Crying uncle in the news business

I’m catching up with my reading after being at NPR and I can’t get over Steven Rattner hoisting the white flag for the news business. After detailing the headaches for the news industry, Rattner — big-time media investment banker — proposes not new business thinking for news but nonbusiness thinking: A BBC-like license-fee to support newspapers (that is, a tax and government support) or gifts from philanthropists (read: manna from heaven). The first is a terrible idea — unconstitutional, I’d say, and damned unjournalist — and the second is wishful thinking in the face of a lack of thinking in the industry.

In the end, Rattner is actually giving up on the news business. But I say it’s too soon to do that and that as a private equity buyer, I’d think he’d at least be attuned to the efficiencies still available in the news business, the strategic necessity to create sustainable business models, and the huge potential of new media and new methods.

It’s telling that Rattner, a friend and adviser to the New York Times Company, rejects going private — advice he reportedly gave to the Times board — and pretty much every other business option for newspapers.

Jack Shafer at Slate takes Rattner properly to task.

For a major capitalist addressing the nation’s top capitalist audience on the subject of capitalist media, Rattner is embarrassingly short on business specifics. He essentially believes that the newspaper industry, which sits atop a $45 billion ad market, should be treated like the ballet or other charitable causes. . . .

But Rattner’s piece neglects to mention that for better than 50 years newspaper companies have feasted on their advertisers, charging steep ad rates everywhere and confiscatory rates wherever they owned the only daily. Now that the Web is underselling them on the ad front and other media are stealing eyeballs, should we weep for them? Or should they stop the blubbering, quit wishing for the return of 1975, and start competing? I obviously think so. . . .

So, please, let’s call off pledge weeks for newspapers. . . . And let’s amend the Constitution to ban tax subsidies for newspapers. If dailies can’t make it on their own, they deserve death.

And their blubbering bosses deserve to go into PR.

Now compare and contrast this with Reuters Media President Chris Ahearn coming off like a cockeyed optimist (like me)

There’s no such thing as perfection, he said, but change is only achievable by taking calculated risks.

“When I think about how I consume media now versus ten years ago, I think there’s a new opportunity for the kind of personal relationships people can have with journalists, editors and brands.” . . .

“Some people snicker, but as soon as we get over this crisis of confidence we will realise that this is a golden age of journalism. I see tools and techniques and methods that allow things paper-based journalists would be so jealous of. It’s a different kind of workflow.”

He described some “aha” moments as Reuters has developed a better understanding of how its news is used. While Reuters has 2400 professional journalists, it could have a network of 24 million sources.

“As a journalist, there’s nothing better than being witness to an event and Reuters specialises in that, but is it not better that if you can’t be there, you have reliable people that are?”

Reuters professionalised the concept of a stringer over time, he said, and this will become a new way to find talent.

“The other side of this disruption I can see some really amazing things – journalists who are finding and hearing things differently using new tools and new information. It’s hard to hide in this world and we shine flashlights in those places people don’t want lit up.”

“This is the best job I’ve ever had and the last job I want to have. I won’t give in to the cynicism.”

: See also the interactive-media blubbering that came out of the We Media conference where Ahean spoke, below.

  • http://somethingsforyou.blogspot.com Josh Dodd

    Wow, I’m amazed that you think the BBC license fee is unjournalist. In my opinion the BBC creates some of the best journalism anywhere. Radio 4 and the World Service are better news sources than any newspaper I can think of.
    It’s ridiculous of Rattner to see a license fee as the only option (along with the mana), but to reject it our of hand is similarly ridiculous.

  • http://notevenonce.com Duffer

    Just a reminder that newspapers already enjoy a government subsidy in the form of lower postage costs. Of course, this is only important to the smallest of the small.

    But the NNA lobbies hard to make sure these subsidies stay in place.

  • http://robertdfeinman.com/society Robert Feinman

    Perhaps if the newspapers are looked at as an industrial enterprise what is happening can be put into context. All industries that make “stuff” are in trouble in the US. That’s why all the pundits keep promoting the service economy.

    If you look at other traditional industries from Coca Cola to GM you will see that they are in disfavor with Wall Street (isn’t that what all the hand wringing is really about?). They all have limited growth potential or even growth slower than population (that is a form of decline). The sectors that are doing well are those that deal in intangibles like banks, hedge funds and other intermediaries.

    If the issues of raw materials and waste byproducts from manufacturing get serious enough the entire capitalist model may have to be rethought. I think I once heard a quip that the NY Times was really in the forest products business. The words on the page were just a way to sell their paper products.

  • http://editor.blogspot.com Howard Weaver

    Unless I am mistaken (and I’m not), it costs more to produce and circulate printed copies than newspaper companies receive in subscription fees.

    Yes, that’s right: modern newspaper economics have ALWAYS relied on advertisers, not on people “paying for content.” It’s nice that we were able to recoup some costs of production through subscriptions, but that was a sideshow, basically a zero-sum game. And as production/distribution costs fall in the digital world, any argument about charing for content based on historical analysis becomes even less tenable.

  • Greg0658

    I’ve been envisioning a YouTube video. Rather than actually create it
    (for now)(cause why, I won’t get paid for the effort)
    I’ll post the script here, maybe I’ll see a great version from one of you.

    background: Monopoly boardgame, a vertical picture of Wall Street, folded at 90degree

    items: 3 shells (you know the peas & shell game)
    a pea in each shell
    a standup pic of a farm plantation
    a standup pic of a chemical plant
    the standard houses and hotels

    visual script:
    s1> a hand reaches in rotating the 3 shells quickly, 1 shell pulls to Wall Street background, lifting the remaining front shells, one is empty, one has a pea, the WS shell has 5 peas (ya I meant FIVE) when revealed

    s2> this goes on a couple times and a Wall Street hand with Rolex watch and diamond ring drags the hotels, farm and chemical plant into their corner

    s3> a hammer smashes a house

    narration script: in development

  • Greg0658

    Heres another vision for you. Run to the Patent Office.

    The next Old Glory succession – replace the Stars in the Field of Blue with:

    The World Trade Org logo.

    For those who don’t know the icon. It looks like the AT&T globe with RGB latitude lines. RGB (red, green, blue ) the primary colors of electronic media.