I was reading Maurreen Skowran's article on E-Media Tidbits, NYT Readers Brainstorm Business Models, Paying for Online News, and it got me thinking again about the "death of journalism" issue and, in particular, the strange idea of "paying for news".
Maurreen wrote:
Two of the Times essays focused on paying for news. The one by Steven Brill (founder of The American Lawyer magazine, Court TV, and Brill's Content) was headlined "Culture of Free" Is Suicide. With newspaper fortunes sliding as they are, the question of whether and how to ask readers to pay for online news has recently gained prominence, including in Walter Isaacson's Feb. 5 Time.com piece, "How to Save Your Newspaper." But Tidbits founding editor Steve Outing advocated a different approach in his Editor & Publisher column yesterday: soliciting donations for online news via a new startup, Kachingle.
All of these ideas seem pretty whack to me. I am not a journalist and come at this issue as someone with an MBA from the University of Chicago which is to say, somewhat coldly and somewhat analytically. As a graduate of a liberal arts program at the University of Notre Dame, I also tend to think in terms of a historical context. The historical, business analogy is the auto-makers and the buggy whip manufacturers. The idea being that buggy whip manufacturers thought they were in the buggy whip business when, in fact, they were in the business of affordable, personal transportation. When automobiles gained acceptance as a more affordable form of personal transportation the buggy whip folks were wiped out. The story is only sort of true but close enough for an analogy.
In this light, it seems to me that those bemoaning the death of journalism should consider what their customers have been buying all these years -- readers of a newspaper, listens on the radio or viewers on a TV station we are not "paying for news" we have been "paying to be informed in the most efficient manner". We, the audience, were willing to pay a subscription fee, newsstand price or put up with commercials only because there was no more efficient means of being informed.
From the mid-ninteenth century until the mid-20th century, the most efficient way for people to be be informed was through newspapers and magazines -- cheap, portable and scalable. The economics of production and distribution of news print is such that the cost to distribute a brief summary of new information (headlines and lead paragraphs) is not very different from the cost of providing the summary information along with details (the full story), discussion of the new information (news analysis, commentary) and subsequent reaction to the new information (op-eds, letters to the editor). In fact, if you are selling ads to run among the content you want to fluff about that content as much as you reasonably can.
From the mid-20th century until recently, the most efficient way to distribute a brief summary of new information (headlines and lead paragraphs) was radio and television broadcast. Television also provided the most efficient way to distribute some details if they were available in a visual form (a house fire, a flood). Due to the high cost of production, news print was still more efficient that broadcast for distributing details that were not readily communicated visually. Radio was still the most efficient way to be informed while driving a car or otherwise being engaged in some activity that required concentration. All forms were efficient for discussion of the new information (news analysis, commentary) but print remained better for subsequent reaction to the new information (op-eds, letters to the editor). In each form of media, someone interceded between the new information and the audience -- an editor -- and they decided what the audience needed to know.
In the news ecosystem which evolved in the period after World War II, each media had its relative strengths and weaknesses so that whatever tension might have existed, the different forms operated in a delicately balanced complementary state - you read the newspaper on the train, your listened to the radio in your car, you watched TV over breakfast or in the evening after work.
The Internet has wrecked that balance because it allows for the highly efficient disintermediation between an original source of information and the information consumer with technology layered onto top of the distribution system allows for the efficient sorting of information (Google News algorithm, Digg, Trending Topics on Twitter) where production itself is disintermediated as the source of the information can just as easily be the producer or the event participant who reports about the experience from within the experience (e.g, the Virginia Tech shooting camera phone video, the baseball player who blogs the World Series while playing in it, the Tweeted photo of the Miracle on the Hudson plane). Just like a hot shot reporter, I do not need to watch Obama address Congress. I can download his speech off the web and read it an hour or two before he even steps to the podium.
Technology also allows information consumers ways to get around the various toll booths erected by information providers. DVRs allow me to time-shift shows that I may not see the ad for the Macy's White Sale until the week after the sale is over or better yet (for me) I will not see the ad at all. Likewise podcasting allows me to time-shift radio programming. BitTorrent goes this one better and allows consumers to skip even having a machine to record anything; they can just subscribe to BitTorrent feeds and quickly and efficiently access their favorite shows. As long as one person on the planet rips a DVD or records a television program, the rest of the world can get it in a hyper-effecient manner.
The same sort of creative destruction that is occurring now in the newspaper businesses has been replayed many times before in many different information based businesses, most notably in the financial industry with the end of fixed-commissions for stock trades and the advent of online brokerage firms. Smith Barney sought to make a virtue out of its reluctance to embrace change. Remember how John Houseman said they made money? "The old-fashioned way....we earn it." Turns out trying to make money the old-fashioned way in a rapidly evolving marketplace is not a good way to earn money. Smith Barney went out of business, its name acquired by Citibank which is itself now trading at below $1.00 a share.
Despite the recent financial market meltdowns, the winners coming out of the era were those that embraced the new technology, the new economics and freed themselves from the old model -- often by setting up business that competed with themselves. There is no reason, for example, for newspapers to have their own reporters write stories about events outside their immediate area that do not directly impact readers. Why do newspapers still print baseball box scores or farm prices? Any sports geek who is interested in those stats is getting that information in pumped into the fantasy baseball team application in real-time so they have 99% of the information before the last at-bat. There is no need to print weather reports, anything other than local sports reporting, entertainment and so on. There are just too many more efficient ways for the reader to be informed for this to be worthwhile -- and let's not even start with classified ads.
The only way in which traditional reporters can be more efficient than alternatives forms of media available over the internet is (1) breaking their own news stories and (2) providing analysis that only they are qualified to provide. This means more investigative reporting and more hyper-local news and more expert analysis. As Chris Matthews likes to say on this TV Show, "Tell me something I don't know".
Newspapers should dispense with reporting that duplicates what is already available on the internet and focus on unique news and information product. They need to dramatically lower costs. That means stop producing and delivering a physical product except where there is a clear profit margin in doing so. People who want their news fast are getting it online so newspapers should not concern themselves with getting their paper out fast; they should outsource production to remote, central plants and deliver the newspaper via the postal service. Or, in certain markets, they should get rid of home-delivery in most zip codes, limiting kiosk or newsstand delivery to high-traffic areas like transportation hubs. They should focus entirely or almost entirely on the web and get rid of almost all staff and equipment that are not directly involved in producing the content for the site. The effect will be less revenue with lower costs but mean sustainable profitability. Of course, that means much smaller companies without the financial clout that large newspaper companies once had but, as has been shown time and time again, the alternative is the destruction of the entire news organization.
Now, I know that many news organizations have been trying to do many of these things. Maybe they never had a chance. But for every Rocky Mountain News there is a Politico and for every Seattle Post-Intelligencer there is a Huffington Post.
