By Paul Gillin | August 5, 2014 - 12:04 pm - Posted in Business News, Future of Journalism, Journalism, Layoffs, Newspapers

Robot

On one level we can understand the teeth-gnashing that follow the Associated Press’ announcement that it plans to start using robots to write the majority of U.S. corporate earnings stories. Robots seem to bring out the Luddite in all of us. What we can’t understand is why anyone outside of a few shop stewards should want to preserve the jobs that will invariably be lost to this new kind of automation.

Actually, the AP says no jobs will be eliminated. “This is about using technology to free journalists to do more journalism and less data processing, not about eliminating jobs,” wrote Lou Ferrara, vice president and managing editor, on the AP blog. You can bet that robots are going to eliminate reporting jobs in the future, though, just like linotype machines replaced human typesetters and computer pagination replaced paste-up jobs. It’s called efficiency, and job loss is one of the distasteful consequences.

We’d suggest that much of the labor impact will actually be felt overseas, which is where the menial jobs have already migrated. Robo-journalists in India and the Philippines will need to improve their skills to continue to get work from U.S. and European publishers, and journalists in home offices will need to up their games as well. That’s a good thing.

What isn’t good is preserving jobs that eat up time and editors’ attention. In one of our recent assignments we worked with a technology news site that employs a small staff of seasoned journalists but that gets most of its content from an offshore body shop that rewrites press releases and news from other websites. The reporters who write this chum make about five cents a word, and in our view they’re overpaid.

Stories come in full of grammatical and usage errors, and many are missing basic facts or explanations. Professional editors spend hours each day fixing these mistakes and trying to educate the writers, which is a fool’s errand because most of them don’t last more than a few months on the job anyway. These tasks can now be automated, and many of them will be. The result will be at a better quality of work for everyone involved.

Will the stories that robots produce be as good as those that humans could write? Probably not, but it’s the market’s job to judge that. The only thing that’s certain is that the quality of robotic journalism will only improve over time. The human journalists who embrace this trend will learn to use their silicon sidekicks as research associates and fact-checkers. Robotics should ultimately make journalism a much more rewarding profession, but it will cost jobs.

Take heart in the fact that newsrooms won’t be hit nearly as hard as many other workplaces. “The factory of the future will have only two employees: a man and a dog,” said Carl Bass, the CEO of Autodesk. “The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.”

Steve Outing

Steve Outing

The leaked “innovation” report from The New York Times that made the rounds in May recommends that the company take more risks, move more quickly and consider radical steps to reinvent itself. Steve Outing wonders what would happen if the Times abandoned daily print editions, and he’s built an elaborate “what-if?” model to test the idea.

Outing’s model doesn’t answer the question, but it does provide a new tool with which to evaluate options. “Most news companies aren’t very good at grokking what’s coming at them or what likely futures could be ahead for them,” wrote Outing in an e-mail to us. “What I did was demonstrate one tool of strategic foresight that news companies should consider using.”

Outing would like to get more consulting gigs working for news organizations that need reinvention, and we hope he gets some. A self-described media futurist, he’s been challenging assumptions about the slow-moving newspaper industry for the past two decades. Read more here. We were fans of a blog called Reinventing Classifieds that he launched back in 2008 that recommended radical new ways to revive the highly profitable newspaper classified advertising business. To our knowledge, no on took him up on his ideas.

For this exercise, Outing applies a “Futures Wheel” to envision a Times that only publishes on Sunday. The exercise is meant to envision every impact on the paper’s business, including staffing costs, production savings, new sources  of revenue and circulation revenue. Outing has modeled his scenario out to two levels of detail. To fully understand the implications you need to go to  third level, and that involves surveys and pilots. Outing will do you that for any newspaper that wants to hire him.

Asked what value news organizations can gain from this exercise, he wrote, “Technological change is accelerating at a faster rate; indeed, exponentially, when it comes to computing power. This means that anyone’s business model can be disrupted, if not obliterated, faster than ever before. So now is a critical time to start seriously using strategic-foresight tools and techniques (futures wheels being just one) to better prepare for likely and plausible challenges and opportunities.”

He’s right. How many media executives have the vision to take him on the offer? Click here to see an enlarged view of the image.


 

Observers of the cratering newspaper industries in the US and Europe may be surprised at this news: Print newspaper circulation around the world actually increased 2% in 2013 compared to 2012. The pocket of strength comes from rapidly maturing economies in Asia and Latin America, where people who a generation ago might have used newspapers mainly for kindling are now finding them to be valuable for the purposes for which they were intended.

That’s the highlights from the latest World Press Trends survey, which was released last by the World Association of Newspapers and News Publishers. The survey includes data from more than 90% of the news organizations that make up the industry’s total value.

There was no good news report in North America and Europe, where with print circulation dropped 5.3% last year and 10.3% over the last five years. Print ad revenues in North America are down a sickening 29.6% over five years. In Europe, print circulation declines have been even greater – 23% over five years – although advertising dollars have not fallen as quickly.

It’s quite a different story in Asia/Pacific, where print circulation is up 6.7% over the last five years and ad revenues have nudged ahead 3.3% during that time. Latin America is booming. Print circulation is up 6.3% over five years and ad revenues are up a stunning 50%.

It all adds up to an industry that’s a lot more stable on a global basis that many people thought. While overall revenue annual is down about 13% since 2008, results in 2013 were essentially flat, indicating that the industry’s freefall has slowed.

This is no time to celebrate, however. The last two years have shown that the developing world is migrating quickly to electronic media the expense of print, which still delivers 90% of the global industry revenues. While publishers report some success with packaged print and digital subscriptions (single-copy sales are down 26% worldwide but subscription sales are only down 8%), no one has yet solved the revenue problem.

Print Newspaper Circulation and Advertising Trends

 

By Paul Gillin | May 29, 2014 - 6:33 am - Posted in Innovation, Newspapers, Solutions

The Newspaper Association of America (NAA) was in denial during the early years of the industry’s crash, but lately the organization has been doing good work to highlight the new spirit of innovation that is taking hold across its membership. As the numbers in this infographic demonstrate, U.S. newspapers have a lot to be proud of. They reached 145 million unique visitors in January alone and the Washington Post and New York Times each drove more than a quarter-million tweets each week.

One of the things we like most about this infographic is the attribution. Go to the page on the NAA site to get clickable links to the source data. We wish more infographic producers would take this small step to make their numbers more believable.

Evolution of Newspaper Innovation - Newspaper Association of America

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English: A speech in The New York Times newsro...
A speech in The New York Times newsroom after the announcement of the 2009 Pulitzer Prize winners (Photo credit: Wikipedia)

We finally got a chance to read through the 96-page “Innovation” report commissioned by the management of The New York Times and leaked last week in the wake of the firing of Executive Editor Jill Abramson on Tuesday. Joshua Benton at Nieman Journalism Lab has already called the report “one of the most remarkable documents” he’s seen in his tenure, and detailed coverage has appeared on BuzzFeed, Mashable and numerous other outlets. We won’t go into detail on excerpts (Nieman’s coverage is the most exhaustive we saw) but thought it was worth sharing a few issues that stuck with us.

In a nutshell, the report makes a powerful case for a complete restructuring of the way the Times approaches its “paper of record” role. The extent of the criticisms contained therein will shock the many people who have come to believe that the Times is the standard-bearer for “digital-first” journalism among traditional media outlets, but there’s plenty of data and examples to support these conclusion.

Twenty years into the commercial Web, little has really changed about the culture at the Old Gray Lady, even as digital and print editorial operations have merged, the report says. Stories are filed late in the day in accordance with traditional print deadlines. Ambitious features are scheduled for Sundays, when print readership is largest but online readership dwindles. Mobile apps are organized by print sections. Traditional reporting skills dominate hiring and promotion decisions and a byline on Page One of the print edition is still considered the gold standard of success.

This is despite the fact that – as the report documents on page 81 – print readers are the smallest audience the Times has. Mobile and desktop readers together dwarf the print audience by a factor of 10. A dying medium still holds sway at the most prominent journalism institution in the U.S.

A few themes run throughout the document that we found noteworthy:

Audience Is Earned

One of the most compelling quotes we read was from Janine Gibson, editor-in-chief of The Guardian’s website. “For someone with a print background, you’re accustomed to the fact that if it… gets into the paper you’re going to find an audience,” she said. “It’s entirely the other way around as a digital journalist. The realization that [the audience is] not going to just come and read it has been transformative.”

This observation underlies some of the core recommendations of the report, which are that the newsroom needs to work much more collaboratively with design and promotion than it has traditionally. In most newsrooms, journalists work in a cocoon and throw finished products over the wall to designers and publicists for packaging and promotion. However, user experience has become critical to success. That’s because readers themselves are becoming the primary traffic-drivers. In other words, great journalism that isn’t easy to access and share doesn’t get very far.

The report has some internal traffic metrics that dramatize what most Web publishers have probably known for a while: Traffic to websites in general and homepages in particular is declining while content is increasingly being consumed through aggregators and mobile devices. The internal data also validates what has been speculated for a couple of years: Readers are now the dominant revenue source, making up 52% of 2013 sales compared to 43% from advertising.

With readers increasingly in control, the report recommends a step that still draws gasps from journalism veterans: Eliminate the wall between the newsroom and the business. “Increased collaboration, done right, does not present any threat to our values of journalistic independence,” the authors declare, recognizing what digital first publishers discovered a decade ago.

The Wall is still very much in place at The New York Times. Popular innovations like a searchable recipe database and the ability to follow stories of interest have come out of product and design groups rather than the editorial side. The Times does a good job of researching its audience, the authors say, but the newsroom has shown little interest in participating in surveys and focus groups. Designers complain that they are treated like second-class citizens. Editors who want to collaborate with colleagues outside the newsroom have to do so on the sly. Researchers said the vast majority of developers at the Times believe they aren’t even allowed to set foot in the newsroom.

Barriers between editorial and business functions are an expensive luxury that media organizations can no longer afford. What the Innovation report makes clear is that the business side contributes far more to the reader experience online than it ever did in print.

Platforms Matter More Than Packages

The Times enjoyed plenty of well-deserved praise for “Snow Fall,” a mesmerizing visual feature it published in late 2012. As beautiful as that package was, the fact that it hasn’t been repeated in 18 months points to the problem of putting resources behind what the report calls “labor-intensive one-offs”.

Snow Fall Intro screen

Snow Fall is cited repeatedly as an example of what the Times is capable of but fails to achieve in its daily operations because it fails to attend to the nuts and bolts of digital media. “Our competitors, particularly digital-native ones, treat platform innovation as a core function,” the authors write. They point in particular to BuzzFeed, which has equipped its editors with a wide palette of interactive storytelling tools, as a better model. While the results aren’t necessarily elegant, they are repeatable, and that’s more important.

In contrast, the Times has failed even to carry out a consistent approach to tagging, a well-established technique for categorizing content in a way that makes it easy to reuse. This has often-unforseen ripple effects. For example, the lack of tags has frustrated efforts to create a useful recipe database, hampered search engine visibility, prevented the paper from automating sale of its photos and limited its ability to target content by geography.

We Are All Publicists

Some of the report’s harshest criticism is aimed at the Times’ reluctance to promote its own work. The legacy of great journalism has become, in many ways, a handicap. Editors believe that journalism alone will carry the paper while competitors invest aggressively in promotion, data analysis and systems to move quickly and double down on success.

Publications like The Guardian, Huffington Post and The Atlantic expect staffers not only to promote their own work but to know how to write headlines that maximize sharing potential. Huffington Post won’t publish a story unless it has a photo, a search-optimized headline, a tweet and a Facebook post.

In contrast, the Times editors didn’t notify publicists of their acclaimed Invisible Child series on New York’s homeless children until it was too late to do any advance work. The reporter failed to even tweet about the feature for two days.

While the Times has millions of collective Twitter followers through its branded and individual accounts, the paper generates less than 10% of its digital traffic from social media. In contrast, BuzzFeed generates six times as much from those sources, the report notes. That’s because social promotion is considered an afterthought. For example, the Twitter feed run by the newsroom is used mainly for reporting rather than for audience development.

The report also criticizes Times management for doing too little to connect with readers. While competitors like Huffington Post and Medium have prospered by making their publishing brands a platform for anyone who wants to contribute, the Times still rejects dozens of op-ed submisions from thought leaders every day. The enormously popular TED Talks, which charge up to $7,500 per ticket, could have been a Times invention, but the paper has failed to market even its relatively modest Times Talks series. “One of our biggest concerns is that the Times will start a real conference program,” says a TED executive quoted in the report.

Gaping Hole on the Business Question

The most glaring shortcoming of the Innovation report is its lack of any creative ideas for solving the revenue problem. This may have been by design, since the team had no representatives from the business side. However, a small chart on page 81 shows the extent of this problem. Print still accounts for 75% of advertising revenues and 82% of circulation revenues. That adds up to $1.4 billion from the print side of the house compared to just $320 million online.

No one has figured out how to bring those numbers closer together, and in an environment of continually expanding inventory and declining CPMs, it’s unlikely anyone will. Marc Andreessen has proposed that publishers need to think differently about their businesses, seeking out much larger audiences with low-priced products. That sounds like a reasonable course, but the Times’ report makes it clear that BuzzFeed, Upworthy, Business Insider, and HuffPo are getting there much more quickly than the Old Gray Lady.

We’re impressed that the management of the Times was willing to commit resources to a project that was bound to return unflattering results and likely to be leaked. Now that the findings are there for all to see, it’s a question of whether management can follow through on them. Assuming that most newspapers are well behind the times in digital integration, it’s a fair bet that a lot of publishers will take cues from this research.

The Full New York Times Innovation Report by Amanda Wills, Mashable

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By Paul Gillin | May 7, 2014 - 3:25 pm - Posted in Newspapers

Are page views your primary measure of success for your website or a story thereupon? Well cut it out. Page views are about as relevant an indicator of content value as the height of the starting center is a predictor of the success of a basketball team.

What should journalists measure?The issue of what online publishers should measure was the topic of a panel at the International Journalism Festival in Perugia last week. Experts debated whether page views have any value at all. We think they don’t. In fact, we think they have negative value.

“Provocative headlines and images encourage people to click but it does not mean they enjoy the content…and the spreading of articles over multiple pages has also allowed many sites to boost their metrics,” said Tony Haile, chief executive of analytics firm Chartbeat, quoted in a piece on Journalism.co.uk.

People count page views because it’s easy, but the metric is almost meaningless. It’s easy to drive valueless page views to a website by posting celebrity photos and top 10 lists. Lots of people will visit, few will stay and almost none will return. What’s worse, panelists said, is that obsession with page views creates valueless traffic that drives down the value of inventory and, with it, advertising rates. In a world of infinite inventory, “the value of advertising space will always decline,” Haile said.

And the Alternative Is…?

So what’s better? No one agrees. Some people say social shares are a superior engagement metric, but research has shown that people share stuff without bothering to read it. Time spent on site is another popular alternative, but no analytics tool can distinguish between an engaged reader and a browser tab left open for two hours.

Steffen Konrath, chief executive of Liquid Newsroom, said the Holy Grail is relevance, which is determined by conducting research among focus groups and then giving people what they ask for. The problem with that is that what people ask for isn’t always what they should read. One of the principal values of traditional newspapers is that they give readers stuff they don’t ask for but need to know anyway. This service has been almost vaporized by the Internet echo chamber.

We once worked at an Internet publishing startup that was laser-focused on page views. From an advertising perspective this was understandable. Inventory was at a premium and the more traffic we could generate the more revenue came in. From an editorial perspective, however, the strategy was a disaster. Editors quickly learned that they could drive traffic by posting trivia contests and virtual scavenger hunts. Traffic grew quickly but repeat visits plummeted. The people who visited weren’t the technology professionals we coveted but rather gamers with time on their hands.

The Perugia panel discussion covered concluded that there is no one ideal metric, and they were right. As journalists, we think audience engagement is what matters, and that can be measured through a combination of factors like shares, repeat visits, comments, time spent on site and pages per visit. For advertisers, total eyeballs may matter more. What’s important is to measure the factors that everyone can agree indicate that the right audience is coming and that they’re staying for the right reasons.

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By Paul Gillin | January 6, 2014 - 1:44 pm - Posted in Newspapers

North Adams Transcript Logo

Martin Langeveld is a 30-year newspaper publishing veteran who was for 13 years the publisher of several newspapers in Northwestern Massachusetts and southern Vermont. He also was executive vice president and director of interactive media for New England Newspapers, Inc., a four-daily cluster which is part of Denver-based MediaNews Group, Inc. He tipped us off last week to the impending closure of the 170-year-old North Adams Transcript, which he piloted for six years. We asked him for his thoughts, which he shared by e-mail.

Martin Langeveld

I started my newspaper career at The Berkshire Eagle in 1978, served as publisher from 1995 to 2000, then did a stint as publisher at the Transcript 2000-2006 and at the Brattleboro Reformer 2006-2008.

For about 85 years, from 1896 to 1979, the Transcript was owned by the Hardman family, which then sold the paper to the owners of the Boston Globe. The Berkshire Eagle at the time was owned by the Miller family, who had bought the paper in 1892. The two families had a friendly rivalry, but when the Hardmans decided to sell, they let it be known that they would not sell to the Millers — because they were afraid the Millers would simply merge the two papers.

The Millers unsuccessfully attempted an end run using a straw man, and then they tried again, without success, when the Globe put the paper up for sale 10 years later and sold it to American Publishing. The Millers sold to MediaNews Group in 1995, and MediaNews bought the Transcript from American Publishing a year later. A couple of years after that, Michael Miller, a third-generation member of the former publishing family, asked me why we hadn’t merged the papers yet — thus confirming the suspicions of the Hardmans. (In the early 1980s, the Millers had merged two other papers, The Torrington Register and the Winsted Citizen in Connecticut, into the Register-Citizen.)

It’s a fact that we ran the numbers in 1996 and concluded that the bottom line was marginally better keeping the papers separate versus merging them, but the deciding factor was really Dean Singleton’s passion for newspapering and his conviction that North Adams was a separate place from Pittsfield and should continue to have its own paper. He brought in a designer, we improved the looks and content, and restored the original, handsome Gothic name plate. Over the years, of course, a long series of small consolidation steps merged the business and production functions of the two papers, and the Transcript’s building was sold, to the point where a final consolidation became the simple step it now appears to be.

Since there was not a huge bottom-line advantage to separate operations back in 1996, I doubt if there’s much financial advantage to merger today. The North Adams office is being retained, as is the journalism staff. The sales staffs were merged long ago and the business office functions were consolidated in Pittsfield. There might be a few circulation positions eliminated. But on the other hand, more copies of the larger Eagle will have to be printed; deliveries will have to be made to all the same places; and circulation revenue will be lost to the extent there was duplication. Back in the day, you could raise advertising rates based on the circulation increase, but that pricing power is gone. There was some duplicated preprint advertising which will be lost.

So my guess is that the justifications for the merger consist of (a) less management distraction managing two different brands in the same market, and (b) the perceived opportunities in focusing on a single region-wide brand. Readers really will gain something since the two papers duplicated coverage on a lot of events, so the expanded Eagle staff can now cover more. (Hopefully there will be enough newshole available to print what they write.) 

The region — the Berkshires — is a brand in itself, which has always been a strength exploited by the Eagle. So the move announced at the same time (making the Berkshires Week supplement, published since 1952, a year-round standalone publication) is a smart one, especially if it’s accompanied by a good online strategy.

It’s understandable the names of the papers will not be merged into Eagle-Transcript. But I’ve suggested that the Transcript logo be retained in a small way as part of the Eagle’s editorial page masthead. The Transcript’s 170 years of publishing history should not vanish without a trace.

Read more of Langeveld’s wisdom at the Nieman Journalism Lab.
North Adams Transcript website.

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By Paul Gillin | January 3, 2014 - 4:51 pm - Posted in Business News, Local news, Newspapers, R.I.P.

NorthAdamsTranscriptThe North Adams Transcript, a daily fixture in northwestern Massachusetts since 1843, will be merged into the larger Berkshire Eagle later this month. The Transcript name will be discontinued and its five-person full-time editorial staff will join the Eagle. A sister weekly newspaper, the Advocate, will also be folded.

While putting the usual happy face on the announcement, management did provide a rationale for the move: “Publishing two daily newspapers that cover the same market – literally, they overlap – no longer makes sound business sense when one accounts for the duplicate efforts and redundancy in the processes involved in producing, delivering and servicing two newspapers that share the same mission,” wrote Publisher Kevin Corrado and News VP Kevin Moran in a joint message to readers.

The Transcript is  one of four Massachusetts newspapers owned by MediaNews Group of Colorado, which is one of the largest newspaper publishers in the U.S. The company is known for its practice of buying multiple newspapers in the same region and centralizing production, ad sales, business operations and even editorial operations to cut costs. Some former staffers have complained that MediaNews sacrifices journalistic quality for the sake of profits.

In this case, however, the merger probably make sense. The Berkshires are the most rural area of Massachusetts, and with readership declining across the industry the wisdom of maintaining overlapping titles would be questionable. Fortunately, no reporting jobs were lost.

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Final print edition of The Onion

Final print edition of The Onion

It is neither major, metro nor daily, but we would be remiss in not marking the passage from the world of the printed page of The Onion, which has long borne the self-effacing tagline of “America’s Finest News Source.”

Founded by two juniors at the University of Wisconsin–Madison in 1988, the satirical journal has thrived online with its diet of satirical news stories written with such deadpan earnestness that The Onion’s entry on Wikipedia lists more than 15 prominent cases of third-party sources citing it as a legitimate news outlet, usually to their embarrassment

Unlike many newspapers that have left the print world, The Onion is merely following its overwhelmingly young and Web-savvy audience. The paper became international phenomenon when it hit the web in 1996 and traffic to theonion.com reportedly now averages 7.5 million unique visitors per month. Its YouTube channel has 670,000 subscribers and The Onion has been liked on Facebook 3.2 million times.

The Onion has been gradually withdrawing from the print market for years. Its last remaining print editions – which were in Chicago, Providence, and Milwaukee – published their final copies last week. Not surprisingly, they were a tribute to the durability of print. Headlines included: “‘ONION’ PRINT REVENUES UP 5,000%,” “Nation Just Prefers Feel Of Newsprint In Hands” and “Experts: Digital Media Revolution Still Another 70 Or 80 Years Away.”

We were subscribers to the print edition of The Onion for several years and keep its RSS feed in our carefully curated list of media sources. We still have trouble reading it without the milk coming out our nose.

 

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By Paul Gillin | November 27, 2013 - 6:47 am - Posted in Newspapers

ImageJeff Bezos (right) may be the most prominent rich person to buy into the newspaper industry recently, but he’s not the only one. Billionaires have been opening their checkbooks with astonishing frequency lately to invest in an industry that many people think is dying.

Warren Buffett owns more than 60 newspapers and says he’ll buy more. Billionaire Boston Red Sox owner John Henry just ponied up $70 million for the Boston Globe. Serial entrepreneur and multimillionaire Aaron Kushner bought the Orange County Register a year ago and has been plowing money into reporters and circulation. There’s evidence that the strategy is paying off.

What do these savvy investors see that others don’t? I think three things.

Value. At a basic level they see business opportunity. Henry purchased the Globe for just 6% of what the New York Times Co. paid for the newspaper 20 years ago. Media properties are so beaten down right now that value investors see nowhere to go but up. Newspaper subscribers still have some of the best demographics of any audience. More than half earn more than $50,000 a year and 22% earn six figures or more, according to the Newspaper Association of America (NAA).

Although the audience is dwindling, more than 60% of US adults read a newspaper in print or online each week, according to the NAA. There are more ways to monetize that audience than just advertising, and these new investors are the kind of out-of-the-box thinkers who will figure them out.

Market Stability. Mainstream media plays a critical watchdog function that greases the wheels of democracy and commerce. Reporters pounding the beat at city hall and scrutinizing the records of regulators keep public officials honest and playing fields level. They also provide valuable intelligence on competition.

The press corps at some state capitols has been drawn down so much that some legislators have actually complained they miss the repartee with journalists. That has to alarm anybody who has millions invested in the market. Most rich people don’t care who’s in office as long as they know someone’s keeping an eye on them. And by the way, Bezos, Henry and Buffett  were avid newspaper readers long before they were media tycoons.

Trust. The great paradox of the newspaper industry bust is that readership of newspaper content is at an all-time high in the U.S. The problem isn’t the product, it’s the business model. Media democratization has been a great thing, but it’s also created a crisis of trust. We are less and less confident in who to believe.

Trusted media brands have a vital role to fulfill in this regard. We trust them to sweat the details and nail down the facts. Misinformation flourishes when everyone is the media, as we saw in the Boston Marathon bombings and Hurricane  Sandy. Mainstream media is expected to be accurate, at least most of the time. That’s why we instinctively turn to them when messages conflict.

I don’t want to imply that the actions of these super-rich investors are entirely altruistic, but smart people know a developing crisis when they see it. Trusted media is too important to the functioning of our society to be allowed to just die on the vine. If Jeff Bezos can put up 1% of his net worth to rescue the Post from disaster, he hasn’t sacrificed much.

Fumbled Opportunity

The newspaper industry has fumbled for a solution to its problems for decades with little to show for it. That’s mainly because the wrong people were in charge. Newspapering has traditionally been a stable, profitable and boring business, characterized by monopoly or duopoly markets, high subscriber loyalty and advertiser lock-in. The people who flourished in that environment where bean counters who knew how to wring costs out of an operation.

When the industry entered walked off the cliff in 2006, these people did what they knew best: Hacked away at expenses. But you don’t cost cut your way out of a fundamental shift in your market. Until just a couple of years ago, newspaper still earned 80% of their revenue from advertising, a business that has been in freefall for years. They’ve done a terrible job of diversifying their revenue streams, although some are beginning to turn the corner.

The Washington Post is a microcosm of the industry’s troubles. The paper was one of the first to go online in the pre-Web days, but it chose to build a proprietary platform that was quickly rendered obsolete. The Post has failed to come up with a workable way to derive more revenue from readers, as The New York Times has done. Many staffers reportedly sneered at The Politico when it launched in 2007. Today, it’s a must-read on Capitol Hill

The Washington Post Co. has diversified its business but failed to invest aggressively in new-media opportunities. The company’s Kaplan education division actually contributes the majority of its revenue and profit, but WaPo has been unable to duplicate that success in other markets.

Its most famous misstep was when CEO Donald Graham failed to pursue a 2005 handshake agreement to invest $6 million in a fledgling social network called Facebook. Accel Partners got the deal instead. Had Graham pressed his advantage, the Post’s stake could be worth $7 billion today, wrote Jeff Bercovici in Forbes.

But why invest? Newspaper owners have never had incentive to be aggressive. The industry has rewarded caution and conservatism, and that’s a big reason why it’s in such a mess today. The good news about the arrival of wealthy entrepreneurs on the scene is that they have nothing invested in the way things used to be done. People like Jeff Bezos are set to break the rules, and that’s exactly what the industry needs.

This article originally appears on Social Media Today.

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