Clay Shirky teaches about the social and economic effects of Internet technologies at NYU. In a post today, he explains why newspapers cannot survive. Here’s the nut graf:
“Newspaper people often note that newspapers benefit society as a whole. This is true, but irrelevant to the problem at hand; “You’re gonna miss us when we’re gone!” has never been much of a business model. So who covers all that news if some significant fraction of the currently employed newspaper people lose their jobs? I don’t know. Nobody knows. We’re collectively living through 1500 (when the invention of the printing press created a revolution and changed the world). During a revolution, it’s easier to see what’s broken than what will replace it.”
Now follow this logic:
1. Journalism is essential to democracy.
2. Journalism costs money.
3. The old ways to fund journalism are no longer viable, so we need new ways to fund journalism.
4. Subscriptions, micropayments and philanthropy have never generated enough money to pay for journalism.
5. With or without newspapers, advertisers still need to reach audiences, and they’re willing to pay billions to do it, so advertising remains the most viable way to pay for journalism in the future.
6. To help advertising pay for journalism, we need to create forms that are more efficient and effective for advertisers without intruding upon the end-user. (See Matt Mansfield’s post on that here.)
7. However, we must also remain open to the possibility of funding journalism with means other than subscriptions, micropayments, philanthropy or advertising.
Read Shirky’s complete post here. It’s long, but it’s essential to your understanding that newspapers are doomed.
Here’s a page from USAToday’s mobile-optimzed site, which isn’t as customized as its iPhone app, but does provide a better experience than most newspapers on mobile devices. It uses an innovative tap-to-expand feature to show mobile-optimized video commercials which I haven’t seen elsewhere.
I agree that this is a great way to use technology to monetize online. Good for you, USAToday.com.
Still, there are a half-dozen things interfering with the cool online technology, in my opinion. All of them are easy to improve:
1. I count the phrase “usatoday” three times on this tiny screen. Every pixel on this tiny screen is too precious to waste. We probably can’t change Apple’s UI, but we don’t need that big, thick, blue USAToday bar - I already know what site I’m looking at without being reminded. I’m all for branding — I hear she’s a fine girl —but branding shouldn’t interfere with the end-user experience.
2. I count seven horizontal bands of information, looking like so many spaghetti boxes stacked on top of each other. If we eliminate the USAToday blue bar, that reduces the count by one. If we integrate the posting date with the title in the URL header or put it in the text, that eliminates another.
3. While I love the idea of a mobile-optimized video commercial, I’m not motivated to watch it based on the headline. “The all-new Flex” doesn’t grab me. Why should I care that it’s all new? I’m a Toyota guy, so Ford really needs to sell me. Besides, I learned to drive on my dad’s Ford Country Squire — I called it the White Whale — no wonder I’m a tough sell for Detroit.
4. Why say “Touch to expand” when the word “expand” is probably sufficient? Obviously, the ad won’t expand without some kind of user input. I assume that users of mobile devices are at least that savvy. If we eliminate two words, we have more pixels for a larger image or we can make the remaining words bigger.
5. And speaking of “expand,” this word choice gives me no indication that I can watch a video if I touch the ad. A better word choice might have been “play.”
6. I gotta believe Ford had a sexier image of the Flex than the one in this ad. This ad should have dared me not to touch it, but it doesn’t. Sex sells, but a box on four wheels does nothing for me. I’m not sure whether Ford is trying to reach men or women, but here are options for each, below:
7. And finally, the biggest omission is an editorial one - there is no text visible to identify the news photo, which could have been cropped from the bottom to reveal the headline.
If USAToday redesigns this screen and this ad to make both more effective for advertisers, then it might garner even more online revenue to help fund journalism.
Newspapers are in crisis. The old revenue model is no longer viable. If media companies want to produce journalism, they’ll need to find new ways to fund it — even if those ways are not explicitly tied to editorial content.
On March 21, the undersigned will gather in Washington, DC to start creating the new revenue models everyone agrees are needed, but no one has yet delivered. We call this effort RevenueTwoPointZero.
But unlike recent confabs of executives, editors and academics, we are hands-on professionals charged with delivering media solutions every day. And because we’re hands-on, we know how build to prototypes to demonstrate our ideas to the newspaper industry. We aim to do that by the end of the day on March 21st.
We reject the belief that media companies should pursue models based on pay-for-content plans or philanthropy. The latest report from Pew concurs. Instead, we believe the best hope for media companies to make money is the old-fashioned way — by earning it from advertising.
We will begin with these tasks:
- Build an effective advertising model for news content delivered on smart phones, such as Apple’s iPhone.
- Create a better CraigsList.
- Show newspaper-centric companies how they can better meet the advertising needs of small- and medium-sized businesses.
- Re-imagine the homepage and display advertising.
This ad hoc group has been assembled by Alan Jacobson of Brass Tacks Design and Matt Mansfield of Northwestern University’s Medill School of Journalism. Jacobson has been talking about online revenue for more than a decade. Mansfield is a former deputy managing editor of the San Jose Mercury News and is the current president of the Society for News Design.
The Society and its members have been at the cutting edge of virtually every newspaper innovation in the past 30 years including pagination, color, digital imaging and multimedia. SND has more direct leadership experience with radical change than any other group in the newspaper industry. And everyone in the industry agrees that radical change is needed.
Despite the fact that most of us come from editorial, we pledge to focus 100 percent of our energy on March 21 to developing advertising models. Our commitment is such that we are paying our own way. We are employed at the following places, but we are not representing them in this endeavor.
Vernon Loeb, The Philadelphia Inquirer
Eric Seidman, AARP
Jay Small, Scripps Interactive Newspapers Group and Small Initiatives, Inc.
Mary Specht, Gannett
Yuri Victor, Gannett
Jon Wile, The Washington Post
Chrys Wu, Washington Post Digital
Chris Amico, PBS NewsHour Online
Patrick Cooper, USA Today
Kristen Novak, USAToday.com
William Couch, USAToday.com
Wesley Lindamood, USAToday.com
John Kondis, National Geographic Digital Media
Kris Viesselman, National Geographic
Kaitlin Yarnell, National Geographic
Chris Courtney, Tribune Interactive
Ernie Smith, Express and ShortFormBlog
David Kordalski, Cleveland Plain Dealer
Steve Dorsey, Detroit Free Press and SND Secretary/Treasurer
Matt Mansfield, SND President and Medill
Alan Jacobson, Brass Tacks Design
Next weekend, the Society for News Design will be part of a day-long event in Washington aimed at helping the struggling newspaper industry find revenue solutions in a few key areas. The belief is that design thinking can help frame the issue because those of us used to conceptualizing can make a fast round of prototypes that will help spur further discussion and point to better practices. Along with Steve Dorsey, the Society’s secretary/treasurer, I’ll be part of the team that’s aiming for answers. We’re not foolish enough to believe we can fix things in one day, but we know the path to progress starts with a first step. See complete story.
There’s an idea going around right now that contends micro-payments for news online would help fund the journalism valued by readers. It’s a quaint thought.
The problem? That idea ignores several generations of how the business of journalism works, not to mention failed experiments in the last decade. We have tread this ground.
Readers never did “pay” for the news, really. I’d bet less than 20 percent of any newspaper’s entire revenue model ever came from subscriptions. Newspapers did make their money by selling advertising. That funded the journalism, as well as the costly means of production and delivery.
Do we really believe this is all that different online? What can go away is the expensive infrastructure required for production, and a distribution system that’s outdated and untimely. Our opportunity now is to fund journalism, not all the associated costs of doing the business of print on paper delivered daily.
The world has opened up. Not embracing that is foolish.
Information online, famously, wants to be free. That’s our collective expectation.
Couple that with an audience that will not pay for news online, like they might a song from iTunes (one of my colleagues likes to say you don’t listen to news over and over again, as you do with music).
Add in a dash of competition for attention in a world overrun with information.
Sprinkle in that free actually is a business model working for many places.
And, well, you get the picture. The marketplace does not support the idea that micro-payments will work. We should not spend time thinking down this path. It’s a dead end.
What should we do instead? Design a free experience that’s able to support itself.
About that advertising problem
We have to make the online advertising experience better.
Wait, let’s make it good. Just better won’t do.
Because many of us believe that the online reading experience depends on advertising to succeed, we need to invent new forms that enhance reading. We need to find forms that will provide advertisers with value while not diminishing the experience that draws people to the content in the first place.
We also must see that many ads are rich with content. They need to exist in an environment that makes sense. The best of the advertising out there begins to understand that role in the experience it has with its audience.
The smartest brands are forging new ground by connecting with customers as never before. The social media landscape has given companies a chance to show empathy, provide useful information, and break down the old walls that existed. It’s a new frontier.
It might well be that we can find ways to support online journalism without the overt advertising subsidy. We have that opportunity if we initiate an increased awareness of those behaviors that make us all willing consumers of information. We must see anew. We have to locate in this process how the journalism, the advertising and the intersection of the two create new meaning.
That kind of thinking may result in a fantastic formula for the function of advertising, pioneering forms for linking users with brands as an essential enhancement for products and services. It’s a concept not lost on the most successful companies. They’re already doing it.
In the meantime, as we learn our way ahead in what will work for journalism, we need less intrusive ads that can enhance the overall relationship we have with valued content. We also need to embrace a mindset that accepts failures on the way to radical change.
Otherwise, we’re just driving readers away, much like newspapers did by littering pages with such density of advertising that, in many instances, the ads were only talking to each other and not to any content or context. The pacing did not make sense. The experience was diminished.
Why replicate the bad inside pages of failing newspapers on the Web? There must be a better way.
There’s a reason we like that New York Times reading experience on the iPhone (free of advertising in all its pristine readability). We are readers first.
We have to see how we can make those kinds of experiences work and fund themselves without consumers paying directly for the content, which won’t work because the expectation of “free” online is so pervasive.
Certain interactions, when conceived correctly and nurtured by community, can be the content. There’s a reason they call it the experience economy.
To that end, we must think deeply about how advertising cannot be the awful turn-off that we all avert our eyes from. How it’s good when done well. Valuable when done exceptionally.
Enhancing these experiences would be a win. For everyone.
Take a look at the traditional newspaper business model from the outside in:
Consumer engagement is a raw material newspapers collect and bundle for resale to their primary paying customers — advertisers — who nowadays fall into two primary camps:
– Big-box chain retailers, who use newspapers to distribute their glossy, free-standing inserts, and
– Small/medium non-chain retailers and service businesses, who face their own huge disruptions from the big boxes but cannot afford rich, diversified marketing programs.
In the glory days, consumers were willing to subsidize a newspaper’s cost to deliver its convenient bundle of news, information and advertising. This allowed newspapers to set a high price for advertising — too high for many SMBs.
But times have changed. Through consolidation in the retail sector, there are fewer big box stores to advertise. Those that remain can communicate directly with consumers via their feature-rich websites, which makes them less dependent upon local newspapers.
This makes it a time of need, and opportunity, for both newspapers and SMBs.
If newspapers want sustainable local revenue models, they should help SMBs make it through big-box disruption, and this current pseudo-depression, as a local business partner with viable marketing solutions. Print can be part. Web can be part. E-mail can be part. So can mobile, SMS, outdoor, broadcast and cable.
CraigsList and Google Adwords do little for brands, or sales/special offers, or new store locations, or loyalty programs. We all can appreciate how hard it is to succeed with a local storefront or service business nowadays. Newspapers could help these SMBs, and themselves, by offering the media solutions SMBs need.
The current crisis in newspaper revenue is result of the loss of the classified franchise to national aggregators and CraigsList.
This seems difficult to believe if you think that classifieds are little more than people selling stuff to each other. But the classified franchise is much more than that. It includes automotive, recruitment and real estate (cars, jobs and homes), as well as the more familiar private-party advertising. All together these categories used to provide 25-50 percent of all newspaper revenue. Now much of that money is gone, and what little is left is going away.
Most newspaper execs believe they can’t compete with CraigsList because it’s free. But CraigsList has an even bigger advantage — it’s easier to use than any newspaper’s classified site — as are most of the national aggregators such as cars.com, autotrader.com, realtor.com, monster.com, et. al.
Ironically, CraigsList isn’t particularly well-designed or easy to use. It’s merely easier than the alternatives that newspapers have offered.
And therein lies the opportunity: if newspapers hosted classifieds sites that were both free and easier to use than CraigsList, they could reclaim the classified franchise. Why do newspaper classified sites look like this, when they could look like this?
Check out the classifieds at KSL.com, which owns the classified franchise in its market because it’s easier to use than either Craigslist or the local newspaper.
So yes, we can build a better CraigsList — and keep it free — but we must also incorporate a sustainable revenue model, like this example from a group of weekly newspapers outside Hartford, Connecticut.
Note how classifieds (on the left) are married up with display ads (on the right). Granted, it would be better to see the display ads, rather than requiring a click to see them, but this basic model could work: free classified ads adjacent to paid display ads, as long as both free and paid ads were in the same category.
And we must include a social networking component — that’s the glue that keeps CraigsList together. Even eBay has a way to rate sellers as a means of protecting buyers. So we need a way to make buyers feel safer.
Here’s how to build a better Craigslist:
1. Make it easier to use
2. Make it free for the general public
3. Serve up context-sensitive, paid ads along with free classified ads
4. Provide a forum for feedback on sellers to keep ‘em honest.
5. Aggregate from CraigsList and other sources of classified ads, to create the biggest and best marketplace.
Mansfield: What’s your current title and role in Bakersfield?
Molen: I’m the vice president of Interactive Media, and oversee our online operations (which include Bakersfield.com and 10 other local websites), our Colorado-based software development team, and our mobile efforts. I don’t directly oversee our online news or advertising staffs, but I do have excellent, dotted-line relationships with the VPs and top managers overseeing those divisions.
Editors note: The Bakersfield Californian hired Alan Jacobson and Brass Tacks Design to redesign its print product in 2004. They recently rehired him to redesign the Californian and baskersfield.com. Jacobson is one of the leaders of revenuetwopointzero.com. Molen’s request to participate in revenuetwopointzero.com is unrelated to the upcoming redesigns.
Mansfield: What do you believe the biggest problem in funding online journalism is right now?
There’s a terrible sense of panic in the news industry that I think is detrimental and has prompted rash decisions that are unhealthy. I think there are huge challenges for newspapers, but I think the debt-driven problems with the major chains have created a doom-and-gloom scenario that ALL newspapers are near death. They’re not. We need to take a deep breath, look hard at the value we can bring to our advertisers and audience, and work quickly to transform ourselves. But we do ourselves a disfavor by spending so much time bemoaning the industry’s woes, what could have been, the glory days, etc. There are huge challenges that demand immediate resolution but we’ve got to think quickly but thoughtfully, not in a panic.
OK, vent over. Specifically to your question, there are a few problems:
1) We need to focus our online-revenue goals so EVERYONE in a media company can rally around them. I like that Scripps Interactive has launched a corporatewide program called “56.2012″ that aims to fund its current level of newsroom budget with NEW, online-only revenue by 2012. That’s a big-ass goal, requiring huge year-over-year revenue gains. But through some very impressive sales of Yahoo behavioral targeting nationwide, they’re way ahead of that goal. They’re making huge sales in markets bit and small and to businesses big and small, with four-fifths of those sales to NEW advertisers and with very high renewal rates. It’s early, but those are impressive numbers for online news companies.
The key is everyone at each paper (whether it’s Knoxville, Naples, Ventura or Redding or Memphis) knows what the challenge is, what the goal is and what the reward is. So you have news editors and reporters paying attention to online-sales opportunities for the first item because they can understand what is a simple concept (if we sell this, we can keep that). We need that kind of synergy at all of our newspapers.
2) As much good online journalism as there is, we’re still very print focused in our thinking and workflow, delivering the same news in the same way even though our audience has shifted dramatically. We’ve got to flatten newsroom workflows, determine what makes sense online (most of what’s in print doesn’t translate online yet, we continue to shovel it up there) and focus what resources we can online to creating/collecting/massaging the type of content that has true local impact that triggers an important emotional reaction every single page. And that’s key: Every page view has to trigger an emotional reaction – positive or negative – with a reader or we’re toast. If we can trigger feelings, preferably warm-to-hot ones (think Facebook, Twitter, your favorite sites/blogs), we can earn the trust and loyalty of our advertisers and audience.
3) Classified upsells are the crack cocaine of online news. That crack pipe is running out of life as it’s currently designed. We’ve got to overhaul our classified strategies to rethink pricing in a world of free so that we can continue to draw revenue and audience share. Craigslist works but it has a huge weakness: There’s a major lack of trust among buyers and sellers. Every negotiation is like a drug deal because you don’t know who on the other end. I think we can exploit that weakness (and in fact, Facebook is taking on that challenge, with its new Marketplace for people with real identities and online personas).
4) I think we as an industry are trying to do everything to pick up nickels and dimes in hopes of helping to feed the till. We need to focus on the important difference makers in terms of advertising and audience and stop doing the rest. One of the reasons we hired Alan to help with some online redesigns is I like his concept of limited but high-impact display advertising. One large ad per page of relevant advertising makes so much sense from a sales and readership perspective. Yet, we tend to pack 3, 5, 7 banners of run-of-site on every page, forcing readers to navigate a meteor storm to get to what they want. We need to approach our solutions from the perspective of an advertiser, and build relevant, trusted content around that. We currently do it the other way around.
Side note: Unfortunately, our initial number-crunching shows that those 3-7 banners will bring in more revenue than a single large display ad, but I think there’s lots of long-term upside there if we execute and completely rethinki our existing revenue expectations).
5) At many newspapers, print sales staffs typically do the bulk of our selling. But they don’t value online advertising like they do print advertising, and often see no problem cutting a deal for $5 CPM on a $20 rate. We’ve got to raise the value of those ads, whether it’s delivering more relevant targeted ads (like using Yahoo’s new ad-serving tools) or rethinking our sales models (pay per click vs. CPMs) or using print as an upsell when selling bundled packages to advertisers.
Mansfield: What will that be in two years?
Molen: We’ll all be much different companies in two years. I think our print products will be smaller or at least published with less frequency. I think we’ll be tackling more niche publications. And I think we’ll be more nimble in meeting audience demands in a rapidly changing marketplace.
But the real opportunities at the local level will involve sales to small businesses. That’s where the huge revenue opportunity is because the large percentage of those businesses aren’t current news company advertisers. The big challenge is the cost of sale is so much higher with small businesses because 1) many don’t yet “get” online so they require more hand-holding, 2) they don’t have much money to spend, and 3) we have horrible self-serve tools. We’ve got to have killer easy-to-use self-serve if we’re to reach those small-businesses and build low-margin but high volume revenue.
Logan Molen, VP/Interactive Media at The Bakersfield Californian, has agreed to liveScribe from Washington, D.C. on March 21 as we begin our work to create new revenue models. On Saturday, you can follow his posts on Twitter @ rev2oh.
Society for News Design President Matt Mansfield conducted an interview with Molen, which began with this question and answer:
Mansfield: What’s your interest in the project?
Molen: Like many in the news industry, finding sustainable revenue streams is top of mind. I have my own ideas that I think have merit, but the best ideas come out of group brainstorming. I like that there’s a sense of a clean slate with this group’s mission and that there’s a tight sense of mission, in that there’s a goal to have results within a day or two.
Click to read the entire interview, which provides an illuminating look at the challenges we face from the perspective of someone responsible for solutions.
- We have the means and the mission to deliver solutions, rather than merely talking about the challenge of preserving journalism.
- We will offer solutions on March 21 based on current technology, so they can be deployed immediately.
- Our solutions will be based on a proven funding strategy — advertising revenue — rather than failed or unproven strategies like micropayments and philanthropy.
- We will, however, be open to new forms that have revenue potential.
This group was assembled by Alan Jacobson of Brass Tacks Design and Matt Mansfield of Northwestern University’s Medill School of Journalism. Jacobson has been talking about online revenue for more than a decade. Mansfield is a former deputy managing editor of the San Jose Mercury News and is the current president of the Society for News Design.