Aim the gun the right way

The last time Paul Farhi and I disagreed, it was about who’s to blame for the fall of newspapers (he found journalists blameless; I didn’t). We disagree about the same topic again. This time, he’s arguing – in an incredibly long American Journalism Review piece – that it’s the Associated Press’ fault for selling content to portals.

I’m going to suggest that you compare his analysis to that of Joey Baker, who writes a heavy metal rendition of Clay Shirky’s already-legendary essay on the economics of news.

Inherent in what Farhi writes is every old assumption about the economics of media, unchallenged by others and by the reality of a new reality. The notion is that portals were empowered by having the AP’s news and that this made it into a commodity (not the AP’s homogenization of the news, not the fact that knowledge, once known, is a commodity). But as the AP’s execs and defenders say in the piece, if the AP had not been there, Reuters would have been. Indeed, Reuters was. A

nd today, Reuters has shifted to a reverse-syndication model in which it gives headlines to portals for links back, which Reuters then monetizes (sharing revenue back for the value of the links). The AP, handcuffed by its paper-owners, can’t do that. The papers should be following Reuters’ example by giving the headlines in exchange for links, which they then monetize.

The AP is, indeed, hurting papers, but not the way Farhi thinks. It’s hurting them by cutting off links to the original reporting. That is how the link economy works. (Oh, and by the way, the big bad portals are themselves crumbling. One wonders which will die first: the papers or their supposed killers.)

The fallacy in Farhi’s argument is this: “When you give away the news, it becomes a commodity. When something becomes a commodity, you lose your pricing power. And that’s where we are today on the Web.”

Now see Joey Baker shooting that through such arguments – aka “the kool-aid of the bass-akwards mind fuck that the ‘old media’ folks try to sell you” – like a machine gun:

“Our economy is based on the trade of IP, and yet, paradoxically, the internet has made information practically infinite. Therefore, attempting to make money by controlling the amount of information is doomed to fail. Put another way: controlling the scarcity of something that isn’t scarce can’t work.”

There are more bullets in his gun:

History is not a good guide here: The internet is a fundamental shift from anything we’ve experienced before. It’s as revolutionary as the printing press and as radical as the written word. It’s both asynchronous and instant two-way communication.

There are however, fundamental laws. We just don’t know them all yet. The idea that you can delay, or should delay the transition to an internet based economy is just stupid. We’re here. Welcome to the future.

We depend on competition in our economy (fundamental law), which means that the first person to figure this out is going to make a boat load of money. Delaying, will guarantee you’re not that person.

There are two camps out there: folks … who think that there is some way that we can charge users for content just because we’ve always done it (we haven’t). And folks like me, who are convinced that the internet is such a fundamental shift to the economy and information management, that charging for basic content is just asinine.

The first of these commentators writes about media for The Washington Post. The second is a student. The first lives in the old world and understands its rules. The second lives in the new world and understands its rules. Who are you going to listen to about the future? It seems obvious to me.

  • http://www.patthorntonfiles.com Patrick Thornton

    This whole situation illustrates another concept that old media types don’t get: People can and will do what you do, but better and for free on the Internet. This is especially true of commentary, analysis and opinion pieces — the kind of content that Paul Farhi produces.

    Case in point: Joey Baker providing free commentary on the media on his blog, while Farhi writes for The Washington Post and other publications, albeit for pay. At least when it comes to newspapers and legacy media, Baker has a much better grasp on what’s going on. Years ago, doing the monopoly age of print, Farhi could have gotten away with what he is doing and his employers would have made money. But today, there is no business model around what he and others like David Carr do.

    • http://thebucketblog.com Frymaster

      Where I live (greater Providence), the papers are slipping and the bloggers are gaining to the point that stories are sometimes better covered in the blogs than in the papers. And I mean City Hall, the Statehouse. You know, real news. Covered first hand by bloggers.

      Monetize that, AP.

  • http://thebucketblog.com Frymaster

    One hyphenated word for all you newspaper folks to help you get yourselves situated in this new reality –

    COUNTER-INTUITIVE

    If you think something makes sense, it’s the stupidest thing in the world (delisting from Google, for example). If you think it’s stupid, it’s probably the thing that’s gonna save your sorry asses (building community, say).

  • Michael Hill

    John Philip Sousa refused to make recordings because he thought they would kill off live concerts. Of course, the opposite happened. The recording people feared radio because they thought no one would buy records if they could hear the music for free. Of course, the opposite happened. Maybe the same will be true today. But realize that the artist and record companies demanded, and got, money from the radio stations that were making money off their recordings via BMI and ASCAP. But when newspapers ask the same thing of internet sites, they are denounced as old school fuddy duddys who just don’t get it. This information-is-free stuff sounds like hippies demanding the same of concerts in the ’60s.

    • http://thebucketblog.com Frymaster

      I think you miss the point. Or perhaps you’re just not being specific.

      When you say “…when newspapers ask the same thing of internet sites…” you’re not referring to the newspaper’s own website but news aggregators like Google News.

      Right? Okay, now we can have an informed discussion.

      Newspapers that have teaser content (heads + leads) listed on Google News get enormous value from the transaction. Users have to click through to the newspaper website to get the whole story. The NP sites get visits to their websites, generating page views and the opportunity to serve ads.

      This is precisely the method that Reuters is using, as clearly pointed out by that old hippy, er, I mean our gracious host.

      And if you think it’s a bad deal for newspapers, why have so many of them worked so hard to improve their SEO (search engine optimization) to list at the top of the Google News categories? Or, better yet, let’s see what happens to the first paper that insists on de-listing from the search engines.

      That’ll be a laugh-riot. Unless you work there.

    • http://baltimoresun.com Andrew

      Great point, Michael. If you removed the information being put online by and recycled from traditional media, the “infinite” amount of information would be a whole lot less, and much of what remained would be opinion. If the paid media were getting its fair share of the revenue coursing through the Internet, there’d be no old media dying.
      Hard not to grind one’s teeth at the self-appointed “new media gurus” who see no hypocrisy in shilling their books about how the media doesn’t get that information wants to be free.

      • http://www.buzzmachine.com Jeff Jarvis

        Less infinity? Hmmm. There will be a market demand for news and the market will meet it in new ways. Hide behind the wall and others will see opportunity. Believe me, TV stations and networks are smelling the carrion now! What’s a “fair share”? This isn’t a playground game. It’s a marketplace. You have to live by the rules of the market and those rules have changed completely. I’m not your enemy. Reality is.

        As for the book: Yes, I confess my hypocrisy. But I also gave away all my ideas here on this blog and that’s what led to the book and to my trip to your neighborhood today to give a speech. You can and must find value but you won’t necessarily find it where you used to. Selling paper? Bad and expensive business.

      • Mike Manitoba

        Jeff: Just because you confess your hypocrisy doesn’t make it OK.

        • http://www.buzzmachine.com Jeff Jarvis

          OK

      • http://blog-o-blog.com Zac Echola

        Andrew – Watch dog groups? Professional bloggers that cover niche industries and topics? The professionals themselves, who don’t care about advertising, only to get their message out? Organizations like Wikileaks? Universities? Not-for-profits? Enterprising programmers parsing government data? Public media? Need I go on?

        Newspapering isn’t the only game in town filling the desire for information.

        Frankly, I’m insulted by your suggestion that only opinion would remain. So what if it did, in a hypothetical event where all ‘unbiased’ information evaporated from the planet? Are you suggesting that that all people are too stupid to parse facts from opinions? Are you suggesting that only newspaper men have that ability to interpret and disseminate the facts, unbiased? The arrogance in your comment is appalling.

    • Andy Freeman

      > John Philip Sousa refused to make recordings because he thought they would kill off live concerts.

      John Philip Sousa did not refuse to make recordings.

      Sousa did claim that that folks who could listen to stars, like himself, via recordings, would be less likely to make music themselves and patronize the concerts of the less skilled.

      In that, he was absolutely correct.

  • http://www.detroitkidshow.com/wwj.htm invitedmedia

    a mere 65 years ago media titans were in another high dollar struggle for the eyes and ears of americans.

    click my name and read the last two paragraphs… sound a little like today?

    get yourself back to the home screen, it’ll jog a few braincells if you grew up on faygo “red pop”

  • Steve- UK

    Newspapers do not “get enormous value from the transaction” when their headlines are featured on Google. What they get it is an occasional spike in “drive-by” traffic which is increasingly difficult to monetise. As far as the user is concerned, Google has provided the service not the content creator – and Google takes the spoils. Another myth is that by publishing just a teaser and a headline the aggregators are respecting the IP of the content provider. Most people just scan headlines, a small percentage read the intro and as Walter Matthau barked to Jack Lemmon in The Front Page “who the hell reads the second paragraph?”

    • http://thebucketblog.com Frymaster

      I gotta go line by line here.

      “an occasional spike in “drive-by” traffic which is increasingly difficult to monetise” – money occurs when the page loads. All ads that are called to the page generate revenue whether they are viewed, stay ‘below the fold’ or get blocked by a pop-up blocker. The “difficulty” is the pathetic real world CPMs that display ads are generating. If papers could sell their online inventory at rate card, we wouldn’t be having this conversation. But they can’t. So they post ‘ad network’ ads (aka dancing sheep) at $0.25 per M. And that’s not a joke. It’s a real network CPM.

      “and Google takes the spoils” – um, how? Show me the ads on Google news. Google make nothing from Google News directly, only indirectly when a user searches. And even then, they make money from their own AdWords advertisers. They get nothing from the click through to the publisher site. Nothing.

      “Another myth is that by publishing just a teaser and a headline the aggregators are respecting the IP of the content provider.” If you know how indexing systems work, you would know that there’s a super, super simple way to prevent aggregator from publishing your content. You just block their spiders/bots. Done. As I say above, I dare any paper to block the Googlebot. Some tough-guy publisher is gonna, and I can’t wait.

      “…and as Walter Matthau barked to Jack Lemmon in The Front Page “who the hell reads the second paragraph?”” – First off, you’re really closing your statement re: the interwebs with a quote from a play written in 1931, and the character you quote is a devious say-anything tyrant? Ummmmm…k. Second, are you really saying that nobody reads anything online? Not accurate. This article from usability ubergeek Jakob Nielsen ‘splains in great detail how and why people read long articles online.

      • http://blog-o-blog.com Zac Echola

        I agree with you, except for this part:

        They get nothing from the click through to the publisher site. Nothing.

        Actually, Google gets a lot from the click through, since most newspaper.com publishers devalue their own advertising by placing Google AdSense ads on their pages, too. Google directly benefits, while the newspapers cut off their nose to spite their face.

      • http://thebucketblog.com Frymaster

        Zac,

        The sad fact is that display advertising on the Internet is a self-devaluing proposition. If newspapers could sell their online inventory at anywhere near rate card, we would not be having this discussion. CTRs and CPM have been falling since the 90s and show no sign of stopping.

        This whole discussion ignores the fact that search advertising is far more effective because all users will have already self-selected their behavioral targeting factors by entering search text. It’s just a much, much better approach. The qualitative difference between a simple, non-intrusive text ad (users like, so users click) and an intrusive, non-targeted display ad (users hate, users train themselves to avoid, aka banner blindness) is another factor the newspaper media people simply ignore.

        When you go on a big name newspaper site and see the dancing sheep/low, low mortgage rates in you area ads, those are “network” ads at ridiculously low CPMs, like $1 or less. Just dirt.

        Web ads are trackable/measurable in fine detail, so the fact that display ads don’t work that well is known to advertisers who use that information to their advantage. The newspapers can’t really say “no” to any offer.

        That newspapers are not more aggressive about developing BT/relevance-seeking ad-serving systems is yet another sign of their not-getting-it-ness. The NAA, to a large extent, has shown p*ss-poor leadership on this and many other issues.

        It’s hard to have sympathy for this group, having worked on this issue for about a decade. They really are quite sure that they – and only they – know how things work.

      • http://blog-o-blog.com Zac Echola

        Search, behavioral and contextual ad targeting is key. This is an argument I’ve been writing about for quite some time. The strongest sites are going to be the ones that can segment their users into interest, behavioral and demographic groups and come up with good reporting metrics.

        You’re right that the approach of one-size-fits-all branding doesn’t work well online. But it’s the only approach newspaper business people know.

        A couple of my colleagues, Chris Welle and Chris Dorsey, spoke at NAA’s Nexpo this year about contextual advertising. Few people showed up to the event. If the lack of interest comes down to a lack of NAA leadership, I don’t know. I tend to be of the mindset that we’re in the cat herding business and we’re not very good at it.

  • Eric Gauvin

    The concept of “free” (either in terms of price or availability) is not the issue.

    The cost or availability of a newspaper has never really been an issue for consumers?

    Yes. The internet newsstand is phenomenal, but it must be filled with “newspapers.”

    I think the real question is whether or not the internet will ever be capable of providing in-depth news. So far, content on the internet is becoming smaller and smaller–more and more fragmented–which takes on the characteristics of a singular amalgamated voice: the internet.

    My prediction is consumers are hungry for a choice and will pay for it.

  • Eric Gauvin

    Here’s the “.” that belongs at the end of the second sentence of my last comment. You can throw away the “?”.

  • Eric Gauvin

    @ Jeff

    You said:

    “There will be a market demand for news and the market will meet it in new ways.”

    It sounds like you’re saying people will pay for news on the internet. Is that true? What do you mean?

    • Andy Freeman

      > It sounds like you’re saying people will pay for news on the internet. Is that true?

      I think that it’s true. I think that it’s also true that people will pay for news in newspapers.

      I think that newspapers are dying because they’re not providing news. They’re selling paper with words and pictures and there are cheaper ways to get that.

      • Eric Gauvin

        @ Andy

        I may be thinking something different. I don’t think people will pay for facts-and-details news. I think they’ll pay for something they can identify with that represents a voice of sanity to them in a world of chaos. Intelligent and well-written ideas.

    • http://www.buzzmachine.com Jeff Jarvis

      No, I”m saying the market will meet the demand. Google meets the demand for search but doesn’t charge. It makes money from advertising. That is a market based solution to a problem/opportunity.

      • Eric Gauvin

        Google. Now there’s something no one would ever pay for.

        • http://www.buzzmachine.com Jeff Jarvis

          Google. Now there’s a company that became the fastest growing in the history of the world. Gee, maybe we in news should try to learn from them and do what they do. Oh, yeah, that’s where the book started.

        • Eric Gauvin

          You could unplug google and plug in some other search engine tomorrow and no one would know the difference.

        • http://www.byjoeybaker.com Joey Baker

          @Eric–

          Not so sure about that sir. Google was originally successful because it’s search technology actually _worked_. Nowadays, others have caught up, but they’re still not the same as Google. Yahoo comes really close, but I know that I prefer Google’s search results over them.

          “Plugin in some other search engine tomorrow?” You’re right that Google has built a brand. But content is still King.

        • Eric Gauvin

          Yes. I’ve grown accustomed to using google. I like many things about it. Google maps blows my mind (but the microsoft version is equally mindblowing).

          However, it seems like Jeff is equating “fast-growing” with “success” and then concludes that we should emulated the fast-growing company to achieve similar success. I see many problems with this line of thinking, especially in terms of analyzing the situation with newspapers during this transitional period of upheaval. It’s not surprising to me that google, with it’s cute name and nerdy, bare bones look and feel, captivated our fascination. There is a very low level of commitment in choosing a search engine. People chose google on a whim and there’s no reason to change (yet). But there’s nothing stopping people from flocking to something new someday unexpectedly. I think consumers would happily be using yahoo to this day had they not been tickled by the silly name and caught off guard by the strikingly sparse UI devoid of advertising (and the charming “I’m feeling lucky” button). You’re right that google has rapidly improved many things to do with search. The question is can they sustain it?

        • http://thebucketblog.com Frymaster

          Eric, you make bold statements about user behavior. Do you have any sources you can share?

          For what this is worth, my anecdotal experience is very, very different from what you describe, although I am also a very, very different kind of user than the “people ” to whom you refer.

          I have never liked Yahoo search. Back in the 90’s at the height of Yahoo’s power I had a Yahoo homepage, but I used Alta Vista for search. My experience was that Yahoo just wasn’t that good. Then an engineer where I was working discovered Google. It was probably 1997. Google positively destroyed Alta Vista by an order of magnitude, so that was my search engine from then on.

          Later, Yahoo started to be far more interested in serving their advertisers than they were in serving their users. I accepted it for a time, but when the served up the first interstitial ad – the most hated of all internet advertising – I quit them forever. Showing me a full page ad instead of the page I asked for is something up with which I shall not put.

          In the years since then, Yahoo has sagged while Google – who still put the user first to the extent that I have actually kissed my computer screen when a super-helpful new feature was added – has done fairly well for itself.

          A direct connection? That would be very difficult to demonstrate. As I said, my evidence is anecdotal but instructive, I think.

        • Eric Gauvin

          I have no sources. It’s just my opinion.

        • http://thebucketblog.com Frymaster

          Thank you.

        • Eric Gauvin

          …what book?

  • http://news.nabweekly.ca Amanda Walton

    I totally agree with you, charging for content is asinine. The media are struggling because they always had total control of news content and advertising dollars and now they are left scrammbling, they didn’t believe the blogging world and social media could in essence take away their control. Only a couple of years ago I continually emailed a large news company talking about using FB as a marketing median, using blogging as one of the biggest marketing tools since the internet was put mainstream into the home. One anchor after a post I wrote on FB and pointed out some negative coverage they had spoken about, made a point on air of saying “There’s got to be something wrong with someone over the age of 30 with a FB account”. Now not only does he have FB, but twitter, myspace and other social medians.

    I’m noticing from many mainstream media they are getting either very nervous or threatened to mainstream bloggers and why? Journalists didn’t realize they could be so readily replaced with bloggers information and can do so at a cheaper advertising rate so a freelancer can make enough money to survive and continue with business growth as the blogosphere grows into the most interactive tool with still so much potential.

    The media hates the blogosphere but has no choice but to use it, it’s where the future is and where the future generations will continue to gather.

    There are answers for successful blog advertising you just need to know how to do it the way bloggers enjoy, and that means being a genuine blogger, not media putting blog in front and believe that’s all it is.

    The world has changed and it’s time for them to ‘catch up’ and give bloggers more credit and not discredit them so easy as they did with me, but in the end, I had the last laugh.

    Take care, enjoy your posts

    • Eric Gauvin

      Bloggers, Facebook, Twitter, social media are not a threat to journalism(ists)/newspapers. They could probably coexist just fine. I think it’s the internet in general (and the economy) which has caused the decline in print advertising revenue, giving new media a foothold in an era of disgust and cynicism about mainstream media.

  • Christian

    Speaking of aim, I am tired of “journalists” being used as a hand-waving term for the whole horde of people, none of them journalists, who actually make these decisions in the media business.

    If the text on a navigational button mysteriously goes wrong, for example, it takes a call to the faceless corporate level to find out why and get it fixed. The simplest, most obvious changes — integration with social media, even the use of tags on stories — are entirely out of the control of eye-rolling reporters. (The Clay Shirkys and the Joey Barkers are saying nothing new or disagreeable to us.)

    But I’m still here because, despite the newspaper’s maddening inertia, it’s still the best place to do what I want to do. When the balance toward new media has completely shifted (And yes, I am trying to force that shift.) I will be happy to shed the stone skin of old media from my work. I don’t fear a collapse; I await it eagerly.

    To address Patrick Thornton’s claim, in the first comment, that there are people who will do what I do better, and for free: I’m not sure what that means. The quality of the work is the result of, simply, talent and time. The medium has nothing to do with it. If there is someone who can dedicate 16 to 18 hours a day to substantive and insightful metropolitan crime reporting, for free, (I would do it for free if I could.) then I will have a serious competitor, but spotcrime.com ain’t that.

  • http://wyman.us Bob Wyman

    > it’s the Associated Press’ fault for selling content to portals.
    I was one of the earliest people to get a license from the AP to distribute content on CD-ROMs and the Internet (text and pictures). That was back in 1994 when I was building Medio Magazine and MedioNet.
    I’ve always thought that the real problem was not that the AP was willing to sell us the content, but rather that the newspapers who created it didn’t get any revenue from the sale. The AP keeps all the money… My personal feeling is that the real problem with the AP is not that it sells content, but rather that it doesn’t *pay* for the content it sells.

    The newspaper industry has always viewed the AP as a “cost reduction” tool. If they had recognized that the AP could also serve as a revenue generator, all sorts of things would have been different…

    bob wyman

    • Mike Manitoba

      Please forgive the digression, but: Oh, wow, you were responsible for Medio? I still have an “issue” among my prized possessions.

  • Pingback: 1. Solve the data problem. 2. Kill the AP. 3. Invest in the future. « BuzzMachine

  • Pingback: Píldoras periodísticas para el fin de semana « Cuarto y mitad

  • Pingback: bailout of the newspapers « Mark Slater’s Weblog