Implicit in the hand-wringing over the death of news organizations (one guest on last week’s Hobson & Holtz Report podcast wondered if PR professionals should even bother tracking newspaper coverage any more) is the concern that good journalism will vanish from the Earth. We’ve always argued that the problem with newspapers today isn’t that they have no value, it’s that they no longer have a sustainable business model. The need for good journalism hasn’t changed but good journalism needs to find new ways to support itself.
Check out two new resources in this area. Jeff Jarvis articulates a future for journalists in an exceptionally cogent summary of his recent work with the City University of New York’s New Business Models for News project. Jarvis sees tomorrow’s journalists as entrepreneurs who create business models around selling their services to those who will pay for them.
We like the analogy to people who work on Hollywood movies. Studios don’t employ legions of camera operators and set designers. They hire that talent as needed for a project. Everyone comes together and works for a few months and then the team breaks up and goes on to other things. Lots of people make their livings that way. Some of them do very well. That’s the way things work in a competitive, entrepreneurial environment.
The skills that journalists will need to survive in this decentralized market are very different from the skills they need today. For one thing, young journalists won’t be expected to spend a decade toiling away for pocket change while learning at the knee of some cranky city editor. They’ll be able to make a good living much faster if they have the smarts and skills to compete.
Political skills won’t matter for much because most journalists won’t work for big organizations. Journalists will succeed or fail based upon the quality of their work and their ability to sustain mutually beneficial relationships with multiple employers. Social skills will matter more than political ones. Self-promotion will be essential. There’ll be less time spent in pointless meetings and bitching about the boss at the local bar because, well, there is no boss any more. Journalists will reclaim vast amounts of time that are now spent on organizational bullshit. They’ll spend their time making money instead of covering their asses.
Risky Business
This future is going to look scary to some people because there’s no job security or benefits. But who’s got job security anywhere these days? And benefits plans are being hacked to pieces as businesses downsize. In the future, working for an organization isn’t going to have many advantages over independence. There will still be company jobs for those who prefer them, but a lot of energetic and resourceful journalists will find that life is better on the outside. It’s amazing how productive you can be when you discard all the overhead of working in a big organization. Trust us on that. We left corporate life four years ago and have managed to produce three books and maintain two active blogs while still making a decent living.
Most journalists we’ve talked to are fine with this idea except for one thing: The thought of selling advertising terrorizes them. They have reason to be nervous. Most journalists we know would be lousy salesman (we tried it for a year and hated every minute) so it’s likely that business models will emerge to manage the business details for them. We told you about one of them – GrowthSpur – back in August, and there no doubt will be many others. As news organizations collapse and journalism opportunities disperse out to a million topical blogs and hyperlocal foundries, new ventures will spring up that aggregate opportunities and provide a variety of other services ranging from promotion to ad sales to accounting.
Read Jarvis’ essay for an optimistic perspective on the future opportunities for journalists. No one is suggesting this transition will be easy, but it will result in a market that is vastly more efficient than the one we have known. Journalism schools today should be training their students in the skills of small business management. Those that continue to preach the virtues of working one’s way up through a newsroom hierarchy are doing their students a disservice. Perhaps J-schools will evolve to become subspecialties of colleges of business. That wouldn’t be a bad thing; just different.
Thriving in the Free Economy
To hear some new ideas about how organizations can profit from the emerging free economy, listen to this Churchill Club podcast titled The Free Economy: How Companies Make Money From Giving Things Away. The panel was moderated by Chris Anderson (left), whose new book, Free: The Future of a Radical Price, paints a picture of economic change brought about by the availability of cheap digital distribution. Anderson hosts a panel of entrepreneurs who are making money with businesses that give away all or part of their services for nothing.
We’ve already seen some industries begin to adapt to this new model, but the panel explores some of its finer points, including the popular “fremium” services that offer a bare-bones product to anyone and charge various prices for more powerful features.
A couple of things struck us about the proceedings. One is that pricing can be dependent upon the experience the customer demands. One speaker cites the example of a rock band that gives away its music online but charge for merchandise, concert tickets and command performances. The band has even sold an opportunity to spend the weekend backstage with the group at a price of $75,000. The point is that technology can increasingly customize price to product. This requires a change in thinking for media companies, which have been accustomed to charging the same (usually low) price to everyone and making the money with advertising. In a free economy, more creativity is needed.
Another important point is that businesses can succeed even if only a very small percentage of the customers pay anything. Some panelists are doing quite well with payup rates of as little as 1%. Anderson suggests that a business could be a hit in the future with just a 10% subscription rate.
The key take-away for us was that publishers will need to be more innovative in packaging and pricing their products in the new economy. This creates another differentiation point. Even a company in a commodity business may be able to separate itself from the pack by designing unique bundles and delivery techniques. Conventional wisdom is that delivery is a differentiator, but this discussion suggests otherwise.
Other posts in this series:
The Future of Journalism, Part I
Comments
This entry was posted on Tuesday, November 3rd, 2009 at 9:19 am and is filed under Fake News, Hyper-local. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
I write most of the news, and I sell all of the ads. It’s not hard.
“We like the analogy to people who work on Hollywood movies. Studios don’t employ legions of camera operators and set designers. They hire that talent as needed for a project. Everyone comes together and works for a few months and then the team breaks up and goes on to other things. Lots of people make their livings that way. Some of them do very well. That’s the way things work in a competitive, entrepreneurial environment.”
Written by somebody who doesn’t seem to know about the various unions and guilds who can bring everything to a halt, and occasionally have to.
Toss out the Hollywood analogy.
What else doesn’t make any sense in the article?
I find all of these arguments vacuous and hopelessly optimistic in the extreme.
They all tend to be formed from lumps of ignorance.
I regret to inform you that people neither know nor care that much about the guts of the things they use.
Apart from first adopters, nobody cares about the intricacies, the details.
That’s why automobiles have automatic transmissions.
“Lots of people make their livings that way. Some of them do very well. That’s the way things work in a competitive, entrepreneurial environment.”
No, that’s the way things work in Hollywood, which has – as msbpodcast pointed out – unions. Not to mention an industry that’s profitable.
These days journalism skills are viewed as widespread and cheap, and I suspect that’s because they are. I speak as one of the lucky few who gets paid to blog, but what I make covers my cable bill and little else.
I know a free-lance writer with a degree from one of the top j-schools in the country. A few years ago she would not even turn on her computer for less than $100. Now, a buck will suffice.
I wish you were right, though.
Hang in there, you can’t always be right. I really hope a new “no-fuss” model does emerge, but I seriously suspect that the days of the “salespeople” (order takers,) at the newspapers are over and it’s going to take a creative, motivated sales staff, not a new business model, to make money on the internet.
I must have made my point badly. This isn’t about unions or sales organizations, it’s about how people will be able to make a living as professional journalists in the future.
The business model that has supported journalism to this point is horribly inefficient and a combination of technology and market forces is wringing a lot of that inefficiency out of the process. That’s painful, but it’s overly pessimistic to believe that journalism will have no market value in the future. Maybe the market value won’t be as high as it is now, and maybe fewer people will make their livings as full-time journalists, but there will be a market for quality work. It just won’t look anything like the structures we have today. It will be a whole lot more efficient, for one thing.
If you fundamentally reject that there’s light at the end of the tunnel, then my scenario makes no sense. I’m not that pessimistic, however.
Let’s use the mythical example of cobbling – fixing shoes. Let’s say that at one time being a cobbler was a good, middle-class career choice. But then one morning half the population of the world woke up and decided they loved to fix shoes.
Furthermore, with every TV sold, you got free shoe-fixing equipment. Shoe-fixing became so popular, there were conventions during which shoe-fixers would tell funny anecdotes and exchange ideas on the best ways to fix shoes and the future of this exciting pastime.
Every other household has a sign out front that says: “Will fix shoes for free.” Remember, they LOVE to fix shoes. They’ll probably get tips now and then, but nothing like a living wage.
The guy who hangs out a shingle that says, “Will fix shoes for $50,000 a year” has a long wait on his hands. “But I fix shoes much better than anyone else,” he might say, if anyone was listening.
Most likely the only guy making a living wage under these circumstances is the warehouse manager who stocks shoe-fixing equipment and the guy shipping the equipment from China.
I realize this is not a perfect analogy, but if someone has a better one, I’d like to hear your thoughts.
I’m sorry Paul, I wasn’t being clear. I was assuming a future where every single neighboorhood has an alpha dog journalist who does it the best and owns the market. This journalist would partner with other alphas in connected neighborhoods, etc and each individual journalist ( and whatever sales staff is needed) would monetize with any of the regular or as yet undiscovered ways of doing so.
That’s how I’m doing it anyway. Isn’t that they way everyone is sort of headed? I’m surely not the guy with “The Answer” am I?
🙂
QC:
It’s an interesting analogy, but I don’t think it holds up. Shoe repair is a commodity business with low differentiation and a mature business model. Journalism is a highly differentiated business with a business model that is still evolving.
The business is being disrupted on two fronts: barriers to entry have fallen and the traditional business model is no longer very effective. That means that journalists have to redefine their value based upon differentiation because they can no longer keep newcomers out.
The business model has a lot of room for innovation. Shoe repair professionals basically make their money one way. Journalists have more options. There’s book writing, speaking, consulting, training, corporate projects, advertising and even commissioned sales. Many of these avenues have not been explored because the advertising model has traditionally worked so well.
I like the analogy of hairdressing better. That industry supports successful businesses that deliver service at a budget price on a mass-market basis. It also supports businesses that deliver a highly differentiated product at a premium price. The barriers to entry are somewhat higher, but that’s not a significant obstacle to new competitors.
Journalism will probably evolve more along the lines of hairdressing than shoe repair. There will be a layer of businesses that deliver a commodity service and a layer that provide a highly customized service at a premium price. We’ve only begun to experiment with alternative business models, too.
New business models are always being invented. If you listen to the Churchill Club podcast I referenced above, the people on the panel are all making money by giving away a service for free. They’ve come up with some very innovative ways to monetize their business. Journalists will do that too.
There’s no question that we’re in for some tough sledding as this industry reinvents itself and that there will be considerably more risk and pressure in the future. But that doesn’t mean the business will go away or that people won’t be able to make a good living practicing journalism. I’m fundamentally optimistic.
Re hairdressers: But you have to factor in a shop on every block with a sign that says: “Free Haircuts!” What then? Yes, the premium hairdressers will do OK, but not the majority.
Maybe you had it right to begin with – Hollywood. But actors, not crew. An elite one percent – the stars – will make loads of cash. Another nine percent with connections will get jobs here and there and somehow make enough to pay the mortgage. The other 90 percent will wait tables and hope for the big break. Until they get tired. Then they will either retrain, or go to work in a totally different field, or put their journalism skills into public relations – once the tsunami of resumes from unemployed journalists begins to dissipate, that is.
I don’t really know you, Paul, but I suspect only you and a few other bloggers and professors are in that top 10 percent, being paid for consulting or teaching. Almost everyone I know is in trouble. I know a guy with a master’s degree in journalism and English and 15 years experience at a newspaper, some of that as an editor. He is now driving limos.
Sure, things may work out eventually if you’re young enough to survive the current turmoil OR if you have excellent connections. The top ten percent, in other words. But things have always worked out well for the top ten percent, haven’t they? I too am optimistic – for the people at the top.
Perhaps the difference is that you’re looking at the issue as an abstract, because you have already, in a sense, moved on. I’m surrounded by the carnage, both past and future. So I see things differently.
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