Fatal assumptions

I may be the last to comment on the American Press Institute's report, "Newspaper Economic Action Plan," which was produced in May and distributed in June at the not-so-secret NAA meeting in Chicago. But I was flipping through it this morning and was struck how thoroughly the report exposes its own fatal flaws, in a section titled "Assumptions:"

  • Consumers perceive that content produced by news organizations is valuable to them.
  • Consumers will actually make content purchases when they are confronted with many free options.
  • Publishers can exert their influence in the marketplace through laws and public policy, both of which could change.
  • Publishers will invest in emerging technologies that establish new work rules, new systems for organizing content and new designs for packaging editorial and commercial content.
  • News organizations can make the leap from an advertising-centered to an audience-centered enterprise.

Consumers perceive that content produced by news organizations is valuable to them. This myth persists primarily in organizations that are dangerously out of touch with their markets. Public opinion of journalism, and of newspapers, has gone into a nosedive. Decades ago, people might trash-talk "the media" but generally would make an exception for their local paper. No more. Newspaper managers should know this, but many of them have fired their research people to save money, preferring to stumble through the fog without eyes and ears.

Consumers will actually make content purchases when they are confronted with many free options. Over the last 15 years, this assumption has been demonstrated to be false in digital paid-content experiments by newspapers all over the world. The numbers of consumers so inclined aren't great enough to sustain a business of significant scale. This idea persists primarily because so many newspaper people are deeply ignorant of what's been going on in their own companies, and because digital people generally lose power struggles with print people. Almost everyone I know who ran a paid-content online media experiment no longer works for the company where they tried it. Those companies are now largely ignorant of their own histories.

Publishers can exert their influence in the marketplace through laws and public policy, both of which could change. Newspapers have been trying without success to get rid of FCC's cross-ownership ban for decades. Newspapers, which are deeply despised by many politicians and sweeping sectors of their own customer bases, aren't going to persuade the government to outlaw Google.

Publishers will invest in emerging technologies that establish new work rules, new systems for organizing content and new designs for packaging editorial and commercial content. These would be the same newspapers that underinvested in the Internet for the last 15 years, while pouring cash into glitzy corporate headquarters, printing presses, and more newspaper acquisitions? The ones who now can't pay back the capital they've already borrowed?

News organizations can make the leap from an advertising-centered to an audience-centered enterprise. News organizations -- OK, let's be specific: newspapers -- are deeply addicted to high-volume revenue streams and huge profit margins that have enabled them to gobble up other newspapers and create huge, dangerously leveraged media chains. Such organizations require growth to survive and will fail in spectacular ways when asked to cope with shrinkage. And make no mistake, the scale of any news business that asks its readers to take primary responsibility for underwriting the costs of journalism will be tiny when compared with the fat times at the end of the last century.

Many of these weaknesses were discussed at length several years ago in the API's first NewspaperNext report, which recommended that newspapers clean up and maximize their poorly operated current lines of business (advertising) and then aggressively seek to create new kinds of businesses predicated on an analysis of poorly met consumer needs -- jobs that people are struggling to get done.

Such new businesses may in fact yield direct revenue from consumers, but they are not a paid content strategy. The N2 path is one of innovation -- starting small, starting at the low end, willing to make cheap mistakes and adjust quickly, and evolving new kinds of content and services.

Any path that attempts to reverse 15 years of social and technological change and force individuals to suddenly assume primary responsibility for financing the the old content and services is doomed from the start. There were many divergent needs that led people to consume the newspapers of the 1980s. Many of those needs are better met today by other solutions.

If there is a path forward for newspaper companies, it will be a new one they have yet to discover. Such discovery begins with listening to real people, not by wishful thinking in the boardroom. But as I said, many have fired their research people and now stumble through the fog without eyes and ears.

Comments

Of course your view is totally correct, especially regaring the past. But there are also promissing signs. Mediapart.fr for example. Sure, they dont't have as much customers as they planed to have, but the actual number is impressing anyway. I'm sure, I don't have to tell you, they run on Drupal Open Source CMS too, but maybe someone else reading my comment doesn't know. And I notice in my own behavior on the web, that I am more and more willing to pay for stuff online, if if if it easy, trustfull and I do get good product. Online Newspapers still aren't good products even compared to their own print pendants. Only few magazines like The New York Moon try to establish the same quality standards regarding typography, design, information architecture and User Experience. Funny thing about the "poorly operated current lines of business (advertising)" you mentioned: This is the same source of income Google lives from. I wonder if we speak about Google in 10 or 20 Years in the same way, we speak about the Newspapers today.

"Funny thing about the "poorly operated current lines of business (advertising)" you mentioned: This is the same source of income Google lives from. I wonder if we speak about Google in 10 or 20 Years in the same way, we speak about the Newspapers today." Yes. Newspapers aren't dying. Advertising is dying; it's just taking newspapers with it as the low-hanging fruit. Next up: Radio & TV. This is why I was warning anyone who would listen that traditional media's schadenfreude when the internet bubble popped in 2001 was probably misplaced. Because the reason it popped was one finally had the metrics to show Advertising Doesn't Work. Google has forestalled the inevitable by doing the Net equivalent of the "tiny little ads" schtick of a decade or two back (and thus distributing their frustrated client base), but I think they see the writing on the wall, which is why they keep trying so desperately to find something, anything, other than search that'll make money.

I use these stats in my own presentation on journalism: Harris Poll: -- More than 50 percent of Americans do not trust the press. -- Two-thirds believe journalists are out of touch with what readers want. Zogby: -- Seventy percent believe journalism is important to quality of life in communities, yet 64 percent are dissatisfied with community coverage. Those Zogby numbers in particular directly contradict the assertion that "Consumers perceive that content produced by news organizations is valuable to them." The thing is, I remember polls like this in the late 1980s, and the attitude in our newsroom, at least, was "stupid readers." We blamed the readers for not seeing the value of our work. Tim Cavenaugh did an article for Reason last year where he noted reporters at the L.A. Times bemoaned, "Too bad we can't fire our readers." Newspapers are dying not because it isn't a valuable distribution model, nor because its advertising is per se ineffective. Newspapers are dying because even the subscribers newspapers retain find their papers boring and out of touch. This has as much to do with what happens in the newsroom as it does with ownership models and processes.

Nigel Barlow boils it down to the right question: "How do you create content that is audience centred as opposed to advertiser centred?"

Quite different from the usual "how do we make people pay for our really great content?"

"How do you create content that is audience centred as opposed to advertiser centred?" One wuick and unsuprinsing Answer: Get real! http://gettingreal.37signals.com/

"How do you create content that is audience centered as opposed to advertiser centered?" does not go far enough, at least in the local context. The more appropriate question is: "How do you lash together audience and advertisers in the same online social experience?" Part of that answer is to make sure that heaping doses of audience-centered content are circulating within that experience.

Some good reaction from Jay Small:

"Advertising (more precisely, marketing communications) is not dead or dying. It is morphing, evolving, becoming radically more efficient. All messages, whether commercial or not, over time become less expensive to ready, aim and fire -- even if the receipt and absorption of a given message remains extremely important to the originator. A dollar spent on marcom next year, even adjusted for inflation, buys better message quality and more units of message delivered. Both gross revenues and margins for the intermediaries, if any, decrease. Eventually, the model's efficiency crowds out some intermediaries, leaving only those who find new ways to add value in the form of better quality or more efficient distribution per message."

And there's more. Well worth reading.

"Consumers perceive that content produced by news organizations is valuable to them." "Consumers will actually make content purchases when they are confronted with many free options." The real telling fact in these two "assumptions" is that newspaper people still use language like this. The idea that we have graduated from the role of passive "consumers" and are now actively engaged in making, producing, and distributing the news is totally foreign to them. Unless they quickly move to a point of view that replaces their notion of "consumers" with something more akin to "partners" they are totally and utterly done.

Mr. Yelvington, I came across your blog through the Google Reader suggested blogs link. Was really hoping for a link to the "secret" report. Still have it lying around there? Thanks for pointing out these assumptions.