What didn’t work (but could): newspapers

What I’m listening to while I type: Songs from the Shipyards

A little while back, I wrote about newspapers’ failing business model and its dependency on advertisers:

The issue is that the cost of producing a newspaper has outstripped earnings from newspaper sales since the 1880s. Since when, the business model has become almost entirely dependent on the delivery of an audience to advertisers – and the valuing of that audience according to both demographic and size.

I argued news is not the product newspapers sell; the attention attracted by news is what’s being sold. The business of newspapers is in providing an effective channel for advertisers.

So much we already know. You get people’s attention; you can sell them something.

The problem is that journalism is used to attract that attention – and both journalists and consumers of journalism would like journalism to be something rather ‘purer’, rather better than it is. But that kind of journalism is expensive to produce and most of the newspaper industry is failing financially.

We’re doing a lot of arguing about what newspapers should do next, but not making much progress.

His Girl Friday (1940)Newspapers have to do a lot of different things to get the attention they can sell to advertisers. They have to find and tell stories people want to read about; they have to present stories in a way that will make people want to read them; they have to deliver those stories so people can read them.

It’s a lot of effort when they could just stick with reader offers, holidays, dating and gambling. They should get into porn (I mean get into it properly)  it’s where the money is.

Telling those news stories is generally what we think of when we talk about journalism. But there’s no direct profit for newspapers in producing journalism; it’s a cost absorbed by the business in order to build or maintain the brand.

To reinvent the newspaper industry we need a business model where journalism is the product being sold, or the asset being valued.

A couple of definitions before I go on.

By “newspapers” I’m talking about the newspaper brand and its output, delivered through print and any other media.

By “journalism” I’m talking about, er…

Deuze argued that our understanding of what journalism is is pretty much based on what journalists themselves think it is:

scholars refer to the journalists’ professionalization process as… the emerging ideology served to continuously refine and reproduce a consensus about who was a ‘real’ journalist, and what (parts of) news media at any time would be considered examples of ‘real’ journalism. These evaluations shift subtly over time; yet always serve to maintain the dominant sense of what is (and should be) journalism… defined as a shared occupational ideology among newsworkers which functions to self-legitimize their position in society.

So journalists by and large define journalism according to what we do, or more accurately how we wish it was done. I’ve had that conversation hundreds of times in newsrooms – is this story “journalism” or PR puff? Is that person a good journalist or a sharp writer?

But what’s the value proposition for journalism to its customers?

If the primary customers for newspapers are advertisers, the value of the journalism to advertisers is its effectiveness in attracting consumers of journalism by type and quantity.

The journalism changes in reponse to market needs, to ensure the right consumers are reading the stories they want to read. It’s those consumers of journalism that value it the most.

I’m going to wander back to the newsroom…

Opening scene, His Girl FridayAt one newspaper where I was news editor I would spend four or five hours a day in news conferences, arguing over stories. There were generally around eight people in that room with ‘editor’ within their job title.

At two newspapers, I’ve sat in a conference group sometimes twice the size of the reporting team outside. We’d agree how a story should be delivered but wouldn’t be the ones delivering it.

Journalism is an old industry. It’s weighed down with historical ways of being and doing: there are still too many blokes in their 50s talking to each other.

So here’s my first suggestion: squash newspapers.

Go for flatter hierarchy, much more weighted towards the activity that’s being paid for.

Concentrate decision-making time on premium activity and manage majority activity through SOPs and supervisors.

Here’s my second suggestion: rethink what newspapers are paid to do.

Newspaper businesses have become really good at giving away their assets.

Not just sticking journalism they charge for in one outlet (print) onto another outlet (web) for free, but giving away valuable customer data (cookies and tracking) to other companies, and pretty much offering the PR industry an open door to talk to their readers.

Newspapers’ biggest asset is their readership. They use journalism (mostly) to attract that readership. The readership attracts advertisers. But by rethinking how their readership is “sold”, newspapers can revalue journalism and mine additional income streams.

If most of the work in newsrooms is making interesting news stories out of PR, why don’t newspapers see that as something they’re good at and can charge for?

The PR industry is worth $10bn globally, it’s growing as the press is shrinking yet a good chunk of that $10bn is being spent on getting PR stories into the press – for free. Doesn’t make sense as business model: close that open door and charge for entry, at least to the regulars.

Here’s my next suggestion: cut the number of journalists.

'The Front Page' (1974)The news industry really doesn’t need thousands of journalists with the same qualifications, it needs better job demarcation for the work that needs doing: fewer journalists and editors and more copywriters and subs.

So (bastardising Google’s 70-20-10 rule) have 70 percent of the newsroom doing 70 percent of the activity: subbing or writing news and information – that non-original news, entertainment, and information that forms the bulk of content.

Much of it originates in public and private sector PR. Much of that could be paid for. Doesn’t mean it has to be bad for the reader, or that the writer/sub doesn’t still get to ask questions to get a clearer story, or work out what’s most important to the reader. Do this job better and newspapers will be replacing fewer journalists with robots.

Put 20 percent of resources into “premium” journalism, the stuff that makes a newspaper’s reputation, produced by a smaller number of journalists good at finding real stories. Journalism needs to be free, newspapers don’t and by-and-large aren’t. Give the journalists and editors freedom to ferret out a smaller number of real stories instead of filling text boxes.

Finally, put ten percent of company resources into R&D.

Here’s one suggestion: Stop giving away data.

Block third party trackers, either to sell readership data yourself or to sell non-tracked web access to readers as a premium service.

And while you’re at it, find out what – or if – readers would really pay to receive ad-free, PR-free journalism.

What didn’t work: newspapers

What I’m listening to while I type: Sea Sew

I’m not saying that newspapers are dead: individual newspapers will continue as businesses as long as the ratio between cost and revenue makes sense for the owner. But as a business model, we really are looking at the endgame.

Last week, Newsweek announced it was to end its print edition and go online-only in a bid to cut “legacy costs” attached to producing the printed product. Reports suggested $40m annual losses (one day I’ll do a chart showing how $40m/£40m is the default for stories mentioning newspaper losses), although other writers suggested it was that Newsweek just wasn’t good enough.

The same week, Guardian editor Alan Rusbridger was spitting bricks over a Telegraph story suggesting he was fighting to save The Guardian’s print edition against pressure to switch to online-only. It’s a story that surfaces periodically, not least because media commentators don’t believe The Guardian can turn around its £40m (yup) annual losses before the business runs out of money entirely.

The issue is that the cost of producing a newspaper has outstripped earnings from newspaper sales since the 1880s. Since when, the business model has become almost entirely dependent on the delivery of an audience to advertisers – and the valuing of that audience according to both demographic and size.

But the problem the business model now faces is that the assumption that equated size of audience to share of advertising revenue has been overturned by the shift to digital. Online audiences don’t deliver sufficient revenue because the advertising industry pays less for digital ads compared to print. The usual quote is that $100 advert offline = $10 on the web = $1 in mobile.

While 43 percent of Guardian News and Media’s readership is online, the company makes only one fifth of its income from digital. The Daily Mail is the most popular newspaper website in the whole wide world yet raises just 2.6 percent from online advertising. In May this year, the Daily Mail was selling 1.9m newspapers a day, but had 5.6m web visits a day. Despite web audience trouncing print, the Group’s news websites earned just £12m against £171m for newspaper advertising.

As Rusbridger tweeted in response to the Telegraph story: “Numbers for going digital only & junking print just don’t add up”.

It’s not just about newspapers having a business model dependent on (falling) advertising, but having a business model that separates product from sales. News is not the product that newspapers sell. News is an attractor: the attention attracted by news is what’s being sold.

 

nestle

In the next village to me is a big Nestle factory. When I walk the dogs, I smell the coffee. Nestle makes Nescafe, KitKats, pizza, icecream, petfood, babyfood…The branding is in the products, the quality is in the products. You know what to expect from a Yorkie; you know whether you like Dolce Gusto coffee.

The business model is that you buy the Nestle products you like, and 130 years ago that was the business model for newspapers. You don’t pay a monthly subscription to drink Nescafe. Shopkeepers don’t give you free KitKats in the hope that you’ll read the advert for insurance on the wrapper.

(I’m making the assumption here that it costs less to make a KitKat than Nestle sell it for. Unlike newspapers).

For newspapers to survive people have to want to read a newspaper. Whether you’re selling adverts or newspapers, you still need readers. But just how many newspapers you have to sell also relates to the size of the business you’re trying to support. The problem isn’t just with the newspaper sales model, but with the scale of the companies that run newspapers.

Newspapers are increasingly a by-product of the global corporations that run media businesses alongside successful insurance risk services (DMGT); contract printing (Trinity Mirror); TV stations, websites, magazines and nursing services (Gannett); TV, Hulu, publishing, Australian rugby league (News Corporation).

If all you need is to make enough money to pay a handful of staff and the print and distribution contracts, you don’t have to sell a lot of newspapers. It’s a model that still works at small-scale or local. But share dividends, company cars, pension schemes, city offices, ad campaigns, a $33m salary for the boss, well it adds up.

Am I saying newspapers can’t be big business? Yes, I am. But I’m not saying that newspapers can’t make money.

I am also saying that you can’t have a business branded by a newspaper but make your money selling insurance and running care homes. Eventually, the insurance-sellers are in charge and the loss-makers are cut or axed.

More importantly perhaps is that you can’t be a big, global, multi-purpose company and still expect to dance like a butterfly and sting like a bee when you’ve got a fight on your hands. As newspapers have now. As tech-VC Fred Destin puts it:

Most corporations are defined by the quality of their planning processes, which in turn become objectives against which execution happens and achievements are measured. Corporate behemoths, faced with change, stumble and fall. In fluid markets where everything can be priced and exchanged dynamically, startups thrive. They are the elemental unit of a cloud economy, highly adaptable and insanely good at one thing. But large corporations cannot adapt at the speed necessary to remain best of breed in all aspects of their business.

Here’s what I think we do with newspapers: we forget what we know about selling newspapers and look at what we’ve learned from the web.

The web is incomprehensibly massive and global yet personal. It’s like driving a car – we shut the door and think we’re the only ones on the road. It doesn’t matter how big the web is (or how few companies are running it); we travel around it according to our personal roadmap of interests.

A couple of weeks ago I challenged my entrepreneurial journalism students to come up with something they didn’t like about the news – a problem that needed changing. Each problem they raised came back to one thing – the news wasn’t personal.

It wasn’t that they only wanted to read the news that interested them, it was that they couldn’t easily access news they might be interested in.

The profession of journalism has been based on how to deliver news that most people would want to know. But most on the web is most products, most choices, most information, most of our friends, most people like us, or most like the thing we’re searching for – ie most of the things one person wants, in one place.

Apply that to news and you get most of the news that interests me, and some of my friends, and some people with the same interests as me – without me having to look for it. Does that sound like a newspaper to you? And then there’s that other bit – the things I don’t know that I might want to know.

So, given another run at investor funding , here’s what I’d do instead of launch a newspaper: I’d build what Facebook could have become on April 6th, 2005.