Archive for May, 2009

NFC payments could help pave the way for micropayments

Tuesday, May 26th, 2009

I recently encountered the term NFC payments. I was familiar with the concept, though not the term. “Near field communications” refers to the technology that allows a mobile device to communicate with, for example, a vending machine to perform payment and make a purchase.

The mobile device has a link to an account and a wireless connection with the vendor. The device is the middle-man in the transaction.

It is interesting to me because it shows the growing ease of transactions. Because mobile devices are quickly becoming a common means of digesting content, like news stories, they unify consumption and payment in one place.

It may not take that form, but it is not hard to see how the smart-phone/handheld-computer could become the link between the account and the pay-per-view content, and thence the link between news publishers and much-needed revenue.

One of the challenges of any micropayment for news scheme is creating  a system that is widely adopted. A generalized payment device for transactions of all kinds eliminates that barrier. Its development could also drive down transaction costs.

Once there is a way to pay for news, you can bet publishers will jump at the chance to charge for it. Right now we are the era of Napster for news and some day soon we will enter the era of iTunes for news.

What lessons do magazines have for news

Wednesday, May 20th, 2009

Magda e-mailed me last week and suggested we look at National Geographic as a not-for-profit publisher. I was unsure because we are studying the business of news publishing and that magazine doesn’t really publish news.

There are many other examples of non-profit magazines in Canada and the U.S. such as This Magazine, Walrus, Harper’s, and Mother Jones. Some do discuss current issues, but they all address a specific segment.

I can see how the model of magazine publishing is similar in that the question is how do you fund resource-intensive content (citizen journalists or unpaid bloggers don’t regularly do photographic deep sea diving or go on expeditions up the Amazon).

Many magazines have continued success despite the advent of digital content distribution. It may be because they have a unique niche and can attract a vertical of interest.

There could be a lesson there for news operations. Newspapers created value with their breadth and controlled distribution, but now many newspapers are full of commodified content: wire stories, classifieds, sports scores, horoscopes.

For many newspapers, local content is their unique offering. People I know have noticed a reduction in local stories in the paper where I work.

So it could be worth looking at that, but it is a huge extra chunk.

Non-profit goes big?

Monday, May 18th, 2009

The news that billionaire David Geffen is considering buying the New York Times was big last week; the fact he’s considering turning it non-profit was buried in these stories.

From the Guardian:

A loss-making, old-technology newspaper would seem an odd vehicle for a colourful Californian showbusiness mogul. Geffen, shrewdly, is casting himself as a potential saviour of a US national treasure rather than as a business buyer - sources close to the billionaire say he wants to turn the NYT into a non-profit institution, preserving it in perpetuity.

Luckily for the Times, a professor has done an analysis of the paper’s various non-profit options, which she lists as setting up an endowment, seeking support from a foundation, purchase by an educational institution, and an angel investor. She’s not convinced by any of the options, but her analysis is interesting.

A trip into the past of a not-for-profit paper

Friday, May 15th, 2009

In February, Ryan and I went to Port Hope to learn about the not-for-profit Crier of Port Hope. The idea for our book project arose from thinking about the Crier in the first place. It’s a story that many Canadian journalists know, because famous writer Farley Mowat was involved with the Crier, and because it was a direct affront to the shoestring operations Conrad Black’s Southam was running in many small towns in Ontario.

Before we went, we thought it amazing a group of community members got together to start a newspaper, each putting $100 in the middle of a table and running with it. But we found out Port Hope was a special place, and the Crier was hardly incongruous.

Now, we’re writing about our Port Hope experience for our sample chapter to go into our book proposal.

In the meantime, here’s are some photos from our Port Hope experience.

2009-02feb-0436miller
On our way to Port Hope, we met with John Miller, a professor at Ryerson University. He was involved in the Crier and, as a journalism professor, had some interesting perspectives on the significance of their grassroots, not-for-profit adventure.

2009-02feb-0481-archives
The group had kept tremendous records. We went to the archives and spent hours wading through them.

Beamish pub
The Beamish pub, where the paper was conceived of, upstairs in a community room. Members of the Local Newspaper Committee each slapped down $100 to take an ad in the local Southam paper arguing Port Hope needs a better newspaper. When their ad was rejected, they started the Crier with the money.

My first lesson in media economics

Thursday, May 14th, 2009

When I visited University of Texas earlier this year, I found out that one of the foremost media economics texts is Canadian. It seems there is, or perhaps was, quite a concentration of media economists at the University of Alberta, resulting in this book.

It took a while before it even occurred to me to look for the book in Warsaw’s libraries. But then I found it, easily, in the reading room at the school of journalism — a brand new, crisp copy.

I’m speaking with one of the authors, Stuart McFadyen, this afternoon (or this morning, Alberta time).

More on that later; in the meantime, here are some interesting points from Media Economics: Applying Economics to New and Traditional Media.

  • “Cultural objectives are considered important  by most governments in broadcasting, film, book publishing, magazine publishing, and music recording. However, most private companies operating in such industries are commercial operations whose main motivation is profits. Typically they are not too impressed if the government, or a regulatory agency, tells them they should be pursuing cultural goals (at the expense of profits).” (page 176)
  • In a perfectly competitive industry the companies would be unable to comply since that would result in negative economic profits and force the company to exit from the industry.
  • Monopolies, though, are more amenable to such pressure. The reduction of economic profits can be seen as a small price, especially if the monopoly’s position depends on regulatory rules. For example if a regulator requires the organization to meet cultural goals in exchange for being a monopoly.
  • Profit can still be a secondary goal in companies that operate as for-profit: eg. as a filmmaker Atom Egoyan’s primary aim is cultural expression, and public funding allows him to pursue those goals separate from aiming for profit. BUT it’s impossible to pursue non-profit goals at the expense of profit in a state of perfect competition.
  • “Economic profits are necessary if firms are to be persuaded, or required, by a regulatory agency to further cultural goals at the expense of profits. Similarly, the opportunity to earn economic profits in the long run permits other goals to be pursued willingly.” (page 208)
  • “If a television program is thought to have external benefits, a subsidy is appropriate. However, the level of subsidy should not exceed the level of external benefits.” That can be hard to measure, which is why governments often set standards instead, similar to pollution caps. (page 294)
  • “For public goods, such as national defense, firefighting, lighthouses and basic research, it is the role of government to determine the optimal level of output and to finance the service from taxation (or, alternatively, for broadcasting, a television or radio license fee).” That involves a cost-benefit analysis, but benefits are hard to measure, so sometimes a government department can provide the service itself, eg the BBC. (page 297)

Developing an outline for a book on business models for news

Sunday, May 10th, 2009

When first approaching a problem it is normal for your thinking to be restricted by your limited knowledge. As you learn more you can see all sides of it and not just understand it but form new ways of communicating it and actually teach about it.

It is like the journalism aphorism about writing an article too long because you didn’t have enough time. A simplistic understanding of a topic can lead to a complicated or clumsy explanation, but with a greater knowledge explanations can be simplified.

That is something that we face. Magda and I know a lot about journalism and the news business, but we are working on the problem of what the future holds for those endeavours. We need to make sure that we know enough and to paint a clear and reasoned picture of the options for news operations based not only on what currently exists, but what could be.

When we started, we discussed doing case studies of operations with alternative business models. We suspected that might be insufficient for our purpose and it is. We will need to research the topic more fully to come up with answers not just stories.

As part of the development for our book, I have been thinking about outline. I envision a structure like the books and articles of fellow Waterlooian (he’s from the region, not the city) Malcolm Gladwell.

Gladwell recounts studies and stories, relating them together with coherent narrative offering a progression of lessons for us as we read. I think we should plan our book and write it like that.

We could start with the story of the Crier of Port Hope. I like the idea of the scene of eight people throwing in $100 each to protest the incumbent local newspaper and then start a paper of their own. That scene shows an impetus for change and the need for an alternative. That is what our book is about — alternatives to an inadequate failing model.

Just doing it isn’t enough though. The Crier folded after less than two years. So, with what else must we concerns ourselves. That leads us to issues like operational funding, and skills. We can look to other stories of other ventures to teach us.

The Beach Metro Community News had a similar beginning to the Crier and could have had a similar end. It started as part of a protest and could have folded, but new people came in to continue it and it has lasted more than 35 years. Advertising has sustained the News over this time. The News does so well, that even as a non-profit it donates part of its revenue to charities and other community projects (2% last year).

Even the staff at the News admit that as a bi-weekly publication with a small news staff — one reporter-photographer with other staff and volunteers as writers — they cannot investigate and report every important issue in their community.

That could lead us to the Voice of San Diego, which also has similarities with the Crier. Voice founders believed the  incumbent Union-Tribune newspaper was not serving the community and began their own operation. They were concerned about quality and depth of reporting so they chose key priorities for coverage and hired full-time professional reporters as well as using free-lancers.

This sequence of stories isn’t just a collection of case studies, but a progression of ideas that shine light on different parts of our topic. As we examine these different pieces we begin to get a clearer picture of the possibilities and we can then develop answers to what kinds of business models for news will exist in the future.

We may not use the same stories, ideas, or order in the final manuscript, but as we learn more and investigate more stories and more models, we will be better able to teach about the issue in a simple and coherent way.

One more week

Sunday, May 10th, 2009

Canwest, the embattled Canadian newspaper publisher, got an extension, again, on its debt payment. One more week until I find out whether my first ever stock investment (all $25-worth) is going down the toilet.

Measuring success

Sunday, May 10th, 2009

Ryan and I have read about and interviewed participants in dozens of non-mainstream news publications. While all of their experiences make for great narratives, as journalists we’re most interested in those publications that succeed as news organizations.

But what does that mean? Here are three criteria I think need to be filled for something to be considered a successful news outlet:

  • Stories need to be independent of contributors’ interests. This is where community-run media organizations often fall apart. While there can be value to articles written by the organizer of this year’s Pasta Festival, these articles do not fit the definition of objective news. So they can have a place in a newspaper, but a publication made up entirely or largely of such articles is a newsletter, not a newspaper.
  • Employees need to earn a living wage. This is connected to the question of independence. Volunteers work for free because they get something other than money out of the experience. In the case of community news, that something is often publicity for an event or organization they’re involved with. Paying employees is one way to encourage their independence. Furthermore, a publication is unlikely to be sustainable if it does not pay its employees.

    Clarification When I spoke to media economist Stuart McFayden, he said it’s important to him that journalists writing what he reads earn more than a living wage, to encourage them to do a good job and draw good people to the job. I didn’t mean here that journalists shouldn’t earn more than a living wage, merely that they must earn at least a living wage.

  • The publication needs, at the very least, to break even. A publication that doesn’t pay for itself — through advertising, foundation funding, contributions from readers or anything else — is unlikely to be around for long.

Our project examines many publications that don’t fulfill one or any of these criteria. The Crier of Port Hope, for instance, did not pay its employees a living wage and, in the end, failed to break even — though it might have had they kept at it for longer. That doesn’t necessarily mean their not-for-profit model was faulty, though — it merely means their particular iteration didn’t succeed. We’ll include their story and stories of publications like theirs in our analysis but will especially seek out publications that satisfy all three criteria.