Network television continues to move the bar lower in its desperate efforts to retain viewers. On Sunday night I witnessed a new low in Keith Olbermann’s “Worst Person in the NFL” feature on NBC’s broadcast of the Patriots-Eagles game. This is apparently a regular feature on NBC, which demonstrates how little respect the network has for its audience. When I heard the title of the segment, I assumed it would be about Michael Vick, who is a bad person by most accounts. Instead, the victim was
This was supposed to be funny, I guess, but it came across to me as simply mean-spirited and pathetic. Is NBC so backed into a corner that it has to resort to character assassination to attraction attention to itself? Could Keith Olbermann have embarrassed himself more?
Fortunately, the Patriots won, so I feel better :-).
Labels: idiots, mainstream_media
¶ 8:27 AM 1 Comments Links to this post
I take no pleasure in this turn of events. On the contrary, I love newspapers. But I find this process to be a fascinating convergence of subjects that fascinate me: publishing, technology and transformational change.
If you have any suggestions for topics or news items I should be aware of, please don't hesitate to send them along.
Labels: mainstream_media, newspapers, social_media influence
¶ 10:12 AM 0 Comments Links to this post
David points out that technology companies are becoming more aggressive about launching their own online and even print publications, and that some of the senior editors who have lost their jobs in IT media will move over to work for vendors. We agree that these custom publishing operations are legitimate targets for PR people to place their clients. Now that everyone can publish easily to the Web, the definition of a “media company” is becoming fuzzier.
In Cheers & Jeers, I praise Oovoo, a new videoconferencing service that sent customized video messages to journalists and bloggers as part of its launch campaign. My jeer goes to Dell Computer, which sent a cease-and-desist notice to Consumerist.com, an action that ultimately backfired on Dell. But at least Dell was contrite in blogging about the mistake and even linking to underground photos of unannounced Dell products. My, how times have changed!
Listen to the podcast here (right click to download): 15:05
Labels: blogging, mainstream_media, podcast, PR, Web_2.0
¶ 11:42 AM 0 Comments Links to this post
The news came down today that technology publisher CMP is laying off 20% of its workforce and merging several publications out of existence, including Network Computing and Optimize. I don't suppose this is a surprise, for the print business in the enterprise technology market has been on the decline for a long time, but the scope of the cutbacks and the extent of the changes to CMP's portfolio were breathtaking. Most publishers have been bleeding away properties as print business has turned down. CMP's action was like an execution.
It's hard not to feel like an old codger at times like these, for I remember the days when Computerworld's print business was so healthy that the company had to start ancillary publications just to handle the overflow of ads because the printer couldn't produce issues that were large enough to hold them all. I don't pine for those days, though. There were times when the editorial staff was slapping almost anything it could find onto a page in order to fill space around the ads. No one was well-served by that. What’s different about online publishing is that the space expands and contracts to fill available content. There is much less of a need to provide some content -- any content -- to run around advertising. It's perhaps one of the great under-appreciated benefits of new media.
People sometimes complain that one of the shortcomings of new media is that space is unlimited, meaning that writers can write as much as they want about whatever they want. I suppose that's a problem in some respects, but isn't the ultimate arbiter of value the reader? If writers don’t produce interesting copy, then no one will read them, and it won't matter how many words they write. The Web is liberating in that way. In removing constraints of space and time, it frees the writer to focus on content and the reader to make choices based upon what they want to read rather than what the publisher chooses to give them. I think that, in the long run, we’ll realize that this was a great liberator and a step forward both for the craft of journalism and the service that publications deliver to their readers.
For now, though, I feel badly for the 200 people who lost their jobs today. They were victimized not by any failure on their part, but rather because of a structural shift in the market over which they had no control. I fear that they are simply the first casualties of a much bigger change in consumption habits that will sweep over much of the mainstream media in the coming years. In the end, it will lead to a richer, more vibrant media landscape, but there is bound to be a lot of suffering in the meantime
Labels: journalism, mainstream_media
¶ 8:37 PM 1 Comments Links to this post
Blogger & Podcaster magazine has launched simultaneously in print, online and as a podcast. Give credit for creativity coming up with that three-pronged launch plan. I actually used to work with the editor, Anne Saita, but I don't know anyone else on the masthead.
One thing you can count on in technology is that publishers will quickly jump on a new trend and launch a magazine for it. The big thing this book appears to have going for it is that its audience has a defined set of interests. That’s important, since magazines that are specific to a single technology tend not to last very long. But I wonder about the business model. Not many vendors sell products specifically to bloggers/podcasters and the target readers tend to find tools of the trade for free where they can. They don’t have big budgets. Also, while bloggers/podcasters have a medium in common, they don’t share much else. The similarities between me and the guy who writes Daily Kos are few.
On first look, I can't see much reason why this magazine should last very long, but I give credit to the publisher for giving it a try. You never know when you might hit it big.
Labels: blogging, mainstream_media
¶ 8:10 PM 0 Comments Links to this post
The techniques you use to influence the influencers really haven't changed all that much from the tactics that worked with mainstream media. It's just that the audience has different motivations. Once you understand how to influence these people, you can build a groundswell of favorable opinion that is impossible for the mainstream media to ignore. See examples.
Labels: mainstream_media, social_media, viral_marketing
¶ 9:51 PM 0 Comments Links to this post
"I would never want to be quoted questioning Mr. Zell's wisdom or insight, since he is clearly a very successful investor. I was struck, however, by the fact that neither the Tribune article or the video interview went into any detail on the challenge that digital media presents to newspapers. In fact, I could find the Internet mentioned only once in the Tribune article, in the first paragraph.
"This seems curious to me, since online competition is clearly the biggest challenge facing newspapers these days, particularly in their classified advertising businesses. Longer term, the newspaper’s value proposition as a timely source of information is under siege. This article seems more interested in the Tribune's ESOP plan and ownership stake in the Cubs than in the serious long-term problems facing its industry.
"It’s been my experience that people of Mr. Zell's age are almost incapable of relating to the culture and lifestyles of today's digital youth. This is not their fault, for it’s almost incomprehensible to someone who grew up in the 50s or 60s to relate to the always-connected, always-interacting lifestyle of today's teens. It's hard enough for me, at 49, to understand it. I would think that anyone buying a newspaper today would have to look at what they’re going to do to court this next generation of consumers, who have almost no affinity for newspapers. The fact that this critical issue was not addressed in the Tribune interview or video is a glaring omission, in my view. I can't believe the editors didn't bring it up.
"Apparently a lot of them aren't even paying attention to it. As reported last week by MediaPost, “The first Newsroom Barometer survey--conducted by the World Editors Forum and Reuters--found that a staggering 85% of editors and news executives of 435 polled were optimistic about the fate of their publications.”
"As they say, denial is not just a river in
Labels: journalism, mainstream_media
¶ 8:37 PM 0 Comments Links to this post
Meanwhile, newspaper editors fiddle while Rome burns.
Labels: advertising, mainstream_media
¶ 1:44 PM 0 Comments Links to this post
I didn’t expect much out of Dan Rather’s appearance at South by Southwest and so wasn’t very disappointed that it didn’t deliver. It was a missed opportunity, though. There was the chance to question Rather about all sorts of things that the audience cared about, including the relevance of mainstream media in market with millions of voices, the low public perception of the media in general, the future of citizen journalism and the relationship between social and new media. Instead, the moderator, Jane Hamsher of FireDogLake, opened the one-hour session with a question about Rather’s confrontation with Richard Nixon more than 30 years ago. That was an event that I suspect scarcely 10% of the audience even remembers, much less cares about, and it got the session off to a bad start. The rest of the hour proceeded through a short series of relatively tame questions about the state of journalism, along with rambling answers by the newsman (this may not be the moderator’s fault; sometimes interview subjects put restrictions on topics they’ll address). Rather had some good messages for journalists, but they weren’t his audience. The issues that I believe the audience really cares about weren’t even raised until a brief Q&A.
The highlight was Rather’s pointed criticism of what he called “access journalism,” or a style of reporting that trades off aggressive reporting for access to inside sources. Journalists too often protect their sources in order to become part of the inner circle, he said, and political and business figures willingly exploit this weakness. He blamed this trend, in part, on the decline of media competition as media ownership consolidates and the increasing distance between news operations and their parent companies.
“Very often the source is using the reporter and the reporter is using the source, but when the source begins to believe that the reporter can be part of the team, that’s when things get dangerous,” he said.
Rather said that journalism needs a “spine transplant,” a return to its role as an independent advocacy for truth and disclosure. The role of the journalist is as a watchdog, he said. A watchdog barks when it suspects danger but doesn’t lie down or attack. It’s a warning system that keeps those in power on their toes.
“Do we still believe that the documents of government belong to the people and not the people in power?” he asked. “The president is not a descendant of the Sun God. This person is elected by the people and part of what [journalists are] expected to do is check on them.”
Rather’s message was a welcome call for a return to the values of Edward R. Murrow, whose name he invoked twice. But I think the audience was interested in hearing more about social media. Rather’s own knowledge deficit in that area - he didn’t mention YouTube or podcasts once and appeared awkward using "Google" as a verb - was painfully evident. As someone whose CBS career was arguably brought down by bloggers in the Rathergate incident, you’d think he would have more to say. But the question about Rathergate, like so many others, never came up.
Labels: journalism, mainstream_media, social_media, sxsw
¶ 4:36 PM 0 Comments Links to this post
The innovation I'm waiting for is when a major news site starts inviting readers to actually contribute to the reporting process. That doesn't mean deputizing citizens as adjunct reporters, but could involve them contributing background and first-person sidebars. I still think mainstream media could learn something from Wikipedia.org and its much weaker companion Wikinews.org. Wikinews, in particular, is a fascinating idea, but the site doesn't have enough traffic or contributors to really work. Could a site with USAToday's throw weight make a companion news wiki successful? Somebody's to figure it out one of these days.
Labels: consumer_generated_media, journalism, mainstream_media
¶ 8:45 AM 1 Comments Links to this post
"It's so pluralistic. We all have less power, much less."
"Government now has to be much more open" because of the Web.
On what media should do: "We just have to let this go. We can't reverse it."
He advised media organizations to look at social media as an opportunity, though he wasn't specific about how to do that. I don't think many media organizations will ever see this as an opportunity.
This is an interesting article because of the blunt language it attributes to Murdoch: media power is sliding away and it isn't coming back. Get used to it.
Labels: mainstream_media, social_media influence
¶ 8:13 AM 5 Comments Links to this post
Labels: blogging, journalism, mainstream_media
¶ 9:41 AM 0 Comments Links to this post
"Hi Paul......I'm a Delivery Foreman for the NYTimes, union, of course. I make 90k a year without overtime. My drivers make 60k+ a year. The Times signed a new contract with us (NMDU) this spring that's "guaranteed" through 2016. With diesel fuel approaching 3 bucks a gallon, newsprint costs, warehouse rent, insurance, pension, workers comp costs, etc. etc. etc. how long is this a viable model? Answer....not too effing long, that's for sure. I tell my drivers, "We're like the dinosaurs after the first meteor hit.........we stick our heads up above the weeds, and think, 'hey, it's getting cold out...'.......and they don't want to hear it. I'm really curious about what Sulzberger could have been thinking when he forced us to re-open our contracts and gave us the guarantee. Does he know something that the rest of us don't? Anyway, I retire soon. I'm more than ready for a buyout, but the younger guys ....well, good luck with that 'guarantee'. If one lawyer can write a contract, another one can break it................ "
By the way, you can now download my article, "How the coming newspaper industry collapse will reinvigorate journalism" as a PDF.
Labels: mainstream_media
¶ 3:04 PM 0 Comments Links to this post
I’ve received a handful of e-mails from BtoB readers about the column and not a single one has disagreed with my position. Perhaps my argument isn’t as far-fetched as it sounds. One writer asked whether I thought magazines were going to suffer the same fate as newspapers. My position on that is that magazines are a different issue entirely and it really depends on the type of magazine. High-end, lifestyle mags will be just fine (Cigar Aficionado, Golf, Travel & Leisure). News magazines have been in trouble for a long time and I think their situation will worsen. Trade magazines will be a mixed bag. I expect very few computer magazines to survive, for example, but CFO magazine or vertical journals in non-tech areas may see little change.
The economic model of magazines is very different from that of newspapers. Newspapers have huge fixed costs for production and delivery and that's why they're so vulnerable. Once they cover their fixed costs, the margins are great, but if they ever become unprofitable, the whole model starts to fall apart. They don't scale down very well. That's why I believe the collapse of newspapers will be so rapid. Remember that in many markets, newspapers operate as essentially legal monopolies. If they can’t make money operating from that position of strength, their situation is very dire indeed.
Another writer asked about the prospects for community newspapers. In fact, I believe those publications have a bright future. My expanded essay refers to resurgence in community publishing enabled by cheaper production costs. Small-town and community newspapers are well positioned to take advantage of the trend toward more localized publishing. They are the least likely to be marginalized by online competition.
In short, I think the rapid collapse scenario will be limited to metropolitan dailies. National papers will probably be okay and community papers could actually get stronger. But I’d hate to be the Detroit Free Press right now.
Labels: journalism, mainstream_media
¶ 5:38 PM 5 Comments Links to this post
Is this the beginning of the end of television news? The average age of an evening news viewer is now 60. Late-night has been the one salvation of the broadcast business, but even that may fall by the wayside. News has always been a low-margin business for TV stations. In the future, will they even bother to offer news any more?
Labels: mainstream_media
¶ 10:20 PM 0 Comments Links to this post
Labels: mainstream_media
¶ 10:04 PM 0 Comments Links to this post
What emerges from the rubble of the newspaper industry will be a fresh, vibrant and very different kind of journalism. It will make a lot of traditionalists uncomfortable. It will force us to re-examine our assumptions about everything from readership to libel law. But it will ultimately be an evolution of the profession into something that is richer, more inclusive and much more dynamic than anything we have ever known.
Print newspapers are modeled on assumptions that were defined by physical constraints but which are outmoded and irrelevant online. Basically, information is scarce and publishing is archival. In most metropolitan areas, the newspaper has been the principal or only source of news for many years. This required editors and publishers to take a very serious view of everything they set into type. Layout, headline selection, story lengths, story placement and design were critical considerations in a space-constrained world. The importance of a story was reflected by its location in the paper or on a page, the weight of the headline and the number of column inches dedicated to it.
Once a story was in print, it was permanent. This necessitated an almost obsessive attention to detail and fact-checking. All facts had to be assembled before the story was written. Often, multiple editors were assigned to review and challenge information in the article. If information wasn’t verified, it wasn’t published.
Structure was critical. Because stories were cut from the bottom, newspapers invented the “inverted pyramid” style of writing, in which more important information was placed higher in the story. Good information was omitted because there wasn’t enough space.
Of course, all that is irrelevant online, and the new journalism will be based on an entirely different set of assumptions. Any report may be quickly and easily updated and corrected. Search engine results and referral links are the principal drivers of readership. Layout is almost irrelevant to a web site. Blogs have no hierarchy at all. Stories can be as long for a short as they need to be, or can even be composed of many links to other content. Stories may appear in many places at once and even in many forms, depending on how they are tagged. Readers are able to comment upon and contribute to articles. Graphics, audio and video illustrations are easily linked to text. If something is wrong, you can always go back and correct it.
In short, the online world challenges nearly every assumption of conventional newspapering. It will dictate a very different approach to journalism.
For one thing, the craft of journalism will evolve to include far more aggregation and organization that has in the past. Editors will assemble their reports from a vast library of resources located across the Internet. Some information will come from paid staff writers, others from freelancers and still more from reports and opinions published by independent third parties and even competitors. Editors will still have a critical role, but their value will increasingly be in assembling and organizing information for readers who don’t have the time to sort through the vast Web.
The craft of reporting will become faster and more iterative. Rumor, speculation and incomplete information will be published far more readily, on the assumption that errors can be corrected. Stories will, in essence, be built in real time and in full public view. Reporters will file copy directly to the Web, often without a review by an editor. Readers will be a central part of the process, correcting and comment upon articles as they are taking shape. Reporting will become, in effect, a community process.
This new model will be very disruptive and very controversial. The idea that a news organization would publish information it did not know to be true flies in the face of all of our expectations. The concept of actively involving readers - who have no formal relationship with the news organization - in the reporting process will be too much for some editors to accept. There will be hand-wringing over fears of libel suits and other litigation. It is going to be an unholy brawl.
But this is where journalism will go, and it is happening now, every day, on blogs and community media sites across the world. There authors knowingly publish information that is unverified and unreliable. They do so with the expectation that their readers will set them straight and that the truth will be arrived at through a process of publishing and correction. More than half a million blog posts are logged every day, yere there has not been a single successful libel suit resulting from any of them. Libel law, after all, is based on the expectation of archival permanence. Nothing is permanent Online.
New models are already being tested at community-journalism sites like Backfence, iBrattleboro.com, Northwest Voice and
Journalism will become much more local. As the cost of publishing falls to near zero and citizens become more comfortable with the tools of publishing, thousands of mini “newspapers” will form around different geographies and topics. Aggregation sites will emerge to sift through and organize the reports and conversations going on in these small communities. Many of these sites will involve human editors who understand the needs of their audience and monitor online activity on their behalf.
This will be nothing less than a complete rebirth of journalism around the concept that information is plentiful and cheap. Instead of 1,500 print newspapers, there will be perhaps five to ten national “super-papers” and many thousands of regional and special interest community news sites. The process of getting there will be wrenching and controversial, but the new model will create a more dynamic and diverse information landscape than we have ever known. It will be incredibly exciting. I hope to be around for the ride.
Labels: journalism, mainstream_media, social_media
¶ 8:19 AM 2 Comments Links to this post
New competition from Web 2.0 companies along with continuing demographic shifts are about to send metropolitan daily newspapers into a spiral of decline from which few will emerge intact. Why now? People have been wrongly forecasting the death of newspapers for years. Why is this time different?
The first decade of the consumer Internet was very different from that which we're now entering. Web 1.0 was the display Internet. It was a decade when organizations put their brochures online and users got comfortable with the idea of a global network. Search tools were rudimentary, Web content was difficult to create and interactivity was limited. The brands that dominated the pre-Web days were able to extend their brands online. While a few important new sources of information did emerge, media giants like CNN, The New York Times, The Washington Post and the Associated Press continued to dominate online media. There was little threat to their underlying businesses.
That's all changed. It's now easy for individuals to create Web content. Computing power, storage and bandwidth costs are declining rapidly. The open-source software movement has dropped the price of software to near zero. Search engines have become a more effective marketing channel than e-mail. Google AdSense and affiliate marketing networks can generate income for website operators, even at low traffic levels. Today, a small group of people with a few thousand dollars and a good idea can build a self-sustaining web franchise in a matter of months. You couldn't have done that five years ago.
Layered on top of that is a demographic shift that is about to move a large new group of Web-savvy consumers into the economic mainstream. This new generation simply doesn't have the loyalty to established media that their parents do. And they don't read newspapers at all.
So here's where the spiral begins. Newspapers' profitable classified advertising business will be all but gone in 10 years, a victim of the vastly superior results and economics of search-driven online advertising. Display advertising will be under intense pressure from alternative media, including not just Web sites but an emerging class of small print publications and supermarket advertisers that serve local audiences (print publishing is getting cheaper, too). The department stores and cell phone companies that sustain newspapers' display advertising business will apply intense pressure on papers to bring down their prices.
Newspapers will be forced to lay off staff in order to maintain margins. Cuts in services will lead to cuts in editorial coverage, making papers less relevant to subscribers. As circulation declines, advertising rates will have to come down to remain competitive. This will put more pressure on margins, leading to more layoffs, more cost cuts, more circulation declines and more pressure on margins. Once this spiral begins, it will accelerate with breathtaking speed. And it has already begun.
Experience has shown us again and again that business models based on vertically integrated, proprietary products quickly collapse when confronted with competition that is open, standardized and much less expensive. It's happened in consumer electronics, telecommunications, computers and household appliances and there's no reason it won't happen in media. Advertisers will rebel at having to pay newspapers' high fixed costs when they can get the same audience through other channels at a fraction of the cost.
The sole advantage that newspapers have is their reach in local markets. Small businesses that sell aluminum siding, flowers and cleaning services have have few alternatives to newspapers for their ad dollars. That, too, is changing. The declining cost of electronic composition and offset printing is leading to resurgence of local newspapers and Web 2.0 technology is making it cheap for citizens to launch their own community websites. Search engine makers are figuring out how to provide value in local search. These forces are converging to attack newspapers' last refuge.
In 10 years, there will probably be half as many metropolitan daily print newspapers as there are now. Some will go entirely online, while others will merge with regional competitors. The question I'll focus on next is what will happen to the profession of journalism as a result?
Labels: mainstream_media
¶ 8:29 AM 2 Comments Links to this post
Having talked about the inefficiencies of the existing newspaper model, let’s look at the economics of what’s emerging in the Web 2.0 world.
A recent story in Business 2.0 magazine revealed the income of some popular bloggers. Read this article if you want to understand the emerging economics of blogosphere. They are vastly more efficient than conventional media. Michael Arrington is pulling in $60,000 a month writing TechCrunch. BoingBoing.net is on target to gross more than $1 million. Fark.com founder Drew Curtis says he’s on track to soon log sales of $600,000 to $800,000 per month.
“Blogs today benefit from what might be termed uneconomies of scale,” the Business 2.0 article says. “They are so cheap to create and operate that a lone blogger or a small team can, with the ever-expanding reach of the Internet, amass vast audiences and generate levels of profit on a per-employee basis that traditional media companies can only fantasize about.”
Take the Fark.com example. The site generates 40 million page views a month with a staff of one full-time person and two contractors. Its only real operating costs are bandwidth charges. It produces almost no original content and has no capital costs. Members contribute their own content, so no editors are needed. The site almost runs itself. Yet this could approach $10 million in revenue before long.
Craigslist.org is another example. This is the fifth most popular site on the Internet, with global reach and an estimated four billion page views a month. It is absolutely killing the newspaper classified ad business. I read one estimate that Craigslist had cost 
There are plenty of other examples. BoingBoing.net is maintained by five contributors, all of whom work on it part-time. Google Blogoscoped, which is the best independent source of information about Google, is run by one person in his spare time. It’s averaging four million page views a month. Gizmodo grew to become one of the top five blogs on the Internet with only a single contributor. Digg.com, which is barely two years old, is already among the top 25 sites on the Web. Its traffic outstrips all the largest media sites. It has a staff of 15.
None of these sites is making piles of money yet, but I think that’s only a matter of time. Companies like John Battelle’s Federated Media and Nick Denton’s Gawker Media are figuring out the business side. And it’s not like these blogs have to make a lot of money to keep going. Adrants generates over $100,000 a year in advertising and that’s plenty to keep Steve Hall plugging away at his one-man operation. He’s getting paid to do something he’s passionate about.
How do these sites generate so much traffic at such low cost? They outsource everything.
- Editorial content is outsourced to an army of individual enthusiasts and bloggers who find interesting information on the Web and feed it to the site operators. Editorial expenses, which account for about a third of the operating costs of a daily newspaper, are practically zero.
- Circulation is outsourced to Google and links from other sites. In fact, there really is no concept of circulation in social media because there’s no way to “own” the reader. This is a very different model from conventional publishing, which relies heavily on subscriber lists to validate advertising rates. The Web approach is much less controllable but also much cheaper.
- Production is outsourced to Typepad, Blogger or any number of other hosted services at minimal cost. There’s no need for designers because everything is templated. Some sites practically run themselves. Bandwidth costs can be steep for popular properties, but that’s true for newspaper websites as well.
- Sales is outsourced to Google Adwords, Federated Media or other sales agents. This may change in time, but for now, most Web 2.0 companies can’t be bothered with a captive sales force.
Labels: mainstream_media, social_media
¶ 7:03 PM 0 Comments Links to this post
The conflict is that nearly every one of these analyst firms relies on vendors for their livelihood. Some, like Gartner, actually have a pretty strong user-side revenue source, but the reality is that most of these firms couldn't survive in their current form without vendor dollars. And the big vendors employ almost all of them. You'd be hard-pressed to find any major analyst firm that doesn't do business at least occasionally with IBM, Microsoft, HP, CA and other big vendors.
Reporters and editors know this, but it's an inconvenient truth that has been conveniently ignored for many years. Which is why it was surprising to read this editor's note in the New York Times late last week (registration required) regarding quote attributed to analyst Rob Enderle.
Enderle, who's a veteran analyst and an expert at courting the media, had contributed two positive but rather benign quotes to an earlier Times story on the Microsoft Xbox. Apparently, someone took exception to Enderle being quoted because Microsoft is his client (a fact that is fully disclosed on Enderle's website) . "Had The Times known of Mr. Enderle’s work for Microsoft, it would not have sought out his opinion on the product," the editor's comment said.
Well, had the Times known of every analyst's work for Microsoft, it would never have any analysts to quote. The reality is that it's hard to be in the tech analyst business without crossing Microsoft's path at some point. But the fact that you take money from a company doesn't mean you're beholden to it.
Perhaps the Old Gray Lady is still smarting from the humiliation of the Jayson Blair incident. It certainly went over the line in casting doubts on Enderle's credibility through this belated retraction.
The reality is that tech clients tend to cancel each other out. Analysts who do business with Microsoft are usually also doing business with IBM, Sun, Red Hat or other companies that compete with Microsoft. This competitive tension keeps people honest. It's appropriate for a reporter to ask analysts to disclose their clients, just as The Wall Street Journal now mentions client affiliations when it quotes stock market analysts.
Also, what analyst is his or her right mind would shill for a client? The damage to one's credibility would be devastating. A lot of people in the analyst business are still smarting over the WSJ's 2002 roasting of Aberdeen Group over the firm's now-discarded practice of "pay for praise." Aberdeen's name was mud in tech journalism circles for years following that disclosure.
In singling out one analyst for criticism, the Times went too far. Show me an analyst who doesn't do business with the big vendors and I'll show you an analyst who probably doesn't have much interesting to say.
Labels: mainstream_media
¶ 1:11 PM 3 Comments Links to this post
It would be pointless to continue to post headlines about the looming financial disaster in the newspaper industry, so I’d like to focus instead on what will emerge from the rubble of that industry’s inevitable collapse. Over the next few blog posts, I’d like to sketch out a model of a new kind of journalism that is being formed in Web 2.0. I believe it will come to replace much of journalism as we now know it, and may form the basis for a rebirth of newspapers.
First, some background and assumptions. The business model of metropolitan daily newspapers is badly broken and can’t be fixed. The model was developed over 150 years ago to support a delivery method that is becoming irrelevant. Huge staffs of people were needed to create content, turn it into type, print it on paper and distribute it on a timely basis. It was very expensive, but it was necessary because there was no alternative way to deliver information on a daily basis.
Large editorial staffs were needed to create proprietary content. A few alternative sources of content were available, such as news wires, but there was almost nothing at the local level. In any case, running wire copy didn’t differentiate a newspaper from its competition, so staffs of salaried reporters were needed to turn up original news. At some newspapers, these staffs can run to several hundred people.
Newspapers had to maintain large circulation operations and massive subscriber lists in order to justify their ad rates. Circulation is expensive. While renewal rates for daily papers have always been high, it’s costly to acquire new subscribers through advertising and direct mail. In my experience working for a paid newsweekly, the cost of circulation didn’t come close to matching the small revenue it generated. Circulation revenue at newspapers has also been falling in recent years due to price cuts and competition, further squeezing margins.
Capital costs inherent in buildings, presses, paper, ink and people to run all those machines were astronomical. Labor unions added to those costs. In some cases, the unions have succeeded in preserving jobs that were automated out of existence years ago. People go to work and literally have nothing to do.
Add it all up and a metropolitan daily newspaper must employ several hundred people to produce the product. Newspaper advertising is very expensive because of the large fixed costs. The Chicago Tribune, for example, charges $755 per column inch in the daily paper ($1,135 on Sunday). That business works as long as advertisers are willing to pay for it and for many years they have. That’s because newspapers were one of the most effective means for businesses to reach consumers in certain geographies.
Because newspapers are so capital- and labor-intensive, their revenue-per-employee is relatively low. The New York Times Co., for example, generates about $280,000 per employee. The Journal-Register Co. generates a much more modest $105,000 per employee.
The upside, though, is that newspaper model has traditionally been profitable and predictable. Once a newspaper achieved dominance in its market, it was practically unassailable. As consolidation reduced the total number of daily newspapers (there are about 1,750 in the
That is all about to come to an end. As I’ll argue in future posts, the business model of metropolitan daily newspapers is poised for a collapse that will be stunning in its speed and scope. The cause is Web 2.0. In the next installment, we’ll look at some of the economics of that emerging business.
Labels: mainstream_media, social_media, Web_2.0
¶ 9:09 AM 5 Comments Links to this post
