The recent anxiety about business models for news has got me thinking about some of this blog's old subjects. Let me start with three recent quotes:
The medium does not matter. [...] It doesn't matter if they want to print the Wall Street Journal on salami and people want to eat it. [...] Whatever way people want it is fine: it's the quality and what you're getting that matters
– Kara Swisher
Instead of focusing on the paper part, which may go away, we need to focus on the news part
– Phil Bronstein
I mean, we've always believed in the value of content, and also that for a publisher the most important relationship is with the reader rather than the advertiser. So I think we've always felt it's important to have a direct, paying relationship with our audience
– John Ridding
There are two key assumptions implicit in these views:
- Consumers will pay for what they want, if it is adequately priced, unless they can get it for free
- Consumers want content
The first assumption is the basis of economics – and, you'll be pleased to hear, I won't dispute it. But the second is more problematic.
Consider this quote, from Mark Potts (my emphasis):
But maybe we're all looking at this through the wrong end of the telescope—or rather, the microscope. Maybe there is something in the news business that people might want to pay for. It's just not what some of the pay-proponents think it is. Maybe—maybe—the thing you can charge for is the package the news comes in, not the specific news items themselves. [...]
What people do buy are packages of news, often supported by other, non-news content. Journalists don't always like to think about this, but the reasons for subscribing to a newspaper often are as much about the comics, the crosswords and the ads as they are about the news itself. That's what people plunk down their quarters for: the package, not the story. News collected in a convenient, easy-to-use form that adds value.
This feels right. People will pay for what they want, and they certainly want to read the news. But perhaps the thing that they want – the object of their desire – is not the news content, but something else. I'm not quite sure of what this is, but I have a vague hunch. Bear with me.
The retreat into content
Back some ten years ago, news executives began to see that one day the internet would change their business forever. Clearly, printed news and scheduled TV would eventually be disrupted by the web and on-demand viewing, but nobody could quite tell how the new technologies and consumer habits would shape up.
Their reaction was to embrace multi-platform strategies. "We are not in the newspaper/television/magazine business", they said, "but rather in the news content business." So they invested millions in new technologies, newsrooms and skills that would let them create content to be consumed "whenever and wherever" people wanted.
This thinking was in the spirit of a long and honourable tradition in marketing, one that was famously articulated by Theodore Levitt in his 1960 Harvard Business Review paper "Marketing Myopia". In it he chastised many defunct industries for not having understood what business they were really in and focusing too much on their products instead of the consumer needs these were supposed to address. For example (my emphasis),
The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented.
The news industry failed to follow Levitt's prescription all the way. It did the right thing in seeing beyond the physical products (newspapers) that it was producing. But instead of finding new ways of satisfying the underlying consumer needs, it concentrated on the disembodied news 'content' that would be involved in that satisfaction, whichever form it took. It never stopped being product oriented; it just replaced a physical product (newspapers) by an intangible one (news content).
To use an analogy, imagine that you are in the construction industry and one day you realise that in the near future consumers won't need the kinds of two-floor houses that you've been building for generations. The experts tell you that people will probably live in something like hotels or student-like dorms, or maybe in large communal spaces – they don't know, but they do know that houses are finished. So you say "fine, but however people choose to live they will still need buildings, and buildings will always need bricks. So I'll rebrand myself as a brick-maker".
This has two problems. First, bricks are undifferentiated – they are commodities. And second, they are not chosen by consumers – they are chosen by the people who manage to sell to consumers and build dwellings for them. Your once-powerful consumer brand now has to work in a business-to-business context – where it has no equity – and your old brand equity among consumers is gone. Even worse, the brick-making industry has been there for centuries, and it has some strong specialised players that won't welcome new competition.
At least some of the blame for this state of affairs must go to the armies of consultants and techno-enthusiasts who proclaimed that from now on "the consumer is in control", and there is no longer any point in trying to control how or when content is to be consumed. "Just look at the kids", they would say. "They are using RSS feeds, email, Youtube, Myspace etc in their own terms. They dictate how news is consumed. Stand in the way and your content will be pirated, your brand will be abandoned, or both. Consumers really want their content, they want it now, and they have the means to get it on their terms. Surrender or be killed."
Content companies responded to this by surrendering control over aggregation. They started publishing their content is disaggregated form, allowing anybody – consumers, other media companies or even machines – to re-aggregate it in new ways. Newspaper websites started publishing RSS feeds of all their news, hoping to increase their reach through people who would re-publish these in Facebook, blogs, news aggregators, what have you. TV companies started slicing their news bulletins into individual packages that were uploaded to Youtube, from where people could embed them on their own blogs. "Go where your audience is" was the motto. Eventually most TV programs ended up being published under a common brand – Hulu, where the kids are – thus creating
the uberbrand of media, and the networks [...] simply relegated themselves to being content producers. In essence, the networks have quit. What happened to the value of a network brand?
– Kevin Wasong
The new house builders
The best proof that disaggregated content was not the only option is that we are finally beginning to see new industries that are beginning to address consumers' real needs around news. I am referring, of course, to aggregators—editorially-run sites like the Huffington Post and the Drudge Report, thousands of professional and semi-professional blogs, and automatic aggregators like Google News—whose value proposition is that they send you to wherever you need to go across the web to read the day's key stories, form the horse's mouth.
To translate the brick analogy to the news business, the old houses are the newspapers, the incumbent brick-makers are the newswires (who seem to be doing well), and the new dwellings are the blogs, aggregators and curators where people find links to newspaper articles. The masses who find these links are not newspapers' customers, they are the aggregators' customers; to them, content is a commodity. Another quote:
A consumer is now as likely to discover newspaper content on Google, visit our sites, then flit away before even discovering that it was the Daily Mirror or the Telegraph that created the content in the first place. [...] Or worse, they may visit an aggregator like Google News, browse a digital deli of expensive-to-produce news from around the world, and then click on an ad served up to them by Google. For which we get no return. By the absurd relentless chasing of unique user figures we are flag-waving our way out of business.
– Sly Bailey
What is particularly painful to newspapers about this is that curators and aggregators are taking exactly the same place in consumers' minds that newspapers' brands used to own. This is no coincidence, since curators are addressing the same need that newspapers used to cater for – a good overview of the world in the morning when you wake up – but better. They do a better job at this not least because, increasingly, "an overview of the world" means "an overview of the web". Of course content is still needed – it is the bricks in the house – but it is not among content items that consumers make their choices. They choose curators, and the curators choose the content.
Memo to newspapers: it is not that people want your content for free. Properly speaking, many of your readers don't really want it at all. What they want – what satisfies their news habit – is aggregation. It is for that that they used to pay you, back when the only way of aggregating content was to own it and print it all in a newspaper. Today you are trying to get aggregators to pay you for the right to aggregate your content – like house-builders paying for their bricks. You may or may not succeed in this. But even if you do, your brands will continue to wither, your products will continue to become commoditised, and your margins will remain low, until you provide something that is the object of consumers' choices. Only then will they once again care to remember your name in the morning, when they think of breakfast – and only then will you be able to command a premium.
Doing this means aggregation. And that is a problem. For reasons I've outlined in an earlier post, there are strong economic forces preventing newspapers from entering the aggregation business. If a newspaper's website doesn't aggregate other people's content it just can't compete. But if it doesn't drive reach to its own content its transition to the web must inevitably mean producing less content – and laying off journalists. But this they can't do, because they need that content for their print versions. Catch 22.
Poor newspapers. Yes, they made some mistakes. But maybe they just didn't have an option.
The barbarians have arrived
In his wonderful essay about the internet (which, inexplicably, hasn't been translated into English yet, so this is my translation), Italian novelist Alessandro Baricco sets out to understand the meaning of a world in which people no longer read newspapers from cover to cover, no longer see films from beginning to end, but surf in a sea of links, jumping from one disaggregated snippet to the next. For him this is no less than a
Copernican revolution in knowledge according to which the value of an idea, of a piece of information, of a datum, is related not principally to its intrinsic characteristics but to its history. It is as if brains had started thinking in a different way: for [these readers], an idea is not a circumscribed object, but a trajectory, a sequence of steps, a composition of distinct materials. [...] Today there is a large part of mankind for which, every day, the knowledge that matters is that which can get into a sequence with all other knowledge.
For Baricco, the change is not just about technology and the media. It is also a mutation in society. New individuals are being born – the barbarians, or mutants – for whom the very experience of content is fundamentally different from what we've known until now:
Experience, for the barbarians, is something that looks like towing, like a sequence, like a trajectory: it supposes a movement that links different points in the space of the real: it is the intensity of that spark.
For centuries it wasn't like this. Experience, in its highest and most redeeming sense, was related to an ability to get close to things, one by one, and to develop an intimacy with them that could open the most hidden of chambers. [...]
It seems that for the mutants, by contrast, the spark of experience jumps in the quick movement that it traces between different things. It is as if now nothing can be experienced except through longer sequences, made up of different "somethings". [...]
As a general rule, the barbarians [...] don't move towards a goal, because the goal is the movement. Their trajectories are born from chance and die from tiredness: they don't seek experience, they are experience.
If Baricco is right, newspapers are history. Their problem is not just about business models or distribution technologies. (Packaging a newspaper, self-contained, in a Kindle won't help: what the barbarians want is not self-contained.) The very nature of content is changing beyond recognition, and any business with it as its foundation will be shaken to its core.
Postscript: for more positive thoughts on what can be done, see this