Friday, February 27, 2009

Newspapers' supply-and-demand problem (Why you should quit doing what everyone else is)

A lot of bits have been spilled over the apparent absence of a viable business model for news on the Web to replace one that no longer works for print. The ad-supported model doesn't seem to work, but clearly neither do pay walls. There's even talk of micropayments again (hello, 1998!).
I'm no economist, but I think the problem comes down to this: The Internet is a single, efficient market governed by the laws of supply and demand*. Because there's surplus ad inventory online — particularly low-grade inventory — prices are falling. But what if the surplus inventory is largely the result of a glut of duplicative content? Would the problem go away if news organizations simply stopped doing about half of what they do and focused on the stuff nobody else is producing?
Consider a scenario: Newspaper A posts a local scoop to its website. The story is picked up by other news organizations. It's rewritten, repackaged, sent out on wires, and within hours that story or some version of it — sans additional reporting — is on a hundred different websites. Much of this duplication is automatic, but some of it is done by human editors. (See Google News any day for an example of this.) Best-case scenario, a few of those sites actually link back to Newspaper A.
Now let's say most of the duplication stops. Because there are fewer versions of the story, more eyeballs now find their way to the original scoop on Newspaper A's site. Good. But aren't many of these additional eyeballs just single-page, out-of-market visits that have little value to advertisers? Maybe, but if Newspaper A is sticking to its core mission of covering local news, it will be able to deliver an audience that's more cohesive on the whole — and therefore more sellable — than if its content is all over the map.
Those of us who have worked for years in online news remember a time when repackaging news from all over was a large part of what we did. At some point most of us figured out it was a waste of time. But sadly, there's still a lot of duplication going on in mainstream media websites, in part because it's seen as necessary for a newspaper to be a broad and semi-comprehensive sampling of the day's news and information.
Well, no more. You want comprehensive? Go to the BBC.

If newspaper bosses are serious about preserving the kind of journalism that makes newspapers great, here is what they must do right away:

1. Stop wasting time on stuff other people are already doing. This means focus obsessively on local or topical content. The era of the newspaper as bundler of many varieties of content is over. If you cover a community, do nothing that doesn't relate to that community. If you cover a topic, do nothing that doesn't relate to that topic.
2. Stop syndicating valuable content to other websites. Let them link to you. (And for goodness' sake, link out. Do it for the karmic rightness of it all, or do it because it adds significant value to your own content. However you justify it, putting your stuff squarely into the clickstream is essential to staying relevant. You can't just be the endpoint.)
3. Scale back or cancel wire service agreements. They're not helping your online product and they might be stealing value from your own content. I have a lot of respect for The Associated Press and the work that all wire-service journalists do, but I just don't think the AP's ownership structure and funding model make sense anymore. (If Reuters can thrive as a standalone news organization, maybe AP can too. But newspapers can no longer afford to subsidize the creation of content that doesn't benefit them directly.)
Am I saying I think newspapers can increase the value of their content to advertisers simply by reducing inventory, the way OPEC does for oil? No (and we can see how well that strategy's worked for OPEC recently, too). Ad inventory, unlike oil, is not a fungible commodity. This isn't about reducing inventory in general. It's about reducing low-value inventory: all those impressions from random walk-ins who aren't a sellable audience because they have nothing in common.

We talk about the newspaper's unique status as a profit-driven public trust and the threat that ongoing structural changes pose to that fragile duality. But how big does a newspaper actually need to be in order to fill the public service role we ascribe to it? Could the Los Angeles Times effectively and profitably cover Los Angeles with, say, 300 journalists (half its current staffing level)? My guess is it could, if that's all those 300 people did.
I feel for my dedicated and talented industry colleagues who have lost jobs in the U.S., the U.K. and elsewhere. This disruptive event is clearly a painful one for journalists. But if newspapers make smart choices this year, maybe it won't be a crisis for journalism.

Souce: Knight Digital Media

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