It’s nearly impossible to talk about the future of news without someone predicting the extinction of two species at once: investigative journalists and working democracies. You can’t argue that wouldn’t be bleak. But Google’s chief economist Hal Varian points out that the biggest cost center at newspapers isn’t the journalists.
“There are huge cost savings associated with online news. Roughly 50% of the cost of producing a physical newspaper is in printing and distribution, with only about 15% of total costs being editorial. Newspapers could save a lot of money if the primary access to news was via the internet.”
He also points out that newspaper circulation declines can’t entirely be pinned on the Internet: “Circulation has been falling since 1985 and circulation per household has been falling since 1947!”
Perhaps the Internet isn’t killing news, it’s just making what one New York Times writer calls a new kind of news junkie — one that doesn’t demand we spend enormous amounts of money putting that news on paper and tossing it to her doorstep.
Three months after the Dolan family (owners of Cablevision) bought Newsday for $650 million and put the website behind a paid subscription wall, only 35 people have coughed up the $5 per week fee.
Subscribers to the print edition and to Cablevision’s Optimim Cable package can read the site for free, which, as one Newsday reporter put it (via The NY Observer), makes Newsday.com “the freebie newsletter that comes with your HBO.”
Two observations:
One: While it might suggest that publishers can slow the abandonment rate among print subscribers by giving those subscribers more value for the buck (generally a good business practice!), it’s another data point in the argument that paid online news models (NYT, for example) will struggle.
Two: The above model is broken. If news audiences are migrating to digital formats, publishers that — come on, let’s be honest — erect a pay wall around the digital product as a ploy to save print (or cable) subscribers are eating their own children. It’s a tactic to buy more time to figure out digital. But while traditional print publishers are “buying more time,” their competitors (especially the native digital publishers) will win the game. In other words, buying time before you have to deal with your digital strategy is the opposite of what publishers should be doing.
That’s a quote from James Gordon Bennett, editor of the New York Herald, in 1845, a year after Samuel Morse connected Washington, DC, with Baltimore on the information superhighway of the day, the telegraph. But the telegraph didn’t kill the newspaper era. From The Economist:
“The telegraph did indeed reshape the newspaper industry, but not in the way that Bennett and others had predicted. For although telegraph wires could deliver news more rapidly than ever, they had a ‘last mile’ problem: they could not disseminate news quickly to thousands of people. Only printed newspapers could do that. Far from putting papers out of business, the telegraph actually made them more attractive and increased their sales.”
Ah…. Perhaps news readers have always valued distribution over the content itself. Bennet is finally right: If you’re in the newspaper business, new technologies have put you in a terrible, probably hopeless, spot. If instead you’re in the news business, though, you’ll figure out how these digital platforms enable more efficient news delivery — dominate that last mile, like you have for the past 200 years! — and you’ll let your legacy newspapers go the way of the telegraph.
Newspapers have lost 7 million subscribers in the past 25 years, while online newspapers have picked up 30 million readers in the past five. See? The Internet’s not all bad! (Though you might argue that email’s mostly bad, since 90% of emails sent each day are spam.)
“It’s the year 2015. The compact device in my hand delivers me the world, one news story at a time. I flip through my favorite papers and magazines, the images as crisp as in print, without a maddening wait for each page to load.
“Even better, the device knows who I am, what I like, and what I have already read. So while I get all the news and comment, I also see stories tailored for my interests. I zip through a health story in The Wall Street Journal and a piece about Iraq from Egypt’s Al Gomhuria, translated automatically from Arabic to English. I tap my finger on the screen, telling the computer brains underneath it got this suggestion right.
“Some of these stories are part of a monthly subscription package. Some, where the free preview sucks me in, cost a few pennies billed to my account. Others are available at no charge, paid for by advertising. But these ads are not static pitches for products I’d never use. Like the news I am reading, the ads are tailored just for me. Advertisers are willing to shell out a lot of money for this targeting.”
The relevance problem with newspapers started with radio, TV and 24-hour cable news (not the internet), even if Craigslist, eBay and Google added to the pain by breaking down their primary business model. But all the whining that search engines (like Google) and news aggregation services (like Digg) are killing the news business neglects the fact that the Google News headline service sends news publishers a billion clicks a month. It’s time for publishers to turn that enormous audience into a new business model.
“Newspaper sites are the patent-leather stilettos of the online world: they get used for special occasions, but other shoes get much more daily wear. The beneficiaries of this behavior are networks and exchanges like Advertising.com from AOL and DoubleClick Ad Exchange from Google, which dominate the buying and selling of extra space.
“At nonnewspaper sites like Yahoo and Google, revenue from display advertising — the image-based ads on Web pages — seems to be returning. Yahoo’s display revenue on its Web sites increased 2 percent in the third quarter, though it was down from a year earlier. Display revenue increased at Google from a year earlier. “
ZenithOptimedia estimates Internet advertising overall to be up 9.2%, to $54.1 billion.
For the past few years, journalists from traditional media have been shocked and horrified at every new model (or suggestion of a model) that would reward content creators based on pageviews or ratings or copies sold. The outrage! A vulgar popularity contest!
Seth Godin joined the fray this week by suggesting that everyone — journalists included — should be compensated on a commission basis, like salespeople. Godin’s readers know that he tends to exaggerate his points for effect, and I’m sure this week’s post is no exception. But the point (in some less hyperbolic iteration) is a very good one. If you look at pageviews or ratings or copies sold as measures of consumer satisfaction, rather than vulgar popularity contests, Godin’s suggestion makes sense, and isn’t actually that new. Doing a good job matters. Executives at media companies — the publishers, the presidents, the editors in chief, the directors of circulation — have always been evaluated based on that kind of “consumer satisfaction.” As readers flock to competitive publications, top brass at the shrinking-popularity publication lose their jobs. That’s why serious magazines often opt for sensational cover designs.
Raw popularity, though, isn’t the best way to measure quality. Us Weekly will always be more popular than the New York Review of Books. But popularity among your universe of prospective readers — the wide net of people who like celebrities, or the narrow net of people who like literary books — is a fair measure of the quality of your organization’s work.
The tricky part is isolating the quality of one individual’s work from the organization as a whole. A great journalist teamed up with a lousy circulation person isn’t likely to hit his or her readership goals, just like a great salesperson who is teamed up with an incompetent ad operations person isn’t likely to collect his or her full commission, no matter how good s/he is at selling.
I love the commission model; it creates urgency and accountability — both of which are far more productive than whining about bloggers and the proliferation of free news on the internet. (Or newspaper bailouts, for crying out loud.) But let’s be sure any commission model for journalists is sophisticated enough to reward (or penalize) the results that journalists have control over.
“The findings emerged in a recent survey conducted by the Associated Press Managing Editors, an industry group. The report suggests the massive staff cuts at newspapers across the United States will make it even more difficult for the industry to adapt and remain relevant in the age of digital media.
“Most of the 95 editors responding to the August survey said their newsroom staffs had shrunk by more than 10 percent during the past year. And workers between 18 and 35 years old represented the largest age group affected by the layoffs, buyouts and attrition, the survey found.”
