I disagree with people that believe that the death of journalism is inevitable because of the internet. Brands such as the New York Times and Washington Post have a level of ubiquity and trust that would have given them a huge advantage back when online publishing was developing. In fact, they still have those advantages now.

While newspaper websites have provided dynamic content, they had failed to provide a dynamic user experience with participation and communication. They are getting better, but are off to a late start, and I think your point about the Stratton decision provides a good insight when combined with the failure to predict how big the internet was going to become.

Newspapers need to adjust to new advertising models and create an online environment that encourages users to visit their sites and spend time there in an interactive environment. They can survive if they are willing to evolve.

Good post. Thanks for bringing up Stratton Oakmont v. Prodigy. I remember casually following the case at the time but don’t remember the resolution or discussions of its impact.

It also so happens that Mike Tharp, Executive Editor of the Merced Sun-Star announced (http://www.mercedsunstar.com/115/story/832057.html) this week a change in policy that will now make comments on stories a matter of option on the part of the paper instead of an always-on routine. In theory, this seems like a rational approach to things, but it would be interesting to see how it shakes out internally at the Sun-Star in terms of how they make the cut.

One of the things that’s gone missing in a lot of the discussions about story comments and/or social interactives in general is that there are a lot of potentially useful lessons from the past which have gone largely ignored. Networked computers have been social tools from the beginning. The first time an engineer in one place sat down and typed a message to a guy at another machine 2,000 miles away, the message was probably something like, “Can you read this?” followed by “How ya doin’?”

It seems to me that a lot of what we’re seeing these days tend to be fundamentally older technologies wrapped up in shiny new packages. Before there was Facebook, for example, there were UseNet and AOL groups, and it seems evident not much attention is paid to group-dynamic lessons already learned. We’ve simply moved on to something different, but the new thing is based on the same old foundation. A foundation with problems which have never been resolved. Spammers aside, these include:

Anonymity – What do you do with a medium where nobody knows you’re a dog? Current ideas range from making every comment anonymous to restrictive paid registration models.

Group Dynamic – There are those who would argue that over time the Internet has gotten to be a less useful place for social interchange. Commenters are less on-topic, less polite, less informed, and less willing to listen to views which may be thoughtful but dissent from the collective group consensus. On the other hand, useful and dynamic social groups can and do exist online; the mystery is how they happen to emerge in one context and not in another.

Moderation – The most workable models now tend to lean toward some kind of moderated comment system but that raises the issue of workload at a time of tight budgets. An interesting area of research going on is in the development of a “stupid filter” (http://stupidfilter.org) which attempts to separate out, for example, the more sociopathic element among commenters.

Online News – Your comment about online variants of newspapers being seen as “The Man” raises an interesting– and scary– question. Does a news site targeted at a general news audience have an inherent disadvantage compared to one targed at a more focused niche? Because if that’s true, it starts to raise even more questions about sustainable revenue models and/or how news gets covered.

Perry

As we moved from print’s limited capabilities to the interactive, networked online world, very few newspapers mounted any serious efforts to take advantage of those capabilities to build interactive communities.

There’s a very deep, poorly met human need for social interaction that traditional media failed to address. Twitter and Facebook are just the latest in a parade of digital-native businesses to enjoy explosive growth by helping people meet that need.

There are many factors — especially cultural factors — to blame for this failure by newspapers to act, but I think Robert’s absolutely right to point a finger at Stratton Oakmont as an important one. I’ve been dealing with this for years.

Newsroom lore (“if we moderate, we’ll get sued”) seems to be infinitely more powerful than what our lawyers actually tell us or what our corporate policy actually says.

The good news, though, is that the game is far from over, and some of us have made tremendous progress in the last couple of years in internalizing the concept of building community by facilitating the “town square” process. While it’s easy to point to many organizations and individual journalists who just don’t understand this, it’s increasingly easy to point to many who do.

A lesson worth remembering is that at the turn of the 20th century, people had a transportation problem…and the solution turned out not to be a “faster horse”…but a Ford.

And one should note that the Ford didn’t arise out of the “horse industry’s” R&D efforts, nor the “Horse Industry Revitalization Act” nor the horse industry’s attempts to experiment with new Business Models.

I think the future of the media business will look as different as Ford and Toyota’s operations look from horse traders and blacksmiths.

——
What’s historically given value to editorial content is the relative scarcity of distribution versus readers (not the Kindle kind). Newspapers have historically enjoyed natural localized economic monopolies that allowed each of them to exercise monopoly control over the amount of content (and advertising) they allowed into their local marketplace.

Monopoly constraint of distribution and supply will always lead to prices (and profits) significantly above open market rates. Newspapers then built costly organizational structures commensurate with that stream of monopoly profits (think AT&T in the 1970′s).

Unfortunately the Internet came along and changed all the rules!

——
The dynamics of content replication and distribution on the Internet destroys this artificial constraint of distribution and re-aligns advertising (and subscription) prices back down to competitive open market rates. The often heard complaint of Internet ad rates being “too low” is inverted…the real issue is that traditional ad rates have been artificially boosted for enough decades for participants to assume this represents the long-term norm.

An individual reader now has access to essentially an infinite amount of content on any given topic or story. All those silos of isolated editorial content have been dumped into the giant Internet bucket. Once there, any given piece of content can be infinitely replicated and re-distributed to thousands of sites at zero marginal costs. This breaks the back of old media’s monopoly control of distribution and supply.

To paraphrase Nietzsche, “God is dead. God remains dead. And we have killed him with the Internet…”

——
The core problem for the newspapers is that in a world of infinite supply, the ability to monetize the value in any piece of editorial content will be driven to zero…infinite supply pushes price levels to zero!

What this implies is that no one can marshal enough market power to monetize the value of content in the face of such an infinite supply and such massively fragmented distribution. Pay-walls, lawsuits and ill conceived legislation won’t allow the monopoly conditions to be re-constructed because only ONE VERSION each story has to leak out to start the cycle all over again.

——
Another way to think about this is that once data becomes publicly visible on the Internet, its monetizable value rapidly dissipates to zero.

This is at the core of why Google can extract $25B a year from the economy without creating ANY content…what they create is meta-data about content (which CAN be monetized)…and all that meta-data remains non-visible. Only the results of decisions based on that meta-data by their search and advertising platforms is made publicly visible.

The lesson is that Google DOES NOT monetize other people’s content…it monetizes its OWN meta-data. This is certainly one path to making the news profitable…not search per se…but various other approaches to the monetization of meta-data that’s within the reach of publishers.

So the exquisite irony is this:
In the future, the only content that will have monetizable value is content that no one is ever allowed to read! (i.e. the meta-data)

——
There are certainly ways to make online news profitable…and many of us are working to develop such approaches…but I can assure you they don’t involve inventing a “faster horse”…

Dale Harrison
dale.harrison@inforda.com