stoweboyd and the /messengers

Chris O'Brien debunks the myth of paid journalism (much like I did in What’s A Fish Without A Bicycle?):

[via Future of Local News About More Than Paid Content]

During an otherwise mundane story about Microsoft's recent decision to offer a free, web-based version of its Office suite of products, I was struck by this sentence in an Associated Press story:

With Office 2010, Microsoft must decide how much software it can give away online without undermining its lucrative desktop software business. If it doesn't make the right calculation, the software maker could find itself in the same position as newspapers that gave online content away and now are struggling to replace print revenue.

That second line is almost a throwaway, written with no attribution. That means that the notion has officially entered into conventional wisdom: Local newspapers screwed up by giving away for free the content everyone used to pay to consume.

Conventional wisdom, yes. And untrue.

Correcting this fundamental error is about more than just debating the past. Because this mistaken assumption is driving the debate about new business models for news.

I want to explain why I think this mistaken assumption is causing people to ask the wrong question about the future of local news. And what I think the right questions are. I want to try to reframe the discussion about business models to focus on where true opportunity and solutions might be found for journalism entrepreneurs to pursue.

First, let me address the first half of the assumption about "newspapers that gave away content." This assumes that people once paid for journalism.

Let's correct that right now: When it comes to local newspapers, people never paid for journalism.

Chris goes on to explain how the vertically integrated newspaper (my term) included puzzles, coupons, food reviews, movie times, and, yes, news. And that it was mostly subsidized by classified ads. And that's all falling apart as the web horizontalizes everything (yes, I said horizontalizes).

But I disagree that the conventional wisdom is now that newspapers screwed up by giving away content free: that's the conventional wisdom in old school journalist circles, and perhaps nowhere else.

I hold -- along with others like Jeff Jarvis and Jay Rosen -- that they are screwing up by not finding new means to compete in a horizontalized media world.

Does every newspaper have to cover national sports? How many reporters need to discover the best piece of pizza in NYC or San Francisco? I don't need news papers to tell me Bruno was a stinker: I heard it on Twitter first.

But they talk about journalism, and public policy, while still publishing fashion pages. Who got married to who is not news, and neither is "Great Homes and Destinations", which the NY Times runs every Sunday. It's something, and people may read it, but telling us "what we can get for $425,000" is not news, it's pablum.

As Steve Buttry wrote recently, newspaper's real sin is forgetting to innovate:

The disastrous error that newspapers made early in our digital lives was treating online advertising as a throw-in or upsell for their print advertisers. Helping businesses connect with customers was always our business. We were facing new technology and new opportunities and we did next to nothing to explore how we might use this new technology to help businesses connect with customers.

We just offered businesses the same old solutions that we offered in print, but pop-up ads and web banners somehow didn’t work as well as display ads. Which was just as well, because we told our business customers the ads weren’t worth much by the way we treated them.

As Borrell Associates pointed out in the Newspaper Next 2.0 report, about 60 percent of online advertising comes from businesses who don’t advertise in print. And newspaper ad staffs barely bothered with potential new advertisers, instead calling on our usual suspects. In addition to conditioning those advertisers to think that online ads were just a throw-in of marginal value, many of them just took their online ads out of their print budget, so we weren’t really getting new revenue, just shifting what they already spent with us. And increasing our dependence on the same businesses, some of whom were also failing to innovate. So we grew increasingly vulnerable to an economic recession. But that was a boom time and our business boomed.

Meanwhile, other businesses such as Amazon, Google, eBay and craigslist were exploring the possibilities we were ignoring. We could have been developing the possibilities of search, direct sales and self-service ads.

Our Original Sin was failing to see beyond our original business model, not failing to force more of it on the new opportunity

[Note: Buttrey details a Twitter exchange with Tim O'Brien of the NYTimes about the vertical nature of newspapers' historic appeal, which O'Brien doesn't accept.]

Buttrey drew my attention to a piece by Michael Hickens, who wrote

The problem with the newspaper industry isn't that free online content has destroyed its business model, but rather that the Internet has exposed and exacerbated its inherent weaknesses.

Newspapers are still run like 19th century businesses (never mind the 20th century), particularly on the newsroom side of the operations, making little or no use of technology to improve efficiencies.

Meanwhile, claiming that readers of hard copies pay for content is disingenuous. What readers pay for is the convenience of delivery (either to their homes or to the newsstand) and the cost of paper and ink for each individual paper. Advertisers pay for the content – and always have. Readers shouldn't have to pay for online content because there's no incremental additional cost associated with their usage of that content -- the "copy" they read online doesn't cost the publisher an extra cent to produce.

The problem isn't free content -- although one problem is certainly poor strategy on the ad sales side, which has accustomed advertisers to getting online ad placements as giveaways in exchange for placements in the print periodicals. Little wonder that advertisers don't value online placements when the people selling it don't value it either.

Again, these are the arguments based on abundance, and those arguing for a return to (artificial?) scarcity, like Tim O'Brien and Newsosaur Alan Mutter, who called free online content the 'Original Sin' of today's media.

We'll have to see what happens when these paywall experiments appear. As I said before, I believe it will hasten the decline of old school news media, and increase the likelihood of new models emerging that actually meet people's needs.

And of course, I think the richest fields to plow here are exactly the sort of thing that the web enables that was impossible with newsprint: the social dimension. No newspaper yet has truly explored the benefits of online social connection, integrated deeply into the fabric of online news and commentary. None. Yet that is the largest growth area online in recent, and the area where media companies could really differentiate themselves from each other.

And I don't mean a superficial Facebook app, or an iPhone news reader. I am talking about real support of online communities of people who are deeply interested in the topics that the papers are opining about, and who want to participate in open social discourse on these issues. That is not happening on these sites, much, simply because they have not implemented the social aspects of the sites, to any great extent.

Social news is the next frontier for online journalism. Just take a look at the emergence of social TV, where everyone is jumping on Twitter. And I don't mean hyperlocal news, or bottom up news, or user generated content, per se, but systems that allow us to to share and comment and annotate and mashup the news stream, from whatever sources. And to do so within the systems provided by the publishers, not externally, in Twitter, blogs, and Facebook, as we generally do now.

Why don't the publishers integrate that social experience? Because it is software, not journalism, and they aren't prepared to accept that shift.

I don't expect that the current management is prepared to consider themselves as having more in common with software development firms than the old industrial era newspaper publishers. But they will have to. At least the ones that survive.