With competition descending on print media, consumers will merely weed out poor quality media and pay for what they value
By Mary Kissel
On 10 June 2009, The Daily Show with Jon Stewart aired a segment in which the show’s correspondent, Jason Jones, toured the New York Times’s headquarters in Midtown Manhattan. Jones sits at a desk and notes the Times had lost $74 million on the quarter and 40 per cent of its advertising revenue to Craigslist. “But even today there are some who still think there’s merit in publishing the news 24 hours after it’s happened”, he editorialises. “Give me one thing in there that happened today”, he asks assistant managing editor Richard Berke, pointing to the printed pages. Berke, a tight-lipped, long-time newsman, is stumped.
Is there a neater summary of the plight of America’s print media? Newspaper titans like the Times enjoyed a privileged position for decades and then the internet arrived. Suddenly the old guard had to compete with (gasp!) websites like the Huffington Post, Politico, and Buzzfeed, with their splashy headlines and tabloid-like reporting styles. And don’t forget Twitter, which makes average joes journalists too. Between 2005 and 2013, print advertising fell 50 per cent, with much of that business migrating to online publications. Major outlets have slimmed down to a shadow of their former selves (Los Angeles Times), ditched their print editions (Lloyd’s List), or disappeared altogether (Baltimore Examiner, Tucson Citizen, Kentucky Post, to name a few). There’s even a website to document the decay: newspaperdeathwatch.com.
Cue the inevitable lamentations about the decline of quality journalism and the deleterious, knock-on effects on civil discourse and democracy. Don’t believe the naysayers.
It must first be noted that horror at competition is odd on its face, given it’s an enduring, essential, and central feature of capitalism. Consumers today enjoy higher-quality, lower-cost, and more plentiful services thanks to internet-induced innovation, across almost every consumer-product industry. Movie lovers can click on Netflix rather than trundle to Blockbuster. Instead of driving to Barnes and Noble, booklovers can troll the vast titles at Amazon for a fraction of the cost and have books delivered instantaneously to their mobile devices. High-end shoppers don’t have to pay for the overhead of mortar and brick at Barneys or Bloomingdale’s; they can surf online at Gilt or Rue La La.
Competition was always going to descend on print media. The only question was when it would reach a critical enough mass to force the management of said publications to do what their online competitors were doing (indeed, had to do) from the get-go — ask what consumers want, when they want it, and how they want it delivered. Does the CFO of a small electronics manufacturer in Iowa City need the same information as a lobbyist inside the Beltway? Does a retiree in Florida reading the paper in print have the same preferences as a recent college graduate looking for a job in California? Of course not.
This notion will immediately offend the journalism-school complex, erected over the past century to teach aspiring Woodwards and Bernsteins that information dissemination is a public service, not a consumer good, and that the two are mutually exclusive. This is the thinking that powers state-backed broadcasters in democracies like Britain and Australia, an oxymoronic concept par excellence. This is also why state media groups will never innovate like their private-sector peers.
Thus the cardinal rule for a financially vibrant, private print media in an internet age: To give away a product is to create infinite demand and zero revenue. The publication I work for, The Wall Street Journal, was lucky to have Peter Kann in the ’90s, a publisher who thought gifting online content was a fool’s errand. In 2009, under the new management of Rupert Murdoch, the Journal started charging for mobile content too. The New York Times, Financial Times, and Washington Post conditioned their readers to expect free content, and thus experienced the inevitable grumbling and resistance when the day came that they too had to put a paywall up online.
The internet is not the only force changing the business model. Prices must reflect the value of the product. As Kann noted in 2009, the roots of the print crisis even “predated the internet by some decades as publishers relied more and more on advertising as their primary revenue source, chased larger and larger audiences to appeal to those advertisers, and displayed less and less confidence they could attract those audiences by charging full and fair value for the publications they produced.” If a print newspaper is destined to become a novelty item for the nostalgic, should it be priced at double its price today? Triple? That many newspapers had — and still do — have journalists playing CEO should be noted.
There’s no indication that print media will suddenly have a grand rebirth and the heady days of pages of classified ads and shareholder notices will return. The paper copies of newspapers may continue to lose money, which is why they should be purchased by owners who can afford to foot the red ink in exchange for the power that a newspaper’s bald-faced headlines afford them. As the Journal’s Business World columnist, Holman Jenkins Jr., put it, “The right buyer for a big metropolitan daily, by this standard, is a local real-estate developer, someone willing to lose money covering local news as long as it helps him win zoning fights and promote cronies to elective office.” The Koch brothers may make better proprietors than a Jeff Bezos sitting in Seattle when his newspaper is churning out copy for a Washington DC audience.
Again the journalism school graduates will cry corruption, as if newspapers weren’t invented in the first place as profit-making enterprises with a point of view. As if a modern-day reporter’s biases don’t inform every story he writes, from deciding what to write about, to the sources he contacts, to the details he chooses to include or discard. The conceit of the Columbia Journalism Review is that there’s a holy grail called “balance” in news, which everyone can and should agree on, but which ends up being a formula of he-said, she-said paragraphs, with colourful quotes thrown in, and a sentence with appropriate caveats, should one side prove not to be true. It is the epitome of lazy reporting.
What then is quality journalism, of the kind that informs the public, enriches democracy, and tempts readers to buy it? It is above all reliable in its facts and energetic in its pursuit of truth. This requires editors and reporters who can rise above the crowd complex that suffuses so many newsrooms. As Gerard Baker, the Journal’s editor-in-chief, explained to a New York University crowd: “Too many news organisations think about accountability of companies”, but are “so credulous about what government is trying to do.” Credulous being the operative word. Cognitive dissonance is just as handy in the news business as it is in IBM’s boardroom.
Like companies, too, news organisations have tangible assets in their employees, cultivated over a generation (if they can be induced to stay that long), and an intangible asset in their brand, built over several generations. A quality business will prioritise both assets equally, with the former being hard to improve and the latter being easy to destroy.
Reporters constitute the biggest expense, and it’s here where the most legitimate concerns have been raised about the future of news, at least across borders. As the Times’s former executive editor Bill Keller put it to the Daily Show’s Jones, “The last time I was in Baghdad, I didn’t see a Huffington Post bureau, or a Google bureau, or a Drudge Report bureau there, because there isn’t one, and there isn’t going to be one.” Why? “Because it’s expensive, because it’s dangerous. It’s a lot easier to stay home and riff on the work that somebody else does.” Truer words were never spoken. (And what of intrepid TV journalists to fill the gap? Back to Kann: “There are few resources and even less commitment to covering significant news beyond floods and fires.”)
Only scale can give a news organisation the ability to shoulder the financial burdens of a global business, and consolidation will inevitably occur. (Remember when the Baltimore Sun had a Tokyo bureau?) Economies of scale may produce only a handful or even a clutch of these large operations. This isn’t a plot to have a single CEO control the flow of information from posts afar, but reality in a marketplace. If governments were truly serious about creating more global competitors, they’d lift restrictions on cross-media ownership and make it more lucrative for new entrants to challenge established operators.
Politicians inevitably quail from such obvious truths, afraid of being labeled as in hoc to big business, and they make democracies poorer for it. Might news companies cobble together alliances to surmount arbitrary regulatory restrictions, enlarge their reach and make their product more enticing to buy, à la the airlines? The burgeoning cooperation between the New York Times and Britain’s Guardian may foreshadow this trend. Market forces are already forcing recalibrations. The Far Eastern Economic Review used to be the go-to source for news on the Asia-Pacific until the 2000s, when local, country-specific internet operations started to compete in the same space. The Review was retired, and now the Journal has started to publish in local languages online, in an attempt to reach down into the local spaces. This strategy won’t supplant local operators, but augment them.
What of the intangible asset, the brand? It is indeed harder to build in the proliferating world of blogs, tweets, and online competitors than it is for old-line newspapers like the Washington Posts of the world. For them, the infinite choice consumers have may work to the newspaper’s advantage because consumers recognise them as reliable providers. An online outfit, in contrast, may gain prominence with a single, huge scoop (think Drudge Report and Monica Lewinsky), by building credibility in a single subject area (TechCrunch), or by showing the nerve to challenge the shibboleths that other news outlets won’t (The Blaze). No one wants to read another bland version of bbc.com/news.
The greatest challenge today may be to protect original news products from those who want to steal them. Recall the fight between News Corporation and Google News, an aggregator of original content and provider of backdoors through leaky firewalls, over the listing of the Journal’s proprietary reporting. Insults (“parasite”) were slung, and, eventually, a truce was reached. When both sides have something the other wants — original content versus advertising — there will inevitably be a compromise that satisfies neither side, but prevents mutual destruction. These fights will happen again, perhaps with more frequency, as other news providers figure out they don’t benefit from having their work cannibalised ad infinitum.
Culling revenue from social media is the next big idea, but has to be done carefully so as not to violate privacy rights, or the reader’s expectation of journalistic quality. Consider the Philippines’s Rappler, which is pioneering the crowdsourcing of news. Layer on top of that an IT operation that culls information about the crowd from social media and sells it to companies who want it. Consider HuffPost Live, a video operation that allows readers to participate in the website’s conversation about the news through video and web posts. Consider the way every journalist of note is reliably posting on Twitter and trying to build an online brand.
News providers are in the extraordinary position of providing a service that has infinite demand, in an era where consumers are being conditioned to expect ever-cheaper prices for products. As in every other competitive industry, consumers will weed out poor quality media and pay for what they value. It will be a long and unpredictable process for many media proprietors, and distinctly uncomfortable for journalists who never before had to compete for readership. But one thing is certain: Those who equate the decline of print media with the end of journalism may just suffer from a lack of imagination and a fear of creative destruction. And there’s nothing new about that.