New business models for news are not that new

December 17, 2008 By 2 Comments

With online ad revenue down for the second quarter in a row and newspaper industry indicators suggesting that 2008 is going be the worst year yet, the frenzy continues for a new business model for news publishing that will magically boost revenue and stop the financial bloodletting.

But innovation is sorely lacking in the new business models proposed; the truth is that many of them have been around since the early 1900s.

In 1923, historian James Melvin Lee outlined in his History of American Journalism alternative business models that newspapers had tried to remove themselves from dependence on advertisers and circulation growth and that now seem strangely prescient: the endowment model, the municipal news model, an adless newspaper, religious news, and what can only be called the “bazooka gum” approach to circulation.

Even before Pro-Publica could be imagined, our predecessors were strategizing how to create an endowment-supported newspaper. Hamilton Holt, editor of the New York City Independent outlined what such a model would look like to other newsmen at the first National Newspaper Conference at the University of Wisconsin-Madison in 1912.

The endowment model immediately had its critics – with much the same response we hear today. James Kelley of the Chicago Herald argued that an endowment newspaper was an “impossibility” for only the “people” could truly endow journalism without it being disinterested. In other words, whoever provided the cash was likely to have the dominant influence.

Lee worried that the endowment model was championed by academics and was unlikely to work because no one was willing to front the cash. He wrote, “The nearest that the endowed newspaper has come to a realization in America was a promise of Andrew Carnegie to be one of 10 men to finance such a venture. It would take just about ten men of Mr. Carnegie’s wealth to establish successfully an endowed daily newspaper.” Looking around in today’s news environment, the St. Petersburg Times stands alone as an independent, endowed print newspaper.

Lee mentions another curious model that seems strangely reminiscent of the turn toward hyperlocal blogging: the municipal newspaper model.

Los Angeles in 1912 had evening and daily newspapers, but it also had the first, and possibly only Municipal News. Financed by the city of Los Angeles, 60,000 copies were distributed by newsboys and to homes. It was under the control of a municipal newspaper commission, composed of three citizens who served without pay and who were appointed by the mayor. They were to hold office for four years and were subject to recall and removal by referendum.

The mayor, the city council, and political party that had more than 3% of the vote were guaranteed column space. Financial support came from an appropriation of $36,000 set aside by the city of LA. Ad revenue was a second stream of income, but the newspaper did not support any major department store ads. Civic minded, it had a special student section.

The Municipal News was truly hyperlocal – it didn’t truly compete with any LA papers because it didn’t cover national or state news or carry wires. Lee is unclear on how long it actually lasted, but was voted down by the city council due to cost.

Some newspapers in the early 20th century tried to do without ads entirely. On September 28, 1911 the Day Book, an adless daily newspaper appeared in Chicago. It began with only 200 copies and sent personal agents of the paper to subscribers to generate revenue. Eventually, circulation got up to 22,938, but when the price was raised from one to two cents and the cost of paper increased due to World War I, it died a few short months later. A major downfall – the lack of department store ads failed to attract women readers.

Still, Lee suggested that people ought to be willing to pay for quality and that adless papers could be a reality: “The adless newspaper may possibly be a part of the journalism of to-morrow, if fifty thousand people will be willing to pay ten cents per copy for their daily paper and will agree not to cancel their subscription orders even through displeased with the presentation of the news or offended at the editorial policy adopted by the editors.”

One form of news that was increasingly popular was a turn toward news financed by religious organizations. Lee dismisses most of these for being too narrowly focused on spreading religion to attract a broad audience, with one exception – the Christian Science Monitor, which kept its religious news to the back and even then was noted for its international outlook. Other religious newspapers are still running strong: The Desert News, affiliated with the Church of Jesus Christ of Latter Day Saints, acts as a competitor to the Salt Lake Tribune. And the Washington Times‘ conservative stance pursues its agenda from the Rev. Sun Myung Moon’s Unification Church.

The Christian Science Monitor is reinventing itself as we speak as one of the first major dailies to switch from print first to an online daily with a print weekly. Lee’s refinement of religious newspapers as a distinct model may be reflected in the Monitor’s bravado: perhaps religious newspapers are hotbeds of innovation.

The final model Lee proposes and dismisses is what can only be called the Bazooka Gum Model and reeks of the gimmicks and cereal box circulation efforts ad departments have tried for years to boost revenue.

For Lee, these efforts were a lost cause. He told the sorry tale of the 1905 United States Daily of Detroit, which offered people little trading stamps that they could exchange for things like bicycles if they collected enough. Coupons failed to bring in enough circulation – and the newspaper died after 68 days.

A return to our history books provides a useful warning and reminder: we don’t have the answers yet. We didn’t have them in the 1920s, and we’re still searching for them now.

But even without answers, news innovators of times past were willing to experiment. We should take our cues from the past, and consider new business models as opportunities for our industry rather than signs of its failure.

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Writing print's epitaph – v6.5.08 (service pack 3)

June 5, 2008 By 4 Comments

My friend Sree Sreenivasan asked members an online journalism e-mail list for reaction to Microsoft CEO Steve Ballmer’s interview with the Washington Post, published this morning.

Specifically, Sree asked for reactions to this statement from Ballmer:

“In the next 10 years, the whole world of media, communications and advertising are going to be turned upside down — my opinion. Here are the premises I have. Number one, there will be no media consumption left in 10 years that is not delivered over an IP network. There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.”

Okay. Here goes:

Ballmer’s talk about delivery gives him an immense amount of wiggle room. “Delivery” can be defined narrowly, to “last mile” delivery of content to consumers, or broadly, to include delivery at any point along the production process. If one takes a broad view of “delivery,” Ballmer’s prediction isn’t that bold, as IP delivery, within some point of any communication media’s production process, is almost ubiquitous today.

On the consumer delivery side, though, I think that Ballmer’s dead-on about television. He cited examples about video gamers, playing over IP networks, and the development of IP-delivered TV. People are sick of cable companies’ set line-ups of channels and want the flexibility to choose their own channel line-ups and set their own viewing schedules.

Ballmer talked about watching “Lost” over the Web. In my home, the only broadcast TV show my wife and I watched on any regular basis, we watched via NBC’s website. There’s no need for a DVR, or even a cable or satellite subscription. If the network makes the show you want available, you can watch it whenever you want, even if that network is not available in your area.

As fiber optic networks become more common, networks are going to have increased ability to cut out middle-man cable providers and affiliates, and instead deliver their content directly to consumers over IP. With consumer demand for flexibility on one end, and network avarice to keep all the ad or sales revenue to themselves on the other, look for IP delivery to take off in the next decade, as Ballmer predicted.

Of course, soon after, production companies will recognize that they can play the IP-delivery game, too, and cut the networks out of the process, as well. That’s why we’re already seeing networks turn to more in-house productions, to eliminate this potential competition.

As for traditionally printed media, I think the economics are tougher. That’s primarily because we’re here talking about a change in the medium through which readers receive their content. It doesn’t matter much to a consumer whether her TV gets its show via IP network, cable, satellite or over the air, assuming picture and sound quality are equal. But there’s a huge difference, today at least, between reading content on a screen and on a printed page. And, to this point, no one’s figured out how to get a piece of paper to respond to IP input.

I love books. I love reading The New Yorker in its printed form. The Internet, as currently delivered on my laptop computer and wife’s iPhone, serves me well for interactive content and for immediate news. I am a hard-core Web geek. But when I want to read in a more relaxed, contemplative environment, I continue to choose books and magazines.

Switching consumption media places both financial and behavioral costs on the consumer, which many consumers sometimes are unwilling to pay. Perhaps, when a magazine-sized tablet online news reader comes on to the market, one with paper-quality type and graphics, I’ll adopt that. But that product’s been “less than 10 years away” for a decade now. (The media geek equivalent of the Friedman Unit?) I anticipate its arrival about the time I get my flying car and jet pack.

Even if that tablet were to arrive this year, I think it would take far more than Ballmer’s “10 years” for its price point to beat paper, and for the public to adopt it to the extent that the market for printed material evaporated completely. (“Ballmer Unit,” anyone?)

But that’s just the consumer delivery side of the issue. What about delivery of content within the production process?

When I started in newspapers, just 15 years ago, we printed columns of copy from our hard-wired newsroom computer system, then walked them over to composing boards, where production folk waxed them, cut ‘em up with X-Acto knives and slapped ‘em onto pages. Those were then walked into the next rooms to be shot and produced onto plates which went on to the printing presses in the room beyond that.

Now, at most newspapers, reporters can file their stories over IP-based virtual private networks, where editors retrieve them, compose them onto pages electronically, then deliver the completed pages, again over the VPN, to a remote printing facility. So, even for content that is delivered today to consumers on paper, almost all of the pre-consumer delivery of that content happens over IP networks.

For more than a decade, publishers have dreamed of a day “in the not-too-distant future” when they’ll be able to extend IP delivery to that “last mile,” as well. With Web readers, that’s happened already. But publishers would love to offload their printing and delivery costs on to print readers too, with print-at-home newspapers and magazines.

Unfortunately for publishers, home printing technology hasn’t advanced as fast over the past decade as other computing technology, and the day when end users will be able to print professional quality news publications at home for less than the current cost of home delivery appears as remote as ever.

But that doesn’t mean that IP delivery can’t step in and play an even greater role in the production and delivery processes. National newspapers, such as the New York Times and USA Today, are published at many remote facilities around the country, due to the time sensitivity of daily newspaper production. As fuel prices rise and peak oil looms, it is logical to contemplate a future in which price sensitivity turns more magazine and book publishers to consider outsourcing more of their printing to regional satellite operations.

Of course, the paper still needs to be shipping to those printers. Maybe the business math will dictate that printing then occurs closer to the point of origin of the paper, to save on those shipping costs. Either way, I do believe that IP delivery of content to outsourced remote printing facilities will increase over the next decade.

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Tim Berners-Lee's Web of people

December 4, 2007 By 1 Comment

Amid the dot-com jargon and techie talk, World Wide Web granddaddy Tim Berners-Lee conceded last week something about his offspring: That somewhere beneath the convoluted coding, acronyms, zeroes and ones, the Web is human, after all.

Speaking to a fire hazard of computer programmers, Web producers and journalists at the University of Southern California’s Annenberg School for Communication last Thursday afternoon, Berners-Lee crammed a career’s worth (OK, maybe several careers) of wisdom and clairvoyance into a little less than an hour of accessible Netspeak. He waxed nostalgic on the Internet’s historical terrain, then prognosticated a Web future rooted in sociability, customization and, above all, user demands.

“We’ve got to keep building those wish lists, because they will inspire people who are doing the coding,” he said. “There are a bunch of geeks… who are itching to find a problem to solve.”

The moral: keep feeding the innovators. You never know what they might come up with, and there’s no predicting what bizarre idea might take off running.

“What if, just before wikis came out, somebody had said, ‘Hey, suppose there was a website that said: Anybody can edit this. Please be careful. It would be nice if this were an encyclopedia. Those are all the rules.’ You would not have invested. You would not have been the manager that said, ‘Yes, OK. Write it.’”

And per his road map, the Web’s uncharted territory is vast and ripe for discovery. As he has since day one, Sir Timothy Berners-Lee sees a blank, royalty-free canvas.

Berners-Lee on what’s in store:

We just hope that there is just a natural tendency to broader interoperability. That we will end up with a very powerful platform in the future. The sea of interoperability…. One of the things that you have to remember now is that we’re seriously thinking that the Web isn’t all there is… that downstream, there’s a huge amount of stuff. So that means that you don’t have to do your work looking to the Web as though it is the geographical terrain. You can do it as though it were something you can send back. Like undercooked beef. It’s OK to say, ‘The Web is fine, but what we really want is this.’ You know, ‘blogs are great. They’re interesting. But what if, instead, we had this?’ So the technical community needs to have feedback from people who are maybe being frustrated by how the Web is doing in all this.

If you go away today with any one thing in your head when it comes to the Web architecture, it’s that it is a universal space. It’s got to be there like a white piece of paper, for people to do other stuff on it. And the Web is great because of all of the creativity that other people have put in. It mustn’t control what other people want to do with it. It clearly has got to be able to work on any hardware platform.

There are some things we can worry about and some things we can get hopeful about. A lot of people are excited about virtual worlds; second lives and things. Some people are worried about the fact that my ISP might stop me from accessing all the new video sites because they are my cable company, and they want to be the person to decide what movies I watch this week. There are some slumps around there, but I think we’ll avoid them.

On digital humanity:

When you design something in the Web, there is a social side to it. The Web actually has protocols like http, but it’s got human protocols, too…. I make a link to another Web page because if I link to good Web pages, my Web page will become valuable. And if my Web page becomes valuable, it will be linked to. And if my Web page is linked to, it will become more read. And I like to be read! It all comes down to psychology. Sometimes it comes down to money, OK? ‘I like to be read because I get cash.’

It’s not a web of computers, it’s a web of people. It’s people that make links, it’s people that follow links. People are affected by many things in what we do; in the policies we should enact — or that we should tweak, or that we should interpret. There’s psychology at the base. There’s a large amount of mathematics about it. There’s a very, very large number of disciplines around websites, and there are great people in the spaces and doing great things who probably don’t know each other. So one of the motivations of Web science is to get people in these disciplines talking to each other.

On creativity:

The creativity has always been the exciting bit for me. We do our software design in such a mechanical, mathematical way. We analyze it and we use software engineering tools. But the actual creative leap to how we’re going to do the thing, or the fact that we will write the program in the first place, is done subconsciously by a mechanism that we cannot analyze. It is not provided to us. We do not have a portal, we do not have the debug access to a brain that allows us to figure out how it was we came to it.

Individual creativity is very special, but group creativity — when we do things together, which is what we actually have to do to solve all these big problems — is even more interesting. And one of the reasons I wanted to make the Web a big sandbox is that I wanted it to be a tool for group creativity. I wanted us to pool all our thoughts and brainstorming together so that we will somehow make our combined brains be slightly less stupid than our individual brains.

On social networks:

These social networking sites are starting to develop new ways of actually determining how you trust friends, and friends of friends have a different status than friends or friends of friends of friends…. One of the things they’re doing is creating new forms of democracy. Or new forms of meritocracy…. It kind of works, but maybe we can improve on it. And maybe, out there in the Web, we will end up producing a new social mechanism, which will improve on the existing democratic systems we’ve got today, and we’ll be able to run the country better. How about that? Run the world better. Don’t aim low! OK?

On inventing the Web:

Inventing the Web was actually rather straightforward. It was the sort of thing you could do on the back of an envelope and code up in two months. But explaining to people that it was a good idea—helping them get over all their misunderstandings of what it was supposed to be, was very difficult.

Because it was a paradigm shift, the difficulty of explaining the Web in the first place was that we didn’t have the vocabulary like “link” and “click.” So I could show someone a Web page and click on it and, tah-dah! Another window would open with a different Web page. So what? No big deal.

What they couldn’t understand was what was really interesting about this link was that this one really could have gone anywhere; to any data you could imagine being out there and conceivably interesting. Now the fact that pretty much anything you could imagine existing out there has got a high chance of being on the Web. And the fact that that link could have been there was just really difficult for people to understand.

In our meetings I wanted us to build the Web as a collaborative design so that we would always leave pointers back to why we made decisions. We would always leave pointers back to the documents we’d read when we had our meetings. So that somebody coming in would be able to understand. Somebody who’s going to reverse a design decision we’d made can find out why it was made; find out what they’re going to damage. And also, when they leave, they don’t have to do the big debrief and explain to everyone what they’ve done, because it’s there. They’ve woven it into the group…. So the first Web browser was an editor. It was designed really to be a collaborative thing.

On Gopher:

It was way more popular than the Web. Taking off exponentially, with I think maybe a sharper time constant. The University of Minnesota then announced that, by the way, they might be licensing the material. You might have to pay royalties. They were toast. Overnight. And people were putting a huge amount of pressure on me to get something from CERN. And CERN, to their huge credit, did produce, 18 months later… a document that declared that CERN would not be charging royalties on the World Wide Web. And that’s why it happened. That’s why it took off.

On bobsleds:

There’s a phase at the beginning of a bobsled run when you’re pushing. The whole team is pushing. And it’s really hard because the bobsled has in fact got some inertia. And then it picks up speed. And then in the later phase, you’re all in the bobsled steering, and things like that. But there’s a very important transition phase when you stop pushing and jump in. And for the Web, that was about 1993. So I was concerned in 1993 and started sort of rushing talking to people about what sort of consortium we would do. And eventually the result was the World Wide Web Consortium.

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