There’s some dangerously wrong-headed lobbying from media lawyers in today’s Washington Post arguing for new laws to protect old media from new technology. Bruce Sanford and Bruce Brown of Baker Hostetler argue that Congress should:
* Change copyright law so that “the taking of entire Web pages by search engines, which is what powers their search functions, is not fair use but infringement.” This would be downright suicide for not only the media companies that I assume are their clients but for every business that wants to be discovered on the web. Not being able to analyze an entire page would mean that search engines could not reliably send searchers (aka customers) to relevant pages and that would mean that the owners of those pages would not be discovered. It would tear about the very essence of the web. This is so dangerously ignorant of the architecture of our new world and how it operates as to be stunning. It also is ignorant of the new link economy of the web. Why the hell do they think that companies hire SEO firms – so that Google will do a better job of analyzing all their content. (Who hires these people?)
* Enact as law the “hot news” doctrine to protect against “taking the guts of the content.” Today, you can’t protect knowledge. The fact that, for example, GM has cut 1,100 dealers is just a fact and it is spread – all the more efficiently online – via conversation. You can’t sue me for learning that in a newspaper and repeating it. That is key to the functioning of a community, a market, and a democracy. But these guys are following an effort by the Associated Press to call on the so-called hot-news doctrine to argue this knowledge is somehow theirs. Once again, this exposes shocking ignorance of the speed of the knowledge economy. Bloomberg and Reuters understand this: If they can deliver knowledge faster to their clients so they can exploit that knowledge more quickly than others, then they have value. That is, indeed, hot news. But they are well aware that the unique value of that heat expires in moments – seconds – and once knowledge is known, it is a commodity. But these lawyers want to make business by getting Congress to extend copyright to enable publishers to sue for compensation of sites that practice what they call “linkspoitation” (that is, putting ads around links, which could be defined as every decent commercial page on the internet). How long, I’d ask them, is news hot? A minute? A day? A week? How long before others may repeat that knowledge? Incredible, eh?
* Use “tax policy” (that is, tax dollars – i.e., our money) to “promote the press.” Which press, gentlemen? The press you represent or the press we the people are creating? We out here don’t actually need such a subsidy because we’ve been smart enough to take advantage of the new, free press and we are not saddled with the costs of an old press. Why should we then have to subsidize the market failure and anti-strategic stubbornness of the owners of those old presses? “Congress,” they write, “could provide incentives for placing ads with content creators (not with Craigslist).” That’s just plain payola. They also want “allowances for immediate write-offs (rather than capitalization) for all expenses related to news production.” Except we in the new press don’t have capital expenses for presses and buildings and trucks. Can we write off our PJs?
* Give news companies antitrust exemption so they may collude and form cartels to wall off their content and fix prices together. “As noted in the Kerry hearing,” the lawyers write, “publishers need collective pricing policies for their Web sites to finally break out of the expectation of free content that is afflicting the industry. Antitrust immunity is necessary because most individual news sites can’t go it alone by walling off their content for fees — readers will simply jump to sites that are still free.” That’s called capitalism, gentlemen. The market. I’d rather protect that open market than the failed monopolists who are finally losing control of it.
* They also want to take off ownership restrictions on media companies. There, we don’t disagree. Let the dinosaurs huddle together against the cold wind of change if they want. Well, except such a strategy of consolidation hasn’t worked so well for Tribune Company or McClatchy or Clear Channel or Time Warner or The New York Times Company, has it? (Is anybody hiring this firm for business strategic advice?)
Add it all up and their lobbying is ignorant of the architecture and workings of the internet economy and, for short-term gain for dying companies, willfully destructive to fundamental principles of the law.
Somebody stop these guys.
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In the comments under the Washington Post piece, Dale Harrison makes a great response, which I’ll quote almost in full (hoping he doesn’t sue me):
This is a shockingly misguided analysis and set of recommendations!
A lesson worth remembering is at the turn of the 20th century people had a transportation problem…and the solution turned out not to be a “faster horse”…but a Ford.
And one should note that the Ford didn’t arise out of the “Horse Industry Revitalization Act”.
I think the future of the media business will look as different as Ford and Toyota’s operations look from horse traders and blacksmiths.
Imagine what the passage of such ill-conceived legislation would have done to the car industry a century ago.
It would have strangled the nascent auto industry at birth, postponing it’s inevitable rise while sheltering a dying industry, only postponing it’s inevitable demise…doing great damage to both. Newspapers need to be encouraged to adapt to the future, not retreat behind legislative walls hoping the future will go away.
The newspaper industry’s troubles go to the very core of their historical business model.
What’s historically given value to editorial content is the relative scarcity of distribution versus readers. Newspapers have historically enjoyed natural localized economic monopolies that allowed each of them to exercise monopoly control over the amount of content (and advertising) they allowed into their local marketplaces.
Monopoly constraint of distribution and supply will always lead to prices (and profits) significantly above open market rates. Newspapers then built costly organizational structures commensurate with that stream of monopoly profits (think AT&T in the 1970’s).
The dynamics of content replication and distribution on the Internet destroys this artificial constraint of distribution and re-aligns advertising (and subscription) prices back down to competitive open market rates. The often heard complaint of Internet ad rates being “too low” is inverted…the real issue is that traditional ad rates have been artificially boosted for enough decades for participants to assume this represents the long-term norm.
An individual reader now has access to essentially an infinite amount of content on any given topic or story. All those silos of isolated editorial content have been dumped into the giant Internet bucket. Once there, any given piece of content can be infinitely replicated and re-distributed to thousands of sites at zero marginal costs. This breaks the back of old media’s monopoly control of distribution and supply.
The core problem for the newspapers is that in a world of infinite supply, the ability to monetize the value in any piece of editorial content will be driven to zero… infinite supply pushes price levels to zero!
What this implies is that no one can marshal enough market power to monetize the value of content in the face of such an infinite supply and such massively fragmented distribution. Pay-walls, lawsuits and ill conceived legislation won’t allow the monopoly conditions to be re-constructed.
There are certainly ways to make online news profitable…and many of us are working to develop such approaches…but I can assure you they don’t involve inventing a “faster horse”…
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In Twitter, Howard Weaver asks an excellent question: Wonder who hired them? If newspapers are lobbying Congress, that lobbying should be – must be – transparent.
The Observer’s John Koblin reports that the NY Times is considering putting a meter on usage of its site and charging once you’ve read too much.
Incredible.
They’ve spent the last 15 years trying to get people to stay longer and read more on their site and now they’re going to penalize their best customers? Readers’ inner dialogue is not hard to imagine: ‘Uh-oh, should I read that next story – and see that ad and maybe find something worth linking to and bring in other readers? It might start costing me. I’d better conserve my Times characters; they’re adding up; already read 20,000 of them. I think it’s time to go elsewhere now.’
This emotional rush to charging for charging’s sake is not only getting dumb and dumber but it’s also going to be destructive.
I fear The Times has been lunching with cable people. They should instead take Tom Evslin out for drinks. I’ve told his story here and in my book. Tom is the unsung hero of the internet who, when he ran AT&T Worldnet, was the first major ISP to go to flat-rate pricing of $19.95 a month for all you can browse. Tom took the clock off the internet. What happened when he did? We no longer worried about that tick, tick, tick. Usage exploded. The internet became part of our lives. Now The Times is thinking about turning the clock back on? If it does, that clock is ticking down its own lifespan.
Koblin says The Times is also considering creating some sort of club: give money (here’s the tin cup) and get a tote bag and a chance to watch an editorial meeting. (Having sat through too many editorial meetings elsewhere in my day, I’d say you’d have to pay me to sit in any more.)
The rush to charging is also getting sadder and sadder. It’s like watching a grandmother who has run out of money and so, to afford the drugs she needs to save her life, is looking around the attic for any heirloom she can sell on the corner.
At Jim Collins‘ event for his new book at BusinessWeek last night, a former journalist turned business exec asked why no one was snapping up newspapers now that their market caps are worth practically nothing. They have powerful local brands, don’t they? he asked. Don’t they?
The first reason no one wants to buy the trouble of newspaper, I suggested, is that it brings not only current loss but also huge shut-down cost and liability. But then, with more and more newspaper owners going bankrupt, they have an escape hatch from the contracts that cause that risk.
Right, the exec said, so what about that trusted local brand? Well, I replied, there have been too many surveys showing declining trust in newspapers by readers. I know folks in a few markets who’ve done research to test attitudes about a paper disappearing and what they got from readers and advertisers was shrugs. Newspapers spent years acting as local monopolies, charging high rates, and now that buzzard is coming home to roost.
Not only does Warren Buffett say he wouldn’t buy a paper at any price but Mort Zuckerman, who owns one, warns away from them.
Yet hope springs daily, if not eternal. In today’s WashingtonPost, business columnist Steven Pearlstein writes an open letter to Buffett proposing that he buy up not just one but lots of papers:
For close to nothing, investors can pick up some of the most respected regional brands in the news business, along with their (shrinking) lists of advertisers and subscribers. They can obtain modern printing presses for a fraction of their original cost. And they are able to hire from a deep pool of talented journalists, pressmen, salesmen and circulation experts desperate for jobs.
But presses are now a cost burden when your competitors get theirs for free. See above and trust. See above on buying losses and liabilities.
Nonetheless, Pearlstein has a plan. He says a strategic buyer “could assemble a national syndicate with millions of readers capable of achieving the economies of scale that have, for the most part, eluded our badly fragmented industry.” He has a point. The newspaper industry has never been able to cooperate – they all think they’re special.
What would such a consortium create under one roof? Pearlstein suggests a high-priced daily tabloid (“a daily newsstand price roughly equal to that of a small coffee at Starbucks” – which is to say the price of the NY Times or WSJ) aimed at “serious news consumers” with “high-quality local, national and international news and opinion… Local pages would be produced by a modest local news staff, with national and international pages from the syndicate.” If that’s an hour read, there’d also be the 20-minute read: another free tab like Metro. And then “a partly free, partly paid Web site that carries the local banner with a full offering of local content and advertising but operates from a single national platform.”
Nice try. But he has basically described Tribune Company.
Yesterday, I spoke in Miami for the International Newspaper Marketing Association. On my way down, I twittered about it, using the economy of speaking in Tweetlish and abbreviating Assn. A twitter wag asked whether that was short for assassin. Duck, he advised. Turns out that this group, from many countries, is as was advertised to me: open and eager for change. Still, the moderator played devil’s advocate (I think) and pushed what we often hear here: The paper still brings in cash, so maximize that (charge; charge more….).
I argued that if legacy news organizations have any hope, they have to rethink themselves from scratch, not trying to protect what used to be. I assured them that there were entrepreneurs in garages – well, meeting rooms – planning new news structures from scratch, with none of the advantages-turned-burdens of their companies.
And there’s the point: Owning a paper is not an advantage. It is now a burden to overcome. So wishing that someone would just swoop in and buy them, now that they’re worth practically nothing, is just that: a wish.
Pearlstein says he has the back of an envelope with numbers on it; I’ve asked him to blog it or send it along for discussion in the New Business Models for News Project. Maybe he can convince Buffett or someone to buy up the newspaper industry. But I think I’ll pass.
The Wall Street Journal’s rules for Twitter and the internet rob the paper and its reporters of a few key benefits. Among the rules:
* Let our coverage speak for itself, and don’t detail how an article was reported, written or edited.
* Don’t discuss articles that haven’t been published, meetings you’ve attended or plan to attend with staff or sources, or interviews that you’ve conducted. . . .
* Business and pleasure should not be mixed on services like Twitter. Common sense should prevail, but if you are in doubt about the appropriateness of a Tweet or posting, discuss it with your editor before sending.
This misses the chance to make their reporting collaborative. Of course, they should discuss how an article was made. Of course, they should talk about stories as they in progress. Net natives – as WSJ owner Rupert Murdoch calls them – understand this.
Twitter, blogs, Facebook, etc. also provide the opportunity for reporters and editors to come out from behind the institutional voice of the paper – a voice that is less and less trusted – and to become human. Of course, they should mix business and pleasure.
Washington State has given a 40 percent tax break to newspaper publishers.
How about giving a break to the entrepreneurs who will build the future of news?
Then again, it might all be show. Who’s to say any papers will have profits to tax?
: LATER: In the comments, Tim Orren explains: “Washington state’s business tax is on gross receipts, not on net income. That’s why it ranks well down the list of good states to do business, and why the tax relief to the legacy press is in fact substantial.”
Greg Horowitz raises an issue with micropayments that I haven’t seen discussed, one I’d think the heavy-duty journalists would be fretting about: If readers can buy individual articles, then won’t their writers be judged on the revenue they bring in and won’t their editors be motivated to assign more of what sells. Now I believe journalism needs market pressures to be responsive to its market. But every time anyone talks about giving the public what they want, some purist will respond worrying about the corruption of that: the Paris Hilton factor.
First, newspapers started dropping days of the week. Now a network is.
Guaranteeing dailiness is expensive and inefficient for the producer. And the idea that we out here need to keep to anyone else’s schedule has been outmoded since the invention of the VCR and the internet. So dailiness looks outmoded.
But keep in mind, if you’re going to produce a newspaper, publishing only some days of the week makes no sense. It makes a lie of the necessity of getting the paper every day. It reveals that publishing a daily paper was only a matter of commercial convenience, as newspapers are trying to publish only on the days when they have the most ads: Thursdays, Fridays, and Sundays. When the other days were profitable – not newsy – they brought papers. When they’re not profitable, to hell with Mondays.
Dailiness – like newspapers and networks – also implies staleness: Once it’s out, it’s over. But thinking of media as a process instead of a product makes constancy a value over punctuality.
On this blog and in my book, I speculated about the social airline. A Dutch reader points me to Bluenity, a social network for AirFrance and KLM passengers. Neat.
Dean Singleton’s memo decreeing his strategy for Medianews is unbelievable. I swear it could have been written – hell, I read it and wrote memos arguing against memos exactly like it – in 1996. It’s as if nothing has been learned since then. I was also depressed reading Howard Kurtz’ eulogy to print but not for the same reason it depressed Howie – that is, because papers are dying. What bothered me was that, not unlike Singleton’s forward-to-the-past exercise in self-delusion, it kept all the old assumptions about news and media intact.
If we haven’t learned anything else, isn’t it that the change that has overtaken newspapers (and TV) is radical and complete? Haven’t we at least learned to throw out the old assumptions?
* Newspapers online are still selling scarcity to advertisers: just so many banners presented to just so many eyeballs. Google instead sells performance and that is what motivated it to create AdSense and to get more and more targeted and efficient and relevant ads all around the web. Think abundance.
* Newspapers are inefficient. I spoke with an editor the other day who broke down the 300-person newsroom of yore and conceded that only 50 of those people created journalism. I would add that when working with a much larger network in a new news ecosystem, the news organization can be even smaller and still see as much news reported. That’s what no one ever talks about when whining about how to support news: the other side of the P&L. Think efficiency.
* Newspapers are no longer monopolies. They have new competition. That’s why they can’t set the price for content or ads anymore. The market will. Get used to it. Think like capitalists.
* Newspapers are no longer factories. Not of paper, not of content. The new news organization will add value by organizing news, enabling it to be made elsewhere, helping it to be made better and bigger in a larger ecosystem. Think collaborative.
* Newspapers are stale. The minute – minute – they say anything, what they say can – if they’re lucky – become part of the conversation and then that knowledge is a commodity. The value to the old product disappears. It’s not the product that’s valuable. Think process.
* Newspapers aren’t conversations. And conversations are the new distribution. If you can’t be searched and linked – if you close up behind a wall – you won’t be found. Think open.
* Newspapers can no longer be about control. They have to be about enabling the community to share its own knowledge and succeed doing so. Think platform.
I’ve had a half-dozen conversations lately with companies that want to answer the question, What Would Google Do? I start by asking where they think their company’s value is. One key answer is usually left out. It’s about who your real value is. And that’s often not just your staff and leaders but your customers, your public, your crowd. What they know has great and too-often unrecognized value.
A few weeks ago, at the beginning of a torturous string of travel, I visited the indefatigable Jeffrey Gitomer, who sells untold thousands of books and seminar tickets about successful selling. G’bless him, Jeffrey was the first to call and tell me that he liked my book and that he wanted to inject some of its ideas and rules into his business: the beginning of a beautiful friendship and the opening of a fascinating laboratory.
I went to Charlotte to spend time with Jeffrey and his staff in one of the many lofts from which he operates and lives. I started by asking them where their value was. Their answers included Jeffrey himself, their content, their brand and reputation, their infrastructure. All those answers were right. But there was one more I thought they’d left out: the value of Gitomer’s customers and what they know. They are salespeople who have their own tips for success, solutions to problems, experience with techniques, and more. It wasn’t hard for Jeffrey’s staff to agree with that.
What does that mean for the business – especially if they try to live by one of the key WWGD? principles: succeeding by building platforms that enable others to succeed? The staff started brainstorming about the ways they could enable their customers to build and succeed. Perhaps they could enable the best of them to become authors and speakers themselves. Perhaps the best presentation makers could make businesses sharing their skills. Maybe within Gitomer’s corp of customers are stars ready to be recognized. The discussion continued and I’ll fill you in on what happens as Gitomer’s staff continues to meet weekly on their transformation. But that’s the start.
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When I was in Amsterdam, Maurits Martijn, an editor from an established and respected – but shrinking – magazine called Vrij Nederland decided to turn our interview about the debut of the Dutch WWGD? (aka WZGD?) into a free consultation for the magazine: what should it do? (Here’s a Google translation.) I started by asking them to imagine a day after print so they could ask what their real value is.
The magazine then started a blog and asked its readers where they thought Vrij Nederland’s real value lay if not on paper. (Google translation here.) One commenter replies that the magazine owes its existence to its readers and they must feel at home with it. I like that. Another said (if Google translates correctly) that the initiative itself made him go buy the magazine because, I infer, it showed a new openness.
Maurits emailed me: “Well, Jeff, what happened is quite amazing. There is a lot of covering here in Holland. Not just in the bloogosphere and on Twitter, but also in a big Dutch magazine and on the radio. It is great. Al kind of new media experts are writing quite interesting and extensive ‘advises’ and a discussion is going on as well. We are a little bit flabbergasted: we are only online for 30 hours!” He offered up the magazine as a lab (the name of their blog): “As a case to think about the future of magazines.”
Maurits promises to keep us up to date on the ideas and what the magazine does with them. Note well that the ideas are coming from the readers, now partners.
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Then this week, I had coffee with TR Reid, Dell’s new vp of corporate communication. He was in Asia for the company during DellHell and came unarmed. It was fascinating listening to him talk about how to extend Dell’s success with blogging past a blogging team and into the culture of the company.
Then I asked about extending it even farther: Would Dell deputize customers to also speak for it? They already do, supporting each other in technical forums. I asked when researching the book whether Dell could set some of them up in their own support businesses. How could Dell act as a platform for them to build and succeed? TR started brainstorming about ways to enable and empower independent bloggers. What could Dell offer them? I asked. It could give them information, promotion (i.e., respect), ad revenue, and more.
Going too far, as is my habit, I wondered whether Dell could even enable other technology companies to start. Should it compete with Amazon and Google in web services (don’t buy the computer, buy the power). Should it manufacture the TechCrunch Tablet?
The point remains: Any company’s unrecognized and untapped value is the crowd around it: its knowledge, its effort, its willingness to invest time, effort, and money. Google recognized that value. How can every company, from publisher to manufacturer?
Considering how infrequently I read Wall Street Journal articles, its threatened plans to bring on micropayments would turn out to be a much better deal for me than for the Journal.
I subscribe to WSJ.com only because I think I should (it’s a legacy of my expense-account days) but I find I read articles rarely because I first go through The New York Times, the Guardian, PaidContent, TechCrunch, and other sources before I get to the Journal. Indeed, I never go to the Journal to see what they have to tell me today; I go there through links to articles that were in none of the above. That is how young people read the news today (remember: “If the news is that important, it will find me”). If I really want to read that article, I might make a payment so small as to be called micro. But I wouldn’t end up making many of them. The knowledge that I could read that occasional piece would give me the confidence to cancel my WSJ.com subscription. In this transaction, Rupert loses.
I did also subscribe to the Journal on the Kindle as an experiment: Would it become a habit? I tried reading it every day but, again, I’d already gone through my primary sources and I found it repetitive. I also have found that media coverage in the Journal has been way down since Murdoch bought it; my Kindle experiment only drove that home.
You see, the problem here is the myth of regular readership. When I started newspaper sites, I had publishers on my rear because they expected people to read them every day, just as (they thought) people read newspapers. But just because the thing plops on the front porch every day, that doesn’t mean everybody reads everything – or sees every ad. That was the myth that fueled overpriced ad rates and overinflated editorial egos. Online, we get to see what people really read – and what it’s really worth to them – and that’s a lot less than we ever thought.
So if the Journal brings on micropayment, I fear for them that they’ll lose doubly. They’ll lose my subscription. They’ll lose my even occasional readership and the ad revenue that can come with that. They will, in a cruel irony, replace digital dollars with micro pennies.
