Categories
media economy multimedia

Newspapers, advertising and the Internet: How journalism has always been subsidised

iStock_000000503743Medium

The disruptive power of the Internet changed everything in media. But it did not cause everything.

The decline of newspapers, so long the editorial paymaster for photojournalism, is a trend dating back six decades.

Globally there are mixed signals concerning newspaper circulation, with some reporting growth in Asia offsetting falls in Europe and the US, while other sources reveal “printed newspaper readership is now declining in almost all major economies,” including China and India.

In the US, UK and Canada, the data is clear and dramatic. The Communications Management Inc. study on Sixty Years of Daily Newspaper Circulation Trends shows newspaper circulation has been falling since 1950:

CM2011 newspaper circulation comparison

Because the defining characteristic of the new media economy is “the separation of information from its means of distribution” we cannot conclude that the decline in newspapers means the demise of journalism, visual or otherwise. The reverse is in fact true – journalism has many homes and benefits from the freedom of circulation and distribution that the Internet makes possible – the Pulitzer Prize winning InsideClimate News is a great example.

The problem is that the traditional homes of journalism have seen their already parlous financial health further undercut. However, we have to remember that most media organisations are in business, but not primarily the business of journalism. Legacy organisations (including great ones like The New York Times) spend no more than 20% of their budget on news content (in fact, in the US the industry average is 12.7%). The rest goes on the management and operation of the distribution model.

Media organisations are in the business of advertising, advertising has accounted for 80% of their revenue, and that revenue has subsidised the journalism that provides the content that draws the readers/views in to see the advertisements. Above all else it is the collapse in advertising revenue for print media that has been the single largest cause of journalism’s financial crisis, as this graph from Mark Perry shows dramatically:

Newspaper ad revenue 1950-2012

The disruption of the Internet has put added pressure on print advertising and online advertising has not replaced print losses.

There are some vital lessons flowing from this for the future of visual storytelling. We have to understand that:

  • journalism (reporting, stories, pictorial coverage) has never been a viable, stand-alone product. It has never paid for itself directly and its users have never directly paid for all of it. Journalism has always been subsidised by indirect sources, principally advertising;
  • the culture of “free” is originally a product, not of the Internet, but of the mass media model – it comes from “free to air” radio, “free to view” television (both financed indirectly by advertising) and newspapers with small subscription fees making up no more than one-fifth of their revenue, all of which enabled many generations of users to get their information for no charge at the point of consumption;
  • there will not be a one-size-fits-all, single business model for good journalism in the future, but it will continue to depend on sources of indirect subsidy;
  • successful journalism operations (of which there many good examples) are becoming sustainable not by discovering some untapped, secret pot of gold, but by diversifying income, making new connections between advertising, paying for content, selling data and technology, events, freelancing, consulting etc.;
  • photojournalists and visual storytellers should not pin their hopes on “paywalls” for established news sites as the single best solution, because even if they work on some measures these are not going to bring back a lost golden age of editorial assignments, as user subscriptions can never replace lost advertising revenue for legacy organisations.

This historical perspective challenges some important myths about what happened to media. None of this makes the present struggle for critical visual journalism easy. But it should re-set the terms of the debate about what is happening now, and re-frame some of the strategic options for the future.

This is the fourth in a series of posts highlighting the content of “Visual Storytelling in the Age of Post-Industrial Journalism“, the World Press Photo/Fotografen Federatie study of the global emergence and development of multimedia in visual storytelling, especially photojournalism. The posts are searchable with the ‘Multimedia Research Project’ tag.

Categories
media economy photography

The new media landscape (2): the importance of community

 

The disruptive power of the internet has made ‘community’ an essential concept in the new media landscape. A community is a group of people who share the similar interests, concerns or pursuits. They form around common purposes or practices.

As argued in the first post of this series, the internet ‘disintermediates’ because it collapses the cost of publishing, broadcasting and distributing, removes obstacles to the creation of new social groups, and eliminates barriers to the formation of distributed networks.

These distributed networks and new social groups are the basis of any new community. This post will argue that for creative producers community is a precondition of successfully operating in the new ecology of information.

There is, however, one common assumption about community that need to be dispelled before I consider what is involved in the development of a community that can support an individual’s creative practice.

Does size matter?

The ease with which web content can reach a wide audience can lead us to think that success is defined by mass interest. YouTube videos with millions of views seem to be the benchmark we must aim for. However, some data from new organisations shows how scale is not necessarily synonymous with success.

Newspaper web sites hailing the tens of millions of unique users they attract monthly is a regular feature (see this example). However, Navigating News Online, a recent report from the Pew Research Center’s Project for Excellence in Journalism, although flawed in many ways, offers a different take on these numbers.

NNO identified an important distinction between ‘casual’ and ‘power’ consumers of information. More than three-quarters of the traffic to the top 25 American news sites came from users who visited just once or twice a month. In most cases they will have arrived via a link or search, read once piece, and then moved on.

While there is an obvious social benefit in getting a media organisation’s content to as many as possible, these infrequent flyers will not offer much economic benefit even in terms of an audience for advertisers.

In contrast, the NNO report found that ‘power users’ – people who came to the same news site more than ten times each month, and spent more than hour each month on those visits – comprised on average only 7% of the total web readership.

This trend was known before the NNO report, and applies also to UK examples. Although the numbers are now larger, these 2009 metrics from the Daily Mail show the number of casual versus power consumers:

  • 28.7 million unique users/month globally
  • 8.9 million unique users/month from the UK
  • Of the UK users 611,588 came to the web site every day
  • Half of those UK daily users (c. 300,000) stayed for 20 minutes/month

So while the headline-grabbing tens of millions of unique users suggests a vast audience around the Daily Mail, their loyal British users numbered no more than 300,000 in 2009.

These dynamics are the reason pay walls attract a small number of subscribers in relation to the overall readership of a news site. Subscribers come from power users: pay walls exclude or limit casual users so depend on subscriptions from the most loyal.

Working with fans

The idea that it is the power users, the most loyal consumers, that are the basis of an economic strategy to fund creative content is common to the music industry, where such people are known as fans.

What the internet has done, however, is made to possible to directly access prospective fans and provide them with content. The consequence of that is that artists don’t have to pursue a ‘blockbuster’ strategy to succeed. Instead of waiting for the one thing that might offer stardom with all its rewards, artists can build a community of those who appreciate their work and might be willing to support it.

Kevin Kelly famously outlined this concept with his post on 1000 True Fans. Like so many things influenced by the web, Kelly identified how a power law curve, which is the basis of the long tail phenomenon, suggested new possibilities. While the number of 1000 was indicative only and varied according to the artist’s media, Kelly maintained that if you could move people from an encounter with your work to being ‘lesser fans’ and on to  ‘true fans’ regular support would be forthcoming.

Kelly later conducted interviews with artists to see if his argument played out in practice. The results supported the thrust of his original argument but tempered its enthusiasm. He concluded that:

there are very few artists making their entire living selling directly to True Fans. The few that are, are selling high-priced goods, like paintings, rather than low-priced goods like CDs. But there are many that partially fund their livelihood with direct True Fans. (my emphasis)

Mike Masnick’s review of musicians supports this conclusion, and importantly demonstrates that the logic applies to more than just the famous who already have a fan base.

How does an individual create a community?

So, if you wanted to pursue this strategy what would it involve? The first thing to note is the hard graft. Kevin Kelly’s interviews made clear “it takes a lot of time to find, nurture, manage, and service True Fans yourself. And, many artists don’t have the skills or inclination to do so.”

Assuming you are committed, here are six steps to create a community around your practice:

  1. Get yourself a web platform (site, blog etc) to make some work and your thinking available for viewing and linking, and keep updating this platform;
  2. Think of yourself as a publisher or broadcaster, find your angle or voice, and offer information beyond self-promotion on a regular basis;
  3. Participate in social networks and other on-line forums, offering comments, links, information;
  4. Understand that a community is more than the sum of your social media followers and friends. Social networks are a necessary but insufficient condition of community;
  5. A community’s members have varying degrees of commitment, from observers to occasional supporters to committed fans. Followers and friends are, until they demonstrate otherwise, not ‘true fans’. But they might become committed supporters if they are engaged with your work;
  6. Engagement means offering your community a sense of belonging and commitment to your practice and the thinking that informs it. This comes through conversation and dialogue around ideas and information rather than just appeals or material inducements;

In the debate about crowd funding photojournalism I have emphasized how having a community is a precondition of successful support. Those who have raised funds have either been already well-known (which means they have had a community of support) or they have in effect followed most of the steps above. As Bryan Formals wrote in his good post on crowd funding, “it all starts to tie together: transparency, authenticity, community building, collaboration, funding.”

Point 6 is probably the most difficult and most important in the process. It is the step where supporters feel they participate in the project, something Joerg Colberg identified as important, and which Tomas van Houtryve has put into practice creatively and effectively. But like all engagement, this participation is not a one-way street – as van Houtryve has found, creative practitioners can learn a lot from their supporters and their work can be better as a result. The benefits are not just financial.

Conclusion

As I shall argue in the third post of this series, the idea of community is important for big media players as much as individual artists, and it is behind some of the new economic strategies to support journalism. There are lessons to be learnt from those strategies for individuals too.

The principles that make community possible are the same in both cases even if the scale is different. The internet’s logics of disintermediation, disruption and disaggregation affect everyone. It’s harder for individuals to perform all the necessary tasks that make a successful community, but the rewards are potentially great.

 

Related posts

The new media landscape (1)

The new media landscape (3)

 

Photo credit: victoriapeckham/Flickr, used under a Creative Commons license

Categories
media economy photography

Paying for photojournalism: a review of the New York Times ‘pay wall’

Newspapers in the US and UK continue to struggle with growing debt, declining circulation and falling advertising revenue. In the search for additional sources of revenue, new schemes for paid content are being implemented. (For an excellent overview of the issues, listen to WNYC’s On the Media podcast from January 28). After nearly two years planning, the New York Times launched its “metered” system this week.

This development has been greeted positively in the photographic world, with Aric Mayer, Rob Haggart and Joerg Colberg endorsing the thrust of the scheme. While agreeing that news organisations need to find new ways to fund critical journalism, I don’t share this upbeat assessment of what the New York Times scheme means for photojournalism. Indeed, as I’ve been arguing for the last eighteen months (see here, here and here), I think it’s a mistake for photography to pin its hopes on a revival of the long-lost editorial paymaster.

Here I will review commentary on the NYT scheme and suggest an alternative way to think about revenue that would be more beneficial for photojournalism. This a complex issue that demands some key assumptions are questioned, so this is a very long post. I don’t pretend to have all the answers, but I hope you will take the time to read it in full and engage the debate.

The pay scheme that isn’t a wall

Although much of the discussion has proceeded in these terms, the NYT scheme is not a pay wall. As Steve Yelvington argues,

A paywall…is a dumb, blunt instrument that separates content from the general public, prevents sampling, inhibits linkage and sharing, and usually is the product of an unhealthy arrogance.

That view sumps up the approach of the Times and Sunday Times in London, the experience of which demonstrates the limits of that approach. Although there are now 79,000 digital-only subscribers to the Times pay wall, there has been a massive reduction in the paper’s online readership (90% according to one initial estimate), advertisers have become nervous about the decimation of their online audience, and the journalists are cut off from the wider social media conversation because of the block on search engines and the inability to link freely. The small gains in monthly revenue will not make a significant dent in the tens of millions of pounds the Times loses annually, they may not offset the lost advertising revenue, and they come at the price of cultural presence and global engagement, which in turn most likely reduces advertising revenue that depends on reach.

To try and avert the falls in readership that result from demanding online payment, the NYT scheme permits some open access and encourages continued linking. Everybody can access 20 articles a month, after which you are asked to pay $15-$35 every four weeks depending on the device you want to use. If you are a print subscriber, you get access without additional cost, and if you come to a NYT article via a search engine or distributed link (via Facebook or Twitter), that does not count against the quota of twenty. To get it all up and running, NYT is offering, in an echo of iTunes, four weeks access for 99c.

Reactions and estimates

Reactions to the details of the NYT scheme have been many and varied (see eleven mixed responses garnered by the Nieman Journalism Lab here). Whatever one’s initial take, it is clear that the paper’s aim is to limit the number of readers who will encounter the request for payment. As Steve Buttry observed:

they have structured this to apply to a small segment of their online audience (people who read more than 20 pieces a month who don’t subscribe to the print edition and don’t find them through search or social media).

Buttry feels that the result will be “a trickle of revenue, not worth the time they spent developing the plan.”

Given that the NYT spent $40-50 million on planning and implementing its scheme, it needs to produce a significant amount of money just to cover development costs before there is any hope that new revenue will make its way into content creation – the journalism, and then photojournalism.

There is also the issue of lost opportunity cost. As Koi Vinh – a former NYT designer who was involved in the initial planning — asked what else could the NYT have developed with the enormous effort and resources the scheme consumed in the last two years?

I’m not qualified to judge detail of the economic projections, but it is clear from reading the commentary there is a great deal of uncertainty around the plans. From its global audience of 42 million unique users each month, the NYT is hoping to get 300,000 digital subscribers in the first year. That could mean it takes two years to repay the development costs, or it could mean increase in subscription revenue of 10% or more. However, even the latter, more optimistic calculation offers a boost that is marginal in comparison to advertising revenue. Ken Doctor notes that digital advertising makes up 26% of total advertising revenue for the paper, and that sector is growing:

If the Times could nab another half a percentage point in market share of that still-growing pie, that would amount to $140 million a year, dwarfing new digital circulation money.

Personal expense and premium content

The NYT scheme varies in cost depending on the number of access points, and is being sold somewhat disingenuously as a particular amount “every four weeks” which, although it sounds like a “per month” proposition, actually requires thirteen annual payments. At the top end, it is a very expensive deal when compared to others offering similar services. Michael deGusta has visualized the NYT and its competitors, and he concluded by asking:

Does The Times really think the mass audience is going to decide their $455/year is better spent on The Times rather than getting 20+ free articles/month from The Times plus The Wall Street Journal ($207/year) plus The Economist ($110/year) plus say The Daily ($39/year) for good measure, and still having ~$100 left over each year? (emphasis added)

What the NYT is requiring for its digital-only subscription has lead deGusta and others (such as Frédéric Filloux) to argue that the NYT scheme is a defensive strategy designed to stop existing customers from cancelling their print subscription revenue rather than a creative approach to generating new digital revenue.

Another part of the NYT scheme underscores its defensive nature. At first glance the scheme is a “freemium” approach in which a certain amount of free content is provided in order to build up demand for premium, paid-for access. Yet while the NYT is requiring payment from its most regular readers, it is not offering them anything new in return. The scheme requires payment for content they have accessed for free until now. As Dave Winer remarked, “they’re not offering anything to readers other than the Times’ survival, and they’re not even explicit about that.”

Still free for many

The NYT scheme is also not a pay wall because it is porous and easily avoided.

Part of that is intentional. To ensure it remains in the global social media conversation, the paper allows the front page of its blogs to be freely accessed, and has no limit on the number of articles that can be read by following a link on Facebook, Twitter and some search engines. Indeed, the paper has its own Twitter account @nytimes with more than 3 million followers, all of whom can follow as many links as they like each month. The Lens blog has discussed all this overtly in a special note.

In addition, NYT journalists and columnists with their own followers – such as the Lens blog’s James Estrin – will get more articles, posts and galleries for free. This is all before the computer literate pursue other ways to maintain free access, which involves little more than four lines of code to get around.

Can it emulate other successful pay schemes?

People who want to see good journalism well funded have been hoping that the NYT scheme might replicate the Financial Times success with digital subscriptions (although there is now a debate how successful the FT actually is). Nonetheless, the fortunes of the FT (or the Wall Street Journal) are not replicable for general news and daily journalism. The FT and WSJ provide time-sensitive market information that has direct value to subscribers, many of whom get it as a business benefit rather than through personal expense and are therefore not price sensitive.

Much as we may wish otherwise, even the investigative journalism of the NYT is not a scarce or fixed commodity like an FT market analysis or a music track from iTunes. With other credible news sources (e.g. the BBC, Guardian et al) pledged to remain globally free, and the news stream constantly updating, readers are resistant to paying for online content that has been and will remain freely available.

If that makes you wish for a chance to rewrite history – imagining that ‘if only’ newspapers had ganged together and set up universal walls at the beginning of the Internet age we would now be handing over money without complaint – then pause for a moment and reflect on this. The Internet is an intrinsically open system. If all the legacy media outlets had withdrawn into walled gardens, do you not think that sometime during the last fifteen a bright spark would have set up a free global news site attracting millions and funded via advertising or related sources? Something like, you know, that Harvard graduate and his little project called Facebook…

What is the purpose then?

The NYT scheme is expensive, complex, porous, and easily worked around. Even if it functions as desired it won’t generate anything like the revenue that would flow from the growth in online advertising. It is accompanied by risks, such as alienating the NYT’s most engaged and loyal users and reducing the reach of NYT stories. And it has potentially large lost opportunity costs – an on-going commitment to a print-based strategy that will run its course in the years ahead, and the lack of investment in creative alternatives during that continued decline.

It is possible that all the sceptics are wrong, and we shouldn’t knock the willingness to experiment in these revolutionary times. There is great uncertainty about the details of the economic projections, but even if the scheme succeeds beyond anyone’s wildest dreams it is only going to provide a fraction of the needed revenue to fund critical journalism. Paid content schemes, no matter how flexible and nuanced, are subscription models, and subscriptions have historically only ever provided approximately 20% of a newspaper’s revenues with 80% from advertising (although papers like the WSJ have a 50/50 split). Given the availability and culture of freely available general news, who would bet on digital subscriptions reaching even that historical share?

So why have they done it?

I think the NYT scheme is less a business model and more a moral imperative.

It is based on the claim that people should pay for quality journalism. It is a scheme designed to defend the worth of the paper’s journalism. This has been explicit in a number of arguments in favour of such schemes that talk about a “value proposition.” It appears when an editor says

the act of placing a value on our journalism may be more important than any penny we ever collect

And it is to be found in Aric Mayer’s statement that

it [content creation] is a thing worth paying for, and requiring the audience to pay for it demonstrates its value.

Of course, quality journalism and photography costs, and it should be paid for (though I am not as misty eyed about the USP of the NYT as some). The question is how and by who is content paid for. Taking an historical perspective again, we have to note two important things.

First, news and investigative journalism has never made money by itself in order to pay for itself. We should not, therefore, be judging current plans by the flawed assumption that we are looking for a single business model that will do what has never previously been done.

Second, we as readers have always paid for modes of distribution but never directly for content. Viewing the NYT scheme as a device for readers to value content though direct payment is wishing for a historically unprecedented change of behaviour in the most unlikely of circumstances. As Steve Buttry caustically observed:

My friend and former boss Jim Brady says that you can’t build a business model based on what people should do (and newspaper people believe in their bones that people should pay for their content). You build a business model based on what people will do. This tortured maze of exceptions and trigger points is a laughable effort to collect because people should pay but to find a way not to lose the people who won’t pay.

The NYT scheme also comes up short as a value proposition because of it offers subscribers nothing new, there being no exclusive or premium content to go with the newly demanded payments. And quite how a company rationalises asking patrons at the front door to pay while the very same goods are being handed out the back door free (via its own Twitter feeds) remains a mystery.

But above all else we should recognise that value has different forms and manifestations. It is a mistake to see price or payment as the only index of value. Circulation, distribution, engagement and global presence have considerable value.

Fine, but where does the money come from?

In his welcoming assessment of the NYT scheme, Aric Mayer wrote:

Journalists and Photojournalists should be applauding this move. It signals an effort by the New York Times to uncouple content creation from direct dependence on online advertising. Without online subscription prices or online newsstand sales, there simply is no other way of generating a predictable online revenue stream.

There are, of course, problems with a dependence on advertising, although that has historically been the mainstay of the legacy media many continue to view fondly, and online advertising is growing and will soon overtake print advertising.

Diversifying revenue has to be a good strategy. But is it that case that without online subscription “there simply is no other way of generating a predictable online revenue stream”? I disagree with that claim.

There are many other ways of generating predictable revenue streams, and this is where the news business has to learn from other sectors like the music industry, which encountered digital disruption before journalism. Pursuing these routes could mitigate the risks of the paid content approach.

John Temple, the last editor of the Rocky Mountain News, argued we have to appreciate that news organisations do not make money from news – news is the ‘brand’ for the organisation and the money comes from relationships and services only indirectly related to journalism. Instead of a single business model for journalism emerging, we need to see a series of diverse models producing revenue indirectly.

For music, the idea that content creation (the songs) is what provides significant revenue through fans paying directly is slipping away as album sales fall. For some of the mega acts, only a tiny fraction of their revenue comes from the music they write. The bulk comes from things that revolve around the content – concerts, merchandising, video games, advertising, and sponsorship. And some of these mega acts give their content, the music, away for free in order to enhance their revenue from the related but indirect sources.

This means that instead of just advertising and subscriptions, transactions are a major alternative revenue stream. Indeed, a Fairfax media executive has remarked that transactions rather than advertising or paid content were the best on-line revenue streams. Crucially, transactions require news organisations to build a community around their brand and product, and then take a percentage of the transactions (hotel bookings, financial advice etc.) those community members conduct through the associations, links, and relationships provided. The various ‘reader’s offers’ that papers have long provided are a pre-web version of this.

How might this work for the NYT in relation to photojournalism? Here is a proposal that is much more direct that the newly proposed scheme and the hope that some of its revenue trickles down to content creators. (BTW, has anyone reported a rise in photo fees or a spike in demand for photographers by News Corporation since the Times pay wall went up?). If someone takes up this proposal for a photography site, I might even coming calling for a consultancy fee, but for a limited time only I am offering it for free!

The Lens blog is a high profile site with some 750,000 users visiting each month. Instead of raising money by hoping some of those subscribe on their 21st visit each month, consider the monthly visitors as a community of interest around photojournalism and offer goods and services to that community. There could be Lens-sponsored master classes, special events and workshops for both professionals and the general public; print sales; discounted equipment and photographic services via business affiliates; photo tours and themed travel; equipment, medical and travel insurance for practitioners; logistics and visa services for photographers having to travel at short notice…you name it, anything that interests a broad photographic community, amateur and professional, could be offered by negotiated deals where Lens’s earns a percentage on each transaction.

This strategy would leverage the Lens blog Twitter feeds and referrals providing unlimited free access. It would be based on growing the community that comes to the site, thereby underscoring the value of having quality photojournalism distributed globally and the benefit of having it accessible to as many as possible. It could raise more revenue than subscriptions could achieve, and the revenue could go directly to photojournalism.

Funding critical journalism and photography has always been difficult and will remain difficult. Hoping for a paid content scheme to offer salvation strikes me as being like a cargo cult. Paying for premium content, or content with longevity – like the move to make magazine articles saleable as in-app downloads or Kindle singles – has a future, through the amounts may not be large. But there is little historical or contemporary evidence to suggest people will start paying for daily news in sufficient numbers, and remonstrating with individuals about what they should do is something best pursued by priests rather than corporations.

Equally, scepticism about paid content is not a theological position dependent on the virtues of free. I think an appreciation of how ‘free’ functions on the web is essential but that means seeing how it connects to paid. Like many I happily pay for multiple modes of news distribution. Having stumped up for a seven day print subscription to the Guardian and Observer, a digital replica subscription of the same papers and two versions of the Guardian iPhone app, while eagerly awaiting their iPad app, GMG has many of my hard earned pounds. They would get even more from me if they had a photography blog that offered equipment transactions, because purchasing that new tripod I need or shotgun mic I want could earn them affiliate revenue.

But if the Guardian was to go back on its commitment to free access to quality content through those modes of distribution, I would be heading elsewhere for my general news and comment. That is the nature of media ecology in the twenty first century, and only a realistic assessment of how people function in the world of social media will provide a sound basis for funding new content.

Featured photo: borman818/Flickr, used under a Creative Commons license

 

Categories
media economy

The ongoing revolution in the media economy

The revolutions transforming the media economy continue apace. In the year since I published my five part series on these changes (beginning here and ending here) we have seen more evidence of the overall direction of change. Reviewing my notes from 2010 here are some of the standout developments to date:

1. Things remain grim for traditional newspapers

Global newspaper circulation continued its downward trend, declining by 0.8% in 2009. A survey covering 223 countries by the World Association of Newspapers and Newspaper Publishers showed that newspaper circulation significantly declined in Europe and North America, although it increased marginally in Asia.

2. Advertising revenue continues to plummet

Advertising revenue is the core of the traditional newspapers business model, and it is falling globally too. Ad spend declined in most of the regions – North America (25 per cent), Western Europe (13.7 per cent), Central and East Europe (18.7 per cent), Asia (9.6 per cent) and South America (2.9 per cent), but remained fairly stable in the Middle East and Africa. In the United States, newspaper advertising revenues are likely to dive to a 25-year low of approximately $26.5 billion, or 47% of the record $49.4 billon in sales achieved by the industry as recently as 2005.

Online advertising is becoming much more important, with the web poised to overtake newspapers as the second largest US advertising medium by revenue behind television. While there is some absolute growth – and the Guardian has reportedly seen a 100% annual increase in digital revenue – this change in relative status is also a function of the collapse of print advertising.

3. Paid content strategies show few signs of success

At the beginning of this year a US survey showed that amongst the handful of domestic newspapers that had erected paywalls, only a tiny proportion (2.4%) of print subscribers were willing to hand over money for access. In the UK, the decision of The Times to go behind a paywall has led to the loss of 90% of the site’s users and scared off advertisers – meaning that any additional revenue from the small number who sign up will easily be offset by lost advertising. The experience of the Belfast-based Irish Times, which attracted only 1,215 paid subscriptions from its 45,000 circulation, suggests the limits of paywalls are apparent in a variety of markets.

4. The disruptive power of the Internet continues to grow

The decline of legacy media has been underway for a very long time and predates the Internet and the web. However, the expansion of a technology that collapses the cost of distribution means industries predicated on the control of distribution are losing their base.

In June this year Cisco forecast that global Internet traffic would increase more than fourfold by 2014. This amount is the equivalent of 10 times all the traffic traversing Internet Protocol networks in 2008. Driving the growth is the expansion of online video, which will make up 91 percent of global consumer IP traffic by 2014.

For an example of what this means in practice, consider the recent observations from the online video rental firm Netflix. Founder Reed Hastings revealed the economics of digital distribution: “It costs us about a dollar, round-trip, to send DVDs by mail. It costs us less than a nickel to deliver by streaming.” That means a switch to video streaming – which is coming – would reduce distribution costs by 95%. Given that Netflix spends $600 million a year on the postal service and pays for hourly labor checking DVD quality, that is a considerable saving (except for those working in the postal service or checking the DVDs). This means, as Ken Doctor explained, that “in the new world the costs evaporate — and quality and timeliness improve. For news publishers, the switch to digital media offers huge savings, at least 60% and probably more.”

However, it’s vital to remember that the Internet is not a universal facility. The number of global users has expanded dramatically in the last decade to 2 billion, but global penetration covers only 29% of the world’s population.

5. The end of print is now conceivable

Publishers and editors of major newspapers are now speaking about a time when their publications will no longer be printed. Last month Arthur Sulzberger told a seminar that “we will stop printing the New York Times sometime in the future, date TBD.” Both the Guardian and Times editors think their current printing facilities will be their last, and that the life-span of these is “telescoping quite dramatically,” while the Financial Times is already reducing some print output.

6. There are no game changers leading to a shiny new business model

Many responses to the revolutions in the media economy have been framed by the desire to find the ‘game changer’ that will ‘save journalism,’ with the iPad being the device that in 2010 has most often borne these hopes. As a proud new owner of said device, I can see the appeal of some the better apps. I think it opens up new possibilities for the creative presentation and distribution of information, and I’m looking forward to more and better efforts to produce compelling multimedia for this format. But a number of available studies suggest that even if the revenue from magazine apps on the iPad exceeds a billion dollars, that will not resuscitate an entire industry given that is what Time Inc. (of which Time magazine is just a small part) made in a little over one quarter.

More importantly, though, we have to see devices like the iPad as another mode of distribution among the many channels for information now available. And we need to understand how the ecology of the iPad is one of a closed economy, cut off from the open web where things are easily linked and always searchable. There is little doubt the app economy is significant, and Chris Anderson and Michael Wolff (not to mention Jeff Jarvis) are right to call attention to the way it differs from the browser-accessible web, though it is just a bit early to proclaim the death of the open web.

Those who want to place the future of their entire industry in the iPad’s basket are surely heading for a fall. To get a better return from publisher’s apps, a group of twenty US-based photo agencies recently formed an alliance to press for higher fees based on additional usage. That’s not an unreasonable notion in principle, but the logic behind their position was stunning for its ignorance of the dynamics of the contemporary media economy. One of the agency bosses behind this alliance told Press Gazette:

We all strongly believe that this platform as a walled garden could be the saviour of declining legacy print publications. A lot of the publishers think so too…we see this as a way to work with the publishers to work on a business model that works for both parties.

In a nutshell you have an example of the thinking that has perpetuated a large part of the contemporary crisis – defend declining outlets, have faith in a walled garden that limits accessibility, and think about business models is in terms of a single business model tied to an established mode of distribution. But – the disruptive power of the Internet continues to grow because of the way it has solved the problem of distribution, so no business model predicated on control over a mode of distribution can succeed.

7. The future is bright

Despite the downturn and the persistence of legacy thinking, the future for the production and distribution of compelling stories and important information is bright. The creative possibilities enabled by digital technologies, the open web and the app economy – in association with those legacy publications now looking to a future beyond print – are being continually enlarged. If we pursue multiple modes of distribution and make them serve the modes of information, then, in conjunction with new ways of thinking about business models, we are in for an exciting if bumpy ride.

Featured photo: Bsivad/Flickr, used under a Creative Commons license

Categories
education media economy

How the social media revolution challenges the university

Recent changes in media brought on by developments in the web, its impact on established news outlets, and the rise of social media have dramatically altered the ecology of information. Its time to starting thinking what this means for universities.

Last year I wrote a series of posts on “revolutions in the media economy” (see parts 1, 2, 3, 4 and 5) detailing the changing context for us all, including universities (the focus of part 4). I had begun to think through these issues last summer and my first take on them was aired at a June 2009 workshop on “Affirmative Critique” at Durham University that explored the work of Jane Bennett and William Connolly.

For the university, the new ecology of information means possible changes in the ethos of academic life, including the transformation of both teaching and academic publishing. For example, Jeff Jarvis, whose thinking has influenced mine over the last year, recently told a TED conference in New York that the lecture model is “bullshit.” Moreover, given the prominence now being accorded to “impact” in the future audit of UK academic research, we need to consider how we might rethink the creation and circulation of critical work produced in our universities.

My colleague Stuart Elden, editor of the important geography journal Environment and Planning D: Society and Space, suggested I write a commentary for the journal based on my contribution to the workshop. This has now been published and you can access it here. The publishers have made it open access beyond their normal subscription pay wall (though in the first version of this post that link was not functioning properly).

In the commentary, I ask:

  • What happens to the university when we move from mass production to the link economy?
  • What does it mean to go from broadcasting to engagement?
  • Why does academic publishing subscribe to pay walls?
  • How can we really have an impact?

Embracing the dynamics of the social media revolution in the production and distribution of information generated through our work in universities would be a major political step towards opening up the academy and enhancing its impact. I don’t have the answers, but I hope I have posed some of the questions that will get us to think about this unavoidable challenge.

Categories
media economy multimedia photography

Revolutions in the media economy (5): the pay wall folly for photographers

This has been a momentous year for media. In my previous four posts on the revolutions in the media economy, I have used the present uncertainty to take a fresh look at the past many now view nostalgically. This critical view demonstrated that newspapers have always been commercial enterprises rather than altruistic associations, they were in decline many years before the Internet restructured the conditions of publishing, and that the practice of investigative journalism is something we need to create as much as we need to protect. In this context, photographers who believe that their practice is defined by an editorial paymaster committed to documentary work are going to have a very hard time. During a recent panel discussion in London on “the new ecology of photojournalism,” Ed Kashi remarked that despite all the gloom and doom we should realize that this is now a potential golden age for photojournalism. He didn’t underestimate the problems but he urged people to think about the prospects for new forms of visual journalism across multiple platforms to diverse communities. I think Ed is spot on with his reasoned optimism, but to appreciate where this might lead us, we have to drive a stake through the heart of a prehistoric argument that has dominated the last few weeks of the year.

‘Parasites, thieves, and promiscuous behaviour’

Rupert Murdoch and his trusty lieutenants (Les Hinton of Dow Jones, James Harding of The Times and Robert Thompson of The Wall Street Journal) have launched a vicious rhetorical war against the free circulation of content on the internet, singling out Google and others for making aggregation and distribution possible. This is part of a News Corporation effort to garner allies for their strategy to charge for news content. Plans to put their papers behind pay walls have been much trailed by Murdoch executives. The time it is taking to implement these proposals, combined with their unwillingness to follow through on their threats to block their content from Google’s view, demonstrates the purpose of these manoeuvres is to try and reshape the public debate, get as many other legacy media companies as possible to join them in similar strategies, and wring some business concessions from the successful new media companies in the process. Murdoch’s protestations – which have been effectively countered by Eric Schmidt – have given some comfort to those in the photographic world who hope that the sight of a pay wall going up might mean the return a benevolent editorial paymaster. It’s time to put that dream to bed once and for all and face up to the challenges and potentials of the new era.

The problem with pay walls

What Murdoch and others are missing is the new ecology of the web and how that has changed things for good, in both senses. For those who want critical journalism in all its forms, the debate on pay walls is at best anachronistic and at worst counter-productive. We can see this in three different ways:

(i) Little money:

Building on the points in my first post of this series, we need to appreciate that even the most successful pay wall strategy will never fund investigative journalism. Pay walls are a form of subscription. But subscriptions have only ever generated about 20% of a newspaper company’s revenue. This means the most successful pay wall will never compensate for the collapse in advertising revenue. Nonetheless, the idea that people paying for content is the holy grail of lost revenue is increasingly promoted by media organisations who are now more willing than ever to explore this option. It has become an almost theological commitment that users should pay. But this overlooks one very significant historical point – consumers have not previously paid for content. As Paul Graham argued, we have paid for the mode of distribution rather than the information being distributed:

Almost every form of publishing has been organized as if the medium was what they were selling, and the content was irrelevant. Book publishers, for example, set prices based on the cost of producing and distributing books. They treat the words printed in the book the same way a textile manufacturer treats the patterns printed on its fabrics.

This has been the case with newspapers too. Rupert Murdoch, now demanding customers stump up for his articles, had no qualms about selling at a loss by reducing the price of The Times to 10 pence a copy (or giving it away as a free item in bulks) during the British newspaper price wars of the 1990s. Having never priced his products in terms of the cost of content, now is an odd time for him to start. It is possible that for highly specialized content consumers will be willing to pay something for access (see the conclusion to this debate). While recent surveys offer contradictory data on how much or how often people will pay, even the highest of these numbers offers no hope as a general solution to the economic crisis of distributing journalism (while the lowest condemns it as a flawed strategy). Corporate media debts are too vast to be eased by revenue from premium content, so we should not cling to the false hope that new money will fund the documentary stories that have long been under-resourced.

(ii) Who they block:

The second problem with the supposed pay wall solution emerges when we have a more nuanced understanding of web traffic to news sites. Companies like to make a big deal about the number of “unique users” visiting their URLs, and this summation of global clicks is an important indicator of reach. But most visitors come quickly for something specific and leave equally as quickly. They aren’t reading “the paper” on-line, but searching for a specific piece of information, consuming it, and moving on. Indeed, although some surveys have reported higher numbers, the average time spent on a US news site in November 2009 ranged from just four minutes up to a high of 23 minutes.

If a news organization wants to extract commercial value from its online users, it needs to find a way to first attract large numbers and keep a proportion of these visitors on site for longer so that over time they become loyal. This means the target audience for such an economic strategy is much smaller. To illustrate this, consider the following metrics from the Daily Mail in the UK:

  • 28.7 million unique users/month globally
  • 8.9 million unique users/month from the UK
  • Of the UK users 611,588 came to the web site every day
  • Half of those UK daily users (c. 300,000) stayed for 20 minutes

So while the headline-grabbing number of 28 million unique users suggests a vast community of potential value around the Daily Mail, in fact their loyal on-line users number just 300,000, which is just 7% of their daily print readership.  (The Times editor recently confirmed a similar pattern on his site by contrasting 20 million uniques with the 500,000 who had developed a ‘genuine digital habit’. If one were thinking about a pay wall to control access to content on a paper with these user numbers, where would it be built? Around all content so that each and every visitor had to pay to pass? Around content viewed a certain number of times so the daily visitors were forced to open their wallets? Or directed at those who stayed on site the longest? Two recent posts by Steve Yelvington and Damon Kiesow brilliantly illustrated the counterproductive nature of this dilemma from their experience with local American papers. Kiesow_graph As this graph from Kiesow’s Nahsua Telegraph in New Hampshire makes clear, if your advertising depends on reach, you don’t want to cut off the huge number of uniques on the left, some of whom might be transformed into loyal users if they have open access.  And the number of daily/loyal visitors on the right is too small to build a viable subscription model on. All this shows a general pay wall for news content will slash the number of visitors and fail to generate even modest revenue for investigative journalism. This is not the counter-theological proposition that “all information should be free” (a view Jay Rosen recently found to be often proclaimed but little referenced by those in favour of pay walls). It is recognition of the harsh economic realities of the web’s ecology for news that too many traditional companies are failing to appreciate. Some, though, are realizing that this disparity between the millions of casual users and the thousands of loyal readers points the way to a new strategy. A Fairfax executive in Australia recently remarked that transactions rather than advertising or content were the best on-line revenue streams. Crucially, transactions require news organisations to build a community around their brand and product, and then take a percentage of the transactions (hotel bookings, financial advice etc.) those community members conduct through the associations, links and relationships provided. Building a community based on the smaller, loyal audience is something a Daily Mirror executive outlined, while Slate has been shifting from the pursuit of a mass audience (7 million uniques) to a smaller, more engaged audience (target 500,000) because “one curious reader is worth 50 times the value of the drive-by reader.”

(iii) How they limit public good:

Proponents of pay walls say consumers must contribute to the cost of journalism because it is a public good. We should debate the assumption that journalism per se is automatically a public good given “the media’s” patchy record for accountability in recent times. But even if we rather rashly accept that the majority of the fourth estate is critical of conventional wisdom and questioning of those in power, pay wall advocates have this argument upside down. The public good of journalism in the age of the Internet comes from the vastly expanded possibilities of circulation and distribution. Clay Shirkey has argued this recently (see video here) by calling attention to how a 2002 Boston Globe investigation of child abuse by Catholic priests in the city travelled globally from its Massachusetts origins to the global community of Catholics, mobilising social groups along the way, and ending with the Church having to take action internationally (such as in the recent Irish government report on abuses in the Dublin Archdiocese). Shirkey’s argument is that it was the forwarding of the original article, rather than just its publication, which enabled people to mobilise and force authorities to act. Circulation was what gave the story value as a public good. So while Murdoch and others see public re-use as a crime against civilization, both Shirkey (and Jay Rosen in his interview with Shirkey here, starting at 9:30) demonstrate that in the new ecology of the web this forwarding (or “super-distribution”) of information and its public re-use is the condition of possibility for the very democratic ethos and public virtue media proprietors say they are desperate to defend. If information gets forwarded to journalists to cross-check and challenge their stories it can make them better, and the journalists’ stories get forwarded to people who are the most relevant thereby enabling social action. For Shirkey, this is the public good of publishing on the web. Murdoch might regard it as ‘promiscuous’, but pay walls would prevent the expansive sharing that is at the base of this public good.

Towards the new futures of photojournalism

Here is my point for photographers – forget all the fuss around the Murdoch-inspired debate about paying for content that has dominated the last few weeks of this year. Perhaps News Corporation will make pay walls work for some of its titles, but they won’t be the economic saviour of any media company. Nobody should pin their career hopes on them enabling a rosy future that will replicate a lost and largely mythic past. A new subscription-funded editorial paymaster looking for photographers to assign is not going to emerge, and holding out for media conglomerates to deliver this will only stymie creative development.

However, Murdoch is not really trying to create a new revenue stream (let alone one for documentary work). He is trying to change the terms of the public debate on the web in order to “call time on free distribution.” But that is an even more impossible task, because free distribution is both the intrinsic architecture and great virtue of the web. Tim Berners-Lee, who is credited with inventing the web, was recently asked why he put the web into the public domain as a free facility rather than a private enterprise. “Because otherwise it would not have worked,” he said. (Just watch the first two minutes of this video interview with Berners-Lee to appreciate this core value).

The successful visual journalist in the new media economy is therefore going to be someone who embraces the logic of the web’s ecology, using the ease of publication, distribution and circulation to construct and connect with a community of interest around their projects and their practice. Like the media players beginning to understand that developing and engaging a loyal community is more valuable than chasing a mass audience (while being open so those passers-by can become associates), photographers need to do the same. If people now understand they are publishers as well as producers this puts them in a new and potentially powerful position. It won’t be easy (but when was photojournalism or documentary photography easy?), but the successful visual journalist will be someone who uses social media (in combination with the more traditional tools of books, exhibitions and portfolios) to activate partnerships with other interested parties to fund their stories, host their stories, circulate their stories, and engage with their stories.

The social value of this is obvious, and this social value will be the basis for drawing economic value so the work can continue. A good number of people (like Ed Kashi) are working this way now. Jonathan Worth has been pursuing a fascinating project based on his portraits of Cory Doctorow (read an interview with him here discussing this), and VII is promoting discussions around these themes. In the last couple of weeks we have seen new digital magazine formats unveiled, and if developed these will be exciting platforms for visual work. What all these moves have in common is an embrace of the virtues of digital technology in an open web. Google has been one of the icons of the last decade, and while as a company it is far from perfect, its success marks the path for the future so long as we understand what is novel about the web.

Featured photo credit: Karl Randay/Flickr, used under a Creative Commons license