Newspapers navigate treacherous road to future of news - East Valley Tribune: Business

Newspapers navigate treacherous road to future of news

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Posted: Sunday, September 19, 2010 11:00 am

Journalism is in a revolution. Ten years from now, maybe sooner, the professional news business as we know it may be replaced by something entirely new and still unknown.

Everything about the news business is changing, from technology and the demographics of the news-consuming public to the traditions of professional news reporting designed to keep tyranny in check.

To date the biggest moneymakers in the online news business -- Google, Yahoo!, MSN, AOL -- mainly sell advertising next to news headlines and stories they don't write, maximizing the linking and aggregation made possible by the Internet.

Computers using search analytics, not editors, are deciding what gets reported, offered and read. Companies like Associated Content and Demand Media pay their stables of freelancers to produce "newsy" feature stories of interest, not to readers, but to advertisers.

Much of what passes as news is commentary about news, created on individual Facebook pages and e-mailed or Tweeted between friends. Much of the news industry is seeking to monetize those relationships, making the gathering of news a lower priority.

The Internet is transforming the news business into something different, but no one knows quite what, and only visionaries and hard-skulled business people grasp what could be. Like every revolution, this one is causing casualties, the guillotinings seen in lost jobs and shrinking newspapers.

The news business is suffering from the absence of a sustainable business model for the creation of original news reporting. Television, cable and radio often favor infotainment, celebrity gossip or shouting commentary over original news reporting. Those that have retained a high standard for journalism, like NPR and PBS, aren't constrained by for-profit pressures.

Newspapers in particular are undergoing fundamental changes as they struggle with falling print circulation, even while they are reaching more people than ever online.

The potential is enormous, but the financial reality is lower advertising revenue and staffing cuts. Until a new model emerges for paying for news online, original news creators support themselves largely with off-line revenue from print and television, while the Internet players who produce little original news are making most of the money online.

There are a few, small emerging companies and non-profits doing traditional watchdog and enterprise reporting online, but their viability remains in question.

What's at stake in the transformation

Vigilance is needed to preserve journalistic standards of accuracy and verification during the transition from ink and paper to Twitter alerts sent out by blogging freelancers, says Tom Rosenstiel, director of the Pew Research Center's Project for Excellence in Journalism.

"The way for those values to survive is for people who work in news to push back against the bias of the technology that weakens those values," Rosenstiel said.

At the same time, the news organizations of the future will be those that "defy any limited description, that encompass all the qualities that the technology allows and that readers want," he said.

The biggest players starting to invest in original content creation

While traditional news companies have continued to lay off staffers, a new trend has emerged. The largest online news players, who had until recently made their news revenue through aggregation, have increased their investments in original content and have hired journalists. Most notably, Yahoo! purchased Associated Content in May for just over $100 million. AOL, which has started the local-news network, has about 500 editorial staffers today, but the number could double in the coming year, the president of AOL's media and studios division, David Eun, told Advertising Age.

The number of newsroom jobs has declined by 25 percent since 2001, with 5,200 jobs lost last year, according to the American Association of News Editors, and leaving 41,500 full-time journalists working in daily newsrooms. Stated simply, that means much of what was once covered by beat reporters now can't be.

How to make enough money to support good journalism is a central issue for the future of news, and smart people are tackling various aspects of the problem. Putting out a digital edition of the same old print newspaper isn't working -- and probably won't -- even if more ad revenue eventually migrates to the Web.

Since 90 percent of most newspaper revenue comes from print advertising and newspaper sales, moving to online-only doesn't currently make economic sense, even with the savings from dropping printing and distribution costs. Advertising revenue for newspapers has declined 45 percent since 2000. Targeting online advertising at consumers' known interests is showing some promise, and has a growing acceptance among younger news consumers.

Making people pay for news they've been used to getting free is also problematic, and only certain kinds of publications -- The Wall Street Journal, for example -- have successfully used pay walls. The metered model used by the Financial Times and envisioned by The New York Times permits some free content but requires a payment after limited use. Its best prospects are with loyal readers, not new ones.

Producing news, maintaining bureaus, sending reporters to far-off places and keeping up with changes in technology is not cheap. At issue is whether the public eventually accepts there is no such thing as free news, at least for long. Pay walls and content protection of some kind are now part of the business models for other media: iTunes and Pandora for music, Hulu for television, and Netflix for movies. Similar pay models are emerging for news, but it's not clear the public will accept them.

However the revolution evolves, the appetite for news is increasing, not declining, and most people still get their hard news from newspapers and television. Newspaper websites consistently report ever-higher levels of users and page views, so whatever's coming, there will be plenty of readers at the barricades.


Applying "apps" to mobile platforms

One trend that's moving fast is the accessibility of news on conveniently sized mobile devices. Gannett's USA Today application is a leader on the new Apple iPad, and most major daily newspapers can now be read on that device or the Amazon Kindle.

Over time, readers have gotten used to reading original content on aggregated sites. But revenue is made by most originating news organizations only if a hypertext headline on Google News, for example, is clicked. As is true of print newspaper readership, many people are satisfied with just a headline or the lead paragraph before going on to the next story. Without clicking back to the original news organization's website, and being counted for its advertisers, only Google benefits.


Tracking Content with "Digital Fingerprints"

One issue affecting revenue is theft of the news, and one solution involves using "digital fingerprints" to find content that slips outside a publisher's control. Bill Densmore at the University of Missouri's Reynolds Journalism Institute promotes what he calls an "information valet" service that could sustain news and information through a shared-user network.

The idea is to create a non-profit entity that would provide payments for the use of news, wherever its users find it, through the use of "digital fingerprints" embedded in each news story, photograph or other content. You'd be billed for your news consumption, and the producers of that news would be compensated on a prorated basis.

"The notion we have in mind requires collaboration so that a consumer can have one account, one I.D. and one password and have access to content at any number of places," Densmore said.

The ASCAP Model

The ability to track where the content was produced has been available for a while - think Google Alerts - but making it pay may take the kind of transformational solution music composers Victor Herbert and John Philip Sousa came up with in the last century to be paid for music played publicly. Their idea is called ASCAP (American Society of Composers, Authors and Publishers), and it monitors and charges for public performances of music.

Martin Langeveld of CircLabs and the Nieman Journalism Lab at Harvard has devised a way to have dynamic pricing for digital content through instant auctions conducted by one or more independent clearinghouses.

The auctions would help because the value of news changes drastically in a short time. Breaking news becomes big quickly, but can turn stale in an hour. Major investigative projects might be priced to cover the reporting costs.


Giving advertisers what they want

Ken Doctor is the author of the book "Newsonomics: Twelve New Trends That Will Shape the News You Get."

Instead of the traditional model of editors and reporters providing news they think is interesting, and having ad salespeople sell the product, Doctor said "content arbitrage" reverses the process.

"We're going to figure out what the advertising market wants and then we're going to decide on what we're going to produce in terms of editorial 'bait,' essentially, based on what we know about what the commercial marketplace wants," Doctor said.

Yahoo! and others are already doing it, he said.

Companies like Demand Media, Associated Content, Yahoo! and Examiner are using what they call an "analytics-driven editorial philosophy," said Doctor. "It's driven by analytics, not driven by journalists," he said.

Demand Media hires freelancers for USA Today's "Travel Tips" section. Associated Content produces 15,000 pieces of "evergreen content" per week, "edited" by just 15 copy editors, Doctor discovered when he interviewed its CEO, Patrick Keane. That's 1,000 stories per editor each week, or 25 stories an hour.

"Let's remember that journalism is essentially a manufacturing process, with as much or as little value added as we want," Doctor wrote in a recent blog post.


Analytics-driven news may not be news

Traditionalists say the lack of respect for the people who produce the news is the worst single element of a trend toward monetizing "content" that, when finally realized, will kill off the news. Some of the best in the business have been laid off or taken buy-outs.

Rosenstiel says the idea of "analytics-driven" coverage may catch what people were interested in yesterday but "you may actually miss the news."

"News is not like making shoes where you can market research whether people like green or blue better -- which sells better. Because news is the unexpected. News is the thing that people aren't talking about today; they're going to want to talk about it tomorrow."

Philanthropic model will not pay

There is some hope for the high-minded in this age of shrinking print newspapers, but it doesn't really pay - it costs. One result of the news revolution is donor-funded organizations like ProPublica, the Center for Public Integrity, and the Center for Investigative Reporting, among others, that are producing hard-hitting, expensive work displayed on websites and run in partnering newspapers. Groups like the Pulitzer Center for Crisis Reporting and the International Center for Journalists are mentoring reporters and underwriting training and coverage in markets where the local paper could never afford it.

The working part time, and not being paid model

Mayhill Fowler wasn't even paid for breaking some of the biggest news stories of the 2008 presidential campaign as a blogger for The Huffington Post, "The Internet Newspaper." She attended an Obama fundraiser in San Francisco -- where access was denied to traditional reporters -- and heard candidate Barack Obama talk about the "bitter" voters of Pennsylvania who cling to "guns or religion or antipathy toward people who are not like them." Her post rocked the campaign.

Purists say she broke the rules because Obama didn't know he was talking to a reporter.

She likens her position to those of 19th century women of means who went out exploring and wrote memoirs of their experiences.

"This is how I fit," she said. "I am a bridge between legacy media and whatever journalism will be in the future."

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