I’m sat on a train on the way to the C&binet session at the Department for Culture, Media and Sport looking at the question of what the government should do – if anything – to save local journalism. Here are my notes:

The problem is not journalism

The vanity of journalists often leads to chest-beating deprecation of modern journalism. While there is some validity to that argument, it misses the point. Audiences have been steadily declining since well before the internet – that’s not what’s caused the current crisis.

The problem is not a journalism problem – it is an advertising problem, and a distribution problem.

The advertising problem is this: over recent years the market has been flooded with suppliers. This has driven the price down to a level that cannot sustain shareholder-owned print operations. In the last 12 months a sheer drop in demand has compounded the problem, and it’s widely accepted that some of that demand may never come back.

Advertising itself has changed too – from the traditional model of CPM (selling eyeballs) to CPC (selling clicks) to CPA (selling actions, e.g. purchases), and is likely to evolve further in the future towards VRM (vendor relationship management, i.e. managing the relationship between seller and buyer). I’ve seen little evidence of newspapers adapting their own advertising offerings in line to get a foothold when advertisers catch up – it’s still print-centric.

The distribution problem is that newspapers do not control distribution online – by and large their readers do, and newspapers have failed to acknowledge this, leaving themselves open to web startups that build user distribution into their design and operation. Of course the loss of control over distribution means losing the monopolies that allowed newspapers to keep advertising prices high enough to sustain the profit margins they were accustomed to. Now advertisers have choice, and the newspaper ad offering doesn’t look much of a bargain.

What does the future of local journalism look like?

I see 2 main paths of development, and both have one thing in common: the future is networked.

On the one side I see the national-grassroots-data path – I’ll call it the Networked Model for simplicity’s sake. As increasing numbers of local newspapers close or stunt their operations, hyperlocal blogs will spring up to address the gap. At the same time national news organisations enter the local market and partner with these and data-based operations. The most likely figures in this scenario are The Guardian, hyperlocal blogs and the likes of MySociety and OpenlyLocal. It’s a patchwork solution that is likely to leave gaps in coverage.

On the other side is the Local News Consortia proposed by Ofcom. Established operators like PA, ITN and regional newspaper publishers will partner up to gain access to a pot of public money and efficiencies that they cannot achieve without ending up in front of the Competition Commission. This will require some public service commitments such as covering councils and courts, and universal coverage – but fundamentally this will be Business As Usual.

More to follow in further posts