Working Title

News Corporation is considering a pay model for its digital content, including news.

Changes to the pay structure must be industry wide, but News Corp. is ready to make the first move, Jonathan Miller, the company’s chief digital officer, told the Hollywood Reporter.

Paid digital media services are the wave of the future for media giants, and the only question is how fast they will become reality, News Corp. chief digital officer Jonathan Miller said here Tuesday evening, adding that the conglomerate will push to develop new business models that work for the industry overall.
[...]
Later on, Miller added: “We want to see a (business) model established,” one that includes paid-for journalistic offers. He signaled that while new models must be established across the industry, News Corp. is willing to take a lead position to push for change.
– News Corp. digital exec supports paid content 2 Jun 2009

Miller admittedly is taking a longer term view and doesn’t have or at least give specific answers to the challenges news publishing faces today. He rightly recognizes that currently valuable content is being given away below cost — that is, it costs something and they charge nothing.

Some news — such as breaking news — is commodified and undifferentiated and won’t attract much revenue. That can be the free part of a tiered model. Investigative reports, analysis, and features — stories with depth and interesting knowledge — cost money to produce and can better attract payment. Just like Miller, we don’t have the answer yet, but there’s still time.

I think it is worth comparing the changes the music industry went through. Rampant file sharing for free, like on Napster, was largely supplanted by pay models like iTunes. Pay music services didn’t totally replace or eliminate free sharing, but it got money flowing back to the producers.

Certainly there are some differences between recorded music and news content, but there are enough similarities to make it a valuable study.

• Newspaper anti-trust exemption and the Newspaper Preservation Act of 1970

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.

I just found a save-the-newspapers action that I must admit I’m a bit sceptical of. It’s a petition for a week without virtual newspapers. The idea is that readers have no idea how much of what they read/hear/see is the result of free online news put out by newspapers. So, founders argue, why not unplug those free online editions for a week and show just how dependent the whole media machine is on them?

I’m intrigued by the concept — certainly, as a reporter for the only daily paper in Guelph, I often felt that even while many stories were written about Guelph issues, their source was our paper. I’ve heard my lead read on tv news; I’ve seen reporters from other media scanning printouts of my stories as they prepare to gather their soundbyte from the mayor; I’ve observed others taking notes of the questions I asked.

But I can’t help but shudder when people’s solution to the current media crisis involves reeducating readers in some way. I read the news online, all the time. It’s convenient, and I’d be woefully misinformed if I relied only on my print paper subscription. It’s incumbent on media to figure out how to make money from my reading, not on me to pay, out of the goodness of my heart.

Still, I’ll be curious to see what kind of waves this scheme makes.

• Know Newspapers online petition

Newspaper giant Axel Springer reported the highest profit in its history this week. The company owns Bild, the biggest paper in Europe.

I don’t believe in the end of journalism. On the contrary, I think the crisis can have a positive impact. The number of players will diminish, but the strong players may be stabler after the crisis,” Mathias  Döpfner, Springer CEO, told the New York Times.

(In Poland, where I am right now, Axel Springer puts out Fakt — one of the country’s top-selling tabloids, often considered to have questionable news value and ethics.)

In Europe, the NYT reports, circulation is falling slower than in the US, and revenue is more stable because papers here rely more on readers than on advertisers.

Online they’re doing better as well. VG Nett, affiliated with Verdens Gang, a Norwegian paper, is the most innovative. News is free, and the company generates most of its revenue from online advertising. But it has started charging for an online weightloss club and for live streams of sports games and social networking.

• European Newspapers Find Creative Ways to Thrive in the Internet Age, New York Times, March 29

Newspaper advertising sales dropped in every category last year.

Also declining was online revenue, which had grown for the previous four years, but by only 1.8%. That means online was still up 56% since 2003.

Here are two charts showing print and online ad sales.

U.S. newspaper advertising sales (source:NAA)

It is good to see the growth in online, but note that the declining chart above it is 10 times bigger. Obviously aggregate sales are affected by the availability and supply of media in given markets, but it shows how much space online would have to make up to support similar operations.

By going online, just cutting printing costs won’t make up that difference.

• Newspaper Association of America: Advertising Expenditures

Editorial cartoon about Google news - click on the image to see it in its full size

It was interesting to be in San Francisco recently and read the discussion, overt and snide (see above), in the Chronicle and elsewhere, about how the future of San Fran might play out without a newspaper.

The Chronicle is NoCal’s biggest paper, with a circulation well over 300,000. But last month, the owner — specifically Hearst vice chair and CEO Frank A. Bennack Jr. and president Steven R. Swartz — released a dire statement.

“…without the specific changes we are seeking across the entire Chronicle organization, we will have no choice but to quickly seek a buyer for the Chronicle or, should a buyer not be found, to shut the newspaper down,” they said.

The paper has been losing money every year since 2001, and, like everywhere, 2009 is hardly rosy. (Hearst recently made good on its word elsewhere, turning the Seattle Post-Intelligencer into an online-only shadow of its former self.)

Cartoons like the one above, and supportive letters to the editor filled the Chronicle. The people of San Francisco, surprise surprise, love their paper. I’ll pay more! they chanted, on the letters page. Here’s a selection of letters from today alone.

I have been giving a lot of thought about how to save one of the high points of my day: The Chronicle. … This plan may also have the benefit of encouraging the suburban dailies to devote more of their coverage to their communities, instead of relying so heavily on the Associated Press and other news services to serve their customers, who may not have the advantage of reading a “city paper.”

– How about one giant daily?, David Loberg, March 26

Don’t leave us … we need you desperately!

–Core audience, Daniel B. Rosen, March 26

I have been reading this paper since I was in elementary school in the ’60’s. I even won an elephant shaped key to the San Francisco Zoo information boxes for a painting when kids used to submit their artwork and the pictures were published in the original Green sports pages alongside the comics.

–Santa Cruz View, Susan Schaefer, March 26

 

My heart goes out to these and other newspaper lovers around the world in danger of losing their daily fix, their connection to the world around them. Here’s hoping something valuable and sustainable comes out of their fights.

The difference between a business venture and a not-for-profit is not just that the latter is not intended to make money but that it exists for a different and specific purpose that offers some public or community benefit. These organizations, don’t have anyone who owns them, not shareholders, but they do have members who elect people to run the show. The members may pay a membership fee, but they have no direct pecuniary interest. Their interest should be in the purpose.

For their good works governments offer tax-free status, so these organizations can put all their resources, income, or donations to further their purpose.

Saving that proportion of your income isn’t the only implication of operating as a not-for-profit though. Not-for-profits don’t just have a bigger margin, they also operate differently.

The lack of shareholders means that they do not, they cannot, pay any dividends and don’t have to answer for financial return, nor do they have a stock price to follow. While there may be turnover in the board of directors and swaying opinions among the membership, unlike businesses they do not have to worry about changing ownership. They do still have short term challenges and concerns, but they can operate for the purpose and to principles over the long term.

In times of crisis and when times are tight not-for-profits may similarly have to make cuts like business do to survive. In better times, though, these organizations can invest in the future, not to make money, but to do better.

Many have suggested a not-for-profit structure for news operations. It is worth looking at.

Reporters and editors who work in the news business tend to already know principles of their work: Things like keeping the people informed as a pillar of democracy; Keeping the powerful in check and shining light on corruption; Helping people be connected in their communities; And participating in the public discourse.

Newspapers already serve two masters, the advertisers and the readers, not to mention those who might be public traded and owned by shareholders. As advertising goes down, choosing a not-for-profit structure would eliminate the shareholder influence, reduce the need for higher ad revenue, and allow news operations to focus on their readers and their principles.

Duncan Day-Myron of The Ontarian at the University of Guelph quoted Magda in his article on the changing news business.

Here is an excerpt that includes Magda’s quotations.

Magda Konieczna is a freelance writer and award-winning journalist currently working out of Poland, but who spent time working as the Guelph Mercury’s municipal affairs reporter. She is in the process of researching PhD work looking at alternative business cases for publishing news with the Waterloo Region Record’s Ryan Chen-Wing.

“We’re focusing on four models: not for profit, which is already prolific, with examples including the Guardian, the Christian Science Monitor and, closer to home, the Walrus; crowdfunding, of which I know only one good example, at spot.us; foundation-funded, such as ProPublica; and government-funded, like the CBC,” she said of her research, although her findings “haven’t yet come across any organizations that actually changed their business model from the standard, for-profit one to something else.”
[...]
The cost, or lack thereof, of news online isn’t the only issue. Konieczna identifies another factor that she feels has contributed to how the Internet changed the news industry.

“I think what there’s been little recognition of until very recently is that the proliferation of news sources has changed the business model for news,” she said. “The problem isn’t strictly that of giving news away free; it’s that, given so many alternatives, the traditional funding for newspapers is fragmented so much so that it can’t support the number of newspapers it once did.”
– The Times… they are a-changing The Ontarian 5 Mar 2009

It is interesting that a student newspaper is looking at this issue. In general university newspapers are not-for-profits that are, in part, supported by a student fee levy. Models like that have been proposed for the wider newsmedia.

• Student media wades in 3 Mar 2009

I first read the suggestion of an anti-trust exemption for newspapers to jointly agree to start charging for content in DeLong’s piece in the American magazine.

He wrote: “The LA Times talked of the need for an antitrust exemption so newspapers can jointly agree to stop giving away the product, and several columnists have chimed in about the need for monetization.”

Anti-trust was an issue back in 1970, when the Newspaper Preservation Act allowed newspapers to enter joint operating agreements.

The Newspaper Preservation Act of 1970 was an Act of the United States Congress, signed by President Richard Nixon, that authorized the formation of joint operating agreements among separate competing newspaper operations within the same market area. The act was designed to exempt newspaper from antitrust laws to allow the survival of multiple daily newspapers in a given urban market in the face of declining circulation. This exemption stemmed from the fact that the alternative is usually for at least one of the newspapers, generally the one published in the evening, to cease operations altogether.
– Newspaper Preservation Act of 1970

So now faced with declining newspapers Tim Rutten of the Los Angeles Times is suggesting a new anti-trust exemption.

Two major newspapers — the Wall Street Journal and the Financial Times — charge readers tiered fees to view their online journalism. The rest of the industry has decided there’s more money to be made in charging advertisers for the larger audiences that free content attracts than in selling online subscriptions.

That’s wrong, in my view, but it’s hard to argue with as long as some major newspapers are giving their online journalism away; until they stop, nobody can risk charging for theirs. That’s where the antitrust exemption would come in: It would allow all U.S. newspaper companies — and others in the English-speaking world, as well as popular broadcast-based sites such as CNN.com — to sit down and negotiate an agreement on how to scale prices and, then, to begin imposing them simultaneously.
– Newspapers need an antitrust exemption 4 Feb 2009