In a few countries around the world, we’ve seen a backlash against Google’s Streetview as somehow an invasion of privacy, even though what Google captures is the very definition of public: what can be seen in the open.
I wish that journalists would defend Google and its definition of public, for it matters to journalism.
See Peter Cashmore’s report on Streetview’s capturing of a crack in a building that collapsed today in Ft. Greene, Brooklyn. Google captured what it thought was merely data but data turns out to be news.
When I was in Amsterdam for the Next09 conference, the Streetview controversy was in full bloom because Google’s oggling cars had just toured its streets (and canals?). Now I’d been told by German friends that Holland is different from the more closed societies in Europe, as folks leave their front windows and doors open, ashamed of and hiding nothing. Nonetheless the Dutch were hinky about Streetview, even journalists I met.
I argued with those Dutch journalists that if a city official were caught red-handed in the red-light district by a journalist’s camera – or a witness’ – there’s no difference if Google’s camera captures it. It’s public. It’s news. But if that politician is given the ability to quash Google’s photo, then it’s a short step to setting a precedent so a journalist’s photo could be quashed, on the basis that the private can occur in public.
No, public is public. We need that to be the case, for journalism and for society. We must protect the idea of public.
What is happening in Iran this week is public, no matter how much the despots try to make it private. See, too, this Guardian report in which a witness captured images of police allegedly roughing up and arresting citizens for demanding officers’ badge numbers and photographing them – for enforcing the doctrine of publicness with public officials.
Indeed, I’d say this doctrine should stretch to saying that everything a public official does is public – everything except matters of security. Thus Britain’s MPs would not be allowed to black out their spending of taxpayers’ money. Thus the default in American government would be transparency, making any official’s actions and information open and searchable. Thus anyone in Ft. Greene could scour Streetview to look for unsafe buildings.
What happens in public is the public’s – it’s ours.
How can and should news organizations and others add value to the new news ecosystem that is being used in the Iran story?
Or to put the question another way: The New York Times keeps talking about how expensive its Baghdad bureau is and what a fix we’d be in without it. Well, the essential truth in Iran is that no one has a Tehran bureau (or if they do, it has been rendered useless by government diktat). So we have no choice but to replace that bureau with the people, with witnesses empowered to share what they see.
The New York Times, the Guardian, and Andrew Sullivan, to name three, have been doing impressive work with their live blogs, sifting through Twitter, Facebook, YouTube, blogs, trying to add as much context and as many caveats as they can. The live blog is print’s equivalent of live TV; it is the way to cover a story such as this: process journalism over product journalism.
But clearly, in that coverage of and by the people, we are experiencing severe filter failure, to use Clay Shirky’s term. Look at the hundreds of tweets that emerge every minute and at the overuse of the word “confirmed” on them, which is meaningless if you don’t know who’s doing the confirming. There’s no way to tell who’s who, who’s there, who’s telling the truth, who’s not.
Note the repeated word: Who. The greatest value a news organization can add to this new news ecosystem is to identify, curate, vet, and train people. Ideally, that needs to happen before the big story breaks. But it can even be done outside the country, as I saw CNN do this morning, talking with a Columbia University student from Iran, who knew who was real and was there from her network of family and friends. Of course, even if you know the people you’re listening to, it’s impossible to know whether everything they say is true unless you can verify it yourself. But that’s the point: You can’t.
So you need to have the best head start you can have. The larger the network of people a news organization can organize, the better shape it will be in when news breaks, the better it can filter the reports that come – whether from people in that network or in the larger network of people those people know. The more people in the network, the more who can go to the scene of news or research closer to it – the more you can ask for help.
Global Voices is an example of this infrastructure: someone who knows someone who knows someone, each able to judge what the next in the chain is saying.
I’ve also been arguing that for journalists, saying what you don’t know is becoming as important as saying what you know. That is all the more critical as misinformation and rumor can spread at the speed of information online. So I imagine a news organization creating a kind of anti-wiki – a dynamic, collaborative Snopes: a list of what we don’t know so we can see what is unconfirmed and so these things can be confirmed – so journalists can add journalism.
On Twitter right now, for example, I’m seeing a great deal about people being taken to embassies instead of hospitals. It is possible for journalists to call their diplomatic sources and confirm at least that, check that off. We need structure around that process.
See also the post below about YouTube holding unique information about the provenance of video. YouTube should not reveal identifiable information about those sources. But news organizations should be able to contact YouTube to help sift through them and find out least which videos came from Iran.
News organizations could also equip their networks of witnesses. Alive in Baghdad distributed cameras to people there. Today, that can be done so much less expensively – think Flip cameras. Bild in Germany sold 21,000 of equivalent devices in five weeks. Michael Rosenblum is planning to distribute 100 Flips in Gaza.
How else can and should news organizations add value and structure to this very disorganized and live new world of news?
I tweeted a few minutes that I wish YouTube itself would be curating and featuring video from Iran because only it is in the position to know whether the video came from Iran and whether it is a duplicate. I said that YouTube has a responsibility in the news ecosystem. Andy Scheurer questioned that: responsibility? Good question. Isn’t YouTube just a host? Can’t it be agnostic as to interests? No, I don’t think so, because YouTube has unique knowledge it can add to inform the discussion (e.g., this video isn’t from Iran or it’s a year old or this video is unique from Iran today) and to not add that knowledge becomes irresponsible, no? YouTube can’t just make the information transparent so we can figure it out because it also has a moral responsibility to protect the identity of those who are putting themselves in danger by uploading the videos to inform the world. That means they are the only ones who can verify at least some information about the videos for our benefit. So shouldn’t they?
The New Business Models for News Project is now well underway at the City University of New York Graduate School of Journalism. Here’s the blog and below is the post explaining our work:
We at the City University of New York Graduate School of Journalism believe that the discussion about the future of journalism — as newspapers and other news organizations find their business rapidly eroding around them — needs to be informed by facts, figures, and business specifics. That is why we created the New Business Models for News Project.
The project is researching best practices in the business of journalism online, gathering new ideas and experiments in revenue for news. We will build complete business models to share with the industry and with the journalists, communities, entrepreneurs, technologists, and investors who will create the future of news.
The project is funded by the Knight and McCormick Foundations. Two earlier conferences leading up to the work of the project were funded by the MacArthur Foundation. The work of the project’s first phase will be presented at the Aspen Institute in August and will be shared, publicly and in progress, on this site.
Our work begins with the assumption that there will be a market demand for quality journalism, watchdogging those in power, and that the market will find a way to meet that demand. The question so many are asking is how. We will attempt to answer that by projecting the future of news in a metropolitan area, concentrating on four perspectives — hyperlocal, the new news organization, publicly supported journalism, and the framework to support this new news economy as a whole.
We will use as our model market a hypothetical top 25 metro area in the U.S. where the sole daily newspaper has ceased publication. In short: We are asking what will fill the void. We posit that no single company or product will do that. Instead, an ecosystem made up of many players operating under many models and motives will emerge. In all cases, we are agnostic as to who owns and operates these entities: legacy or new companies, large or small. In that context, we will examine:
* The optimal hyperlocal (town or neighborhood) blog or site. We will look at how to maximize revenue to such sites, whether they are run by sole proprietors, larger startups, or established media companies. This will include helping sites provide the best and most valuable service to local advertisers; establishing local networks of fellow hyperlocal sites to increase sales and revenue opportunities; larger metro-wide networks; and exploring other revenue opportunities, such as paid models and commerce. We will look at what these sites need to succeed, such as networks, promotion by aggregators, and technology.
* The new news organization. Even after a market loses its daily paper, we believe there is an opportunity for a new news organization to be reconstituted around key journalistic roles serving the metro-area. We will project the scale of such an enterprise: its audience and revenue yielding its resources and functions: reporting, aggregation/curation, perhaps organizing the broader community and its news efforts. How many employees can a profitable, journalism-centered business support and what can and should they do? What is its relationship with other players in the ecosystem?
* Publicly supported journalism. We do not believe that any single savior– foundation, government, device, or massive public contribution — will rescue an existing news organization as it operates today from the crush of the market. But we do believe that publicly supported journalism — that is, from individuals, foundations, and perhaps companies — can play a role in this model city’s news ecosystem. This could take the form of a local Pro Publica or of crowdsourced funding through a platform such as Spot.US or of an expansion of public broadcasting’s role. The key question we will answer is what level of support will likely be available — projecting from current efforts locally — and what those resources could provide.
* The ecosystem’s framework. We will examine the supporting infrastructure this ecosystem will likely need, bringing together independent players to reach critical mass so they can recognize greater market value (in, for example, advertising networks and in mutual promotion) and greater efficiency (in, for example, technology platforms, the ability to create collaborative projects, training in journalism and sales, search-engine optimization…). Once again, we are agnostic to ownership: These functions could come from a single company (which is how we will present the model); they also could be provided by a legacy player or they could be offered by various players. To quote Mark Potts at one of our CUNY conferences, “You may want to be small, but to succeed at being small, you probably have to be part of something big.”
In addition, the project will gather and also propose a catalog of revenue models, working with those who are building systems to support paid content; interviewing local advertisers to learn more about their needs; talking with sites in the U.S. and elsewhere to learn what is working and not working for them; examining the possibilities for more unusual revenue streams such as e-commerce.
After this work is well underway and after the Aspen report in August, we plan to extend the project’s work to examine more business models, such as national and international content exchanges; interest-based sites and networks;
The project is headed at CUNY by Prof. Jeff Jarvis, head of the interactive program. Peter Hauck is project director, working with Jennifer McFadden, business analyst; business researchers Kate Albert, Gary Frangipane, Noah Xifr, Darshan Dedhia, Frank DiBartolo, and Senem Coskun of Baruch’s Lawrence N. Field Center for Entrepreneurship at the Zicklin School of Business; and reporters Matthew Sollars and Damian Ghigliotty, both graduates of the CUNY Graduate School of Journalism. We are grateful to the Field Center’s Edward Rogoff and Monica Dean for their support. We are also happy to tell you that Jeff Mignon and Nancy Wang of Mignon Media are also working with us.
In a Guardian interview, UK PM Gordon Brown says that the internet changes foreign affairs forever:
He described the internet era as “more tumultuous than any previous economic or social revolution”. “For centuries, individuals have been learning how to live with their next-door neighbours,” he added.
“Now, uniquely, we’re having to learn to live with people who we don’t know.
“People have now got the ability to speak to each other across continents, to join with each other in communities that are not based simply on territory, streets, but networks; and you’ve got the possibility of people building alliances right across the world.”
This, he said, has huge implications. “That flow of information means that foreign policy can never be the same again.
“You cannot have Rwanda again because information would come out far more quickly about what is actually going on and the public opinion would grow to the point where action would need to be taken.
“Foreign policy can no longer be the province of just a few elites.”
I’m fascinated with the services that are popping up in Italy – and now, I see, in the U.S. – enabling people to rent instead of buy things and to rent out the things they have: to share, in short.
The Washington Post writes about Zilock.com, Rent-instead.com, Chegg.com for textbooks, and Babyplays.com for toys (well-sanitized, one hopes). Not to mention the ultimate in sharing things, Zipcar.
I take a tour around my house and it’s hard to come up with a long list of things I’d only want to rent and no longer need to buy – tools, mainly, because I’m a klutz and try to avoid all handyman chores (whenever I tell people who know me that I’m using a chainsaw, they shudder at the thought). But I can imagine things I might not buy but would want to rent: a great digital camera or video camera, for example.
So I don’t see this phenom as a major force in the economy. I think we’re more likely to see sharing brought to assets like office space and equipment. Still, it’s just one more case of innovation yielding efficiency instead of growth.
Here’s the Post on these services:
Zilock.com came about like this: In the fall of 2007, a couple of friends in France were trying to hang something up on a wall and didn’t have a drill. They thought about buying one but somehow calculated that a drill is used only an average of 12 minutes in a lifetime. It made no sense to buy one, they argued.
“We were thinking about all of the drills lying around the building or the block and we had no access to it. We thought there are so many ways you can sell your things online but no way to borrow things,” Boudier said.
The peer-to-peer renting Web site first launched in France and Belgium. Once it took off, the founders expanded to the United Kingdom and the United States. Boudier, who is the U.S. general manager, said there are now 100,000 items for rent just in America. Not only are there drills up for grabs but infant car seats, camping gear, and digital cameras. “We are offering new ways for people to save and make money,” he said.
I’m getting email pitches – filled with legalese – to contribute to Dan Abrams’ awkwardly named Mediaite (guess all the good URLs were taken). This is the same Dan Abrams – lawyer, thus the legalese, and failed MSNBC host and executive – who is starting a PR company – oh, excuse me, media strategy firm – to advise companies on media while promising access to media people – the same media people, one imagines, he is getting to write about media for his media site. Gawd, it’s positive hermaphroditic: A bunch of worms who can’t figure out who’s fucking whom how. I think I’ll stay away. Don’t want any of that on me. To quote the wonderful Jemima Kiss of the Guardian as she tweeted today about somebody switching the mouse on her desk: “hand cheese.”
When I write for HuffingtonPost or the Guardian’s Comment is Free or Silicon Alley Insider or Seeking Alpha, I just write and say what I think. Not for lawyer Abrams’ Mediaite. The email from fellow lawyer turned media person Rachel Sklar says they’re going to have “a number of great, regular paid columns and intend to have a number of paid contributors” but adds that payment is still being “hammered out.” I’d suggest bringing the hammer out when ready. “What does this mean for you?” she can’t help adding. ” Well, our goal is to develop these ideas, and eventually to pay certain top contributors a revenue share and/or stipend.” Eventually.
Then we get a 14-point list of rules. Including:
…3. Feel free to express any opinion, however unpopular; however, you must be able to support your arguments with linkable facts and/or original, verifiable reporting. We need to give the reader enough information to intelligently disagree with you; you need to be able to demonstrate to your critics why you are totally right and they are idiots…
9. NB: #3 effectively precludes racist, sexist, homophobic, anti-Semitic or otherwise unsupportable/repugnant views. Provable arguments mean rational, sane thought. Since you are all sane, rational people we’re not that worried, but it must be said….
11. We are happy to cross-post material from your website or another source, provided you have the rights to do so. If you wish to respond to reader comments, you may submit one “Update” to the post. Two is pushing it, especially since you adhered so strictly to #3. We’d rather you just attack the person on Twitter….
13. You retain all the rights to your work. In the event that we enter into a revenue-share or some other financial deal, we reserve the right to negotiate the terms on a case-by-case basis….
So we’re told to argue our points and not be repugnant and though we own our nonrepugnant thoughts, they reserve the right to negotiate with us for them. Should they have quit their day jobs?
I want to hug my blog. I don’t need any lawyers-turned-flacks-turned-media-commentators-turned-publishers. I can publish on my own. Right here. And I can be as repugnant as I want.
Let me make clear: If he had just started a blog or a group blog about media, cool. But announcing that he’s also starting a PR company offering access to media people makes it stink. And then trying to throw on the cloak of legalese does nothing to relieve the stench. I’m sorry but this smells.
: As I read Abrams Research’s site, it only gets worse: The media people sometimes won’t even know whom they’re advising.
Here’s an example of what they do:
# A Fortune 500 business believes the financial media has focused unfairly on a small change in accounting practices rather than significant increases in revenues.
* Abrams Research can bring together top financial journalists to advise that business on how to best convey its message.
My emphasis. Journalists?
: LATER: Here is Rachel Sklar’s response to me. And I still say craigslist is lower case.
It soon will be – if it not already is – known as the Twitter revolution in Iran. But I’ll think of it as the API revolution.
For it’s Twitter’s architecture – which enables anyone to create applications that call and feed into it – that makes it all but impervious from blocking by tyrants’ censors. Twitter is not a site or a blog at an address. You don’t have to go to it. It can come to you (as newspapers should). Twitter is an outpost in the cloud and there can be unlimited points of access from every application and site using its API, so the crowd can always stay ahead of the people formerly known as the authorities. That, I believe, is the keystone in the architecture of the new infrastructure of unstoppable freedom of speech and democracy. That’s what enables Clay Shirky to declare, “This is it – the big one.”
It isn’t merely “social media” that make this a step-change in the internet’s impact on society and government, as the reporters who’ve been calling me and other pundits want us to say. Sree Sreenivasan tweeted, “on CNN just now, I asked – China quake, Mumbai attacks, US election, Iran… how many times can one technology ‘come of age’?” RIght. See January 16, 2001 when, as Howard Rheinhold recounts in Smart Mobs, tens of thousands of protesters against Philippine president Joseph Estrada were brought to a square with an SMS. See Mark Zuckerberg proudly talking about the Spanish-language Facebook being used to organize Colombians against FARC. Iran is just another example of people organizing themselves online for a cause or a revolution. The people will avail themselves the latest available technology to serve their needs and cause.
Twitter is different because it’s live and social – the retweet is the shot heard ’round the world – and because that API lets it survive any dictator’s game of whack-a-mole. But it’s by no means the final word in digital revolutions. I know we will soon see witnesses and participants to events such as these broadcasting them live from their mobile phones. We will see people organizing with Google Maps. We can’t imagine what will come next.
Twitter has been used in many ways in the Iran story:
* Citizens of Iran are using it to inform each other.
* They are using it, most importantly, to organize.
* They are using it to inform the world.
* We outside Iran are using us to see what people were saying and doing in Iran. Journalists are using it as a tip service to news and a way to find witnesses to interview. I’ve said in Twitter – to respond to the obvious complaint I hear – that, no, Twitter is no more the final source of news in and of itself than Wikipedia is the only source of knowledge. But it is a tip service for journalists who then still need to do their job and report.
* We can use it to see the interests of at least the Twitter demographic – limited though it may be – and then to use that to beat up CNN, Fox, and MSNBC for their terrible news judgment last weekend as they all but ignored a revolution.
Of course, Twitter – and Facebook and blogs and camera phones – alone cannot win a revolution. They cannot protect their users from government’s bullets and jails, as we have seen all to tragically in Iran. (This thought led Tom Friedman to the worst line on the New York Times editorial page, worse even than the worst of Maureen Dowd: “Bang-bang beats tweet-tweet.”) Fighting for freedom requires courage and risk we must not underestimate. But at least these tools allow allies to find each other and to let the world know of their plight. For thanks to the fact that anyone in the world – outside of North Korea – now has a printing press and a broadcast tower, they can be assured that the whole world is watching.
I recorded a Skype video interview for Al Jazeera English that will air at 20000 GMT today and looked at the camera and said, “Despots, beware.” Your days are numbered. This is more than a revolution. It is an evolution in the architecture of speech and freedom.
: LATER: Note that not just Iran is censoring the internet. Germany wants to, seeking a censorship infrastructure that can be used for one purpose today, another tomorrow. Oh, when will they ever learn?
Three apparently unrelated items on the shift from valuing the product to valuing the process as the product:
* Trendwatching tells the story of what it calls “foreverism” – that is, that things never end (friendships, news stories, product development) and uses as illustration not only process journalism but also beta chocolate. TCHO is a chocolate company populated with geeks and so they brought betathink to their candy, releasing it as a beta, taking feedback from customers, and iterating it 1,026 times before coming out with the 1.0 chocolate. They didn’t put out bad chocolate to start with; they did their best. But then their customers helped make it better, ever better.
* Experientia.com reports – translating the newspaper La Stampa – that Italians are buying goods less often and renting them more often.
But the real revolution is that renting is becoming a way of life which is changing consumption and society. Car sharing, bike sharing, i.e. quick rentals of cars and bikes, but also dress sharing, i.e. the rental of clothes and handbags. There is toy sharing: children toys, small machines, lego, and puzzles. Even tools for the disabled, wheelchairs, orthopaedic supports, computers, and whatever you might need in the gym, sports or vacation. You don’t need to buy, you can just rent.
I think this ties into the idea of process: You can always rent the latest without having to buy it. You can afford to do so because you are sharing the cost with other users. Companies can find larger customer bases who are likely to be satisfied more because they are getting the latest. We move from a consumption economy to a use economy.
* NYU student Cody Brown delivers a neat take on the discussion about process v. product journalism last week, making distinctions between batch and real-time processing of journalism (read: The New York Times as opposed to blogs). Because The Times’ brand hinges on it as a product that has been curated and edited and checked and polished – note editor Bill Keller’s language on The Daily Show about his package – it finds itself in dangerous territory trying to compete in real time with those whose brand expectations are entirely different.
Brown says that for print, the “gestalt” is “batch processing.” How should it develop its brand? “As the voice of god.” How should it publish information on a developing story? “Cautiously. It should triple check it’s information and call every source involved in the story to give them an opportunity to comment.” How should it produce its product? “Into tight neatly written comprehensive articles … meant to exist as a ‘first draft of history.’” Who should do this? “Professionals. It’s expensive. A finite number of pages means a constant question: what is newsworthy to the most number of people?”
Compare and contrast with his take on online. Gestalt: “”Real Time Processing. Information is processed on the fly.” Brand? “An open platform…. Take the values/tactics that go on behind the walls of a newsroom (’the magic journalism box’) and execute them publicly.” How to publish? “Instantly. When a page is able to be updated at any frequency, corrections can be made just as fast. Rumors and gossip can be used as leverage to get sources, who otherwise wouldn’t, to spill what they know. Publishing incomplete information is the fastest way to get users to contribute to the bigger picture. This is a tactic in effective commons-based-peer production and it is how Wikpedia grew so fast and so well. As Harvard Law Professor, Yochai Benkler, describes, it often looks like a ‘disaster area.’ This is the ’scuttlebutt’ the Times can’t wrap its head around.” How should it produce its work? “API.” Who should do it? “Everyone in the beat. When a website has unlimited pages: there is no excuse.”
Brown says it’s possible for one to produce like the other But “the challenge is in branding.”
The messy, opinionated, incomplete, rumorladen, shit-show that is actual news production is hidden away. If you want a real time news website, it must be brought to the surface. This isn’t a problem for a brand like Tech Crunch, but it puts print news brands in a terribly awkward position. How does The New York Times show the mess under its articles without wrecking the omniscient aura of the brand it has worked so hard for? …
Batch is killing them. Online, it is expensive, slow, and wasteful. It’s not sustainable and it’s a problem that will only get bigger for the The New York Times. … The fundamental problem The New York Times has online is that its brand carries too much weight. The Times stamp means a piece has been packaged, and is no longer in process. If they’re interested in participating in the journalism of the 21st century, they need to shed the baggage of the last one.
They won’t.
Very neat take on the question. It’s not just the standards, tradition, and ego of the legacy press that prevents it from enjoying the benefits of beta, Brown argues, but the perception and value of its practices and reputation. That would seem to argue that it’s impossible for the legacy to update from product to process. I’m not sure I agree, but I do think that Brown put the challenge clearly through one end of the prism. The question is whether the legacy press – for the benefit of its staff even more than its audience – can issue enough caveats to enable it to work real-time. Forget blogs in this discussion. Will The New York Times ever be comfortable working on the standards and practices of 24-hour cable news? Can it afford to? Don’t they have to?
(By the way, the subject of last week’s NYT snipe, Michael Arrington, did well in an On the Media interview on his process with Bob Garfield.)
David Carr surveys a series of alleged experts to try to determine the market value of the Boston Globe, now that it’s finally up for sale (oh, if only they’d sold it when they could have). He concludes:
No consensus, but most of the experts who judge media properties for a living seem to be saying that the only way The New York Times Company can unlock any value from The Boston Globe is to get the newspaper’s losses off its books. Next time you’re in line at Starbucks and buying a $2 cup of coffee, you might want to consider that you could have bought one of America’s most storied newspaper franchises for less.
Or you could buy The Globe for about the cost of buying a copy of The Globe.
Those who say it’s worth tens or even hundreds of millions are smoking bad shit. Remember that when Robert Maxwell “bought” the New York Daily News – when I worked there as Sunday editor – Tribune Company had to pay him $60 to cover some liabilities and then Maxwell cut more expenses than that … and it still went bankrupt.
Buying the Boston Globe is buying liabilities and shut-down costs and operating costs and pissed-off unions. Oh, joy.
Ken Doctor was most right in Carr’s piece when he said that The Times Company will try to make it look like it got money by holding onto liabilities. Any way you cut it, the Globe is not worth much of anything.
And if it does get bought, what happens? See: Philadelphia, Minneapolis, Tribune Company. Slow destruction follows.
I repeat: The best thing The Times Company could do is push The Globe into bankruptcy, shut down its production and distribution structure, reduce editorial and sales to essential and open-minded employees, go online-only, and come out as a much smaller but profitable company that is no longer a drain on and threat to The New York Times. This new Globe would also be a laboratory for The Times to learn how to recast itself.
The Times gets shortchanged. It paid $1.1 billion for the paper just 16 years ago. It’s struggled to keep the Globe staffed through bad economic times. It’s subsidized losses.
The new owner takes on great risk. It’s highly unlikely any bank will finance a purchase, given the half-dozen bankruptcies we’ve seen over the last year in the industry. That means the new owner’s own money is immediately at risk. The new owner starts out behind, even with recent contract givebacks, given the trajectory of operating loss and a continuing 30% decline in year-over-year advertising revenue. Forget the purchase price; how many millions will I have to sink in within the next year?
I’m delighted that the Associated Press is going to distribute the reporting of four nonprofit investigative news organizations: the Center for Public Integrity, the Investigative Reporting Workshop at American University, the Center for Investigative Reporting, and ProPublica. That will get their work seen in many more print outlets. Print.
Except — and I hate to have another exception with the AP — online that isn’t necessarily the best service to the work. In a search-driven ecology, the better thing to do is to send all traffic to the reporting at its source so that can rise in search. It also means that as stories are updated, readers can get the latest. And it gives these centers the opportunity to raise money with readers who care about their work. So I hope that the papers that print these stories online also link to the source.
Much of the innovation we’ve seen lately hasn’t led to growth but instead to efficiency – that is, shrinkage.
I’ve been mulling over Mike Mandel’s cover story in last week’s BusinessWeek, in which he tried to puncture another bubble: the belief that we’ve had a rich decade of American innovation. He argues that there’s actually an “innovation shortfall” and he uses economic stagnation to plead his case. Now I’m not economist (that’s a straight line) and so I won’t argue about the impact of other events on growth – starting with the so-called financial crisis.
But as I thought through the major innovations of the last decade, many of them have not led to economic growth; they haven’t added money to the economy but left it in the economy. Thus measuring innovation’s impact in the revenue, growth, productivity, and market cap of large companies may not be valid. Instead, we are seeing innovation take money out of their pockets, leaving it with their customers. What they, in turn, do with that extra money and what impact it has on the economy is an entirely different question – and that impact is likely seen in any case not in large companies but in individual consumers and in small businesses. But I think the proper measure of the changes in the last decade is the innovation dividend. See:
* craigslist is blamed for destroying (that’s from the publishers’ perspective) $10 billion in classified ad value annually**, replacing it with its reported $100 million revenue. Newspapers act as if that was their money – as if they had a God-given right to it – but, of course, it wasn’t. When Craig Newmark spoke with my students at CUNY, and they asked him why he didn’t maximize revenue at craigslist and sell it for billions and then use that money for philanthropy, he told them that he thought he was doing more good for the country and the economy by leaving more money in the pockets of the people who were doing the transactions he now enabled. He cut out a gross inefficiency born of the monopoly that newspapers held over the means of production and distribution. If you try to measure his innovation’s impact on the economy with old methods and metrics – built on the assumptions of the old economy – you can’t see it. He didn’t make companies grow or become more productive. He added efficiency.
* Amazon, eBay, and the internet as a whole are blamed for destroying large swaths of the retail marketplace. But again, they brought efficiency in a number of ways: price transparency, which leads to lower prices for customers; critical-mass efficiency; the reduction of brick-and-mortar and staff costs; and I’d imagine a reduction in distribution and warehousing costs. The net result is fewer jobs, less rent, less waste (that is, books on shelves that get pulped; now they’re made just in time), and lower prices. Again, more money is left in the pockets of the transcators. The impact of innovation on retail is seen in shrinkage and efficiency, not growth.
* Google is blamed for destroying media but, of course, all it did was give advertisers a better deal. It dared to compete. Google did this not just by creating abundance rather than selling scarcity born of control of those means of production and distribution. This created a more efficient – read: less expensive – marketplace for advertising. More important, Google revolutionized advertising by selling performance, proving a return on investment. So the money that didn’t stay in the pockets of people buying and selling cars and homes, thanks to Craig, now stayed in the pockets of retailers and manufacturers thanks to Google. More efficiency. In What Would Google Do”, I argue:
We have shifted from an economy based on scarcity to one based on abundance. The control of products or distribution will no longer guarantee a premium and a profit. . . . We are entering a post-scarcity economy in which Google is teaching us to manage abundance, challenging the bedrock rule of economics, first written in 1767: the law of supply and demand.
Old rules and measures and analyses can’t track that.
* Web 2.0 is credited with making it much faster, easier, and far less expensive to start new companies. That is the other innovation dividend – the innovation that happens on the back of innovation. But this is happening, again, not at a large-company level but at a small-company level. Measuring spending on innovation, then, becomes another unreliable metric. The economics of innovation itself have changed.
The reliability of the standard metrics and analysis matters greatly because profound – and expensive – policy and economic decisions are being made on the basis of them and I’m not at all sure they’re valid anymore, or at least as valid. They miss too much of the change and impact and value and dynamics in this new economy. They lead us to bail out GM and Chrysler. One could argue, as George Will did in yesterday’s Washington Post, that that the bailout violates even old rules:
The administration’s deepening involvement in designing and marketing automobiles through two crippled companies ignores this truth: Capitalism is a profit-and-loss system, and the creative destruction it produces is supposed to clear away failures such as Chrysler, freeing capital for more productive uses.
But that capital, once freed, may not go to building huge new ventures. It may go to building small new ventures. It may stay in the pockets of people doing transactions and now instead of spending it on Toyotas, it may go to banks. You won’t see all the impact – except negatively – on the Dow Jones Average and the Fortune 500; those were the measures of the old economy. We need new measures.
** I had said craigslist and the internet replaced $100 billion in revenue in newspaper classified, which was an attempt to calculate over the life of the web, but that was difficult to calculate, so I changed the figure to $10 billion, the difference between classified revenue at its height in 2000 and in 2008.
