Posts about newspapers

What crisis?

At the Aspen Institute FOCAS event, where we presented our CUNY New Business Models for News, there came to be an unspoken debate – that is, an idea thrown out but never really engaged – about whether there is a crisis in news and journalism.

I now say that there isn’t a crisis. That’s not what I used to say. Indeed, one of my mistakes in this debate has been accepting the assumption that there was one and allowing the debate to start there: “How are you going to save journalism from the scourge of your damned internet?”

Instead, the discussion should start here: “Look at all the new opportunities there are to gather and share news in new ways, to expand and improve it, to change journalism’s relationship with its public and make it collaborative, to find new efficiencies and lower costs and thus to return to profitability and sustainability.”

One’s view on the question determines one’s response and its level of desperation or optimism.

To generalize unfairly, those who say there is a crisis – most often, those whose legacy institutions are fading – are often known to react by:
* Looking for others to blame for the purported problem – Google, bloggers, aggregators, craigslist, et al (which is to say, not taking responsibility for their own role in it);
* Trying to preserve their past (expecting newsrooms to be supported, unchanged, by some manna from the market – paid content being only the latest prayer);
* Seeking protection from government (antitrust exemptions) or the law (copyright extensions);
* Demanding tribute (saying they are entitled to get paid because what they do is worth so much);
* Giving up (talking about abandoning growth by building walls or shifting to not-for-profit and begging for charitable support).

Those who say there is not a crisis (for- and not-for-profit entrepreneurs, inventors, and investors) instead tend to:
* Look to innovation (collaboration, algorithms, data, streams) to create new ways to make news;
* Look to entrepreneurship to sustain journalism (in blogs and networks);
* Be open to new ways to define journalism;
* Irritate the legacy people by not seeing the crisis they see.

So if we’re looking for an original sin in this saga, I’ll confess that mine has been viewing news from the perspective of the old controllers rather than from that of the community (the people formerly known as the audience), the inventors, and the entrepreneurs. At Aspen, it was Sue Gardner, head of the Wikimedia Foundation, who made me see this as she talked about the wonders that have been done with news on Wikipedia, which no one could have predicted. Being open to such new possibilities is key to building news’ new future.

There are so many reasons to be optimistic about the future of news:
* The audience for news is only growing online.
* The audience isn’t an audience anymore. News is becoming more and more collaborative as witnesses share what they see and communities join together to create news.
* Those who make news are more accountable to their publics.
* News is opening up to more diverse voices and perspectives.
* News is becoming far more specialized and targeted, which is to say that it can give deeper service to more communities.
* New technology – and freedom from the limits of the old means of production and distribution – allow the reinvention of the form of news, organized around streams, topics, ideas, and concepts still being imagined.
* News is more efficient thanks to the link – do what you do best and link to the rest – and specialization. That is what makes it more sustainable.

Some – but not nearly enough – of this optimism is inherent in the future we imagined in the New Business Models for News Project. We used the financial lingua franca and assumptions of the present world – CPM advertising, page views per user, even the concept of a page and a site – because that made it easier to describe what can follow and made our vision of sustainable news more credible. We were criticized for being too optimistic about audience penetration and ad rates.

But I think we were not nearly optimistic enough. We have to leap past the idea that news is a collection of pages worth 12 views per user per month (or, quoting Martin Langeveld, 0.5% of time spent online). News shouldn’t be a site we force people to come to but, as Google’s Marissa Mayer said at Aspen, we have to find ways to insinuate news and its value into anyone’s – her words – hyperpersonal news stream. We shouldn’t create sites but instead create platforms that enable communities to share what they know and need to know, with journalists contributing value – reporting, editing, aggregation, curation – to their ecosystem. We should build and assume much greater engagement and define engagement not as consumption but as creation. We must value that creation (and not consider it merely a reaction to what we do). We should forecast much greater relevance and thus value for both the market and the marketer.

We should set the bar way higher. And that is the real problem with letting the discussion start with the pessimism, depression, and desperation of the perceived crisis among the past’s players, who aren’t inventing the future. It limits the possibilities.

The real sin: not running businesses

Like priests looking for someone to sacrifice, Alan Mutter, Steve Buttry, Howard Owens, and Steve Yelvington have been on the lookout for the sin that led newspapers astray. For Mutter, it’s not charging; for Buttry, it’s not innovating; for Owens, it’s tying online dingies to print Titanics (my poetic license); for Yelvington, it’s inaction.

But I think Owens hit on it when he wrote this: “I realized I needed to flip the expense/revenue picture upside down. Instead of thinking about how to generate more cash, I needed to figure out how to create a news operation that could exist profitably based on a reasonable expectation for local online revenue.”

Right. In other words, the sin was not running a business. It was not creating a sustainable P&L.

Newspapers have been too busy trying to protect specific budget lines that protected specific interests – the size of the newsroom, the ego expressed in gross revenue that yields stock performance and salary bonuses, the size of unionized staffs (up or down), the rules that governed advertising relationships even as they disappeared. They made preservation their mission.

What they should have done instead is rethink the bottom line: How is journalism going to be sustainable in new business realities?

Said Owens: “In a market where the newspaper newsroom might cost $10 million, I knew how to make $1 million online, or even $2 million, but I didn’t know — and still don’t — how to make $10 million. So if I can make a million online, why do I need operate a $10 million newsroom, especially given the greater efficiencies of online publishing?”

He built a realistic budget based on new business realities. Now picture news executives across the country hitting themselves on the head saying, “Damn, why didn’t we think of that?” They should have. But to do so would have required them to completely tear apart their businesses. Witness Detroit, banking, retail, advertising, insurance, and every other industry undergoing upheaval – nobody wants to do that.

Just as the bloggers linked above took their share of blame, so will I. Owens suggests that the problem with tying old and new operations together. At Advance, where I worked for a dozen years, we created separate online companies, which had some benefits: enabling the sites to build what was right for online (that is, interactivity), creating real value for advertising (rather than throwing in online as value-added), creating smaller and differently skilled staffs. But it also created problems: sites that were dependent on newspaper content, rivalries that killed collaboration and limited the responsibility anyone would take for the future. In the end, everyone needed to rethink what they were creating and what value it had, how they were creating it, how they related to their communities, and how the business could be run. But I didn’t see that happening anywhere in the industry. Everywhere, I saw people looking for someone to blame and somewhere to hide. I don’t put all the blame on the individuals because that’s how companies and industries operate.

Individuals who want to succeed in this upheaval become entrepreneurs. That’s what Owens – and many others – are doing. That, I’ve come to see, is the basis of the future of news.

In our New Business Models for News Project at CUNY, we threw out the old business assumptions with the old business. That’s why we tried to answer the tough question people were asking: What happens to journalism if the paper disappears? (their implied answer was that journalism does, too). What we came up with was one entity being replaced by well more than 100 entities – 1,000 entities, perhaps – each run according to new opportunities and needs, each smaller, each contributing real value, each sustainable (some very profitable; some choosing no profit). Everyone in this ecosystem has to think about running a business rather than preserving one.

Someone else looking for sinners is James Murdoch, whose MacTaggart Lecture at the Edinburgh Television Festival excoriated the BBC for bigfooting the news market in the UK and the government for enabling it and for regulating everybody else. I agree with him to an extent, this extent: that profit, in his words, will make journalism sustainable, independent, and innovative.

Except I doubt that this sustainable, independent, and innovative journalism will necessarily come from Mr. Murdoch’s father’s business and its cohorts because they are the ones that even today are trying to maintain the scale and models for their old businesses rather than inventing new ones. Look, instead, to the entrepreneurs who are starting over and rethinking the business from the bottom up, as Owens is.

Hyperdistribution

The newspaper industry should be sobered by Martin Langeveld’s calculations, based on the Newspaper Association of America’s misplaced bragging about Nielsen internet data, that only about a half one one percent of time spent online is spent on newspaper sites.

It is clear that if journalists want to be supported – let alone have impact and influence and find their days worthwhile – they need more people to spend more time with news. I believe they should be doing the opposite of what is being suggested in many quarters: clamping down controls to try to fight aggregators and search engines, threatening to build pay walls, consolidating content into destinations they’d have to work harder to get people to visit.

Right now, news organizations should be trying to reach more people and engage with them more deeply. They should seek hyperdistribution.

Since when did it become OK for media people to shrink their audiences? Since they gave up on the ad model, that’s when. But I am not ready to surrender to the idea that advertising, which has supported mass media since its creation, is over. Yes, ad rates are lower; welcome to competition. That’s all the more reason why publishers must attract larger audiences publics – make it up on volume – as well as more targeted and valuable communities.

In my presentation at the Aspen Institute on CUNY’s New Business Models for News Project, I listed some of these opportunities, even though we didn’t build them into our first models because we wanted a conservative base case. Next we are building blow-out models incorporating these means, many built on the principles of the link economy:

* Reverse-syndication. We suggest that the new news organization (NNO) we envision in our ecosystem can create highly targeted content that can be distributed on the sites of other members of the network. So, for example, a new news org could create voting guides for every state assembly member and all the hyperlocal bloggers in the state could offer them to their readers. This content could carry both metro and hyperlocal advertising sold by and benefiting both sites. It is in the NNO’s interest to help these bloggers succeed. Thus they should collaborate on creating and distributing everything from news to calendars to functionality.

In the link economy, value is created by he who creates content and she who delivers audience. So in this networked ecosystem, large players and small will find ways to mutually create and share in more value.

* The embeddable paper. Once you embrace hyperdistribution, then you’ll find new and simple ways to get readers to become distributors. In this post I suggested that we should enable any content to be placed in YouTube-like players that carry brand, advertising, states, and links.

Lo and behold, Silicon Alley Insider just made it possible to embed its stories on this blog or anywhere. In fact, you don’t need to follow that link above; you can read the story below (and I imagine it won’t be long before there’s an ad there, along with the Insider’s branding, links, and data collection).

* API The New York Times has an API (application programming interface) enabling developers to incorporate its headlines, driving traffic to NYTimes.com. NPR and the BBC have APIs that enable others to use more content; as public broadcasters, their goal is simply broader distribution. The Guardian’s API offers full content but requires developers to join its ad network. Thus the Guardian wants to get its journalism into the fabric of the web, as they put it, and support it at the same time. Fingers crossed that it works.

* Specialization. One-size-fits-all news was a product of our means of production and distribution and a very small number of topics aside, that just won’t cut it anymore. Whether by geography, interest, or community, news must become far more specialized. In the link economy, this is how content rises in search to be discovered and it is how value is added with advertising.

Specialization sounds like a way to decrease, not increase audience but with the efficiencies specialization enables, many more publics can be served more deeply and each is bound to be more engaged. In our New Business Models for News projections, we ended up – to our surprise – with an equivalent number of journalists working in our hypothetical ecosystem when compared with the legacy newsroom, but these journalists were all covering much more specialized topics in much greater depth, creating more journalism for more communities than before. Specialization becomes a way to grow.

* Social engagement. In our NewBizNews models, we projected 12 page views per user per month because this is in line with existing news sites and thus, a conservative assumption. But it’s also a shameful assumption.

Local news networks that are truly a part of communities – owned and operated by their communities – will surely have much higher engagement. The fact that Facebook – which brings communities elegant organization, just as newspapers endeavor to do – gets hundreds of pageviews per month per user should be a lesson and model for news networks.

If news organizations – pardon me – asked what Google, Facebook, Twitter, and craigslist would do, they would define themselves as platforms more than content creators and controllers. They would act as networks rather than destinations. Once again, this gives them not only distribution and engagement but efficiency.

I have stood in and before no end of conferences when I or someone else recalls what that student said in The New York Times said a year ago: “If the news is that important, it will find me.” Waiting for her to come to our site won’t work – and it especially won’t work if, once a peer links her to our site, she finds a wall. No, we have to take news to her.

At Aspen, Google’s Marissa Mayer told the assembled news machers that they have to find ways to insinuate their content and value into our own hyperpersonal news streams. In other words: This ain’t about getting people to come to your home pages anymore.

You can bet if Mayer is thinking this way, so is Google and so it will find ways to consolidate information about sources across these new means of distribution. It’s still in Google’s interest to tap the tree for Googlejuice. So I say we cannot waste a moment finding more ways to get more people to distribute and engage with news.

Three nails, one coffin

Line by line, newspapers’ businesses are falling apart as they shrink and become less efficient for advertisers against the competition and reach of online. Consider:

* Coupon giant Valassis abandons newspaper distribution for the postal service in three more markets. Says Crains: “The move represents the acknowledgement that newspaper circulation is on the decline and advertising clients want to continue to reach as many people they can in markets with shrinking newspaper coverage.”

This is significant for two reasons: First, consider that a primary reason papers are reducing frequency but maintaining print editions a few days a week is that they can still make money by distributing coupons and circulars. Second, readers value those coupons. I’ve told the story before of my time as Sunday editor of the NY Daily News when we regained coupons after a strike and circulation jumped more than 100,000 – that is, those readers were buying ads, not news. So this becomes a vicious cycle: the more papers shrink, the more value they lose and the more value they lose the more they shrink.

Coupons and circulars are media and they merely use newspapers as distribution vehicles. When they can be distributed online, for free, then the distribution business will fade away.

* Next, newspapers are starting to lose movie listing ads. That advertising used to be content with value – like, say, home and job ads – but now that value can be delivered online, for free – next to a ticket sales opportunity – online. There go a few more dollars and a bit more value.

* Newspapers were smart to start an online company to serve their ghoulish but lucrative line of business in death notices, Legacy.com. But now it has a competitor in Tributes.com. And I wonder how long either of them can continue to convince people that they need an obit service when any web page will do.

None of these, in and of itself, is a killing blow to papers. Just three more dull blows to the kidney.

Sustaining journalism

Finally catching up with David Folkenflik’s NPR piece yesterday about Columbia J-school’s efforts to help news companies update:

And then there’s the BBC Media Show about pay walls and collaborative hyperlocal and more; listen here.

Warning: You’ll hear me on both.

A next generation in Ann Arbor

(First, full disclosure: I consulted for Advance Publications on its project in Ann Arbor and worked for the company for a dozen years as president and creative director of its online arm, Advance.net.)

AnnArbor.com launched on Friday. I think it’s a bigger deal than it seems at first glance. Advance folded the Ann Arbor News the day before and closed that company. On the next day, it launched AnnArbor.com as a new service, based online and in the community, structured very differently from a newspaper: smaller and more collaborative. As folks have noticed on Twitter, the home page looks nothing like a newspaper site of yore. It’s a blog and it’s intensely local.

Note also that the advertising is different. Rather than banners and buttons, AnnArbor.com offers local deals that are interspersed in the content and also listed in a directory. It happens that these deals are published as blog posts and they read that way. We need to try new and more appropriate means of serving local marketers.

The new company will still print two days a week, and that’s probably why people don’t notice just how much of a change this represents. As I said below, there’s still money in distributing coupons and circulars and in some print advertising, so the company will continue to grab that, at least in the transition. But this company is focused online and in the community.

Ann Arbor is a unique place: highly interested in news, highly connected, with a great university, not to mention a Google office, in town. That’s why it was picked. From the moment this shift became public, the project’s editor, Tony Dearing, and business chief, Matt Kraner, were out in the community to build with the community. I said sometime ago that if this works, the community didn’t help them build AnnArbor.com; they helped the community build it (and their own sites in a new news ecosystem in town).

It’s just a beginning. I hope we’ll see the service become more collaborative, more of a network and less of a site. I know they will experiment with new advertising and sales models and methods. And I hope they will find the way to create a sustainable journalistic enterprise serving the town for many years to come. It’s a brave start and I think it’s worth watching, so that’s why I’m drawing it to your attention.

Guardian column: Charity v. collaboration

My Guardian column this week expands on an idea I discussed here, about viewing charity to news organizations as collaboration in the news ecosystem. The kicker: “Charity is likely to be a contributor to the future of news. So will volunteer labour in the form of bloggers and crowdsourcing. But we still need a business model for news. News still needs to be profitable to survive. It’s not a church.”

The death of snail mail & Sunday papers

The Washington Post reports that “in the past year alone, the Postal Service has seen the single largest drop-off in mail volume in its 234-year history…. That downward trend is only accelerating. The Postal Service projects a decline of about 10 billion pieces of mail in each of the next two years, going from a high of 213 billion pieces of mail in 2006 to 170 billion projected for 2010.”

No, physical delivery won’t ever die. (Like a good newspaperman, I lie in headlines to get attention.) Indeed, we’ll get more ever deliveries of more stuff that used to be on store shelves but are now ordered online. That’s what UPS’ and FedEx’ businesses are built for. But, as the Post says, we’re sending fewer messages to each other; we have much better means to do that now. And companies are trying hard to reduce their cost of dealing with us – billing, bank statements – by taking that online.

There is still a business to be had in distributing coupons and circulars (aka junk mail); this is why newspapers are holding onto delivery a day or two a week. But that’s transitional; it won’t last forever.

As volume decreases, costs to users will increase as deliverers try to cover fixed costs that just can’t be cut anymore. Newspapers like to think they, too, have fixed costs and that’s why they keep whining that readers “should” pay their bills. But they don’t; for their core business – content and advertising – papers have new efficiencies online that the Postal Service doesn’t have. Except for those trucks and presses. They are fixed costs and that puts them in the same sinking ship as the mail.

At some point soon, the couponers will desert both the Postal Service and newspapers because they’ll be just too expensive. But consumers still want coupons; they have real value. (I often tell the story of coming back from a strike when I was Sunday editor of the New York Daily News. We didn’t have coupons because our new owner, Robert Maxwell, was feuding with Rupert Murdoch, who controls coupons – aka FSIs or free-standing inserts – in the U.S. When we got them back, circulation went up more than 100,000. Those readers weren’t buying news. They were buying ads.) Coupons are creeping online but it’s still a pain to deal with them digitally. Mobile devices may be the solution, but they’re not there yet.

So physical coupons and circulars are still great business – if you can get them into consumers’ hands. And it occurs to me that someone will craigslist – that is, undercut – both newspapers and the Postal Service in the delivery business. It’s in the interests of Murdoch’s coupon empire to do so and work with large retailers that produce circulars to come up with an alternative. Or an entrepreneur could establish a network to make it happen. I see the return of the paperboy (oops, the world has changed since then; pardon me: the paperyoungperson): networks of small agents who can deliver this material, which isn’t wildly timely (get it there this week) without the cost structure needed for individualized delivery – the Postal Service – or with a time wrapper of expensive content – the newspaper. Again, it’s transitional, but it’s a nice business for some years.

Here’s what happens then: The cost of mailing an old-fashioned letter will become prohibitive as the Postal Service covers its fixed costs for a system we won’t kill.

And the economic benefit of distributing a Sunday newspaper will all but disappear and news organizations – the ones still standing – will have no reason to hold onto the presses and trucks.