Newspapers Don’t Understand How Screwed They Really Are

A few years ago I wrote a post on a now defunct blog with the title “Newspapers Don’t Understand How Screwed They Really Are”. Over the last few years (and particularly the last few weeks) I think they might just be starting to get the message. Unfortunately some of the same misconceptions that apply to the print media are the same as in the retail industry. Journalists operate under the delusion that they provide a valuable service that consumers should be willing to pay for. They are wrong.  

The problem, as they see it, is that newspapers in the past made the mistake in giving away content, and now the challenge is to change consumer expectations and habits. I would counter that the only reason that newspapers can still command any sort of audience is due to consumer expectations and habits, and messing with this is not likely to achieve the results they might be expecting.

The media industry has a short memory. The reason why newspapers never charged for online content is that no-one was ever willing to pay for it. The few sites that put up paywalls lost their audiences, and never regained them, even when they backtracked. An audience is a valuable commodity. Getting someone’s attention, time and involvement is a very challenging problem, and audiences think they should be rewarded for their investment, not penalised. To ask an audience to invest more than just time and attention requires an extraordinary level of value in the product you are selling.Value that does not exist in simply digitising a newspaper.

A few commentators in the news media have finally admitted that raw news is a commodity. That only took ten years to sink in. There is no value in a journalist regurgitating something from a wireless service. Not when there are so many other outlets that just post the feeds directly. No, that battle is lost, white flags have gone up, prisoners have been exchanged.

The battleground now appears to be “opinion” and “analysis”. Certainly the News Ltd paywalls are counting on the proposition that people will be willing to pay for opinion. But the trouble is that opinion has even less value than news. Every blogger has an opinion. Every comment on a blog or a forum is an opinion.

What makes the news media believe that the opinions of journalists are worth more than the opinions of anybody else? Particularly when journalists usually have such limited real world skills? Surely the opinion of a professional businessman who blogs is just as valuable as a journalist who regurgitates what professional businessmen blog about? Why not just get rid of the middle man and go straight to the real expert?

This is the heart of the dilemma. A newspaper’s value is not the work of the journalist, the value of a newspaper is as a compilation of information into a consumable format. A newspaper needs to have a strong editorial consistency and a well established target audience. Otherwise you may as well be compiling your own list of interesting news sites with Google Reader.

Imagine if several like-minded professional bloggers consolidated their efforts, would it end up looking like the opinion section of a newspaper? Well imagine no more, just visit Catallaxy or On line Opinion. Not only is the opinion just as valid, in many cases it is the same people providing opinion! It’s just that you get to pay for it on the newspaper site!

The challenge for newspapers is that opinion makers need to be heard. The outlet may be a newspaper or a blog, a seminar, a book, it really does not matter, as long as they can keep the attention of the public. Newspapers need exclusivity in order to pay. Once paywalls go up then people simply find other opinion makers to follow, or follow their opinion makers on free blogs. No-one who commands an audience will allow themself to be limited exclusively to newspapers. And if you can simply go to a blog and read essentially the same article then what is the point of paying?

There may be a more compelling case for charging for analysis. However the potential audience is much more limited to the realms of business or finance. No doubt some business focused publications will continue to thrive for the foreseeable future, but it is unlikely that printed versions will continue.

The Kohler example is an interesting case study. Here we have a group of experts who have built their reputations with traditional media and then go out into a new media venture to attack the old media, winning significant market share in the process. Without the same overhead as their old media rivals they are able to undercut and decimate the old media readership, based on the reputations they built when they were part of the system! And in the ultimate ironic twist they are then bought out by their old media rivals, so nothing has really changed in the long run!  Except that many former loyal old media customers are now new media customers and will simply move on to the next new media provider who offers better value.

This scenario is an anachronism, a moment in time that creates a few transitional opportunities for the few that are lucky or smart enough to straddle the divide. It is like the music industry which is still dominated by a few aging artists who rose to prominence during the dying days of the old music industry marketing machines. But the global music machine is no more, new artists now have to contend with having smaller fan bases, excelling in self-promotion and developing other income streams such as playing live in order to survive. Hmmm… that seems a familiar path.   

The best advice I could give to the media industry is to get rid of all journalists. They add very little value. There is always someone willing to write for a ready-made audience for free, you should never have to pay much for opinion. Do it while you still have an audience to leverage. The worst possible thing that any media organisation could do is to sacrifice their audiences and balance sheets by pointlessly continuing to pay excessive premiums for basic journalism. Whoops, Fairfax, too late!