Economic models for newsbrands

April 19th, 2009

Three journalists, publicly, have been proposing new models for newspapers’ financial survival in the face of Google’s aggregating all web-based articles writes Andrew Whiteacre. The three articles are submitted by David Carr, Maureen Dowd, and David Denby

of the three, only David Denby of the New Yorker proposes a business model that’s coherent: a partnership with internet service providers that levels a monthly surcharge on all customers in exchange for open access to partner websites. There are a lot of problems with that model, though. You can’t easily identify who has paid their fee, because it’s tied to an I.P. address or email address (I suppose newspaper readers would also have to get use to a new model, when it means you can’t as easily pass the Sunday paper around the room as my in-laws and I are doing right now). It skips over any addressing of/updating copyright law. And it places undue pressure on newspapers that don’t sign up and/or creates a cartel of newspapers that would have the power to decide who is included in the deal (not saying newspapers would do that, but it’s a concern that they could).

Peter Preston recently observed

Don’t write off newspapers. They aren’t finished,” said Sly Bailey, CEO of Trinity Mirror, the other day. “This is absolutely not facing oblivion. We believe in the future of newspapers.”

Well, she would say that, wouldn’t she? She runs 140 or so titles around the UK – but she’s closed 27 of them in the past 14 months, sold four more, and made 1,300 staff redundant. Ad revenue at Trinity plunged 30% in the first two months of 2009. And her share price – once the be-all-and-end-all for misty-eyed investors – has followed suit, from 314p to 25p over 12 months.

Yet she’s not part of the rather long pundit queue crying doom via internet bloodbath. She’s much more hopeful about real business and real recovery prospects – and she’s not alone. Read the authoritative Pew Center annual report on the future of American journalism and you’ll discover that “the death of newspapers is not imminent, despite news of bankruptcies and even some closures. The industry still took in roughly $38bn last year, and earned profits in double digits. Some 48m newspapers are sold everyday in the US. Even newspapers whose companies are in bankruptcy are profitable.”

Personally I believe in community journalism and a re-establishing of what community media means beyond an age which was defined by advertising $$ financing journailsm. Bailey reminds us writes Preston that there is life in the old dog yet, Better to analyse than wail.

Preston concludes that it is not

death by the net, or salvation by the net, but something a little more complex. The really significant US news of the past few days, in fact, has been good, not bad: the purchase, after a year in limbo, of one of America’s top 30 newspapers, the Union-Tribune in San Diego, bought by equity capitalists – and clearly bought cheap. Conclusion: print still has a price and is still worth buying if that price is right (which it hasn’t been through 20 silly years). Now, as the price goes down, recovery prospects rise.

That won’t prevent much evident pain and loss in print’s shrinking ranks, but it will begin to rebalance perceptions. Is the 20-person website that now serves Seattle as a residual Post-Intelligencer up to snuff? No, it’s thin and ordinary and – above all – short of reporting resource: it direly needs more of the 145 or so print journalists it couldn’t afford to keep because average ad takings on the net are only 10% to 15% of what they remain on paper.

“We have an absolute belief in our print brands, but alongside a growing, profitable digital business,” says Bailey. Crucially, she’s talking not one or the other, but both: a transition of shared necessity. It isn’t a future that will comfort those 1,300 who have lost their jobs; bitterness and blame inevitably flow free across recession’s landscapes. But it is a future with evidence

We need news and reporting, but the question beyond “new economic models” for newspapers is – what exactly do they offer as value? And, is it worth paying for? And that is a question, that I fear has not been asked in the board rooms of national and local newspapers as much as perhaps it should have been. I can think of countless attempts to get newsbrands to rethink, reimagine, engage with, play with what their businesses might look like if existing models of advertising, that filled their coffers might look like. Sadly, no one was home. On this theme Jay Rosen writes, in the age of mass media, the press was able to define the sphere of legitimate debate with relative ease because the people on the receiving end were atomized connected “up” to Big Media but not across to each other. And now that authority is eroding. The human driven communications revolution challenges that authority, and those in command have been found somewhat wanting. Not that this is in any way a “first” or unusual. Much evidence supports this theory, which smlxl has been a diarist for over the last 8 years

Clay Shirky is of the opinion that,

Revolutions create a curious inversion of perception. In ordinary times, people who do no more than describe the world around them are seen as pragmatists, while those who imagine fabulous alternative futures are viewed as radicals. The last couple of decades haven’t been ordinary, however. Inside the papers, the pragmatists were the ones simply looking out the window and noticing that the real world was increasingly resembling the unthinkable scenario. These people were treated as if they were barking mad. Meanwhile the people spinning visions of popular walled gardens and enthusiastic micropayment adoption, visions unsupported by reality, were regarded not as charlatans but saviors.

When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based, while employees who have the temerity to suggest that what seems to be happening is in fact happening are herded into Innovation Departments, where they can be ignored en masse. This shunting aside of the realists in favor of the fabulists has different effects on different industries at different times. One of the effects on the newspapers is that many of their most passionate defenders are unable, even now, to plan for a world in which the industry they knew is visibly going away.

Indeed as Shirky points out, if it ain’t broken don’t fix it.

The curious thing about the various plans hatched in the ’90s is that they were, at base, all the same plan: “Here’s how we’re going to preserve the old forms of organization in a world of cheap perfect copies!” The details differed, but the core assumption behind all imagined outcomes (save the unthinkable one) was that the organizational form of the newspaper, as a general-purpose vehicle for publishing a variety of news and opinion, was basically sound, and only needed a digital facelift. As a result, the conversation has degenerated into the enthusiastic grasping at straws, pursued by skeptical responses.

Perez talks about the patterns of technological revolutions how they impact industry, society and culture. And here we find ourselves. Of course there are solutions and answers, the question is are the incumbents to wedded to the old way of doing things, to embrace the networked society?

When the economy is shaken by a powerful set of new opportunities with the emergence of the next technological revolution, society is still strongly wedded to the old paradigm and its institutional framework. The world of computers, flexible production and the internet has a different logic and different requirements from those that facilitated the spread of the automobile, synthetic materials, mass production and the highway network. Suddenly in relation to the new technologies, the old habits and regulations become obstacles, the old services and infrastructures are found wanting, the old organisations and institutions inadequate. A new context must be created; a new ‘common sense’ must emerge and propogate.

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