Currency of information - the future of newspapers | SMLXL - Business and Communication Innovation from Alan Moore

Currency of information – the future of newspapers

March 25th, 2009

The future of newspapers is a bit like climate change: there are now far fewer ‘old-media’ deniers. said Alan Rushbridger

In December last year I wrote

I predict we will see newspapers fail, the economic downturn is the final scene in this play. However, what newspapers have not done, nor most media, is to understand that in a networked society, the currency of advertising has to evolve, that offers more perceived value to both its recipients and its creators. An information ecology and economy judges information on its contextual relevancy, its timeliness and its ability to enable decisions and transactions to be made. Unfortunately, few have been able to grasp this completely and be able to deliver the type of value that signals the potential of survival as the gales of creative destruction whirl around us. The Link Economy is different to the Controlled Content Economy. We need a new logic and common sense and only then can we comprehend this miscellaneous world.

In Downfall I commented on the sad tale of the decline of local newspapers in the US and indeed in the UK. And James Robinson picked up the story last Sunday

In the UK, dozens of titles have closed in the past 12 months and consultant Deloitte predicts that one out of every 10 print publications will have to reduce how frequently they publish, go online-only, or close down in 2009. No owner is unaffected. Earlier this month, GMG Regional Media, part of the Observer’s parent company Guardian Media Group, announced extensive job cuts at its local titles, including the Manchester Evening News and the Reading Evening Post, with 113 journalists likely to be made redundant, according to GMG chief executive Carolyn McCall, who emailed staff last week to explain the decision. Profits at the division will fall by 85% in the current financial year, she warned, “and the trend is worsening”. The Independent’s owners are reportedly about to enter talks with creditors after finding themselves unable to pay a £188m bond due in May.

Advertising goes on-line
According to media regulator Ofcom, internet advertising rose by an average of 70.2% each year in the five years to 2007, when it was worth £2.8bn out of a total UK advertising market of more than £14bn. But the vast majority of online ad revenue is soaked up by search engines – £1.6bn of the £2.8bn total – and a single company, Google, dominates that space.

However out of this statement comes a truth – advertising or the perceived “value” of advertising has evolved from “display” to “search and discovery”. Again, the observation, in a networked society, the currency of advertising has to evolve, that offers more perceived value to both its recipients and its creators.

For example the BMW winter tyre mobile campaign in Germany, that for an outlay of $60,000, received a 30% response rate which calculates to $45m in revenues. It is not impossible – but companies have relentlessly stuck to the old furniture of advertising to their financial and sadly, human cost

Yet we know for example that The Johnston Press was selling digital display advertising exactly the same as it was for its print editions. Why? And why did they not ask the question, what is the role of our local newspapers in the early 21st Century, how do we make greater meaning out of our claim that Life is Local? As a consequence of their failure to answer that question, or even to ask it, has seen that news group close to defaulting on its banking covenents – though they are not the only ones.

But here we see the Johnston Press creating online editions of regional titles. Johnston Press made a two-year deal with PageSuit, a software development company that creates digital editions of publications, to establish e-editions of all their regional titles.

The move should increase ad revenue and online readership for the company. Digital director for Johnston Press Commercial, Chris Babyode said in a press release from PageSuite that “Local and national advertisers will benefit through direct links to their websites, be able to track ad performance and reader behaviour, plus significantly increase their online audience by targeting readers more effectively.” In the last year, Johnston Press underwent 1,110 job cuts and the largest decrease in ad revenue in its history.

The answer is not technology per se, and the answer is not the same display advertising in digital format. How close to 0 do you need to get before you understand that click-through’s don’t work?

More over we need to round on the word TRUST. Because as Ian Jack writes

What happens next is more interesting, and well described in a piece by Jon Slattery for the National Union of Journalists’ paper, the Journalist. Local newspapers often reproduce the press releases of local authorities unchecked and unchallenged as the cheapest way to acknowledge new information; written by former local journalists, its style fits perfectly with the paper’s. Journalism is quietly migrating with journalists to the public sector, enabling (according to the NUJ) newspaper owners to make even bigger cuts. Slattery quotes an NUJ official, Miles Barter, wondering why “the poor council taxpayers of Burnley and Accrington” should subsidise the shareholders of newspaper chains such as Johnston Press and Newsquest.

Unchecked and unchallenged, Nick Davies in his book Flat Earth News excoriates the owners of newspapers (describing them as Grocers) because their interest its not about community, its not about quality journalism is about one thing and one thing only – MONEY – PROFIT AND SHAREHOLDER RETURN. And that’s all well and good until the quality of the product is so inferior it devalues itself. This is life in a news factory says Davies whilst writing about one journalists experience of working for a local news paper. These are corporations that think greatly about commerce and casually about journalism. This is the heart of modern journalism, the rapid repackaging of largely unchecked second-hand material, much of it designed to service the political or commercial interests of those that provide it.

So trust becomes the key to unlocking advertising revenues, and that currency seems to be going south along with revenues. Yet no-one seems to have spotted that one either.

Cutting jobs, and with that reducing the massive fixed overheads of print publishing is only one part of the solution. Display advertising has been with us for hundreds of years, and did a great job – but today it no longer works in any medium, just look at the sorry state of commercial broadcasters. What I don’t understand is why so few have experimented with new advertising/currency models?

James Robinson argues that knowing your customers is absolutely paramount – indeed, and that comes with deep insight as the BMW campaign demonstrated. What could newspapers learn from such a success? I wonder.

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