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FTC workshop: Old hands: Ken Doctor and Leonard Downie

This is page for rough, contemporaneous notes of today's U.S. Federal Trade Commission workshop: "From Town Crier to Blogggers: How Will journalism Survive the Internet Age," held Dec. 1-2, 2009, in Washington, D.C., at the FTC's 601 New Jersey Avenue offices. Your scribe is Bill Densmore, a fellow at the Donald W. Reynolds Journalism Institute at the Missouri School of Journalism. Of course we've tried to provide accurate quotes and summaries. But the FTC has stenographers recording all of the testimony and that should be your definitive source. The home page for this coverage is http://www.newshare.com/wiki/index.php/ftc

thesis papers

Two old-hands of the newspaper industry -- former Knight-Ridder executive Ken Doctor, now an industry consultant; and Leonard Downie, former executive editor of The Washington Post and now a professor at Arizona State University -- helped set the scene on Tuesday morning, each with 15-minute presentations. Doctor provides the situation analysis in numbers; Downie adds more details and suggests solutions.

Ken Doctor: The new local and the big gaps

He takes a look at the "big bang of media change." He says there have been a lot of developments in local. "We've never seen change like this and I think all of you know it."

The advertising revolution, not the reading revolution, has taken the breath out of the news industry. He goes through some numbers that he thinks really matter.

"Can you imagine a city without a daily newspaper?" he asks. There are now 90 formerly dailies in the United States that are not daily -- having dropped one or two or even three days a week. They are publishing less news. "So in some sense this idea of life without a daily newspaper is already here." Youth get news without a daily newspaper.

"If you ask people involved in communities, they'll tell you that they don't see reporters at community meetings, at groups, at government meetings of all kinds -- and this is an evolving problem."

There have been 10,000 jobs list in newsrooms, more than 25% drop, in the last two years. There are 20 million fewer daily newspaper copies printed on a daily basis than 25 years ago. Still about 85% of newspaper industry revenues still come from the print side, not the Internet/digital side. This year it will go to 15% for sure -- not because digital is going up, but because print is in decline.

In the pre-digital world, newspapers got dependably about 20% of the ad pie. In the digital advertising world they get 10%. So where they got 20 cents on the dollar in the old world, they're getting a dime now.

In terms of clout and profitability: In the third quarter, Google's profits were $1.65 billion. Gannett, the second largest news organization in the world and first n the U.S., reported total revenue of $1.3 billion, and profits of only $73 million. "This is a very good proxy for the change in power we are seeing in the world and the receding of the news world."

Outsell asked what customers were spending on their website -- and they tallied it at $66.6 billion. Another $24 billion will be spent this year on online advertising. But a lot of that money is coming out of print and broadcast.

So where are the readers? People are reading the news about an hour a day, same as they were 10 years ago. But more of that is on the Internet and less with print or broadcast. Of the top news sites on the Internet, only the New York Times is a newspaper; the rest are search aggregators. About a third of consumers spend their morning with digital news, rather than a newspaper or broadcast. This was 25% two years ago, now 33 percent.

A majority go online, they tell Outsell, for immediate news. They go to search aggregators, online sites or other locations. one in four say local news is a top priority. The daily newspaper was a bundle. "The Internet blew apart that bundle." About three out of four use the Internet for national and only one out of four say they use it for local.

outsell finding: Only 50% of consumers go from Google headline to story

About 50% say they scan Google-type headlines without going to the underlying website or story. About 10% said they would consider paying for news.

Changes in amount of reporting? About 800,000 stories will not have been written in 2009 that were written in 2006. "what are those stories? We don't know. And that's the whole problem. We don't know what we don't know."

The news industry is using 40% less newsprint, 20% smaller staff, diminished clout. Publishers say next year will be flat to down 5%, which basically means they don't know what to expect.

New local -- no longer a monopoly

Local is not a virtual monopoly any more for the legacy daily. "A lot of people are putting their hands in the new local . . . many competitors of every kind -- national, social, local." He's categorized what's going on into seven categories:

  • Ankle bitters and watchdogs. Companies like MinnPost, Voice of San Diego, Pegasus News.
  • Knee choppers. Politico. Bay Area, Texas. An incredible flowering as the recession ends -- professional-level salaries and partnerships with publihshers.
  • Broadcasters -- In top 50 markets, 14 are now lead in terms of local news by broadcasters.
  • Pro-am aggregators. About.com was the first out there. Now DemandMedia, Examiner.com, Helium. Get a lot of laid off or aspiring writers, find out what advertisers want, mix and match stories to what advertisers want. "Our question is -- is it journalism." He says jouranlism is manufacturing.
  • Public radio stations. In four cities, moving up and becoming major news websites, especially in Boston, Los Angeles, Minneapolis and San Francisco.
  • Search engines. MOving to get local dollars. Estimated market at $15 billion overall. Patch.com -- owned by AOL.
  • National head bangers. Wall Street Journal and NY Times head to head in New York, across the country and now locally.

Dallas Morning News increased circulation fees 40% and is hiring staff.

"I call newspapers now a Starbucks buy -- it's a convenience buy, it's a habit buy."

The gaps: "The old model of the newspaper is unfortunately I believe unsustainble, and non-competitive and at a disadvantage ... the problem now is that the printing presses, the circulation systems the big buildings are an anchor around the necks around the old newspapers and instead of the battleships which won the old wars, the speedboats are winning.

The gaps:

  • Coverage gap -- 800,000 stories a year not being written.
  • News-ad gap -- Not local, government or watchdog
  • Pro-Am pay gap -- $10 a story isn't a living
  • Credibility gap -- People trying to figure out who to trust.

"We know that there is a market for news. People still want to read. But is the market system, the commercial system, up to providing us with the local news we need and if not, who or what is."

"And I think Mr. Downie has some good solutions to this issue."

Leonard Downie

Downie and Michael Schudson, a professor at the Columbia University School of Journalism to develop a research-and-recommendations report on the status and future of journalism. Here's the link to "The REconstruction of American Journalism," their report.

"We concluded that newspapers and television news are not going to vanish in the forseeable future, but they are going to be very, very different than they were in the past." Metro dailies nationwide are struggling but they are being joined by small city, state, local and neighborhood website. Almost every Seattle neighood as a small local website run by a professional journalist. The Seattle Times (the legacy daily) is now working with these small neighborhood sites to share coverage and advertising.

Some of these local online news communities (LONCs) are for profit and some are incorporated as not for profit. Public radio stations around the country are starting to fill in the gaps with some support from the Corporation for PUblic Broadcasting. Public TV stations aren't generally doing news coverage and Downie thinks this needs to change.

A lot of laid off reporters are now working in university settings, helping students learn how to do journalism. There are non-profit investigative reporting groups launching. "Many bloggers are becomming reliable sources of news reporting in their areas of expertise, something that I certainly did not pay enough attention to in my newspaper career." He says subjects covered include politics, government, business-economics, legal, health-care policy, local crime and housing, sports, housing, "almost anything you can think of."

And there are aggregators of content from other sources. "Whose role is still not clear to me in terms of original reporting." He says Huffington Post and others aren't yet contributing that much in terms of new reporting.

Downie: Rediscovering the value of competition

"Obviously this creates new competition which is a good thing," says Downie. "I was telling Ken (Doctor) before we came in here that when I was running a newspaper I liked not having much competition because I thought, 'We knew how to do this, why have everybody bother us.' But I have come to realize that as it had been before the four or five decades of dominant monopoly newspapers -- competition's good for news. I welcome Jim Brady's new local news reporting project here in Washington. It will do different things. It will keep us up on our toes. We'll both be better as a result of having it here."

He says there is also collaboration, and that's healthy, too. "I never would have dreamed as executive editor of The Post, of taking news from other news from some other organization like ProPublica, the huge investigative reporting startup nonprofit in New York. But now, we need that help, and so we have joined with ProPublica on a number of investigative reporting projects as has the New York Times, for example, which would again never have used material from outside its own staff in the past."

"Then you get to the local newspapers around the country who's staffs are so de-nuded, they are desparate for this kind of help from non-profits and other news sources. And then newspapers themselves are also collaborating. The eight largest newspapers in Ohio share every single bit of their news reporting on a unified website and then put what they want on their own websites and in their own newspapers. So as a result even though their staffs have been cut in half or worse in many of these cities, they have more reporting resources available to them by grouping together than they would have had before."


Downie summarizes the written report's recommendations in the non-profit area. He briefly comments on the two issues which might affect for-profit jouranalism -- antitrust and charging.

Not recommending an antitrust exemption

He continues: "We are not recommending an antitrust exemption for newspapers to take collective action to charge for news on the Internet. By enlarge that's unconstitutional; this adminstration's not interested in doing it, and we just think it is a bad idea, plus the nature of the Internet just makes it impossible to enforce it at any rate."

In terms of payment for news on the Internet: "We think there are good experiments going on out there" either through paywalls or individual content or increasing targetted ads. "The marketplace will decide which ones will work."

The six recommendations to support non-profit journalism

  • IRS or Congress should allow any news organization to be converted into a 501(c)3 or a low-profit, limited-liability corporation (L3C). The IRS is silent on whether a metro daily could be tax exempt. He thinks that should be clear.
  • Local philanthropies should put support of news in the same class with other public goods that they support in health, education and welfare.
  • Public radio and TV should be revamped to cover local news. This requires revamping the Public Broadcasting Service, changing leadership of many stations across the country, and congressional action.
  • Universities should make it a part of their educational missions to operate news organizations and be laboratories for digital innovation and the gathering and sharing of information -- ongoing sources of investigative reporting.
  • A national fund for local news should be created for local news from fees imposed by the FCC, administered in open competition by independent local news fund councils. "That's obviously the most controversial recommendation."
  • More done by governments, non-profits and journalisms to increase access to public information. The Obama administration is acting is this area.