The journalism bubble

When I decided to go into the news business, we took a vow of poverty, or at least acknowledged that we’d never be rich. I chose not to go to law school and instead transferred to j-school and did so in the full awareness that I’d never be well-paid.

Wrong. I ended up being very well-paid because I worked in news in the last gasp of its century-longer monopoly bubble, which ironically came to a climax at the same time as the short-lived tech bubble. Before 2001, metro newspapers still made tens of millions of dollars in each of the classifieds categories, plus retail, plus circulation revenue. Magazines were still blockbuster businesses worth risking tens, even hundreds of millions of dollars to launch. TV will still a star medium where so-called talent was worth big money.

Journalists ended up with a severely inflated view of their own value. It was a bubble that has now burst. That is why they are barking so loudly against the wind of change. Change isn’t just taking away jobs, it’s taking away great jobs: visible, self-important, well-paying, once-secure. Damnit, it’s ruining a good thing.

Media economist Robert Picard poked a pin to that bubble – after it was deflated; this is a case of kicking them when they’re down – as he argued in the Christian Science Monitor and in an Oxford speech that journalists deserve low pay because they don’t add sufficient value. Picard says, and he’s right, that journalists spend too much effort churning our commodity value: the stuff we already know, the same stuff others are making:

Well-paying employment requires that workers possess unique skills, abilities, and knowledge. It also requires that the labor must be non-commoditized. Unfortunately, journalistic labor has become commoditized. Most journalists share the same skills sets and the same approaches to stories, seek out the same sources, ask similar questions, and produce relatively similar stories….

Across the news industry, processes and procedures for news gathering are guided by standardized news values, producing standardized stories in standardized formats that are presented in standardized styles. The result is extraordinary sameness and minimal differentiation.

It is clear that journalists do not want to be in the contemporary labor market, much less the highly competitive information market. They prefer to justify the value they create in the moral philosophy terms of instrumental value. Most believe that what they do is so intrinsically good and that they should be compensated to do it even if it doesn’t produce revenue.

So where’s the value? Gawker friend Nick Denton says it’s in reporting. So does Arianna Huffington, who just today hired away the head of investigations from the Washington Post to head her new investigative unit. Arianna has said for sometime that she’s hiring reporters because their stories get more traffic. Denton told Ad Age:

People — particularly if they’re under 40 — have news priorities other than those of the editors of The New York Times or producers of the “NBC Nightly News.” A new tablet from Apple — or last night’s episode of “Gossip Girl” or the adventures of the hipster grifter — is a bigger deal than the latest petty scandal in Albany. You think that’s a damning indictment of modern society and a recipe for idiocracy? Fine. Start a nonprofit to cover all the local-government news you think a healthy society needs. But don’t expect advertisers — or commercially-minded publishers or readers, for that matter — to share your interests. . . .

When Gawker started, there was a surfeit of information and not nearly enough context — so we provided that, in the form of links and occasionally snarky commentary. But now the balance has shifted. There are pointers to articles on the blogs, Facebook, Twitter, Digg. And all these intermediaries are looking for something to link to. If a good exclusive used to provide 10 times the traffic of a standard regurgitated blog post, now it garners a hundred times as much. That should be reassuring to people. The content market is finding its new balance. Original reporting will be rewarded.

So how can journalists create value? They can and should report – but the link economy demands that they specialize, that they stand out above the level playing field by reporting uniquely: Tell us something we don’t know, something we want and need to know, not what we already know.

Picard thinks that local newspapers can specialize and there we agree, but we disagree about the topics; he says they should take on national and international topics – Dallas on energy, Chicago on aircraft, Des Moines on ag – but I think their strength is in being local. And there I disagree, too, with Denton; I think that some advertisers – new advertisers never served by bit and inefficient papers – will care greatly about local and will end up helping to support the work that serves local customers (I spoke with one such advertiser today; more on that later).

Picard says that papers need to learn to collaborate and there, too, I agree; but he says they need to do it “throughout news enterprises” but I say they need to do it outside news enterprises, supporting and enabling networks and distributed ecosystems of news.

Picard says that journalists “need to acquire entrepreneurial and innovation skills that makes it possible for them to lead change rather than merely respond to it.” There we certainly agree; that’s why I’m running a course in entrepreneurial journalism. But I wonder whether, inherent in what he says, is that it’s too late for entrepreneurship from inside legacy institutions; it has to come from without.

But the bottom line is the bottom line: Journalists need to make an honest and harsh accounting of the value they create before they can worry about what they’re being paid and by whom. They can no longer use bubble accounting, when they convinced themselves that they and their high calling were worth their inflated paychecks (and I was among those who got them) without facing the blunt truth of the market. Now they have no choice but to face their market.

: LATER: I meant to add this yesterday: Of course, I’m all in favor of journalists making as much as they can and of as many journalists as possible being sustained by the business. That’s why I run the course in entrepreneurial journalism and why one of our tasks in the New Business Models for News Project is to find ways to maximize revenue and profit for journalists in optimal business plans.

But the standard of success may not be the pay rates that we became accustomed to in the journalism bubble. We may – I hope we don’t, but at first we certainly will – end up back in the early days of my career when we didn’t get rich reporting. Especially starting businesses, we need to recognize that it’s going to be tough and we’ll be subject to what the market will bear.

Already, though, there are hopeful excceptions: Michael Arrington and Rafat Ali built substantial empires on reporting. there is a high-end to aspire to and I hope many reach it. But as in all start-ups and all upheaval, it’s going to be hard work getting there.

  • I was impressed by what Picard said, because he not only explained what was happening, and why, but how to adapt to it. I’m going to bring his speech and your post to the attention of my editors. Thank you for the reminder.

  • Jason

    Somehow, in the fog of old media’s supposed fraud, old media produced some amazing talent: Hemingway, Terkel, Royko. They knew how to tell a story. They didn’t bitch about the same topic over and over and over and fucking over again to sell a book. Take a hint Jarvis.

    • Solitude

      Didnt bitch about the same topic over and over?

      You must mean some different Hemingway.

      • J

        Paying someone to spend time to find out the truth of something is one of the most valuable things.

        No one in Western Society can afford to give lots of time for free.

        Thus the dilema of journalism in the digital age.

        For everyone journalist out there today, in the digital age you’ll need MORE blogers etc for journalism to be improved. Them bloggers will need to be on par with the earnings of the journalists they’ve replaced.

        Sounds pretty hard from where I’m sat.

  • Nic Fulton

    Jeff – I don’t really think the argument is sound. I don’t think people RECOGNIZE the value of journalism, but I don’t think it’s as clear as there not BEING value. Here’s a thought experiment. You have a corker of an exclusive and you know that it’s only a matter of time for it to come out (say a couple of weeks). You did nothing illegal to get the information, just analysis and investigation. You can publish it, and a Fortune 500 company will likely half its share price. Or you can quit your job and sell it exclusively to a hedge fund… which should you do? Think about yourself and those financially dependent on you. Think about your current audience who may well also own shares in that company (or buy the product that is defective). When the story comes out, a 10 billion dollars of value are wiped out on the stock market. Your story was worth that much. In one case you gave it away, the other you sold it for what it was worth…

  • Nic’s point has me thinking. Is the _value_ of an article what advertisers are willing to pay to reach the audience that reads it ? Or does the value of the article lie in what a reader can do with the information? Learned how to change my oil — $35. Discovered a great way to find my next job, $82,000. Read the tale of the Enron scandal — worthless to me, yet priceless to the market.

    But it’s all relatively moot. As long as substitute goods exist (and lordy, do they ever) price points don’t easily rise, regardless of the realized or unrealized value. So you better find a way to deliver what advertisers are willing to pay right NOW. And you can get there by either dramatically changing your cost structure to adjust to the realities of Internet content monetization (ala Demand Media or Huffington Post) or by increasing your brand value (struggling for good examples in 2009 ! )

  • “…Well-paying employment requires that workers possess unique skills, abilities, and knowledge…”

    Just wondering if that applies to all employment “verticals” … Actors, musicians and the like come to mind :)

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  • Thought provoking…

    When I practiced financial counseling, the impact of getting clients to make good moves far exceeded the price that I charged. Ditto for the advice books I now write.

    At times it’s frustrating that any schmo can write about personal finance and too many folks can’t tell the hacks from those with training and expertise in the field (also see the “Guru Watch” section of my website). The best-seller proves that too many people can’t tell the truly good from the bad.

  • zywotkowitz

    Eric Tyson wrote:

    Ditto for the advice books I now write.

    Indeed. Reading Eric Tyson’s mutual funds book was far more valuable than any of the meetings that I’ve had with “401K advisors” and the like.

    But Tyson at least has the advantage that in his field “quality information” does in fact provide material benefit to people.

    As Denton points out, what was considered “quality news” (by the old measure) doesn’t necessarily have market value.

  • So the days of “inflated paychecks” for journalists are over? When did they ever begin, Jeff?

  • Thanks zywotkowitz!

    What is disappointing in the field and another some papers are struggling is that they at times don’t value (and recognize) quality content.

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  • Something that I think got overlooked in your blog, Jeff, is that there are still a lot of reporters taking direction from editors who are stuck in an old way of thinking. A reporter may be able to think in terms of the value they bring to a topic. But there is an editor there who is still thinking in terms of the octogenarian reader who has to have the mosquito control board recap. So the reporter goes into survival mode, writing stories that don’t add value to the news cycle and wondering when things will get better. It happens all too often.

  • You know what the problem with medicine is today: doctors all do basically the same thing. They have these standards of practice, and all tend toward the same outcome. It’s just commodification of health.

    What’s needed is more specialization, and more diverse, ideosynchratic appraoches.


    Are journalists more like doctors or actors?

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  • Mike Manitoba

    Part of what saddens me most about this transition is the victory of language like “content” and “market” over “stories” and “readers.” As much as I embrace the changes inherent in rapidly evolving technology, I hate to see the human element of news-gathering (and the relationship a writer has with a reader) so easily dismissed and forgotten.

  • John

    Nic Fulton makes a good point. The work has a value to someone, but the writer never realizes the value of his work. He is more like a factory worker than a professional.

    Journalism is blue collar. We create something that other people sell. Some create better than others. But, if I write a story that causes a 10 percent spike in newsstand sales, do I get a bonus?

    No. So the journalists are not the producers. They are the product.

  • Wow Picard, that was priceless. Tell your pay thoughts to people who are making $19,000 a year in this business – that’s what I made in 1985 but in many places, it’s 2009 dollars. Sorry to bring you back into a sense of reality that’s a bit more accurate than the one your average newspaper CEO looks at the world from.

  • Mike Manitoba

    I am glad, however, to see Jeff acknowledge the vow of poverty. Too many in the blogosphere assume journalists make money hand over fist.

  • and now we are all broke

    get used to it

    we suffer a bit

    sing the blues

    and move on down the line

    good stuff


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  • I also published this at where Jeff cross posted his blog.

    As a journalist, publisher, entrepreneur and long-time media observer and critic, I think it is easy to be self-righteous about how journalists work and what they accomplish. Those who point to reporting on Iraq and Madoff as examples of bad reporting over simplify and repeat complaints they’ve heard or read.

    Those who complain reporters are simply rewriting news releases ignore the economics of journalism. Simply put, rewriting press releases worked for generations. Now, readers can get the releases online.

    The economics of the media are that you need the wealth of a “60 Minutes,” WSJ, NYT or LAT (historically) to employ journalists who know something more than journalism and spend weeks and months on one story.

    The other fact of life is that few readers want such reporting. The biggest mistake an editor can make is to publish a series of articles over more than two or three days. People don’t read them. Only panels of judges who grant journalism awards do.

    What’s the evidence? How many indepth mags are profitable? How many subscribers do they have? Not many.

    So entrepreneurial journalism, which I used in the 1960s, 70s and 80s to make my name and career, is romantic and the ideal, but the market for it is very limited. People who will pay for such reporting and analysis hire highly skilled analysts and consultants to produce such work for a very few eyes.

    If you want such “journalism,” you buy a few books on a topic, read widely and do your own reporting and analysis. Few want or need such info. and fewer will pay for it.

    Evidence? Look at how few pay for subscriptions to the WSJ, Barron’s and How many buy Value Line and its various services? Thousands, not millions.

    So I think Jarvis is training his journalism students to work for the government, hedge funds and market research firms, not for the media.

    • Solitude

      You still aren’t getting it Donald.

      Very few people in the new media are going to be able to make a living at it. The career boat sailed and hit an iceberg.

      Journalists with hence forward have to compete with hundreds of thousands of new media content producer who are posting content because the want to. Because the topic matters to them. not because they are getting paid.

      You can copyright fiction, and you can copyright an exact quote, but you can not now and will never be able to copyright simple information.

      If you write something on say veterinary research pertaining to Labrador Retrievers on a website or in a magazine I can take your information, combine it with other information, put my spin on it, and put it out there on in another venue. If I don’t use your words, you can’t do ANYTHING at all about it. Where does that leave you, given that my total cost to post is the internet connection fees I pay every month anyway? If you put up a pay wall, well only one single poster needs to read what you wrote and incorporate the information into something they write. The more people pay for your content, the faster anything unique is going to leave that pay wall.

      As many of us have been pointing out for a decade now, and as Clay Shirky stated so well in hit post on Newspapers and thinking the unthinkable – What made newspapers work was the high cost of printing. That isn’t coming back. Ever

  • Mike Manitoba

    I think we can all agree on the important lesson here:

    Old-media journalists: overpaid seat-warmers, cancerous vultures, disgruntled puke screeching in godless fear at e-mail.

    Bloggers: Plucky, incorruptible revolutionaries with an unquenchable thirst for answers and an unwavering, lifelong willingness to inform for little or no compensation

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  • Sam Clemens

    jeff, quality journalism will rise to the top. Right now, the old economic model is breaking down and a new one is required.

    The old model depends on “eyeball count” to reward advertisers, and leads to popularity (hence, sensationalism) in lieu of good analysis. When information is abundant, there’s no premium in a “scoop” or more of the same hack theatricality.

    No doubt, a new business model for journalism will arise. People are pessimistic because their ideas are shaped by what worked in the past, such as pay walls, and the new landscape is different in many ways.

    With the collapse of old media, think of journalism as a startup business, with all the uncertainty, challenge and excitement of creating a future rather than researching the past and present.

    While we are inventing new business models for journalism, perhaps “Small is truly beautiful” and we don’t require a publisher to make $100 million a year to pay a journalist a pittance.

    However, new internet-based business models will continue to be highly problematic as long as internet security remains an oxymoron.


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  • Mattathias Schwartz

    anything that lasts a century is not a bubble

  • The thundering power of the printed product is, at this very moment, sounding off in England.

    The Daily Telegraph is devoting almost 20 pages a day to their exclusive scoop (On expense abuses by members of Parliament) and they reaping huge circulation gains as a result.

    Data mined from a terabyte of classified data.
    Yes this could have been a digital product – but that approach was probably not the way to break the big story. For impact, the rare treat of an exclusive being broke on Page One cannot be matched. Also, it has not been proven that it can be monetized.

    What newspapers are capable when breaking a big story is truly amazing. We should not be so prepared to live in world where this perfected craft can provide a swift and profound effect on government power and abuses of public funds.

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