What will work – journalism’s future

What I’m listening to as I type: Wounded Rhymes

Twice a year I give a lecture to journalism students on where I think journalism is going.

For obvious reasons, I rewrite the lecture each time I deliver it. Often minutes before I deliver it. It’s also more interactive than I can show in a post, but this is it, pretty much…

First, two videos – one from 1981 and one from 2011, to illustrate how the technology of delivering the news has changed in thirty years:

Now the one from 2011 – apologies for the music…

What I love most about the first video is that the pioneering souls who took part in this radical e-newspaper experiment had to cut out a coupon and post it back to the San Francisco Chronicle!

But what’s most interesting is that this happened in 1981 – ten years before Big Tim’s worldwide web went public.

The 2011 video focuses on what already today seems a limited range of news gathering tech. However,  the changes haven’t just been technical – twenty years on from the birth of the web  it’s the social change in the way we consume news that has had the biggest impact on the business of news.

The process of journalism has changed alongside our behaviour. We expect news we’re interested in to be available to us whenever we want it and wherever we are. The business of making money from journalism has had to fit into an open-all-hours, shop of news model.

 

Still from multimedia immersion rap videoRemember the picture above from the 2011 video, illustrating what’s happening to newspapers’ profits?

More accurately, what’s happening to the business that journalism depends on – which is advertising. The traditional business model for journalism, hasn’t been to sell journalism but to sell the attention the journalism attracts.

Here’s a better representation:

US newspaper ad incomeThe chart above, reproduced on Prof. Mark Perry’s economics blog, shows how quickly the money is disappearing – US newspaper ad income in 2012 was the same as in 1950. But the cost of producing a newspaper isn’t the same as in 1950.

The picture isn’t any different in the UK – 2012 should have been a bumper year for selling ads; the Olympics, the Jubilee, yet national newspaper ad spend actually fell by five percent in 2012 and dropped further in 2013.

TimetopanicIt should have been a neat equation – money from ads offline – in newspapers, magazines, on TV and radio, goes down but online ad income goes up to fill the gaps.

Except for every new dollar made online, newspapers lost 10.

The issue is that it’s not the traditional media companies making money from online ads, it’s the new kids on the block – Google, eBay, Amazon, Facebook, etc. But mostly it’s Google:

Google Ad Revenue Now More Than U.S. Print Publications CombinedHowever, we’ve been here before. The news industry is always changing. Like a snake shedding its skin every few years. Right now it’s changing faster than ever – driven by that technological and social revolution in the way we communicate and share news and information. There’s a another big change we’re living through  – the mobile revolution.

Radio took off because it’s mobile – it went with us in our car, our office, our home.  When it stopped being a piece of living room furniture; when it became small enough to take to the beach, radio took off and its content changed with its new users.

Now we take our mobile phones with us and what we carry – our phone, our handbag – is part of who we are.

The rise of mobile use is extraordinary – driven faster by its usefulness as a social web device:

  • Half the world now owns a mobile phone
  • One-in-seven people across the globe are on Facebook
  • 3bn hours of video are watched each month on YouTube
  • Over 60% of smartphone/tablet owners read news on it
  • Up to 24,000 pictures a day were sent to BBC during riots
  • 17% and growing of all web traffic is now through mobile

 

Putting global mobile use in contextChetan Sharma’s chart, above,  shows how the 6bn mobile accounts globally (not 6bn people with a mobile phone) compares against other things we might need. There are more mobile phone accounts than people with access to safe drinking water or electricity.

We love our mobiles but we wouldn’t love them quite so much if they didn’t deliver things that were more important to us than electricity, or bank accounts, or the internet.

So, will mobiles save the news industry?

Nope. Again, some businesses are making good money from mobile ads but not the news industry.

This is the sum (from Michael Wolff) that’s generally used to explain the problem: $100 offline = $10 on web = $1 in mobile.

The news industry, with its the ad-dependent business model, just can’t make enough money. The value of ads is worn away with each technological iteration.

But if you have a business model like Facebook’s,  where it costs comparative peanuts to generate all the content your users want (because it’s your users producing the content) you don’t need to charge  much for your mobile ads to make money.

So, the news industry is at this stage:

Running round like headless chickens

But why am I telling you all this? Why should profits and charts matter to a room full of student journalists?

  • Because you should know where the news industry is going.
  • Because  you need to know where journalism is going (and how you go with it)
  • Because the industry and the journalism may not be going in the same direction.

But mostly because journalism matters and because journalists matter.

There are stories that still need to be told. There is so much news that isn’t getting reported, or not reported well enough.

Here’s a handful of lesser-told stories I picked to fill just one slide:

  • Half of all under-5s that die, die in southern Africa.
  • Four-in-ten children globally don’t survive their first month; one-in-three children starve to death
  • WW2 didn’t stop wars: 51 wars and major conflicts in 1992; 21 in 2002; 38 in 2011… around 34 today.
  • More people have been killed in genocides since 1960 than died in WW2 concentration camps
  • 17 countries have higher life expectancy than UK
  • Over 45k UK homes will be repossessed this year.

The journalism needs to be done. It doesn’t matter what’s happening in the news industry or to advertising profits. We need good journalism. We don’t need rewritten press releases (or regurgitated content with 25 headlines).

And journalists matter. They’re still out there fighting and sometimes dying to bring in stories:
1017 journalists killed since 1992Not just ‘trained’ journalists – citizen journalists and netizens on the ground in conflict zones. The biggest change the web has delivered in news is the range of people delivering news.

Guardian editor Alan Rusbridger describes it as ‘open journalism’ – a shared activity with journalists, readers and others delivering and developing the story. I love the Guardian ad:

Journalism is still about having the skills and drive to find the story – like the reporter in his pyjamas in the Guardian ad talking to his contact.

It’s not about the technology, it’s about how you use the technology to become a better journalist how you use all these new tools to help you tell the stories that need to be told.

I’m going to finish with four predictions – the things I think are on the horizon for journalism.

  1. More news stories originating in computer algorithms, eg Narrative Science
  2. News will become more personal, more locative, and more recommended –  eg Summly, Buzzfeed, Facebook news feed…
  3. Journalism split further into similar and short-form vs different and long-form – eg Medium, Matter
  4. We’ll move away from devices to everywhere access to news and info – google glass, iwatch..

Narrative Science uses computer algorithms to turn data – business information, sports reports submitted by amateurs, into news stories.

We’ve made that easy by writing, and teaching, journalism ‘rules’ and  journalese. Every time your player “attacks” the goal or your “sick” youth “knifes” your “OAP”, you – we – have made it easier for a computer to write the story.

We don’t yet have a ‘tripadvisor’ news recommender, but every app or curator that that sorts through existing news to give you only what you say you’re interested in, is making you more conservative, less curious than you should be.

We used to go to our news source. We would walk up to the TV, or go and buy a newspaper, or sit at the PC. Then we took it with us – the radio in the car, our laptop, our mobile phone. Increasingly, it’s wherever we are – waiting for us to arrive and ask for access. By tapping a table, or waving a sleeve, or nodding our head.

Google glass is currently in semi-public testing and will launch in 2013. There are all kinds of issues around privacy and usability but it’s still very new.

As you watch this  last video, think about where Google glass and other wearable tech could take journalism? Think about what you will do with everywhere, real-time access to gathering and uploading information. Think about who will see what you do.

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.