Monday, May 18, 2009

Really? It's The Business Model?

Sorry to momentarily feel prescient, but I was amused to read this morning so much crosstalk about the idea that newspapers, and other media, are starting to think about the ad model a little more seriously.
The FT has a nice article up relating to Rupert Murdoch's latest thinking about content, ads, and whether or not to make the Fox audience pay to receive.
The big idea, as always, has been to say, okay, the ad revenue isn't there (yet.) to go ad-only with respect to revenue, so what about subscriptions.
Content has always been a mix of sub vs. ads with respect to keeping reporters at the phones, so this is surprising.
What's struck me over the past 15 years has been the idea that micropayments haven't caught on.
We, who still buy papers from newsstands, have been well at the epicenter of the micropayment model, trotting out our silver in exchange for news, amusement, and other print-based delights. The ability to facilitate a $0.75 transaction through the Internet, however, doesn't seem to have caught on in the same way that AT&T's monopolistic relationship with Apple's iPhone. As a consequence, Internet news has suffered -- only to be supplanted or supplemented (depending on the vertical market) by the blogosphere.
So, now, Rupert's elected to test the micropayment sphere to address his empire's online revenue issues.
Well and good.
The pricepoint for online news is an area that has defied many analysts, thinktanks and whathaveyou.
I've long been an advocate for a living wage for journalists, since I think journalism is vital to a well-informed democracy.
I've blogged here about the notion that entertainment vs. information continues to be a struggle for major networks. I've also blogged here that local and regional journalism is more than a first draft of history -- it is also, when aggregated -- the rough draft of history, rich in footnotes, commentary, and primary sources. Also, I should say, that local and regional journalism OUGHT to be able to charge more for their archives than national journalism for the following reasons:
a) It's more granular.
b) And therefore richer in content and primary sources.
c) Obits, the first thing any serious journalist learns to write (because it teaches compassion and accuracy), are gold for avid audiences thirsty for genealogical information.
d) High school sports are so bloody important for people with skin (and bloodline) in the game.
e) Most people are regionally bound by blood, history, and the caretaking gene -- the one that says I should care about people, families, and events in my immediate contorno because that's what is immediate, accessible, and therefore important to my family, my friends, my contacts. Because for most people, still, geography is destiny, as well as community.
f) National journalism will always be ADD. Local and regional journalism is more OCD, and therefore inclined to follow stories. Local and regional offers depth. National will always cleave to those topics that are, with few variations, more surface-oriented. National captures the zeitgeist of the body politic, when they're right. But they're also more likely to aggregate around teapot-tempests that, ultimately, are silly, and manipulable (as in the recent Teabag party).
I don't, therefore, believe that national news markets should be able to charge as much as can local or regional newsproviders. I think the "give it away/freeware" model will benefit them much more than can micro-subscriptions (ie, pay per article). Whereas small news outlets can, and should, charge a premium.
Because local avidity should not be under-rated. It caters to an audience of enthusiasts that will show less price sensitivity, because they will always care more than "outsiders."
Hope this helps shape the debate.

Wednesday, May 13, 2009

It's the business model, stupid.

So, Al Giordano has a post up entitled Black and White and Dead All Over over at his website, and frankly, it's tiresome, and simple-minded, in the extreme.
The basic gist: Newspapers are folding, becoming online editions, and generally exhibiting acute signs of suffering. And what that means, per Giordano -- who is out on the speaking circuit -- is that a thousand flowers will bloom in the absence of dead-tree media.

First, to be kind, let's stipulate where he and I agree.
a) The fall and trouble associated with papers is widespread, rampant, destructive of contemporary journalism, and the informed public will suffer as a result.

Okay, that was a short list. Here's where he and I disagree.
a) That journalists had it coming because we were all of us in the pocket of corporate media. That's simply not true at the local level, or even at the regional level. Most of us -- as in 99% were trying to do a good job.

b) That the Internet has now flanked print media. Also untrue. Newspapers and magazines continue to offer sound journalism because -- drumroll -- they throw resources after trusted reporters who know they're onto something. The blogosphere is great for opinion, often deep insight, and when it comes to breaking news -- sadly late. There are exceptions, but they prove the rule. Josh Micah Marshall over at TalkingPointsMemo.com is the exception for his tenacity in following the State Attorney Scandal. Individual journalists like Walter Pincus, and his contemporaries are the exceptions because they have deep wells of contacts. Most of the Internet blogosphere have a small network of contacts that are useful, occasionally, for breaking news. But not consistently. Moreover, the blogosphere has few resources to do vital things like file FOIA requests, go to meetings, network on the payroll, etc. -- the typical things journalists do when in the field that waiting for AdSense bucks has not yet been able to duplicate.

c) That the sooner the traditional media are gone that it will create a vast wellspring for the blogger to pick up stories. Actually, here, he and I agree, but only partially. Yes, if traditional media die, this will create an opportunity for the blogger. But only if they die, which implies that while traditional media continues to limp onward, that the blogger is shut out. Surely, if traditional media die, those with something to say will have to come to the blogger, and then the tireless blogger will receive a well-deserved scoop. But until then, sources (especially whistleblowers) will continue to gravitate to the news outlets where their statements can have the widest impact.

All of this cuts to the twin issues of audience and revenue model. It stands to reason that audience=dollars/n, where n is a four to ten digit number. What is important to note is that AdSense is not a revenue model for the individual contributor, unless they have a trust fund, live with their parents, or have become independently wealthy.

Nor have any other revenue models appeared that supplant AdSense, and until Google collapses -- of which it shows few signs -- there likely won't be any models that can supplant AdSense.
AdSense will always favor the momentary attention spike versus the truly valuable -- ie, first draft of history -- journalism, because most people would rather be entertained than informed. Don't get me wrong: I'd rather be entertained than informed, but I'm informed because I know I must be in order to be remotely valuable to society. Being well-informed is always a sacrifice of pleasure, although, I will admit that being even moderately well-informed is its own, twisted reward.

The other thing is that the fate of over-leveraged national media outlets is not necessarily indicative of the overall state of journalism. It's indicative of being over-leveraged.

Bottom-line, until a business model is found for individual correspondents to live on more than the ramen diet, the thousand flowers Mr. Giordano proposes will never bloom.

They'll never even sprout.

Thursday, May 07, 2009

Don't Buy The Hype

This is my 15th year in journalism, and I haven't spent 15 years doing anything consistently, other than eating, breathing, and making music where possible.
Since 1995 or thereabouts, it was clear that the Web was going to change journalism, and it has, but the evolution from print/audio/video to Web remains incomplete.
Which is why I like noting the changes.

So today, three things grabbed my attention: First, Walter Pincus' superb article on the Columbia Journalism Review site, which essentially summarizes all of my views on journalism in the electronic age, and dives deeper, with more historical context. It's a must read, and am very pleased that Metafilter picked it up.

Second, this news over at Techdirt relating to newspapers crawling to Congress for bailout privileges.

And third, this post at Gawker.com on David Simon's testimony on the subject before Congress, and how he has it all wrong.

Pincus has it right. First, the problem for newspapers is debt, much as it is for other sectors of the country. Consolidation has messed things up. Over-leveraged consolidations has messed things up considerably. Second, Google is not the enemy. Third, journalism has lost its way, for a variety of reasons. Downsized newsrooms lack institutional memory, because freelancers are temps by another name, and spreading too few journalists too thin leads to bad coverage.

Techdirt backs up the financial issue, and a review of say, McClatchy (one former employer of mine which strapped itself to buy Knight-Ridder) versus Lee Enterprises (another former employer of mine) demonstrates clearly how Wall Street looks at stocks that are carrying too much debt-load.

Gawker in both the article and the comments upbraids Mr. Simon for a) not being a journalist, really, because he went off to write The Wire, and b) being a techno-Luddite -- both of which are, fundamentally, less-than-savvy arguments.

Newspapers and related, let's call them analog, media will not be saved by bailouts, nor by turning them all into non-profits. Analog media are going through a change period, wherein consolidation is not king, overwhelming debt is not a business model, and Web-based advertising for local and regional coverage is undervalued. On the Web, vertical models are rewarded because they can appeal to global interest groups. Horizontal (geographically-based models) are undervalued because the Web audience is global, and geography (at least for now) less important. This will ultimately, I believe, not stand, because geography remains important for everything that involves atoms, which are still harder to ship, see, and touch than digital items. The Web is maturing in this direction, but not swiftly enough to make up for the loss of classified advertising.

Not every merchant can afford to run a Fedex/catalogue/shipping-based business. Local businesses remain important to local people. Ditto with regional. As transportation becomes pricier, local and regional media will see an upswing in their importance. Ad values will rise accordingly. We're just not there yet, and this is an awkward economic transition for overly-leveraged businesses with loans to payoff.

It's the winter of journalism's discontent. How we manage this transition, and what recrudescence we are able to pull off with respect to journalism's core values will be important.
If you're a journalist like I am, this period of soul-searching and concentration on our core values will be important in the near-term.

Think of it as a mix between cognitive and shock therapy.
But we will get through this.

Tuesday, May 05, 2009

Hamstrung

So now Disney has a deal with Hulu, which you've all probably read about in greater detail than I'll go into here. Media watchers are generally taking the view that this move leaves CBS in relative isolation, although some suspect that CBS execs are already in talks to figure out how to latch onto the Hulu revolution.

Well and good. We'll see how all that shakes out.

The thing I want to get into today is a quick discussion of the publishing business model, and how that applies to just about every troubled media business, including NBC and CBS, plus the music industry, and newspapers.

Ready?

So, here's how publishing works: You back a talent (to produce a book, a video, or some form of media), the talent produces the work, and you obtain rights to it. In the case of dead-tree publishing, this is practically in perpetuity. With video, the rights are a little more fragmented -- witness Hulu's ability to publish certain episodes of certain seasons for certain durations of time.
A microcosmic case: NBC's popular Heroes series had its season three finale, and the bulk of Season 3's episodes will be available on Hulu throughout the summer, after which, not so much -- a rotating group of five random episodes thereafter.

Taking this case as a microcosm, then, what are users to do to get Season 1, or 2? Well, there's plenty of sites that are hosting bootlegged/ripped episodes, or users can go to Netflix and rent the season compilations. What about NBC's own website? After all, they backed the series. Surely all the episodes should be there. Alas no. Not the case. And even more water-brained, NBC's own site lacks a search function that would allow the retrieval of full-episodes from past seasons, instead of the -- let's be kind, and call it extraneous, non-episodic material. Instead of, say, useless garbage, which is a tempting term for someone less genteel than I.

Let's establish a maxim: Users always want what they want and how when they want it. And now a corollary: If they can't get it from you, they will get it from somewhere else. In other words, viewers/users/consumers will follow the path of least resistance. Go hiking sometime where livestock roam. Follow the footpaths beaten into the hillsides by countless hooves. You'll find their routes are the most efficient for traversing the incline. Ditto with users. Therefore, if you (the publisher) fail to provide for a given device, a format, a time-shift, or a place-shift from your traditional business model, away go the hits, and next thing you know you're looking for remedies from law enforcement agencies to stop all the piracy. When, in fact, you could have simply anticipated the needs of your users with the content (that you had rights to) and made it available and monetizable.

Back to publishing: The one lasting fundament of traditional publishing (paper) is having a deep backlist. If you own the rights to Catcher in the Rye, you'll continue to make money until the world explodes, thanks to high school student reading lists. This applies to other media as well: Think of all the radio stations making money from music released in the seventies/eighties/nineties. Think of all the newspapers that are NOT making money off their non-digitized archives of every story since the dawn of the 19th century. Think of all the television stations that continue to broadcast material whose creators have long since shuffled off this mortal coil.

Back to NBC: If you own the rights to stream episodes of Heroes, you could theoretically also make money until the end of time. Providing you provided all of your episodes in an easily searchable fashion.

There is no reason why NBC can't do this right now. Ditto for all the other networks. It's a missed opportunity that is being flanked by overseas sites that are not governed by US copyright protection. With a global Internet, this is simply short-sighted and destructive.

Execs need to negotiate now for broadcast rights that take into account the new economic realities of time/place/device shifting. They need to take a note from the Gutenberg galaxy, and realize that all their programming (including all that tape/film they warehouse in New Jersey) is potentially important, should be digitized, archived, made searchable, and available for download or streaming.

I'm not trying to tear down the networks for their failure. I want them to succeed so they can continue to bankroll great programming.

I just wish they would stop failing so obviously.