Here’s another free chapter of Geeks Bearing Gifts: Imagining New Futures for News. Now we get into the business models and strategies for news companies, starting with the question many ask John Paton, who named his company with the phrase — “What’s digital first?” — and the question he asked me — “What comes next?”
Here’s how I translate the catchphrase “digital first” into a business strategy for legacy media proprietors: They must transform their companies into fully sustainable digital enterprises before the day when print becomes unsustainable. And for the most part, print will become unsustainable. I needn’t explore in depth the causes of death, as the essence of mass media’s plight is now apparent: Publishers as well as broadcasters controlled scarcities — limited space in print and time on the air, each in a closed distribution channel — which afforded them enviable pricing power. The net creates abundance — no shortage of content and no end of advertising availabilities, not to mention the opportunity for brands and merchants to bypass media altogether and build direct relationships with customers. That abundance drives the value of content and advertising toward zero….
The solutions for media companies may not be obvious, but the arithmetic of sustainability is: Start by reducing costs to their most essential and efficient level — assuredly a fraction of what they were for an old, vertically integrated monopoly. Then maximize digital revenue — advertising volume, yes, but I will also argue for building greater advertising value through deeper, richer relationships with consumers. Build new products and services appropriate to the new opportunities that technology presents: digital services for advertisers, mobile applications, newsletters, and so on. And explore additional revenue streams, including events, direct commerce, and consumer revenue via patronage or paywalls. Digital revenue surely will not cover the legacy costs of a deposed monopoly, but one had better see a path to digital profitability. The alternative is just to milk the old print cow until she keels over.
And one more snippet from this chapter about Paton and the genesis of this entire book:
Back to John Paton: I remember the day in 2012 when he charted for his advisory board — at the time, Jay Rosen, Emily Bell, and me; Clay Shirky joined later — his path to fixing Digital First’s corporate structure, reducing costs to the minimum (selling every printing press, fleet of trucks, and office building that was not profitable on its own), and driving maximum revenue to digital. He explained the dynamics of working with hedge funds — a crucial factor to keep in mind when we see later how his story ends. Paton drew his projections on the whiteboard and said: OK, let’s imagine that at a date only a couple of years out, we get there — the company will be substantially sustainable as a digital enterprise. Then what? he asked. What are we then?
That question inspired this essay. Trying to answer Paton’s question forced me to reexamine my own thinking about the future of news, to identify and push harder against my own assumptions that sprang from my experience in legacy media: the Gutenberg context, or pressthink, as Jay Rosen would call it. Paton was asking what news could be, what news should be. What is the strategy that takes us past mere survival to reinvention? Can we get there? I realized that until we reimagined our destination, we would be stuck recycling the past. What’s required to get to that goal is considerable imagination, experimentation, risk, failure, courage, and urgency — as well as patience.
If you can’t wait for the rest of the book, then you can buy it here.
