BuzzMachine

The media pundit's pundit. Written by NYC insider Jeff Jarvis, BuzzMachine covers news, media, journalism, and politics.

Tag: newbiznews

  • Value-added journalism

    10 comments on Value-added journalism
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    I asked Alan Rusbridger, editor-in-chief of the Guardian, whether his paper should have started Wikileaks. I wondered whether the Guardian was looking at WIkileaks the way it looked at HuffPo when it started (that is, ‘darn, we should have thought of that, so we will’ … and it started CommentIsFree). Is Wikileaks a tool for investigative journalism? Or is it better for Wikileaks to be separate? Would being associated with a news organization subject it to different standards of verification and transparency?

    “I think it’s better separate,” Rusbridger responded. Wikileaks does things the paper wouldn’t want to do or couldn’t do. And a paper is easier to attack by governments and companies; it has greater liability than a stateless news organization, as Jay Rosen calls them. “I think the Afghan leaks make the case for journalism,” Rusbridger said. “We had the people and expertise to make sense of it.”

    Right. The Afghan war logs story is a case study in what Rusbridger would call the mutualization of journalism. I’d call it collaboration. The leakers and their medium — that is, their mediator, Wikileaks — did what they did and the paper’s journalists added value: digging through the data, giving it perspective, editing out dangerous pieces, getting reaction, and then giving it audience and attention.

    That is the role journalists will continuously perform in the future: adding value. Wikileaks and the leaker didn’t need the Guardian, The Times, and Der Spiegel; as Wikileaks has proven many times, it can publish its information to the world without help. But they chose to work through those publications because of the value they would add.

    Thanks to the internet, the marginal cost of sharing information today is zero. So the value of the journalist in merely distributing information is nearing zero. Distribution was just the stranglehold the journalists’ companies had on the market that enabled them to be supported by monopoly economics. They can no longer build their businesses on that barrier to entry. This change in market reality forces us to examine journalists’ true value to the public in the market.

    In the war logs story, journalists added value. In the story of a town board meeting, journalists also need to add value, not merely acting as stenographers — a task most anyone could perform — but adding perspective (which might — horrors! — mean having an opinion), standards of behavior (you shouldn’t call the mayor an idiot without the links to back it up), and audience (which doesn’t mean distribution in the old sense of a stranglehold; it means the ability to get people to pay attention because you bring them value and they’ll click on your links).

    If you don’t add value, then you’re not needed. And that’s not necessarily bad. When you don’t add value and someone else can perform the task as stenographer or leaker or reporter — and you can link to it — then that means you save resources and money. This means journalists need to look at where they add maximum value.

  • Advertising is next

    34 comments on Advertising is next
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    Condé Nast is a house built on smoke and mirrors — that is, to say, on brand advertising. So it is astonishing to hear its CEO, Chuck Townsend, essentially toss the company’s business model out the window of the Death Star in what The Times frames as “a fundamental overhaul of the advertising-based business model.” This, folks, is surely the real product of the McKinsey studies undertaken at Condé, not a few magazines folded but a new strategy. In a phrase:

    Advertising is fucked.

    I’ve said that Rupert Murdoch’s paywall is also essentially his surrender of any hope that advertising can be grown or even maintained. He gave up and shrank like George Costanza’s privates. It’s one thing for the dirty digger to give up on car ads. It is quite another for Condé to go off its diet of Madison Avenue and Seventh Avenue in favor of a parking meter.

    Photo: Flickr – wallyg
    “We have been so overtly dependent on advertising as the turbine that runs this place, and that is a very, very risky model as we emerge from the recession,” Condé CEO Chuck Townsend told The Times. “In a company like ours where 70 percent of our margins are generated on the advertising side, we must develop a much, much more effective financial relationship with the consumer.” That is, get money from the consumer instead of the advertiser.

    Good luck.

    The company plans — like Murdoch — to try to suddenly get new money from consumers who for years — long, long before the internet — have been accustomed to almost-free content: $1-per-issue luxe magazines that cost probably four times that to produce and distribute (not to mention the tens of dollars it takes in marketing to acquire that subscription with advertising and schwag — a purse for Glamour readers or the fabled sneakerphone up the street at Sports Illustrated).

    Condé promoted Bob Sauerberg, former head of consumer marketing (read: circulation) to its presidency. Bob is one of the good guys of Condé Nast (I don’t mean to damn him with faint praise there … sorry, couldn’t resist); he’s smart, mature, experienced. (I worked with him a good deal when I was at Advance’s parent company and he was at Fairchild; I should add that none of what I’m saying here comes from the slightest contemporary knowledge of the company; haven’t been in the cafeteria for many months.) Bob knows management and consumer marketing. The age of the ad sales guy is over because the age of the ad is over.

    The problem is going to be that there is only more competition in content and so trying to suddenly charge more flies in the face of basic economics. The absurdity of the strategy struck me yesterday as Amazon tried to sell me a subscription to Time for 28.8 cents an issue while Time is trying to sell its iPad issues for $4.99 and I see no reason to buy either. In what world do these economics make sense? In their dreams.

    “I want to collect income from the consumer,” Townsend told The Times earlier. “An annual magazine subscription may be something like anywhere bet[ween] $12 and $24. So I’m currently locked into a model that says I get a buck or two a month. How about I get a buck for a click?”

    Dream on.

    They’re not wrong that they need to get money from consumers but they’re not going to get it for content. Sorry guys. But as Google schooled the newspaper industry (I’ll substitute appropriate words):

    The large profit margins [magazines] enjoyed in the past were built on an artificial scarcity: Limited choice for advertisers as well as readers. With the Internet, that scarcity has been taken away and replaced by abundance. No [dreaming] will be able to restore [magazine] revenues to what they were before the emergence of online [content]. It is not a question of analog dollars versus digital dimes, but rather a realistic assessment of how to make money in a world of abundant competitors and consumer choice.

    Instead, I suggest they have to get new revenue through commerce — through selling the things they once advertised now that advertisers are deserting them to sell direct. Problem is, that’s hard, as Condé knows best from its experience with Style.com, which started as an attempt to create a high-end store (I worked there then). They created it in partnership with a retailer and the retailer bagged the effort when times got tough in the first bubble; it then became another ad-supported site. But the strategy wasn’t wrong. Problem is, there is no retail expertise in the company.

    More recently, Condé should have bought Net-a-Porter but instead luxury conglomerate Richemont snarfed it up. (Disclosure: I spoke at Richemont’s corporate retreat recently.) Condé should buy Gilt to establish new skills, a new relationship with customers, and new revenue. Its content then becomes just added value: the Cinnabon’s in the mall.

    A media company going into retail and selling in areas held by former advertisers has precedent: Media News’ Salt Lake City paper became a real estate broker and undersold the entire business in town. The Telegraph, as I like to point out, sells everything from hangers to wine to betting to its readers.

    But if Condé and other media companies are going into retail, they need entirely new skills of merchandising and sales, an entirely new financial structure to cope with inventory costs and tight margins, the ability to cope with entirely new competitors and suppliers (that is, former advertisers — but, worse, Amazon), and an entirely new efficiency (forget the cafeteria; they’d be lucky to have a Wal-Mart lunch room with vending machines as a profit center).

    They also have to defeat a calcified, entitled culture. For that, I’d suggest they buy Gawker Media to get the incredibly popular competitor Jezebel and to infuse the company with a new culture. Make Nick Denton editorial director and COO and then watch the fun.

    I doubt they heard any of this from KcKinsey because in the few encounters I’ve had with them they remix known models rather than invent new ones, which is what is called for here. I’ll bet they proposed cutting some costs (done) and remixing revenue (started) when what’s really needed is a complete restrategizing.

    Or maybe I”m wrong. Maybe 4 Times Square will become the world’s lushest mall, with one helluva food court.

    Nevermind my advice. The moral of this story remains that advertising is next to fall into the black hole (as a Time Inc. president once dubbed this damned internet thing). Welcome to Bob Garfield’s Chaos Scenario.

  • Google takes the FTC to school

    33 comments on Google takes the FTC to school
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    Google just issued a response to the Federal Trade commission’s staff discussion draft on potential recommendations to support the reinvention [read: preservation] of journalism [read: newspapers]. (here was my reaction). It’s a wonderful document that takes the FTC — and the news industry — to school on the First Amendment, copyright, fair use, antitrust, media history, business, and technology. The government and publishers should be embarrassed to need such remedial education.

    Highlights:

    This says it best:

    The large profit margins newspapers enjoyed in the past were built on an artificial scarcity: Limited choice for advertisers as well as readers. With the Internet, that scarcity has been taken away and replaced by abundance. No policy proposal will be able to restore newspaper revenues to what they were before the emergence of online news. It is not a question of analog dollars versus digital dimes, but rather a realistic assessment of how to make money in a world of abundant competitors and consumer choice.

    Google’s doc leads off with promotion of its efforts to work with news organizations: Living Stories, traffic sent to news sites, technology help, and so on. They might as well just have linked to James Fallows’ paean and Eric Schmidt’s Wall Street Journal op-ed. You’ve heard these points before. My problem with them, as I’ve said, is that Google is trying to make friends with an industry that only wants enemies to blame for its failures. But at last, Google stops pulling punches and slaps down the industry’s self-deluding myths and the FTC’s dangerous ideas.

    “[T]he current challenges faced by the news industry are business problems, not legal problems,” Google says,”and can only be addressed effectively with business solutions. Regulatory proposals that undermine the functioning of healthy marketplaces and stall the pace of change are not the solution.”

    Google points out that newspapers’ circulation peaked between 1890 and 1920; that newspapers declared radio would kill them and only newspapers should hold the sacred and hallowed mission of news; that newspapers declared TV would kill them and characterized broadcast reporters as “parasites” (a lovely tip of the hat to Rupert Murdoch). We won’t buy that again. “The internet, rather than being the cause of journalism‘s downfall, provides a unique opportunity for news organizations to renew and reinvigorate journalism,” Google says.

    Google lectures the FTC and the industry on internet business basics: “Unfortunately, the Discussion Draft does not acknowledge the basic economics of search engines and similar services and instead erroneously suggests that search engines are somehow cannibalizing newspaper advertising revenue rather than serving as an important connection to potential consumers.” Aggregators, Google points out earlier, send traffic and business opportunities to publishers. And Google does not make a significant amount of revenue from news … just as newspapers do not (subsidizing it with more lucrative verticals).

    Google lectures the FTC et al on the unbundling of news. Fact o’ life. It then offers a primer on how publishers should be treating the readers who come to them via links.

    Google restates the FTC’s dissection of newspaper revenue: 80% advertising, 17% newsstand, 3% subscriptions. “Pay walls,” it says, “could be an effective way to raise the 3% revenue figure.” A zinger for publishers. But Google’s fine with pay walls if publishers want them. It’s just not fine with government regulating them. “Innovating to create products and services that consumers want to pay for,” Google says, “is the only way to guarantee long-term subscription revenue growth, and none of the policy proposals are designed to foster that kind of innovation.” A zinger for the FTC (one I wish Google had dwelled on more since it does know innovation.)

    Another zinger to the industry and the FTC comes as Google points out that classified revenue implosion had “nothing to do with copying or free-riding and everything to do with the emergence of a new, more effective and more efficient product into the marketplace. The FTC would ordinarily regard such a situation as a cause for celebration – consumers are getting a better product at a lower price – not an opportunity to slow down that innovation through regulation.”

    Google salutes the flag the FTC raised on making government information more accessible — but then Google went the extra step to suggest “harmonization of state and federal law relating to copyrightability of government information.” There, the agreement ends.

    Google decries proposals to extend copyright law and limit fair use and repeats its fine arguments against the antiquated notion of hot news from its FlyOnTheWall brief. “Facts, hot or cold, cannot be protected by copyright since there is no author of them,” Google instructs the FTC. “This has been the law of copyright since its inception….”

    Google goes after proposals to establish taxes and fees to support legacy news operations. And it attacks efforts to let news organizations fix prices and charge aggregators. The doc makes the FTC eat its own words: “The FTC‘s long-standing position regarding antitrust exemptions properly subordinates a desire to advantage individual firms (here, print news organizations) to the need for a competitive, even playing field that offers the maximum good to consumers.”

    Bottom line: There’s no need for the FTC’s meddling:

    ….Google continues to work with publishers to find ways to ensure that journalism survives and thrives on the Web. We remain optimistic about the future of journalism: The Fourth Estate is too crucial a part of a functioning democracy, and the Internet too powerful a medium, for journalism to die in transition to a Web-first approach. News organizations have more readers than ever, more sources of information than ever, more ways to report and tell stories than ever, and more potential ways to generate revenue than ever. Journalism will change, but the free market and free society will ensure that it won‘t die.

    Amen and good night.

    Comments to FTC 20 July 2010

    Related: Here’s a segment of On the Media this week with me lambasting the FTC:

  • No American BBC

    41 comments on No American BBC
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    I just don’t understand Columbia University’s apparent obsession with handing over portions of the press to government subsidy, giving up on the free market. I haven’t given up on it. Have you?

    The latest raised palm comes from Columbia President Lee Bollinger in tomorrow’s Wall Street Journal, of all places. This could send BBC-hater Rupert Murdoch to his grave so he can spin there. Bollinger proposes that we start an American BBC by pooling (merging?) the resources of the Voice of America, Radio Free Europe, PBS, and NPR.

    He repeats the old saw that American media is already government subsidized. Except postal subsidies are meaningless as print and the post office decline. Legal ads should be going to the web for free to save taxpayers money anyway. I wish PBS and NPR did not rely on any government money so it would not be put under government pressure and could operate with true independence. And I do think broadcast spectrum should be sold so it is not seen as public airwaves (broadcast itself becoming meaningless) and so it is not subject to government censorship (see today’s victory for the First Amendment).

    Bollinger argues that we’re getting the BBC thanks to the British taxpayer. Well, yes, the BBC has funded its world service for years to extend its empire; their choice. But I pay a fee on Sirius to hear them. And its TV channels in the U.S. are ad-supported, as is its web site. As BBC budgets are attacked by the Tories, I’d say it’s more likely our marketing economy will subsidize their free news — if Murdoch doesn’t stop them.

    When Columbia presented its plan to save journalism — which included government subsidy — I had this discussion with Bollinger and he pointed out that I am subsidized by government as a professor at a state university. Touché. But I’d rather raise money to support my work from foundations and companies and revenue-generating activities. “Indeed,” Bollinger writes in the Journal, “the most problematic funding issues in academic research come from alliances with the corporate sector.”

    Bollinger then questions the editorial integrity of the American press he wants to save, saying: “To take a very current example, we trust our great newspapers to collect millions of dollars in advertising from BP while reporting without fear or favor on the company’s environmental record only because of a professional culture that insulates revenue from news judgment.” Who has mishandled BP more — the press or the government?

    Shockingly, he mentions as models of state-supported media, not just the BBC but also China’s CCTV and Xinhua news and Qatar’s Al Jazeera. In what sane world is the Chinese government’s relationship with news a model. What would Google do?

    Bollinger suggests taking down the prohibition on beaming propaganda broadcasters VoA and RFE into the U.S. “This system needs to be revised and its resources consolidated and augmented with those of NPR and PBS to create an American World Service that can compete with the BBC and other global broadcasters,” Bollinger concludes. “The goal would be an American broadcasting system with full journalistic independence that can provide the news we need. Let’s demonstrate great journalism’s essential role in a free and dynamic society.”

    I think we can demonstrate and build that independence by teaching tomorrow’s journalists to build strong, sustainable, and independent businesses. We just disagree.

    : SEE ALSO: George Brock of the other City University (London) and Roy Greenslade of the Guardian and City as well.

    Brock and I agree. The rational Greenslade wants to agree but the emotional Greenslade doesn’t. He, like Brock (and me), respects the talent, value, and experience that is trapped in dying institutions and so he, unlike Brock and me, wants to overcome what seems to be his better sense and agree with Bollinger that we should consider government rescue.

    With respect, I think Greenslade’s logical leap illustrates the problem with Bollinger’s thinking: They assume that the business model of journalism is hopeless. I do not. That is what needs discussion.

    Quite to the contrary, I believe — based on research, which is one of the values we add from a university — that journalism could well be more sustainable, accessible, and accountable than before because of the efficiency brought by specialization (do what you do best, etc.), free platforms (see John Paton‘s Ben Franklin Project), networks (see Growthspur), collaboration (or Alan Rusbridger would call it mutualization), not to mention the casting off of industrial ways and expenses (in the pressroom as well as in the newsroom).

    Greenslade acknowledges that government support would be a regrettable idea and so he can come to it only if he believes — as he says he does — that the web is not sufficient “to act as a competent watchdog.”

    Well, all four of us — Bollinger, Brock, Greenslade, and I — teach in universities. If we do not together believe that we can equip the next generation of journalists to build the structure that creates that competent watchdog, then perhaps we should not be teaching journalism, as it would be irresponsible to do so. But I don’t think any of us believes that, for we all teach or support the teaching of journalism. So I say the question we should be investigating with all the rigor and diligence we can muster is how to build that future. Perhaps Bollinger does indeed believe that the only solution is to seek government rescue but I say it is far too soon to resort to what Greenslade acknowledges should not be a first resort. We have a lot of resorts to go through first.

    : AND MORE: Reason attacks, as do Mark Tapscott and Claudia Rosett, who says: “If, as Bollinger suggests, the provision of adequate news coverage cannot be entrusted to the market, then what about such vital matters as shelter and medical care?”

    I’ll just bet we’ll soon hear from Bollinger or his allies that at least he sparked a discussion. But he sparked the wrong discussion. We shouldn’t be debating which desperate move to take having given up on the sustainable future of journalism. We should be discussing how to build that sustainable future, damnit.

  • Independence day for newspapers

    17 comments on Independence day for newspapers
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    Today Journal Register, a newspaper company, declared its freedom from old publishing methods and old journalistic methods. The company’s 18 dailies published today, July 4, using nothing but free, web-based tools. And they involved their communities in their journalism in new ways. They call this the Ben Franklin Project.


    Here’s their VP of content, Jon Cooper, reporting on the work of the project in each paper (my emphasis):

    The difference between how these stories are usually written and how they were written for today is the process. In many cases the stories reported as part of the BFP began with the audience. The people who are usually last in line were moved to the front of the process. Rather than just being able to read the finished product, the audience – through town hall meetings, social networking sites, direct requests via email and in person and more – was asked to help determine what the editorial staffs should cover.

    This took the in-company collaboration to where it needs to be – collaboration between the audience and our organizations. To truly serve the communities in which we live and work we must be part of those communities. We must be connected to those communities. We must listen to those communities. And, we must be help accountable by those communities.

    And here’s their CEO, John Paton praising his staff for their accomplishment:

    On this Independence Day, you have declared that our Company’s future will be freed from expensive and restrictive proprietary publishing systems but more importantly that our Company will be freed from the old way of thinking about how we do business. You have ensured we will become a Company with a future and one that will continue in its mission to serve our communities with compelling local journalism.

    And while the tools you have found and adapted are an achievement, it is our new approach to journalism which is the true revolution here. The Ben Franklin Project is the beginning of a new era of an open and transparent newsgathering process. Our publications harnessed the power of their audiences to tell stories of importance to their communities. Those stories ranged from childhood obesity to property taxes.

    This is all the more remarkable because Journal Register is an oft-bankrupt, long-neglected, poor waif of a newspaper group that is suddenly seeing new life under the leadership of Paton, who is bringing his precepts and success from Spanish-language publisher ImpreMedia — digital first, print last — to this company. I’m advising him (along with my friends Jay Rosen, Betsy Morgan, and Jim Willse).

    It was only a few months ago that John and I sat in my office at CUNY and he told me about the laughably deplorable state of technology in the company he’d just taken over. He said they still have VDTs. If you came into the news business after about 1980, you’ve probably never heard the term and assume it’s something cured with a shot. Video display terminals hooked into old mainframe publishing systems were how we published starting in the ’70s (I’ll date myself badly and say that I started on them at the Chicago Tribune in 1974). They were replaced in the ’80s and ’90s by PCs. But JRC still had them. That’s how bad it was.

    Paton told me he was looking at having to spend $25 million just to get the company’s technology up to date. Hold on. We took to the white board and brainstormed how one could publish a paper today using Google Docs, Flickr, and WordPress. Paton, as is his habit, took my bull(shit) by the horns and ran with it. His staff found other, better free tools to do everything (even advertising). He printed one test edition of a paper to prove it could be done. Then he decreed that all his dailies would do this on one day, on July 4. More important, he used this as a means to get the staffs to think differently about their relationships with their communities, to act differently in how they made journalism. And they did it. Theyr’e not dealing in some theoretical future of news talked about by consultants and professors. [cough] They are building it.

    A friend of mine who’s met Paton [that’s Mark Potts] asks why it took the newspaper industry 15 years to get a Paton, a leader with the guts to see a new future for the business rather than merely trying to protect the past. I don’t know but I tell news executives around the world to watch what’s happening at humble JRC. There’s a future there.