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21
May 12

The economic history of newspapers according to the Sage of Omaha

The economic history of newspapers according to the Sage of OmahaFor many years, Slate has been one of the best sites for commentary in America. One of the stupidest things that intelligent team ever did was to sack their media columnist Jack Shafer, who now writes at Reuters.

His trenchant style hasn’t yet quite recovered from the transfer, but he continues stubbornly to refuse to think with the herd. For this alone he is required reading.

As evidence, here is Shafer’s column on Warren Buffet (left), the uber-guru of counter-intuitive investors everywhere, and newspapers. Buffet has owned newspapers on and off over the years and his commentary on their profitability or otherwise happens to write the twentieth-century history of printed media pretty well. And not just in America either. Once upon a time, newspapers could price their advertising space pretty much as they wished because their position in their markets was strong, bolstered by lack of competition and brand loyalty. Now that “franchise” has weakened. A cold-eyed view? Yes, but that is no bad way occasionally to look at newspapers which have more often been seen through rose-tinted spectacles of sentiment.

Journalists like to think that they are above grubby matters of business. But if you don’t understand what went wrong in the business model for printed news media, how are you going to figure out what will work in the future?


14
May 12

Newspapers: even if you don’t have the solution, stick with the main issue

Newspapers: even if you dont have the solution, stick with the main issueTeachers (and I’m one) have a habit, which understandably annoys many people who wrestle with practical problems, of posing questions to which they don’t have an answer. When I’m in this mood with an audience or class, I tend to put a questions about bundles.

Newspapers, many news websites, magazines, radio and television programmes are bundles of stuff. While this may be justified as making content more attractive and useful (variety, serendipitous discovery of the unexpected), bundles are really made by economic imperatives. A mixture of news and features collects together enough attractions to persuade someone to buy a newspaper; the newspaper sells the attention thus secured to advertisers who buy space alongside the content. In theory, the bundle’s total income exceeds its outgoings in a web of cross-subsidy. Magazines and commercial broadcast channels operate variants on this model.

But what happens, my irritating question goes, if an irresistible force blows the bundle apart? What happens if the readers or audience sees no logic in consuming journalism packaged in bundles? Social media, search engines and the internet don’t naturally see things in bundles. Bundles are by definition ambiguous compromises. Web search abhors ambiguity.

For a year or two, this uncomfortable thought has been pushed aside by more immediate, and slightly more palatable, issues. Can newspaper paywalls be made to work? (Has the New York Times discovered the secret sauce/holy grail/formula for eternal life?) Is the iPad the answer to struggling publishers’ prayers? But underlying fundamentals have a way of coming back to the surface.

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20
Apr 12

Local newspapers: sentiment, logic and the experiments of the future

Local newspapers: sentiment, logic and the experiments of the futureJohnston Press’s new boss Ashley Highfield set off a row which will erupt again and again in the coming years when he announced that the company is turning some its daily local papers into weeklies. Local papers are so long-standing and (mostly) loved that we find clear thinking very hard.

There is no general, worldwide “crisis” of journalism or even of newspapers. Newspapers are declining in North America and Europe but not in South America; they’re doing fine in Asia (numbers here). There are countries where journalists are badly treated and physically under threat, but that’s not new. The convulsions of the phone-hacking scandal are so far confined to Britain.

There is a crisis affecting journalism in the US and Europe, but it is worth being clear-eyed about exactly what it is. It is the ruin of the business model for printed daily papers in which news is cross-subsidised by advertising income which is leveraged on circulation numbers. That way of doing things is in trouble. That decline in circulation and income is a deep, long trend.

The lines on the graphs have been drifting down for years. As one of the analysts at the Enders consultancy pointed out (£) in the wake of Johnston Press cutbacks, the circulations of local papers have been going down for 40 years: this is nothing surprising or new. A graph of the total aggregate circulations of all British national papers across the whole of the 20th century shows that the combined sales peak for all of those papers was in the 1940s (see slide 5 here). The internet may have made the headaches of newspaper publishers much worse, but the rot started well before the web was ever thought of. Finding a new way of financing news matters even more than phone-hacking and the Leveson Inquiry.

One of the most basic foundation ideas of the newspaper was its separation from the state. Free news media choose to live out in the cold of open economies. When the society, economy or technology changes, the media must change. Digital communications alters all three and turns a lot upside down. Information doesn’t require capital to move; news no longer goes one-to-many but one-to-one; printing isn’t required. And so on. The history of news reveals endless experimentation amid chaos and fast-changing conditions. It was only in the second half of the twentieth century that news media in Europe and America enjoyed a stable, institutionalised era which gave journalists the impression that secure employment in large organisations was the norm. Historically, it isn’t.

There was a piece last weekend in the Sunday Times magazine (£) which captured the paradox of much gloomy pessimism about newspapers sitting side by side with experimentation. The paper’s writer Tim Rayment assembled many grim statistics recording the falls in circulation, jobs and reach. To illustrate the problems he had gone back to Cleethorpes, the north-eastern town in which he had been a cub reporter. The local paper was having a tough time, to be sure. But Cleethorpes has a new fledgling weekly paper challenging the incumbent and a local news blogger, who annoys and provokes the powers that be in the town. So the risk of decline was there – but so were the seeds of future change. Something is lost in the transition chaos. But new energy is released as well.

Update 23.4.12: (lengthy) defence of the value of local papers via a survey of what the major British owners are up to by the knowledgeable Liz Gerard and interview with me about pressures on local papers on BBC Radio 4′s Broadcasting House yesterday (item starts 32 minutes in).

 

 

 


19
Mar 12

News = technology (and vice versa)

News = technology (and vice versa)A headline sparked off by the annual Pew report on the state of news media caught my eye. “Tech companies control the future of news“, said a Forbes blogger John Dube.

This is the kind of headline which is designed to frighten people. Just think, the headline implies: nerds, geeks and new media tycoons messing with news which was once lovingly prepared by noble journalists who have lost control of their business. The news industry, the Pew report says, “finds itself more a follower than leader shaping its business.”

But technology always has shaped news media and journalism and always did. The two are so closely intertwined that it couldn’t be otherwise. If journalists were not so distracted by the distress of watching the business model for printed news crumble before their eyes, they’d remember that technology and the people who make money from innovations often shape, make and lead developments in journalism.

The newspapers which dominated news for at least a century – face it, a pretty good run – took their present form around the middle of the nineteenth century. These developments didn’t depend on somebody having a blueprint for serious daily journalism. They were evolutions driven by the arrival of better newsprint, fast rotary presses and, last of all, “linotype” typesetting machines. Then journalists set about exploiting these new possibilities as best they could. Many editors of local papers were technologists – or, as they said in those days, master printers.

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17
Feb 12

The shift of power from print to digital: a hinge moment

Buried on page 11 of this week’s Spectator was eloquent evidence of a slow but inexorable shift with large consequences: the transfer of power and influence from printed newspapers to digital publishing.

Oh that, you may say. Old news. Isn’t that already blindingly obvious? Doesn’t this blog go on about just that all the time?

Yes, but that doesn’t mean that everyone sees it. Big, slow changes are hard to trace and measure when you’re living in the middle of them. And newspapers still have a central role, clout and readers. But have a look at Charles Moore’s short note about the importance of Conservative Home and its owner, the Tory peer Michael Ashcroft. Moore describes Ashcroft as on his way to being “the Beaverbrook of the internet age.”

I pick this example of because it is hard to imagine a magazine less likely to fall for hype based on a techno-fad than the Spectator. The same applies to Moore, who as a political commentator is interested in power and its use. What he is observing here is a redistribution of political influence caused by the technological revolution of the last fifteen years. Old powers will wane; new ones will use the opportunities to rise. Digital is transformative and not adaptive change.

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09
Jan 12

Paywalls, niche, mass and “general interest”

Here are two posts for anyone at all intrigued by what kind of income keeps journalism – and particularly journalism institutions – in business.

  • Clay Shirky on payment “threshold” schemes which are becoming more and more common in the US, particularly since the New York Times porous paywall looks as if it’s delivering on at least one aim of preserving the online audience while collecting some revenue from committed online users. Whether that’s enough revenue – Shirky thinks not – is another question.
  • Frederic Filloux on what we don’t yet know about the NYT scheme and on the striking price rises just announced by both the NYT and the Financial Times for their print editions. Filloux sees this, rightly I’m sure, as evidence of both titles trying to drive their readers online.

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19
Dec 11

The meaning of the abrupt departure of the New York Times CEO

Recessions, or rumours of their return, concentrate minds. Late last week, the New York Times announced the departure of its CEO, Janet Robinson, in terms which made clear that this wasn’t her initiative and that it had something to do with the paper’s struggles to find a successful digital publishing strategy.

I suspect that Ms Robinson’s removal is a symbol of a debate not confined to the boardroom of the New York Times or, come to that, to the United States. A long period of economic uncertainty on both sides of the Atlantic is starving newspapers of both readers and advertising income. In Britain print circulation declines are accelerating and given that two of the largest year-on-year falls are for the Guardian and Financial Times, I don’t think this can be attributed to the phone-hacking scandal.

This pushes all newspapers and their publishers closer to one of the biggest decisions in their history, a momentous choice which is coming sooner than many expected. How much longer can they stay in print? When do they switch to digital?

When two British editors were asked last year how much longer they expected to be printing their papers, both said that the companies had bought their last printing presses. Since both had invested in new presses in the past few years, that gave the Sunday Times and the Guardian maximum time horizons of between twenty and thirty years as paper products. I doubt that many titles now think they have that long.

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12
Dec 11

The government media review everyone’s forgotten

Amid the drama of the phone-hacking inquiries, anyone could forget that the British government is undertaking a review of plurality and media ownership. I had forgotten myself. And I’d actually sent the review a contribution.

My memo to the Department of Culture, Media and Sport was based on a post on this blog. But for the record it’s here (scroll down to Brock and click). By far the hardest issue is not “how much should anyone own?” but how to measure media influence in the hands of one company.

Transparent government is a splendid thing. But that hardly makes it exciting.