13.5 million circulation, but changing media preferences for audiovisual materials on television news and magazine shows stripped Life of its audience and advertising.
Many functions of network television news, which grew rich in the 1960s and 1970s, were displaced in the 1970s and 1980s by local television newscasts that provided more hours of news and more opportunities for viewers to get international, national, and local news. That displacement was compounded by the development of 24-hour cable news channels.
Today, further displacement of the functions of network and local television news is taking place and the functions of metropolitan daily newspapers are being significantly affected. This does not the end of news provision, however. Although many journalists in the legacy media desperately assert that only the forms of news in the organizations that employ them can serve social needs and provide quality journalism, the reality is far different.
Reputable and well-trained journalists are now establishing new journalistic forms on the Internet, linking web and print operations, and syndicated materials produced by web-based news providers. There are more journalistic startups now than anyone can ever recall.
Although web-based news has historically be aggregated materials from traditional sources, these new enterprises—some commercial and some non-commercial—are increasingly providing original journalism. Some are concentration on serious investigative national and international reporting; some are providing hyper-local coverage; and some are providing coverage of specialized topics. These serve some functions previously provided by legacy media and some functions legacy media ignored.
The technologies are also allowing engaged citizens to create and distribute news and information on their own, supplementing material produced by professional journalists or providing material in its absence.
These are healthy developments for journalism and for those who want news and information. Although the form of provision is changing, the functions of gathering and conveying news and information and the functions of keeping people informed and engaged are continuing and being improved.
Most of us recognize that form and function are linked together, with the form of objects influenced by their use, economics, and technology (Something architects and designers have recognized for more than a century). Contemporary technology has broken the connection between the traditional forms and functions of news providers and made it possible to serve the functions of legacy news organizations and news distribution in many different forms. This development is undermining the consumer and financial bases of long-established news media.
Because they have been in place for so many decades, it is easy to forget that established news media developed their forms within specific economic and technological environments. The form of newspapers and radio and television newscasts developed when new technologies allowed creations of mass audiences, distributed news to them at specific times, and supported the delivery of low priced and free news because advertisers of general consumer products paid to reach those audiences.
Today, the underlying elements of that business model, which was highly successful in the twentieth century, are decaying. Mass audiences are disappearing, technology is providing new ways to reach audiences, individuals are becoming active, integral participants in the communication process, and advertising are seeking more effective ways to reach potential customers.
These changes are significantly altering the functions previously played by metropolitan daily newspapers and network and local radio and television newscasts as primary creators and distributors of news and information. The dominance they once had has been replaced by ubiquitous distribution technologies that provide a continually updated stream of news through cable channels, Internet portals and news sites, social networking sites, mobile devices, and news screens on buildings and in public transportation.
It should be no surprise, then, that the form of legacy news provision is no longer as successful as it was in the past. Those who own and work for legacy organizations see the changes as cataclysmic, but the shifting of functions to more forms is natural and provides significant benefits to those who want news and information.
We have seen this type of displacement before, even within our lifetime. Life magazine, for example, played significant roles in conveying news and features on social life from the 1930s to the 1970s, but lost its functions with the arrival of new technology and changes in social life. As the foremost visual presenter of photojournalism, the magazine once garnered 13.5 million circulation, but changing media preferences for audiovisual materials on television news and magazine shows stripped Life of its audience and advertising.
Many functions of network television news, which grew rich in the 1960s and 1970s, were displaced in the 1970s and 1980s by local television newscasts that provided more hours of news and more opportunities for viewers to get international, national, and local news. That displacement was compounded by the development of 24-hour cable news channels.
Today, further displacement of the functions of network and local television news is taking place and the functions of metropolitan daily newspapers are being significantly affected. This does not the end of news provision, however. Although many journalists in the legacy media desperately assert that only the forms of news in the organizations that employ them can serve social needs and provide quality journalism, the reality is far different.
Reputable and well-trained journalists are now establishing new journalistic forms on the Internet, linking web and print operations, and syndicated materials produced by web-based news providers. There are more journalistic startups now than anyone can ever recall.
Although web-based news has historically be aggregated materials from traditional sources, these new enterprises—some commercial and some non-commercial—are increasingly providing original journalism. Some are concentration on serious investigative national and international reporting; some are providing hyper-local coverage; and some are providing coverage of specialized topics. These serve some functions previously provided by legacy media and some functions legacy media ignored.
The technologies are also allowing engaged citizens to create and distribute news and information on their own, supplementing material produced by professional journalists or providing material in its absence.
These are healthy developments for journalism and for those who want news and information. Although the form of provision is changing, the functions of gathering and conveying news and information and the functions of keeping people informed and engaged are continuing and being improved.
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