Monthly Archives: June 2009

In defence of paywalls (a thought experiment)

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It may be received wisdom that paywalls don’t work, but that seems to me a great reason to challenge that wisdom.

Here’s the thing: the media landscape as we know it is now unsustainable.

It doesn’t matter if all newspapers stopped publishing online overnight, or blocked Google, or anything else. The problem lies offline: the business model no longer supports the debts. The advertising has left the building.

Now news organisations are looking to online to save them.

And hence we come to paywalls.

Turning around a tanker

If you work in a news organisation this is the institutional position: your whole structure is built around selling and distributing 2 things: advertising; and platforms filled with content (newspapers).

Now, when the first (and main) revenue stream goes, what do you do? Do you take a long-view gamble on something that requires you to restructure the culture of your organisation? Or do you go with route of trying, somehow, to get people to pay for content alone?

Seen alone, that may look like a flawed strategy. Your product is perishable, the customers have already paid for the platform, and you don’t control the distribution.

But the people you have to convince in your organisation believe their work is worth paying for. Do you lose time and money convincing them otherwise, or do you move fast because time isn’t something you have to spend?

Do you come up with an idea that requires investment and change – which also takes time – or do you come up with one which adjusts the existing model cheaply – and quickly – and is more likely to bring in some money, even if not at the levels which might secure the long-term future of the organisation?

Do you come up with an idea that looks to protect what revenues you have?

When you’re driving a tanker and you see a big rock ahead – do you ask everyone on the ship to rebuild it as an aeroplane? Or do you start steering away in the hope that your part of the tanker will somehow avoid the worst?

Sometimes we need to make mistakes twice. Sometimes things change enough to make it work second time round. Sometimes it’s in the execution and not the concept. And sometimes things need to get worse before they get better.

What happens next

I can see a number of things happening as a result of news organisations charging for content:

  • First, it will put organisations like the BBC, NPR, ProPublica and (to a lesser extent) Guardian in a strong position to claim they are providing a public service and appeal for, retain, or increase, public and donor funding. Among all of the mercenary rhetoric it’s worth remembering that news has a civic and democratic value as well as a commercial one.
  • Second, it will strengthen the ability of any organisation that has free content to attract larger visitor numbers and therefore higher advertising revenue. In effect, the paywalled news organisations will be giving up on at least part of their advertising, which will actually make it easier for other news organisations to make advertising viable.
    (And yes, paywalls may well be the final nail in the coffin for some companies – it’s fair to say that advertising revenue is now so thinly spread that it will not support the number of media outlets it once did. Let’s not extend that misery. Some news organisations have already lost.)
  • Third, it should put pressure on paywalled news organisations to create unique, valuable content that people are willing to pay for. That’s a very different dynamic to filling column inches with a roundup of what’s happened in the past 24 hours. And it’s a very different commercial context to the one that led to only 12% of stories in the quality press being generated by reporters.
  • Fourth, it will most likely force news organisations to look beyond content alone and towards providing services like those that have given some creative news organisations profit margins of nearly 30 percent.
  • Fifth, for that reason we might discover some models that actually work. And we’ll discover which ones don’t. It’s never as simple as ‘Paywalls don’t work’. History may suggest it’s not a gamble that’s likely to pay off, but there may still be a black swan out there.
  • And finally, it will clear the way for independent media companies and startups to do more with their own content and services, and more agile business models. They will have the luxury of starting from scratch, without debts to service, stakeholders to satisfy, or cultures to rebuild.

So when the alternative is a slow, passive agonising death, let’s stop fussing about hypotheticals and let the Great Paywall Experiment begin.

[Posted with iBlogger from my iPod touch]

How the web changed the economics of news – in all media

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UPDATE (Oct 9 2012): Following the reviews of a collection of journalism students, as well as other topical events, I’ve written a follow-up piece here.

Listening to news executives talk about micropayments, Kindles, public subsidies, micropayments, collusion, blocking Google and anything else that might save their businesses, it occurs to me that they may have missed some developments in, ah, well, the past ten years. For those and anyone else who is interested, I offer the following primer on how things have changed.

Any attempt to create a viable news operation needs to recognise and take advantage of these changes. I will probably have missed some – I’m hoping you can add them.

UPDATE: Jay Rosen suggests reading this post alongside this one by David Sull: “newspapers are essentially a logistics business that happens to employ journalists”. He’s right – it makes some great points.

1. Atomisation of news consumption

In the physical world news came as a generic package. You had your politics with your sport; finance news next to film reviews. You might buy a paper for one match report. No longer.

It’s probably no coincidence that majority news consumption recently shifted from regular consumption to sporadic ‘grazing‘.

2. Measurability of users

If you placed an ad on page 3 in a newspaper with a circulation of 100,000 or a broadcast watched by 5million, you didn’t think about the readers who only bought that paper for the sport; or the viewers who popped out to put the kettle on – and that’s before we talk about circulation figures inflated by the assumption that every paper was read by 3 or 4 people.

Online you know exactly how many have looked at a specific page. Not only that, you know exactly how many have clicked on an ad. And you know exactly how many made a purchase (etc.) as a result.

There’s more: you know what page the user was coming from and went to; you know what search terms they were using; you know what country they are in, how high spec their computer; and depending on how much data they’re provided, a whole lot more besides.

There are two huge implications of this measurability (which many advertisers are only just waking up to).

Firstly, advertisers expect more. Online, advertising has moved from a print/broadcast model of paying per thousand viewers (CPM) to paying per thousand clicks (CPC) to paying per action – i.e. purchases, etc. (CPA).

Secondly, it means that editors and managers now know in much more detail not only what readers actually read – but what they want to read (what they are searching for). My name’s Britney Spears, by the way.

3. Mutually conflicting business models

In print you could have your cover price and your ads; online, any paywall means vastly reduced readership because you are cutting out distribution channels – not just Google, but the readers themselves who would otherwise pass it on, link to it and blog about it. You either square that circle, or look for other revenue streams.

4. Reduced cost of newsgathering and production

The technologies were dropping in price long before the internet – satellite technologies , desktop publishing. But the web – and now mobile – technology has reduced the cost of newsgathering, production and distribution to almost nil. And new tools are being made all the time that reduce the cost in time even further. When publishing is as easy as making a phonecall, that causes problems for any business that has to maintain or pay debts on costly legacy production systems.

UPDATE: Robert Brand takes me to task on this one in the comments but also on his blog, where I have responded in more detail.

5. End of scarcity of time and space

Sometimes people need reminding of the basic laws of supply and demand. From a limited availability of journalism to more than you can ever read, any attempt to ‘sell content’ must come up against this basic problem.

6. Devaluation of certain types of journalism

If a reader wants a book review most will go to Amazon. Music? Your social networks, Last.fm, iTunes or MySpace. Sport – any forum. Anyone producing journalism in those or similar areas faces a real issue.

7. The end of monopolies

Just as the scarcity of space has been broken; the scarcity of distribution networks has been blown apart. To distribute information in a pre-web era required significant investment. To distribute information in the web era requires an email account or a mobile phone. Social networks are more powerful and efficient than delivery vans, and you don’t need to sell a certain amount of information to make them viable.

Oh yes, and that makes news even more perishable than it was before.

Meanwhile, the monopoly on advertising has gone. Where before an advertiser might have had a choice between you and a local freesheet, now they can choose from dozens of local media outlets, national directories, international outlets, search engines, social networks, or spending money on becoming media producers themselves. This competition has driven the cost down and innovation up. What have you done to stay competitive?

8. Cutting out middlemen

Because anyone can publish and anyone can distribute, retailers can talk to customers directly. If Threshers can release a money off voucher directly to customers and it become wildly (too) successful, why should they advertise in a newspaper or magazine? If councils can publish news on their own website, or indeed publish and distribute their own publications, why should they publish announcements in a newspaper? If Coca-Cola can create a ‘brand experience’ on its website, and gather consumer data at the same time, why should they limit themselves to 30 seconds in the middle of Britain’s Got Talent?

9. Creating new monopolies

Google rules this space, not you. Amazon rules this space. iTunes rules this space. eBay rules this space. Facebook rules this space. Craigslist rules this space. If you want to thrive in the new environments you have to understand the contexts within which users operate. Search Engine Optimisation is one aspect of that. Social Media Marketing should be another. Understand how one website’s domination of a particular space of the web impacts on your strategies, and acknowledge you no longer control your own destiny. Yep, Google stole the delivery trucks and Amazon stole the newsstand. Oh, and you gave away a whole lot more too.

10. Digitisation and convergence

When everything is digital, new things become possible. Audio, video, text, photography, animation – all becomes 1 and 0. You need to understand the efficiencies that makes possible, from broadcasting live from your mobile phone to releasing images on a Creative Commons licence or publishing raw data to allow users to add value through mashups. The value of your organisation lies not just within its walls but beyond them too.

11. The rise of the PR industry

The PR industry is often overlooked as an economic influence on the news industry.  Its first influence lies in the way it has provided cheap copy for news organisations, meaning an increased reliance by news organisations on fake events, reports and releases. This will become increasingly problematic as the PR industry starts to cut out the middleman and appeal directly to audiences.

Secondly, the PR industry has an enormous effect on recruitment and retaining of talent in the news industry. In short, news organisations have become a training ground for the PR industry. Journalists who cannot live on newspaper wages have been leaving for PR for some time now, meaning increased costs of training and recruitment (partly because there are few older journalists able to train informally). Furthermore, good graduates of journalism schools are often recruited by PR even before they enter the news industry, meaning the news industry has a problem attracting the very brains that could save them.

12. A new currency

Oh yes, and that money thing? It has competition. The rise of social capital is a key development that must be considered. Anyone who thinks nonprofessional media is not important because it doesn’t have a ‘brand’ or because people will lose interest, doesn’t understand the dynamics of social capital. Many people read blogs and other UGC because they trust the person, not the ‘brand’; many people self-publish because of the benefits in terms of reputation, knowledge and connections. And many people link to news articles or contribute user generated content because a journalist invested social capital in their communities, or an organisation built a platform that helped users create it.

That’s it. Unless you can come up with some more…?

What’s been happening with Help Me Investigate

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It’s finally been announced that my project Help Me Investigate is being funded by 4iP and Screen West Midlands.

Help Me Investigate (HMI) is a platform for crowdsourcing investigative journalism. It allows anyone to submit a question they want to investigate – “How much does my hospital make from parking charges?” “What happened to the money that was allocated to my local area?” “Why was that supermarket allowed to be built opposite another supermarket?” …

But more importantly, it then enables users to mobilise support behind that question; and to pursue it.

HMI attempts to address the biggest issue facing journalism: how do we save the good stuff? The persistent slow-brewed journalism that was previously subsidised (if you were lucky) by more commercially friendly instant journalism, but which stands to lose most as commercial content becomes disaggregated and reaggregated, and audiences and their activity measurable.

How do you support Slow Journalism?

Help Me Investigate is an attempt to use the qualities of the web to pursue investigative journalism. There are various aspects to this (which I’ll be exploring, along with others, in the Help Me Investigate blog), but fundamentally it comes down to this:

  • The web allows you to ‘atomise’ processes – break them down into their constituent parts. The site breaks apart investigative – often campaigning – journalism allowing users to contribute in specific and different ways. This is not citizen journalism – it is micro-volunteering.
  • Investigative journalism is about more than just ‘telling a story’; it is about enlightening, empowering and making a positive difference. And the web offers enormous potential here – but users must be involved in the process and have ownership of the agenda.
  • The web is more tool than destination – successful business models rest on creating a platform
  • Likewise, the web is more of a communication medium than a storytelling one; therefore, we are focusing on communication and community rather than stories; process, rather than product.
  • We are also focused on making the process itself rewarding, not just the end result. Journalism is a by-product.
  • Online, failure is cheap; unlike a traditional news organisation, HMI doesn’t need the majority of investigations to ‘succeed’; in fact, failure is built into the design as a necessary ingredient of the site’s overall success. If you want to budget for it, put it under ‘training’ and ‘R&D’.
  • Do what you do best and link to the rest: the site is networked – we’re not trying to be or host all things but will be pointing elsewhere more often than not

I could go on, and I will in the blog. But I think those points are core. I don’t expect this project will have all the answers, but I think we are asking the right questions, at the right time.

Now, it’s worth pointing out that the idea of ‘investigative journalism’ covered here is a broad one – indeed, we have no idea of predicting what questions will be pursued: the agenda will be determined almost entirely by users (including journalists) and topics could range from the very personal, hyperlocal to more national questions. That alternative to a mainstream editorial agenda will be interesting in itself: how many questions will we get that newspapers would find unappealing?

So what’s happening now?

We’re building a very rough and ready frame within which users can play. How that develops depends in large part on what the users need to do – we’ll be doing much of the development as it is being used.

Already a handful of people have used the site in its closed test form, and in the following weeks quite a few more will start to go through it. Then the site will be opened in a semi-closed beta.

To begin with we’re focusing our personal efforts on Birmingham, although people elsewhere will be able to use the site.

The site is being built by Webby Award-winning developer Stef Lewandowski, while the community side of things is headed up by Nick Booth. Both have been crucial contributors to the development of HMI. Joining us behind the site are community support Paul Henderson and investigative journalist Heather Brooke, author of the wonderful guide to FOI Your Right To Know. They will be suggesting and supporting activities to users who submit or join investigations on the site.

It’s taken 18 months to get to this point, and the hard work starts now. If you want to be involved in any capacity let me know.