BuzzMachine

Friend Dave Morgan writes an insightfuul, provocative post — reacting to mine, here — suggesting that newspapers should disaggregate themselves into their separate, marketable skills: a news service; a sales/marketing company; a printing house; a distribution company; a digital shop. He breaks up the dependent, exclusive relationships that made newspapers businesses since their beginnings: nobody else has the content, nobody else has the audience, nobody else has the presses, nobody else has the trucks, nobody else can have a newspaper, but no more.

As we seek new business models for news — not to mention new futures for newspaper companies and their constituencies — this is the kind of thinking and discussion we need. So let’s explore it.

My fear in Dave’s scenario is that the news service won’t be supportable. Oh, the size of present newsrooms most certainly will shrink — no matter how much their inhabitants wish that weren’t true. But I wonder just who would buy their services and for how much. How much of a market is there for syndication when any information is an instant link away, when the value of exclusivity collapses? And disaggregated, it becomes easy for competitors to emerge.

So maybe we need to disaggregate the newsroom yet further into its distinct and, we hope, marketable skills. Reporting and news-gathering (words, images, sound, video, data, investigation) may well be something that freelancers (professionals and amateurs) do. And editing — curating, vetting, enabling, educating, to cut up the task yet further — may find new value. Analysis may happen more and more in the commentsphere that the community has become.

In a world of disaggregated, independent practitioners of journalism and media, I think the editors’ skills of finding the good people and stuff and making it better will be of value mostly to advertisers as they look for quality, credible networks where they can reach audiences. That ties journalism back to ad sales. But it also amplifies the church-state conflicts newspaper organizations were cultivated to control: That is, tough journalism, disaggregated, will not appeal to advertisers; fluff will. One hopes that the opposite is true of the audience — that there is a market demand for journalism, for harsh, true reality — and there lies the solution: without quality, you won’t have audience. That is the inherent leap of populist faith one must make to believe that news survives. I’ve made that leap.

I have similar trepidation for Dave’s digital company, since those divisions of newspapers have fewer unique skills (anybody can build a web page and with easy tools, no one needs to build them anymore).

Sales? There is where I think the core value of the newspaper lies. If the sales organization were freed up to sell anything — to help local and national marketers reach local customers — then it would, in turn, support no end of new efforts, products, services, networks — and, we hope, journalism. The problem with Dave’s scenario is revealed in my post that inspired Dave’s: Newspapers have not been good at innovating and finding new ways to serve new advertisers; Google has been. But Dave’s leap of faith is that freed from supporting only a newspaper, sales will be sales and it will find value in service to a market. My leap, again, is that this will still support quality, credible reporting.

Printing and distribution? Yes, absolutely, they are no longer key values but are, instead, cost structures with too much drag. Divest them; take the cash to invest in innovation. And the fringe benefit is that, no longer tied to the infrastructure of shifting atoms, the journalistic and sales operations will finally engage in that innovation; they won’t care about preserving paper but will instead concentrate on their true values in the market.

I wish I had a bunch smart business students at hand to start making models for each of these media economies. If we assume that there is a demand for news — and in a democracy, we must — then what does the supply side of that market look like? How will local marketing operate? How will networks replace corporations?

When you get down to it, what Dave is really doing is cutting newspapers into platforms that enable independent operators to do their jobs and make a new economy of local media. I say that news and media organizations must think and operate like platforms. This could be what that looks like.

I knew it was bad, but Forbes details how bad McClatchy’s fall is: As Steve Yelvington notes, the entire company now has a market cap of $1 billion, which is what it paid for the Star Tribune (which it sold for about half that, says Forbes). The stock has falled from a split-adjusted high of $76.05 in 2005 to $12.75, a fall of 80%. It bought Knight Ridder for $6.5 billion, sold off papers to get $2.1 billion, but then wrote off another $1.37 billion and, again, today the whole kaboodle is worth only $1 billion. “Total ad revenue was down 8.5% through the first 10 months of 2007 from the same period last year, including a vertigo-inducing 21% plunge in real estate ads and a 16% drop in automotive ads,” says Forbes. Ouch.

But time may be running out. Now, for the first time, pure-play Web companies have the biggest share of the local online-ad market. In 2007, Internet companies had a 43.7% share of the $8.5 billion local online-ad market, while newspaper companies had a 33.4% share, according to the media research firm Borrell Associates. Just three years ago, newspapers had 44.1% of the local online-ad market. (Directories such as the Yellow Pages have 10.1%, and local television outlets 9.3%.)

Local media companies, because they are based in the communities they serve, would seem to have an edge over Internet sellers when it comes to persuading the diner or corner hardware store to take out an ad. But they have largely failed to convert that advantage into sales. Instead of tailoring their sales to local businesses, many newspaper companies initially focused on selling ads to bigger advertisers who were already buying space in their print products.

That Wall Street Journal story hits the coffin nail on the head. Newspapers are losing their own core market because they didn’t understand the scale of the internet. They still thought mass when they should have realized that small is the new big. That is, online, newspapers still threw their lot in with the big advertisers who had been the only ones who could afford their mass products. They didn’t see the mass of potential spending in a new population of small, local advertisers who never could afford to advertise in newspapers but who now could afford to buy targeted, efficient, inexpensive ads online. There’s growth — yes, growth — there. But newspapers ignored that — apart from some half-hearted attempts to come up with crappy online Yellow Pages — and handed what should be their local market over to Google and other online companies that set up efficient means to sell a lot of little ads, which equals big revenue.

I saw this first hand in many companies. Print sales teams didn’t know how to sell online. Oh, they’re trying to catch up now, but it’s often too late, for advertisers are already using their competitors; newspapers lost the opportunity to usher small advertisers onto the internet. Even the online sales teams at newspaper companies didn’t how now to sell small; they were — as I once put it in a meeting — putting all their effort into saving the old $100,000 advertiser and saw getting 1,000 $100 advertisers as a distraction. The new-media divisions had already become big and old. They weren’t nimble. They lost out.

If it’s not too late, here’s my long-standing (now free) advice: A newspaper (or, for that matter, TV or radio) company needs to set up a new, hyperlocal company that is designed to go after those 1,000 $100 ads. Let the big, old newspaper and online divisions keep serving and saving those big advertisers. Start a new company that makes small, local advertising its sole focus. That means they need to set up automated systems to accept and place highly targeted local ads and directories. That means they need to come up with new means of selling without on-the-street sales staffs: outbound phone sales, direct response, even local sales network (instead of citizen journalists, citizen sales people), making aggressive use of the promotional power of the newspaper while you still have it. That means they need to have lots of targeted local content without large editorial staffs. That means they need to set up networks with local bloggers and others and they need to encourage more people to join and the way they will do that is by sharing revenue and so these need to be both content and ad networks. This is unproven but I know that this won’t happen in the existing structure from print or even online staffs. It’s hard and its new but — as the Journal now well proves — if you newspapers don’t do it, your online competitors will.

Rather than creating new networks that serve new advertisers in new ways, though, the newspapers are trying to outsource this by joining big networks with the likes of Yahoo and Monster - which are just big, old media companies without the presses. As the Journal says, that’s no silver bullet:

Increasingly, newspapers are deciding to form deeper alliances with their main competition. More than a year ago, Yahoo struck a deal with about a half-dozen newspapers to create a national online-ad sales network. Since then, additional newspapers have signed up. In the coming year, papers in the alliance will start using Yahoo technology on their sites so that they can sell more-sophisticated ad offerings, such as behaviorally targeted ads. Separately, a group of 11 newspaper companies representing nearly 300 newspapers recently formed a partnership with real-estate site Zillow.com to tap into more real-estate classified ads.

Analysts say these kinds of steps will help but that none is a silver bullet. “Ultimately, it is going to take a lot of singles to really have a significant impact on the overall operations of the company,” says John Janedis, a publishing-industry analyst at Wachovia Securities.

The internet is an entirely new economy. It’s not built on big. It’s built on a mass of smalls. And newspapers think big. That’s their real challenge.

I’ve just returned from the first commencement of the City University of New York Graduate School of Journalism. It’s a happy day of accomplishment for the students and for my colleagues who’ve built this school. And so we send them out. More journalists, that’s just what we need.

I was shocked by the willful naivete of yesterday’s New York Times editorial decrying media deregulation. Engrave this line on their tombstone:

The strategic challenge for newspapers is not cutting costs, but how to attract a larger share of online advertising and make money off the millions of people who read them free online.

They wish.

That has long been the cry of editors of papers including the Times: preserving their newsrooms as they operate now, protecting their ways. But they keep ignoring the obvious fact that most newspapers operated as uniquely profitable media monopolies but those days are clearly over. The internet is a highly competitive market where prices and margins simply will not match print — though audience size is greater. They also keep ignoring the obvious opportunities presented by the networked internet to operate more efficiently and also more broadly (start here and here as well as here). Finally, they keep ignoring the opportunities of crossing media, which leads to the next red herring from the Times as it argues against merging local newspapers and broadcasters:

For all the technological advances that have shaken American media over the last 30 years, remarkably little has changed about who produces the local news. Internet outlets repurpose and comment on the news. A few cable channels provide national news. But in many small and even medium-sized cities there are only two entities that put money into local news-gathering: the local newspapers and the TV stations.

Oh, come on. Local TV stations may put money into local news — and pull money out of it — but they don’t put real reporting into it. Newspapers like the Times used to sniff at local TV news the way they sniff today at blogs: They have long been repurposers, recyclers; they’re not even commenters. Imagine the possibilities of a print newsroom that follows the Rosenblum method of empowering every reporter to shoot video stories — and shoot them in new ways. What if that became the basis of the local TV news? What if instead of four crews on the ground in with expensive satellite trucks you had the hundred reporters of a formerly print newsroom all gathering news across media with small and inexpensive cameras? What if you had real reporting, real stories, not just reading out loud on cold streetcorners (’police this morning are….’)? I’d start watching local TV news again (oh, it’s on in my house, but that doesn’t mean there’s anything to watch). There’s a benefit of combining, of finding new ways to do things, a benefit for the newspaper, the broadcaster, and the public. Oh, yes, and they can do all these things on the internet, too, proving that it is more than a place to repurpose and comment.

Here’s another herring in this barrel:

But you don’t get one healthy media company by combining two sick ones.

Really? Mergers are, of course, a way to create stronger companies out of weaker ones, otherwise no one would merge or acquire; old companies would just die. Certainly adding a healthy P&L to a struggling one is one way to help the struggling company. Why else did the Times buy About.com, which is just about the only bright spot in its P&L. (Disclosure: I used to consult at About.) But I guess the Times knows what it’s talking about here: It’ learned from the company’s purchase of the ever-sicklier Boston Globe. Not all acquisitions need to be so dumb, though.

One more bullet, one more fish:

Mr. Martin’s plan, moreover, could dangerously reduce media diversity. Not only would the mergers allowed under the rule change eliminate independent voices, but they also might crowd rivals out of the news business. A study of F.C.C. data by consumer groups indicated that less news is broadcast in cities where companies have been granted waivers to the rules to allow them to own both newspapers and broadcasters.

Diversity of voices? What, happy talk voices? There’s no perspective from the community on the 5 p.m. news; the people reading it all came from elsewhere on their way to elsewhere. I could well imagine how that show could have more voices — start with giving some of those cheap cameras out to people in that community. But today, there’s no media diversity because media are homogenized, purposely bland, cherishing sameness, dreading change. You want diversity? Go to that dreaded internet thing, there you’ll find more diversity than the Times can bear.

Oh, and by the way, does New York have less news because it has cross-ownership (and doesn’t the Times Company have a dog in that fight, one it doesn’t mention in the editorial: The NY Post and its WYNY, not to mention the Times’ WQXR)? Does Chicago? Did San Francisco?

Now I happen to agree with the Times about the point of its editorial: FCC Chairman Kevin Martin’s plans for media consolidation are half-assed. We just disagree about what should be done about it. I say he should open up the media marketplace. But, of course, the Times doesn’t want that. It wants protection. It wants sameness. It wants to preserve its ways.

Remember that the editorial page at the Times reports not to the newsroom but to the publisher’s office and then consider this a window onto its strategy or lack thereof. If I owned Times stock and if I hadn’t sold ages ago, I’d be selling now.

LATER: I’ve thought better of that last night. It was wrong and unproductive — to much the old us-v-them mindset. So I retract and apologize for it. Journalism and Times journalism are worth investment. I hope the investment is spent wisely. We need that.

I wouldn’t go so far as to say that we’re headed for a post-text era, but here are some indications that — according to some — text will decline as we are able to talk instead: to cameras, to each other, and to machines.

I’ve been listening to Jeff Gomez’ Print is Dead (the fact that I’m listening instead of reading is not, itself, intended to be a commentary… but maybe it is…). When faced with fears that we are becoming a post-literate society of nonreaders (see below), Gomez makes the arguments I do: That we still do read, more than ever, it may just not be so much in the forms we used to; that is, reading online is still reading. But now I see two predictions that reading online will also decline.

Robert Feinman says in this comment that video is taking over:

I think this was the year where video replaced words as the most popular way for people to express themselves online. This fits with my feeling that we are entering the post-literate age. Youngsters have little interest in reading or writing, but understand all the nuances of the visual language used in TV and film. YouTube may be the next place to be.

Now add this prediction from today’s Times about the impact of much faster processing on our communication with machines:

Microsoft executives argue that such an advance would herald the advent of a class of consumer and office-oriented programs that could end the keyboard-and-mouse computing era by allowing even hand-held devices to see, listen, speak and make complex real-world decisions — in the process, transforming computers from tools into companions.

I’m not ready to declare text dead or our intelligence ruined because of it. I don’t see one medium as inherently inferior to another — that is, a movie can be a great way to tell a story and a book is not, our snobbishness about print aside, necessarily better. Still, I take the point that these changes do move us past text and that will have many reverberations, some good, some not.

Here’s my year-in-review piece for Media Guardian. The lede: “Never mind websites. Forget page views. They’re so 2006. This was the year of Facebook.” The kicker: “This may have been Facebook’s year. But so far, it is still Google’s century.”

If you saw a post about the YouTube campaign flash by on this page or your RSS, it was a mistake I too often make: I meant to post to Prezvid, where it now is. Just letting you know that you’re not going crazy, I am.

Go right now to see Jonathan Harris’ experiment in storytelling: an Alaskan whale hunt. Jonathan took photos at least every 5 minutes for the week of the tale, which itself is a unique means of using the camera to capture the story, freeze-drying moments instead of memories. Then he returned and created a stunning interface to display his 3,214 photos — many of them stunning — enabling you to explore by time, by image, by adrenalin (how many photos he took in a given scene, mimicking his heartbeat), by characters, and by concept tags (for example, blood). I dabbled at first, poking my head into the story here and there, randomly or by tags. But then I had to watch the whole thing. So I recommend heartily that you go over and explore yourself.

I haven’t decided yet what I think about the form. There’s no question that it is compelling, engrossing, informative, entertaining, beautiful. It’s an unqualified success. What I don’t know is how this translates — or should translate — into other stories. Newspaper online sites tend to use slideshows too much, just because the internet lets them. I have no doubt that Jonathan’s work will spread around that world and photo editors and online producers everywhere will trip over themselves to mimic it. My son Jake suggests that Jonathan open this up as a platform.

But this was a special story, an extreme story; that’s one reason why Jonathan picked it. He says in his statement that he wanted an “epic personal experience” to translate onto the internet. He also wanted to mimic the cadence of computers gathering and displaying data, since he forces them to do that with his online work. “I was interested in reaching some degree of empathy with the computer, a constant thankless helper in my work,” he says, which may be going an inch too far, but I think what he means is that this will give him an even better understanding of how machines can help tell stories.

What I’m trying to say, I guess, is that what others should learn and copy from this is not the form but the motive: the effort to innovate, to find stories that demand experimentation. Please don’t give us 3,214 photos from the frozen north of New Hampshire during the primary. Please don’t. But do think about what new ways stories can be told now that we no longer are forced to choose one medium or another.

An everyday view:

So far, video is being used online mostly to tell a complete story: here’s the story in text, there’s the story in video (or there’s a slideshow or a podcast or a Flash thingie). The video is almost always a packaged piece, self-standing. It wants to be television. In some cases, that’s fine. But there is no reason that video could not be used, as photos are in print, as part of the narrative, as moving pictures. I began to learn that on Prezvid, where the videos are very much the heart of the story and our text is merely commentary or context. So you could start with a paragraph of text and then comes video to illustrate or report a point and that video need not be a produced piece but could merely be a snippet that demonstrates a point better than words can (rather than saying the candidate was angry, you can show her anger and let her be heard). And then comes more text, then a photo, then a graphic, then text, with links and updates and corrections and tags throughout. Ideally, each element can have a permalink so others may link and add to the story; each element can also expose links and commentary from others if you want. You get the idea: a story need not be a galley of type or a packaged sequence of images. It can be an appropriate mix of both now.

This, in turn, has an impact on the story gathering, which I see as the real the point of Jonathan’s exercise. At a more mundane level, this is why I want to see reporters take video cameras with them as notebooks (as my friend Michael Rosenblum says) so they can capture and share that moment of the angry candidate. That is different from them setting out to tell a story in video; then the appropriate use of the tool is more focused, more about gathering the story selectively. It depends on the story and how you want to tell it and how your public can best use and interact with it.

This is why I shake my head when I hear journalists complain that making them take video or photos or audio is forcing them to do extra work, to tell the story more than once. No, it is about gathering the means to tell the story in any appropriate medium, mixing those media in one narrative, because we finally can. That is why, at CUNY, we insist on teaching all these tools to everyone.

And that’s why I admire Jonathan’s spirit of experimentation. I was lucky to work with him at the start of Daylife, where I marveled at his genius for mixing news gathering, data, analysis, media, presentation, interface, and programming. He could do it all and do it all brilliantly. His other experiments include 10×10, We Feel Fine, and Universe.

The online news business thinks it needs more Adrian Holovatys, and well it does, for he understands how data and news can become one. It also needs more Jonathan Harrises, who understand how newsgathering and narrative can change. It needs to find ways to support their talents and learn from it. (Hint: The Knight Foundation gave Holovaty a grant to start a new data-news company. I’d give Harris commissions to find new ways to find and tell stories.) But first, go watch the hunt.

Back in history, my children, when Nick Denton hired Elizabeth Spiers to be the first Gawker, he declared, to me anyway, that he didn’t want journalists, tainted as they were by their old ways. Well, note now his hiring notice at Gawker. Now he’s seeing someone with “at least two years of experience as a reporter at a daily or weekly newspaper, covering either crime news, business, or media and culture (yes, a print background is an advantage).” But he adds another requirement: “A reporter who appreciates the discipline of newspaper traditions, but chafes under them.”

There’s a sea change in that. Gawker and all blogs could make a go of it at first just commenting, but as Nick points out in his posting, there is a value in original reporting: “But the web—other blogs, search engines and social network sites—increasingly rewards original items.” So the two worlds do converge.

But that doesn’t mean Nick is doing things the classical way, or only that way; there’ll be no 5,000-word takeouts and weeks-long task force projects, he says. Here he’s putting out his formula for what we’ve called half-baked items, which he explained at the Murdoch newspaper confab we both attended as a blogging reporter saying to his audience, “Here’s what I know. Here’s what I don’t know. What do you know?”

At its most elevated, the new Gawker hire may experiment with a new form of reporting, unique to online, in which ideas are floated, appeals made to the readers, and the story assembled over the course of several items, from speculation, and tips from users.

I’ll take all the fun out of that, as perfessors do, and label that networked journalism.

(via Adrian Monck. Disclosure: I’m a friend of Nick’s and was on the board of his last company, Moreover.)

Medium, a media magazine in Germany, just named a blogger, Stefan Niggemeier, as journalist — yes, journalist — of the year because of BildBlog, which follows, criticizes, and dogs the huge tabloid newspaper in Germany, Bild. Just to give you a flavor that translates easily, here’s a post about a picture that ran in Bild, supposedly of a Turkish prison cell, when readers noticed the similarity to a picture of a cell at Alcatraz — note that moment of networked media criticism. I don’t know enough about the German media society, but I suspect this award could be as much about antipathy toward Bild as admiration of BildBlog. And I suppose this could only fuel the fires of blogs-v-MSM (which I keep trying to douse). Still, I think it’s a positive sign that a blogger is recognized not only as a journalist but as the journalist of the year. (via Martin Stabe)

Two and a half years ago, I wrote a post using the shrinkage of TV Guide (a slow fall from 17 to 3 million circulation, from more than 100 editions to one or two) as a cautionary tale. Beware the cash cow in the coal mine, I said — the money machine that blinds you to the strategic imperative for change.

Well, that cow’s come home. As Paid Content summarizes a Wall Street Journal calculation, News Corp. lost about $7 billion on the quaint old relic, now being sold to Macrovision. Most of that was lost at the hands of John Malone (not uncommon in dealing with him). The Journal concludes:

But in gross terms, Mr. Murdoch looks to have paid $1.6 billion — after selling the magazines in 1991 and receiving cash from Mr. Malone in 2000 — for the first half of his Gemstar stake. He paid $6 billion in News Corp. stock for the other half. That is nearly $8 billion for an investment valued at $1 billion today.

Now, of course, that doesn’t calculate all the profits — the cash — that News Corp. and its partners were able to milk from ol’ Bessie before sending her to the dog-food factory. But then, that’s also the point: it was that cash that was blinding.

I repeat: There is a lesson here for every media company. Oh, yes, the cash may still be coming in. But what’s happening to the true value of your asset? What are you doing to make the bridge to the future? How much of that cash are you investing in innovation? Should you get rid of it now? Is it better to hold onto the old asset and its cash or cash out and invest in something new?

(Disclosure: I was TV critic at TV Guide in the ’90s.)