Posts about great restructuring

The Gapper gap

(Note: I’m going to link to the Financial Times three times in this post. You’re allowed two views a month at FT.com before being forced to register. If you’re conserving, I suggest you read the second two FT links.)

The Financial Times’ John Gapper gave my book a bad review because he refused to go along with its organizing premise and principal: that our economy and society are undergoing fundamental shifts as we move past the industrial age and that Google is a worthy totem to use to understand that change. Gapper instead treated the premise with surprising literalness (for a Brit) and decreed that Google is not a good example for business; Apple is.

I got some insight into Gapper’s worldview in a good piece he wrote last week on the death of Bertelsmann mogul Reinhard Mohn and, with him, the media moguls of his generation. Gapper does acknowledge fundamental change but he still explains it in the old, expired terms of the old economy, in terms of control.

The challenge of the internet is that it blows up the control of distribution, ensuring that all content owners – from Rupert Murdoch to the lowliest blogger – compete on equal terms. Moguls can no longer exploit its scarcity by buying television spectrum or by owning printing presses.

That is why media moguls have been pushed on to the defensive by a new breed of technology moguls such as Steve Jobs of Apple and Sergey Brin and Larry Page, co-founders of Google. Control of distribution has passed to people who make the software through which content passes.

He’s half right. Control of distribution was how the old moguls prevailed. But that is not replaced, one-to-one, with new control of distribution. The internet makes us all distributors. That is why you want to be open and part of the conversation so the people formerly known as the audience distribute you.

Google is not a distributor. Indeed, its greatest misstep to date, the book settlement, came in part because it uncharacteristically was going to control and distribute content (that it didn’t own). Google doesn’t distribute. It organizes. It links. Google is not in the software business. It is in the platform business (advertising being its primary platform). Apple, too, isn’t in the software business. It’s in the hardware business and that is what gives it control of distribution: we, the cult, buy its great products and take Apple’s control as the price. That, I realized, is why Gapper admires it, because it still has control, like the old media moguls. He defines and measures value in their old media terms.

Gapper is hardly alone. I’m using him as a convenient totem for media’s insistence on viewing the world through old media lenses. Both media and the world around it have changed in many more ways that I tried to outline in WWGD? That’s what I wrote in this post the other day about media’s blind spots to the realities of the new-media economy:

…the imperatives of the link economy, the need and benefit of giving up control, the advantages of creating open platforms over closed systems, the value of networks, the post-scarcity economy and the art of exploiting abundance, the need to be searchable to be found, the deflation innovation brings, the value of free, the triumph of process over product….

Now here’s the bigger question: How does this willful worldview affect the business analysis performed by business journalists? Gapper’s boss, FT editor Lionel Barber, predicted that “almost all” news organizations will charge for content within a year. That was in July. The clock’s ticking. I snarked at the time that if this same analysis were applied to GM, Barber would predict that the car company would simply raise its prices just because its cars cost more to make. There are no simple solutions to such fundamental change. Every industry has to remake itself under the new realities of the new economy. That is the story business media should be covering. But if media people refuse to – if, like the moguls Gapper eulogizes, they insist on holding onto their old ways – how good will they be at analyzing and predicting the future?

That speaks to the key recommendation in the good Luke Johnson FT column Gapper quotes in his Mohn piece. Johnson argues that lamenting change in media is futile and that media companies need to hire the digital natives who understand the new age.

The only answer is to hire as many bright young things as you can afford and hope their dynamism will counteract the inevitable conservatism of an existing institution. The media trade could learn from the technology industry, which is subject to wrenching structural upheaval at regular intervals.

Right. And Johnson also says that’s why the legacy companies are the least likely to see and build for the new world.

Unfortunately, a chief executive only a few years from retirement is hardly motivated to sack loyal colleagues to bring on board lots of teenagers to turn their company upside down. Psychologically, we are congenitally opposed to tearing down what we have helped create in order to build anew. Hence the status quo prevails, even if it is the demoralising task of managing decline with no salvation in sight. And so all efforts are applied to preservation in spite of a realisation that the economic model is broken – because no one is forcing the company in a new direction.

Right again. On this week’s On the Media, Ava Seave, coauthor of The Curse of the Mogul, told Bob Garfield that the media businesses that media reporters love to cover are and long have been bad businesses. But we don’t hear that – because, one assumes, they don’t want to hear that.

So how well equipped are reporters in legacy media companies to analyze the upheaval in the industries they cover? Where are their bright young things who see the world in new ways? Who is the Google of financial reporting?

: Later: Gapper responds.

The collaboration economy

Two events of recent days underscore for me how old-media executives are not comprehending the collaboration economy: how it adds value, how it creates efficiency, how it operates under new currencies.

Add this to the other blind spots these old media powers have about the new economic reality: the imperatives of the link economy, the need and benefit of giving up control, the advantages of creating open platforms over closed systems, the value of networks, the post-scarcity economy and the art of exploiting abundance, the need to be searchable to be found, the deflation innovation brings, the value of free, the triumph of process over product…. This is what I wrote in my book about. Trying to get media to understand it is why I wrote it.

Behind each of these new laws of the new age is a set of consequences that result if you don’t at least try to understand them and continue to operate under the expired rules of the industrial economy. We online folk tend to operate under entirely new assumptions and think that our legacy colleagues see the same world we do. But they don’t. That hit me square between the eyes – once again – this week at a Paley Center debate over paid content between Steven Brill and NPR chief Vivian Schiller.

“I don’t know of any worthwhile content that’s free,” Brill said at the start of his remarks. He said it as a truism, as if we’d all assume the same. But I think most of you reading this would think that false. You may not value this very blog, but it’s free. The web is filled with free wonders. There’s plenty of wonderful content that’s free, more every day.

Later, Brill suggested we imagine going into the New York Public Library and instead of seeing many books, we see millions of pages, loose and flying about. What would we do? His stated assumption is that we would recognized the need for professional editors and journalists to make sense of it all. My response to his question was, “Go to Google.” Not for the first time, he sneered at me. But others around the table agreed that Google brings together our editing through our links and clicks; we will make order of that pile of pages, given the means to do so. Our assumption is that we value those actions and opinions, even if they are free – perhaps all the moreso because they are free.

That afternoon, I finally read AP CEO Tom Curley’s remarks in Hong Kong – before his duet with Rupert Murdoch at the Forbidden City – in which he equated control with value. That is the distilled essence of the old media model.

Listen to Curley: “The value of that content has been undervalued. It’s now at the lowest level, I think in history…. But the reality is that all of us know that our content is valuable…. We deserve to be paid, and now it becomes a matter of trying to figure out how to do that…. It’s time for us to get control of our content, and so we shall do that.”

Curley is saying that it’s up to him – not us, not the market – to set value. That is possible only if one controls distribution. That is why he wants control – or wants it back. He asserts value as a matter of entitlement, emotions, and ego over economics. But in this open economy, there is unlimited competition and value is created in many places, measured in many currencies.

Curley says that “we intend to participate in that stream, in that revenue stream.” But what about the content stream? He needs to participate in what Marissa Mayer calls the hyperpersonal news stream. He has to break out of the idea of sites and portals and go to where the people are. Yet Curley said he’d prevent his customers from redistributing his content through emails or “re-syndication” – from the stream, in short.

Here’s the nub of it: Curley says, as has been quoted often already, that “there is an oversupply, at least in the short term, of us.” That is true only if you see the world in the old, owned, controlled, closed, centralized, professionalized, scarcity economy – only if you think you can own news and access to it and thus its price. In the post-scarcity economy, he can’t bear new competitors; he call them the oversupply.

But in the collaborative economy, it’s another matter. All those “extra” people add new value and efficiency – if you see the opportunity in it and enable them to. They’re us. That’s how Google sees us, capturing our links and clicks to discover the value of those million – no, trillion – flying pages. That’s how Wikipedia and Craigslist created their value, dealing in trust and membership as a new currency. That’s how I want next-generation news organizations to look at us, as the people who will create news while the news orgs add value to it: vetting, correcting, organizing, training, promoting, selling. The news orgs and their journalists then become so much more efficient because they work collaboratively with the public. That’s how they become sustainable and profitable again. But this happens only if you trust and value the others and understand the economics of collaboration.

Curley talks, at last, about wanting to link to journalism at its source, which is important, since the AP has long cut the link to original journalism by rewriting it, by turning it into a commodity. But Curley talks about his news registry doing this among his closed circuit of members and big old companies – not the unlimited number of witnesses and citizens who will create news now. He talks about creating “our own self-referring network” (after talking nonsense about Google referring to itself nine times out of ten when Google links out to news far more than the AP ever does). He still sees a closed, controlled world where he sets the value. He, like Brill, does not respect the links and clicks and creation of people outside their walls, paid or otherwise because he can’t control it and he thinks that control is what still gives him value; the truth in the new economy is exactly the opposite: You gain value by giving up control. They do not see the value in collaboration and collaboration as a key to the creation of value and the recognition of efficiency of the new news economy.

Not my fault

“Criticism of CNBC is way out of line,” NBC head Jeff Zucker said at the BusinessWeek media summit at McGraw-Hill’s headquarters just now. “Just because someone who mocks authority says something doesn’t make it so.” He argued that “you’re already seeing a backlash” against the backlash against news media “in terms of people saying, ‘let’s stop beating the press.’” The press didn’t cause us to go to war in Iraq, he said; a general did. The press missing the financial crisis didn’t cause it. “Both are absurd,” he said.

Really? I think that says that the press has no importance and no role in public policy. Doesn’t matter if we miss the story, he’s saying. It’s not our fault. Will he take no responsibility?

Over to you, CNBC bashers.

Later: Asked whether MSNBC is tainting NBC News, Zucker says, “I’m not worried about it.”

He does kind of look like Alfred E. Newman. Without the hair.

He says the answer is that NBC News is “probably in a more dominant position against its competition than it has ever been.” It’s also smaller than it has ever been.

He says David Gregory “frankly has done a fantastic job, something we’re very proud of, and reasserted his dominance on Sunday Morning.” (Over to you, Jay Rosen.)

On media facing the internet: “Newspapers didn’t face those questions fast enough. And they weren’t honest…. We can wish this were 1987 but it’s not…. Advertising is not what it was… We have to think about the model.” He acknowledges that NBC prime time has not had a good three or four years. “Sometimes you see the world more clearly when you’re flat on your back.” That is making them question the model, “question everything.” There, we agree. “Too many media organizations, especially newspapers, weren’t willing to question the model…. including the local TV news model.”

Zucker acknowledges that he will never be No. 1 in prime time (in response to a question about the Jay Leno strategy). He’s right about the changing role of live, prime-time TV. But there again, isn’t he surrendering?

“We’re in show business and the show is important and the business is important. It was easier to be in the show when the business was easier. The business is much harder today.” Has he been drinking out of Paula Abdul’s Coke glass?

Zucker says if they don’t adapt to changing media habits of young people, “we will become the Rocky Mountain News.” The Rocky in the coal mine, it is.

Asked about his comments about analog dollars and digital pennies, he says, “I think we’re at dimes now. We’ve made some progress.”

: Later: In addition to lots of juicy comments, see the LA Times Patrick Goldstein skewer Zucker.