A discussion: How to Make Money in News
ALSO: Nieman Lab link back
(@infovalet: One piece of research needed: What are the community information needs of people in a democracy?)
CircLabs: New way to discover, share, create, discuss, exchange and value the news
These are raw notes by Bill Densmore, of the Reynolds Journalism Institute, from the Oct. 29, 2009 "executive seminar" in Cambridge, Mass., organized by the Joan Shorenstein Center on the Press, Politics and Public Policy at the Harvard Kennedy School. Entitled, "How to Make Money in News: New Business Models for the 21st Century," the event is organized as a roundtable discussion and breakouts. There are some 24 people in the circle, and some 30 or so observers sitting around the outside of a meeting room at the Charles Hotel, next door to the Kennedy School. Here are running notes of the day and discussion -- with no pretense that quotes are precisely correct or exhaustive -- but with every attempt to get sense and context correct.
Alex Jones, who heads the Shorenstein Center, opens:
"We did not want to put a gloss on what we want to do."
"We are trying to find a way that the covering of ... news can be covered financially.... try to find away to solve the riddle of how to keep news alive."
"It is going to take a long time for people who don't have an interest in news, or are certainly unwilling to pay for news ... to realize that the cost of that is too dear."
He took consolation in the latest circulation reports, because the past six months were one of the worst economic times in the American economy since the depression. Craig's List "has definitely disrupted what was a monopoly for us."
In the case of the Boston Globe, 82% decided to keep subscribing at a time of great economic hardship and even though it cost more.
"There is demonstrated out there a core of people who still take news seriously . . . that is the base upon which we need to build."
Bob Giles talks about how the Nieman Journalism Lab got started. They decided to look at best practices in digital development that support journalism.
Now Josh Benton of the Nieman Labs is explaining the mission to share the successes and mistakes in journalism -- that wasn't happening very well before the Nieman Journalism Lab. They are at 150,000 page views a month and 75,000 unique visitors a month . . . and 17,000 followers on Twitter. "That's really been transformative for us ... we now get almost twice as much traffic from Twitter as we do from Google."
A Carnegie grant has allowed them to hire Max Slocum from O'Reilly's book operation.
Bill Mitchell from the Poynter Institute is on a fellowship at Shorenstein this year. He talks about three areas Poynter is working in with the Carnegie grant money, including research and conferences.
David Levy, Reuters Institute
David Levy from the Reuters Institute is also "in the circle." Carnegie is funding them to study what's being done about news in Africa. And they are doing some comparative project on how news organizations are responding to the Internet. "I think comparative research is often quite useful" in dispelling myths.
- Avoid technological determinism. "The Internet isn't killing news, what it is doing is it is increasing the reach of news." It is undermining one business model, but in Brazil, newspapers are growing and in Finland, high news readership is compatible with high Internet penetration.
- Move away from an obsession on the supply side.
- Let's look at the demand side. We need more research on how people value the news. The move from pay to free doesn't have to be a one-way street. The bottled water business is now a $2B a year market. SMS messages are profitable. "People will pay for the oddest things ... if we can provide them in a useful and convenient way."
- If journalism matters to democracy, let's focus on that purpose for journalism rather than jobs for journalists." Focus on networked, public journalism.
- Focus on ubiquity and impact. There will always be news for enthusiasts. "What I care about is public-interest news that is used by large numbers of individuals."
- Public support is rightly viewed by suspicion by many, rightly in some ways, and it may well be impossible in the U.S." Broad support and use can increase the independence of the news organization -- such as the BBC. If you combine that with automatic support mechanisms, that can increase the independence from the funder. In Sweden, a fund makes sure that 15 Swedish cities have competitive newspapers ... there is 75% turnout to elections there. Support for distribution is less contentious than support for content.
"There may well be new business models, but above all let's come up with solutions that are as routed in understanding demand as supply" .... and serve "a mass market, not just a minority interest."
Jeff Cowan, formerly USC
Interested in what the government's role could be. Key findings to date:
Government support of media has always been there. With postal subsidies -- always a core principle. Today the funding level for commercial media is in excess of a $1B a year -- but it is declining. There are three buckets of it:
- Postal subsidies. Taking 1969 as a departure point -- as of 1970, 75% of the cost of postage for publications was being paid for by the federal government. Today that is down to 15%. "That decline ... if you take those numbers would actually take some magazines that are currently losing money profitable." The Reorganization Act of 1970 made most the difference.
- Public notices. At least one full page of the Wall Street Journal every day consists of legal notices. "We think that the federal government is in terms if lines of print, is if not the biggest one or the two or three biggest advertisers in the WSJ, maybe the single largest advertiser -- the federal government .... But it is certain to decline." it is inevitable that this will move online.
- Tax breaks. Ink subsidies and other things.
"It's more than a billion dollars, but it is hard to assemble this."
"We want to think about some criterias about ways in which the government should be involved."
Copyright is designed specifically for people to get paid for what they do. That's important.
"We think that funding for innovation is important."
"If there is going to be direct funding for publications, it should be on a formula basis rather than for specific programs. ... It should never be more than a small percent of a publication's budget, otherwise they become too beholden."
(This proposal submitted Jan. 16 to change.gov) How about a national service corps, similar to the '30s era National Writers Project, which would select the best-and-brightest of America's college graduates for a year of service working for non-profit and for-profit news organizations to report on important civic issues? Their work would be "open source" -- made available publlcly on the web. It could be sponsored and promoted by blogs, local online news organizations and traditional mainstream media outlets. The work could be reviewed prior to publication by a non-partian panel of editors or citzens -- not to edit or censor, but to provide a concurring or dissenting opinion about the reporting against which reading/viewing public could make judgments about its trustworthiness. Look to NewsTrust.NET for an example of how journalism can be vetted and rated by the public. (If you would like to join a discussion about this idea please contact: Bill Densmore, 2008-2009 fellow, Donald W. Reynolds Journalism Institute at the University of Missouri. firstname.lastname@example.org)
David Westphal, USC, Online Journalism Review
He writes about the non-profit media sector. He also wants to mention an emerging non-profit model. "There is striking growth going on here and it is probably going to continue." Support of local sites, topical sites and investigative-reporting sites, as well as funding of sites that reflect the interests of the foundation.
Also just getting going -- journalism by non-news organizations, particularly at universities. The Goldwater Institute in Phoenix has hired an investigative reporter. There are labor unions which have funded two new sites in Orange County, Calif. "So here we are labor unions and the Goldwater Institute, comrades in journalism ... kind of back to the future.... so is this stuff journalism and are these people journalists? ... I suspect these questions are just beginning."
Labor unions, government think tanks, political parties, trade associations and unions will be among funders in the future.
Alex Jones asks Josh Benton of Nieman Lab if any of the things he's looked at appear promising.
Benton: He is encouraged by small local blogs, 1-3 person startups. "They are either profitable or at least paying their bills." He is also encouraged by the response seen from foundations. He is less encouraged about circulation numbers. "I tend to think the comet has just hit and the dinosaurs are not doing too well."
Jones: "These are people we ought to study very carefully because they have made a very counter-intuitive decision." We are trying to persuade people to be interested in the news instead of focusing on growing the base of people interested in the news. He thinks focusing on the demand side is really important.
Alex Jones: What about the situation with the Boston Foundation?
Bob Giles: The management of the Globe hasn't been very forward thinking about changing its content. The Boston Foundation holds money from many people who are particularly interested in journalism. "In this community there could be melding of people and funds in a place like the Boston Foundation, in building some specialty websites online that would take the paper beyond its normal coverage of city hall and public places."
- Hechinger Institute, at Columbia University is starting a website on education coverage.
- Environmental reporting also.
"If you think about the Center for Public Integrity, that's been around since 1990." Chuck Lewis has been able to keep raising the money for it.
Alex Jones: There is also some discouraging news from the foundation world. "Foundation fatigue is something I worry about a lot ... do you see this foundation support for journalism ... that would be more neutral in its journalistic support, do you see that as an enduringly sustainable source of support for journalism?"
Westphal: "Enduring for awhile." He says people are becoming more and more concerned about the news ecology. Most people think the legacy news ecology will continue to erode. He thinks foundation funding will continue to increase in terms of the number of players, but after the first three-year grant it becomes a more difficult proposition. We shouldn't assume that sustained foundation funding is out of the question, however.
Alex Jones: What about the idea of established news organizations becoming non-profit?
Westphal: The idea that there isn't a big IRS problem in front of that is important. There may still need to be changes. "Some of them will set out on this course, probably, or think about ways to split off pieces of their enterprise that could be supported by of foundations."
David Levy: Worries about an answer to a democratic problem.
Geoffrey Cowan: The New York Times audited circulation includes over 100,000 copies that go on college campuses, paid by universities. "That's sort of a hidden example something that's already being done." Says Cowan, himself an attorney: "As we have more and more fragmented and weak news organization, which is what we are talking about here, we lose something else ... we lose the ability to have strong lawyers protecting and fighting for these organizations."
Alex Jones now turns to Rick Edmonds at Poynter and asks about a blog report he wrote about how much news reporting has disappeared from newspapers.
Edmonds says it's gone from a $60B industry to something in the mid $30B this year. He estimated how much of that budget goes into newsgathering. He figured it was about $1.6B annually that has gone by the boards. That is a lot in comparison to the scale of the new ventures. Granted maybe there is some waste, as Bill Densmore's discussion group said, "It is a little disturbing that we don't know what that $1.6B might have turned up. That's cumulative, it keeps on happening."
It's now 10:03 a.m. in Cambridge and Jones opens it up to general questions.
Scott Karp of Publish2 wants to ask questions about the non-profit model. "In the early days of the web, 1994-1995, there was a general view that search was not a business and it had to be subsidized by portals ... it was something you don't make money of off.... and then a little company called Google came along ... would you agree that there has been a little bit of a sense of capitulation about the possibility of a profit model?"
David Levy of Reuters responds: Newspapers are business with high fixed cost and relatively low variable cost. The logical business case is to try to make your content work harder. "I agree with you people are giving up too fast and people are not being very creative about how they might expand their business."
Alex Jones says the strategy at the NYT is increasing the cost of the paper enough to still keep the circulation at a million. The NYT has found that the demand for the print paper is fairly inelastic.
David Levy: The Guardian had no presence in the U.S. a decade ago. Now have of its 20 million page views on the web are from the U.S. "So there are opportunities." Levy says there is a tendency for complacency, to rely on the reader who will pay for the paper no matter the price. (Another commentator observes The Guardian is losing 20 million pounds a year).
Geoffrey Cowan: There may be ways to make the distribution model profitable. "I think there may be all kinds of revenue models and savings that will be created."
Alex Jones: Increasingly newspapers are separating the printing from the news organization. They are going to be contracting it out.
Scott Karp: Basically all advertising models explored so far are pasting onto the web.
Joan Walsh from Salon: Her college-age daughter won't read the paper. "It's sad to me, I don't think we are going to reach them with the news product."
Alex Jones: When people make a geographic living commitment, that's when they get interested in the news. "I have hope for your daughter."
Virginia Postrel, The Atlantic: When I was in college, I not only read the college daily and the times but I paid for them. She moved from Dallas back to LA. Until then she always had three newspapers -- the local daily and the WSJ. She still has the WSJ, after a year, they go they got the LA Times so her husband could read the puzzle. "I'm like everybody, I read it all online ... I get the LA Times headline service and read the headlines that interest me."
Alex Jones: If there were a news organization that needed you to subscribe, would you?
"We can talk about that later . . . That's a charitable decision. That's different from a commercial decision."
Discussion about whether that is commercial or charitable.
At 10:16 a.m., short break before second panel.
Second panel: Disruptive technologies
Lead by Nicco Mele, of the Harvard Business School. Mele says he was one of two people (with Zephyr Teachout, also present today) who ran the Internet outreach operations of the Howard Dean presidential campaign.
He talks about SimCity the computer game, which allows you to build a virtual community in an architectural sense. He thinks journalism could be part of that.
Sherry Turkle on how youth consume media
He starts with Sherry Turkle, from MIT, who has a background studying youth, technology and society.
Sherry Turkle: Has been excited about the talk about studying the user base. That's what she does and brings the data from the field. She studies the 13-25 adolescent years. "The bottom line when I talk to them about the news ... I would pay for my iPod on the New York Times every day, now its free." They are used to paying for music after the first 10 seconds. "They are used to seeing the news for free, for those that read it, they thing it is just as valuable as paying 99 cents for a song." One girl says: "Its not my fault, I'm used to paying for news, I don't understand it."
All of this is paraphrased and with ellipses of Turkle on her discussion/study of youth media/news use:
"I would love to get this and other stories on my I phone, I usually read news and stories on my iPhone. I usually get news on my iPhone and my Blackberry, but receiving news in pod casts is better. They want to be read the news."
Based in a seven-year study, she is going to give five points of how technology disrupts this generation of readers and listeners:
"I believe that disruptive technologies afford us an opportunity to assert human purposes . . . to ask us again what are those purposes ... journalism, narrative journalism, may be among the human purposes that we need."
Five ways digital technology changes, disrupts education etc.
(Densmore note: I've only bulleted three -- will figure out where the other two were later)
- Technology changes how people read. Shirkey: We need to shift from saving newspapers to saving journalism. "But there is a big problem in this formulation. Something is left out." Newspapers create the reading space that journalism exists in. Teen-agers leave with the profound question: Will we be able to read journalism when we don't have newspapers to read it from. There is not one answer to the question. One group of teen-agers is trained to read. They want to read it on their iPod or iPhones. Think of it as readers who are listening to books on tape. They want it on their iPhones, audible or the other way.
But there's another group of teens they interviewed, which grew up with news on the web, and they struggle to read the narrative forms. If you just read on the web, does not favor narrative, wrapped, complex lines of thought. "You cannot focus on saving journalism unless you make an active effort to train readers to read complex narrative." "This is a goal, a human purpose we need to actively encourage."
Educators need to catch up with their students in the ability to multicast. If you let students multitask during their class, they are at their laptops and not looking at you, underneath the table with their iPhone. "I love all this media, but basically we are learning now from very compelling studies you ability in every one of the tests goes down. That is happening to every one of our students ... multitasking degrades performance of everything you do.... those pilots who overshot the airport because they were on their computers."
Stay with narratives.
- Simulation technologies create a crisis of authenticity. A complex dynamic is faced here, as more and more people become bloggers. "They know that they don't know what they are talking about ... this is a piece of the user puzzle that is going to take a little time to unfold."
Her daughter reads the New York Times in Dublin: "I just think that the New York Times and iTunes need to chat."
"Authenticity is to this generation what sex was to the Victorians." But among teens, they are beginning to admit what they don't know. They are looking for expertise. The have an expectation of peer support. They move from "I have a feeling, I want to make a call, to I want to have a feeling to I want to have an idea, I want to make a call." This is one of the things that leads people to continual use and to a rebirth of the interest in experts. There will be a thirst for expertise. Jon Stewart and Stephen Colbert fill that need. Students see that the program takes time to prepare. Somebody who looks to have put time into something -- that's craft.
- Young people have no expectation of privacy. We have become virtuosos of public expression. The challenge to privacy leads to many questions, but the most important. "What is civil society without the ability to know and defend privacy." Her grandmother told her it was a federal offense to open other peoples' mail every morning when they went to the mailbox. "I learned the connection between privacy and democracy in our trips to that mailbox."
In the 1980s where you went in your area was a zone of necessary privacy. "Now you are holding up traffic if you don't have EasyPass for the MassPike. Many people don't think any longer you have an expectation of privacy.
The teen-agers she speaks do don't know how to think about this. Kids are used to think of their mailboxes on the web "as like jokes -- anybody can look at them."
"Mother made me a defendant of the First Amendment and privacy at a row of mailboxes in Brooklyn. I'm not sure where to take my 18-year-old daughter . . . I am haunted by the high-school seniors who tell me how hard it is to find a pay phone in Boston because that is where they have to go when they want to make a private phone call."
Nicco Mele: Observation from Sherry's talk: Studying the media habits of 13 year olds is how we are going to figure out how to make money.
Next panelist Tom Eisenmann, Harvard Business School
Eisenmann: The first panel had an anti-startup bias, or at least it was pro-big.
He mentions the Huffington Post. He's doing a business school case study on the Huffington Post. "They are doing something really powerful. It started as a little flower and it has bloomed and blossomed into a big plant." A total of 25 million monthly "uniques.": "What the HuffPost is doing is aggregation and bundling."
Eisenmann notes earlier discussion about a possible legal issue with news industry collaboration around bundling.
"There is nothing illegal about bundling. The newspaper is nothing but a bundle of multiple things. So all that's illegal is preserving or abusing a monopoly by virtue of tying products together." He doesn't think the cable industry has done that, at least legally. He's not defending the cable industry. But bundling and aggregation are themes.
One thing in common with the music industry: The book "Blown to Bits," was about unbundling in the music industry. As is the case with the newspaper industry, the wounds in the industry were self-inflicted. What can we learn from the response of the music industry? The players retrenched, litigated and lobbied around stopping file sharing.
There were a whole bunch of failed online ventures -- pressplay. "So what you got in response is an aggregator. And this one came from a big company -- Apple -- and it was called iTunes. ... People seem to want and need aggregators . . . keep an eye on the Huffington Post."
"So you get a lot of aggregators and the old elements of the industry learn to hate that and it makes them crazy."
In music, the four big labels got rid of the A&R (artist and repertoire) business (essentially the creative pipeline) and pushed it out to independents. The big majors now basically just do distribution.
He wonders, in news organizations, is that the role of the aggregator in the future? (Not sure if he means the A&R work or the distribution work). Musicians now make most of their money from selling objects and doing concerts.
So the question for news: "Who is the aggregator, and what is the role of the aggregator in nurturing a very diverse group of independents journalists?"
Mele: At HuffPost most people write for free, which raises questions about tipping and compensation. Let's look at how the changes in the music industry, and HuffPost and writers and money.
Virginia Postrel, The Atlantic
What do we mean by make money? Do we mean a positive rate of return, or do we mean income-replacing business as in a small business. Some startups are designed to make a return for investors, and some that are designed to provide an income for the proprietor and a little more. How you think about that definition will change whether you think it is possible and what sources to fund it there might be.
She tells two stories:
- In college, she aspired to be manager of a general-interest magazine. She bought a book, how to start a magazine. She learned what she wanted to do was impossible. There was no business model for a general-interest magazine. Because television had taken away the advertising that supported general-interest magazines. It's not just on the advertising side. General-interest magazines used to publish the short story. Now you can buy them in anthologies. The short story is now the television drama.
- About her "hero" -- Frederick Douglass -- in addition to his famous abolition speeches, he sent a lot of letters to people asking that they send him money so his newspaper wouldn't close. She felt a lot like Douglass. Most of the general-interest magazines went out of business, the rest were reborn as the pre-Samuel Johnson model -- amateurs and patrons. People, who liked the cause, liked the newspaper -- people who give money. "I think in a market where the supply is going to infinity and you are competing with people who are primarily making a living doing something else that the future of making money in the sense of making money doing news is amateurs and patrons, which is unfortunately, because I really wanted to get away from that in my career."
The other model is the music model, which is books and speeches and which she hopes will work.
Persephone Miel, Internews Network, and former Berkman Center researcher
At Internews Network she helps very small outfits in other countries to do journalism. She came from the gospel that independent journalism would be support by advertising. What we are really interested is not about making money in news. If we were going to focus on doing that, we know how to do it -- We would become the WSJ or Bloomberg on the elite end, or produce 20:20 on the sensationalist end.
"I don't think that's really the question. The question is the same question our U.S. State Dept., and funders around the world ask us in countries around the world and that is: "What's necessary for democracy? ... I think (we need to be) unbundling that from this mythology of are we saving newspapers, or the New York Times or journalism jobs." "Supporting it blindly as the Boston Globe which does all of those things together when all of that bundling is no longer realistic is not where we should be looking."
We need to look at the non-wealthy, non-white folks who need the news, and how to make the news accessible to them.
She's a big fan of non-profit journalism. She thinks it will be hugely important, but need to broaden definition of what that is. It's not only about journalists finding jobs by creating non-profit newspapers. It should be about funding non-news organizations that are doing the watchdog and reporting operations that are really important ... most of them are not going to be the traditional news organizations." It will be people working to make sure city council meetings are cablecast, and that they are transcribed so people can access them. She likes the idea of relating journalism of the future to SimCity. She says it's important to look at the supply side, but the demand site is separate. We don't have the answers. There will be plenty of people to figure out ways to make viable entitles to figure out how to get news to people. But will there be any firewall between news and advertising -- an historic firewall. "I still think there is a need for that, but I don't know where that is going to live." She doubts it will grow out of the traditional news companies. How does that get pulled into the demand stream for entertainment news, fun, sports scores that people will continue to want.
We don't understand the demand very well. Wally Dean did a study a few years ago: Audiences didn't like what the TV news producers thought they liked. Coverage was driven by what consultants dictated, not what viewers wanted.
"I do think there is a lot of work to do on demand because I think there is a demand for serious news."
Goli Sheikholeslami: (WashingtonPost.com) talks about the mission of the WashPost to do journalism, not just an advertising and she worries about the fact that aggregators like HuffPost are reaping rewards but they aren't paying for journalism.
One commentator in the circle: "The Huffington Post makes my teeth crawl."
Doc Searls Berkman researcher on open source
Apple is an example of a weird company. Trying to duplicate it is not possible because Steve Jobs is so obsessed with product. He wants to talk a long view. He is a senior editor at Linux Journal.
He's followed what geeks in the open source movement have been doing. He wants to talk about the Enlightenment and person rights and empowerment and a line from the First Amendment: "Congress shall make now law . . . . "
We used through our surnames by what we did in the marketplace. But nobody is called Joe Middlemanager anymore.
Peter Drucker in the 1950s saw the coming end of the organizations as we saw them then. Back then what Drucker saw coming, he could see the end of it because knowledge workers -- a term he coined -- were going to become more important.
What did we create with industrial systems? We got the Bell System. They wanted to build intelligence systems that produced things like call waiting. Then the Internet came along, and the Internet was made by geeks for geeks. He talks about the Internet Engineering Task Force vs. the phone system's International Telegraphic Union. How long have we been talking about open source -- since 1998, when Netscape open sourced its software as Mozilla.
At that time, the free software community changed it to "open source." This was done by Eric Raymond. It is remaking the news world, and many other worlds. "And we are trying to cope with this and it is really, really hard."
The Internet is really only 15 years old. In the open source world, nobody every really wins, there are just leaders at time.
Searls gets a laugh when he applies pre-Cambrian analogies to various Internet players and adds: "Think of the Huffington Post as an early sponge."
Searls looks at it in terms of the demand side first. "And what we have in the geek network is the demand side supplying itself. We are looking at new ways for the demand side to drive the supply -- with money."
He mentions his Project VRM.
Comment from Virginia Postrel of The Atlantic: Now a lot of people who are commenting on blogs on the web are sources, people involved in the story. And with journalists, it is the people who are the brand, not the brand. "You don't go to Huffington Post to read Huffington Post, you go to Huffington Post to read a particular story or person . . . a stall in the bazaar."
Sherry Turkle -- Two panelists were enthusiastic about news and video games. She wants to explore that a bit.
She interviewed a game-savvy teenager. She noted that Rule No. 6 in SimCity was that raising taxes leads to riots. What she got out of that was a certain kind of political message. For her the blur between what happens in SimCity and the real world. I tried to explain to her that in the version of SimCity that I would right would lead to greater social harmony and better schools and hospitals .... she didn't understand the sense of the programming input."
"Perhaps what we need is more of a wall which is the simulated, and what newspapers defend, which is real life."
In digital culture, young people expect to take things at interface value. In the past, transparent understanding, or the kind of understanding where you opened the hood and look inside . . . what I go to traditional journalism for, in 1984, transparency on the Macintosh is that you can make something happen with a double click precisely with not knowing how it works. "The Macintosh meaning of transparency is the old opacity." .... "This is how teens become accustomed to not knowing the character, source or intention of things on the web." It leads to teens not feeling accountable on the web. You don't take it as seriously as real life. Blogging is not quite like real life. They say what they are doing on blogs, but they embellish it. They tell you what they are doing now, but a little bit extra. "They still know now that the news is RL (real life)." Aligning those two things is the work of their generation. The Bush administration said it could create its own reality. The simulation culture that empowered him to think such a thing is still with us. "There is a little bit of push back from the current generation about reclaiming the RL."
"We have enabled political discourse to veer away from the RL.... so I think the RL and the virtual separate is important."
What about aggregators pulling the first 25 words?
Mike Klein, Sunlight Foundation: The doctrine of fair use was created before the Internet. It strikes him that that a component of making newsgathering and reportage viable would be a small charge or a toll on the aggregator. Does that make sense?
Eisenmann: Huffington Post makes so many peoples' skin crawl in this room. But nobody prevents web sites from blocking the spiders. Everybody has made the choice. Facebook does let Google into spider all that stuff. You can block Google. You can take Huffington Post to court if you like. An awful lot of what they aggregate they pay for. They are paying AP, they are paying Reuters. So we have mechanism in place for paying for the content and protecting the content.
"So what you need is collective action."
Geoffrey Cowan: One of the concepts out there is hot news. A period of exempting from free use a period of time when news is fresh. The law was changed in the 1970s that got rid of the hot news exception. I think Congress could reimburse that. We can learn with how it works in the music business.
Scott Karp: People are always asking, how do we get money from the aggregators. Newspapers use to be the aggregator. "There seems to be giving up on being the aggregator. Why can't news organizations compete with the aggregators, and own that distribution model instead of sitting on the back end of the distribution model?"
Josh from Nieman: In bringing back hot news -- we forget newspaper reporters are aggregators. Does that mean the Boston Red Sox can control what is written in real time?
Geoffrey Cowan: "You wouldn't say nobody could use it, you would say there is a small charge for somebody to use it."
Regarding Huffington Post, Cowan says it is not clear it is making money or is a successful news model.
Conversation is now ranging about.
"We have to think about what we mean about quality in a different way."
Eisenmann: It took AOL years to make money.
Melinda Henneberger of AOL Politics Daily: She worries about what happens when the original content goes away. What will HuffPost point to?
Josh of Nieman: He finds it hard to believe there will ever be a shortage of things for Huffington Post to aggregate.
Persephone Miel: The MSM papers like NYT and WashPost are working hard as aggregators.
Sherry Turkle -- Newspapers do allow voice in their pages -- especially editorial and op-ed.
LUNCH BREAK at 12:02 p.m.
Martin Langeveld comments on pay walls
Panel 3: New Models for News, in Practice
restarting at 1:00 p.m. after lunch ...
Alex Jones explains this panel will give examples. First one:
Phil Balboni, founder of GlobalPost.com starts the afternoon session -- examples of new business models being tested. He talks about how he's started three or four ventures over his career (including New England Cable News) and they have always hard and always people said they would fail and this one -- GlobalPost, is still hard, but has been blessed with a lot of support from many quarters. He has seen over 40 years of his journalism career the loss of global news grows larger and larger and larger.
The convention wisdom this time around was that no one cares about global news. MSM media has steadily diminished that product. You just have to find an easy way to deliver it to them in a way that is useful to their lives. Nearly 3 million people have come to GlobalPost since Jan. 12 launch. Have a goal of 600,000 monthly "uniques" by end of year -- they will reach that goal. It's a modest goal by comparison to some news sites. He thinks they will get to the 2-4 million monthly “uniques” range eventually. "We are steadily down our path, ahead of our expectations." He says the audience is "stunningly global." From more than 200 countries every month.
They work with and have agreements with Huffington Post, AOL and Reuters. They have signed a non-exclusive agreement with CBS News "and we have more exciting partnership announcements in the coming month."
They will have about $1 million in revenue this year from advertising, syndication and "our most innovative revenue stream, which is our passport membership service, our paid membership." They will triple their revenues next year and project being profitable in 2012.
He calls himself: "A passionate believe in online monetization." He believes we can't support quality journalism online unless we can have the consumers involved in some way. With Passport they created a site within a site with benefits for those members and asking people to pay $50 to $90 a year.
"It has been the steepest learning curve of the revenue streams. We have about 500 paying members, we will have thousands by next year, I see the path to 25,000 or 50,000 members in the years head."
Re advertising: Just received a triple-figure commitment from Siemens. The Economist is advertising with them. Advertising is really picking up, "but I don't think advertising is sufficient." He says it is extremely hard work. "Journalism entrepreneurship is not for the faint of heart." Some of their advertisers are: Bank of America, Liberty Mutual, Singapore Airlines, Merrill Lynch, Delta Airlines, Siemens, the Economist.
He says GlobalPost does not sell advertising via aggregators, because that would be a $1 per thousand impressions or less. He says they tell their advertisers they only way they can appear on GlobalPost is purchasing advertising through them. "We have forbidden working through ad networks. If you want to buy GlobalPost you have to come through us and you have to pay reasonable CPM rates."
Alex Jones: Have you had to adjust any expectations?
Balboni says no, actually their expenses will come in 10% under budget this year.
Melinda Henneberger, AOL Politics Daily
Henneberger says she was invited after her book came out to come launch Politics Daily. She gets to try her theory that quality works on the web and that everything we think we know about what works on the web may not actually be 100% true. She has had the luxury of putting things together in a way she sees as idea. She is hiring "the best people in the business" instead of people I don't have to pay at all. "I'm finding that some of the stories that are done best are 3,000 words long."
They just hit 6 million unique users this month. It's counter programming -- the place for people who want depth to come to. The HuffPost model is being hyper political. That's not their model. With AOL supporting them, they have a fire hose of readers being sent to PoliticsDaily.com. There's an opportunity to convert old dial-up email users of AOL to be long-term Politics Daily users. "Every single month, our out-of-AOL-network numbers have been shooting up (too)." If anyone can make it work, AOL can, just by sheer scale. "AOL is trying to turn themselves into a publishing holding company."
She calls Politico "the high-school newspaper for the hill." Politics Daily is not pitching to people who eat-sleep-breath politics. She is pitching to people "who care about the civic life of this country" and who believe "that politics is everything."
Scott Karp, Publish2.com
Alex Jones asks, what is your take on the viability of making money with some of these models?
His company is the fourth leg of the stool, which is technology. News organizations should be technology, not be exploited by technology. News organizations should be the aggregators not be exploited by them.
"Our technology is about enabling news organizations to be aggregators of information all over the web as the extension of their own reports and get back to being what they always were before the web -- the place to start." He is also looking at the power networks -- a word not heard today. There is another use of the word, and that is connecting news organizations together.
How can news organization serve this aggregation function in a networked environment, Karp asks? He talks about blogs and other news organizations in Washington state tweeting and uploading about a flood. They used Publish2 to create a newswire of links. "It is about sending people to where the information lives. They all collaborated to create this newswire of links, and they all published out of it."
They start from extending the value of what journalism does on the web back to what it did in print. How could you create that similar value proposition for advertisers? They have extended their platform to make that possible -- to allow advertisers to curate news as a sponsored advertising product. It's all clearly differentiated.
Here's an example of an advertising understanding this intuitively. Before his startup got funded, he was working at a Panera Bread everyday. He overheard a managing partner of a local real-estate development firm. He was telling a blog operator, that he wanted to create a news letter that rounded up stories about local commercial real-estate marketplace and things happening that effects. He wanted to be branded as an expert. "This is someone who understood intuitive that what he wanted to create was a substantive form of communication . . . it's a sponsored function ... finding a way for advertisers to create value around consumers . . . it gets out of the bottom of the barrel (CPM wise).
"That's why Google makes money. Because they created a marketplace . . . they are making money, and everyone else is in a death spiral."
Alex Jones asks Joan Walsh of Salon: Does Karp's idea make sense?
Joan Walsh: It does sound plausible. There is a lot of interest among advertisers in sponsored content. Lexis has a sort of open blog that is on the Salon site, which Salon allows them to have. Apple has a marketing gambit of "taking over a site." Advertisers are always wanting new things "and we are trying to give them to them."
Alex Jones: Karp are you generating significant revenue?
Scott Karp: Just launched. He says ask him in 12 months.
Alex Jones: Phil Balboni how do you respond to this?
Balboni: I intend to call Scott as soon as this meeting is over.
Linda, Do you feel the same?
Alex: What is the Salon model and how has it evolved?
Joan Walsh: When it began, they were at a disadvantage when they had registration and subscription only. Then they went to interstitial ads you had to watch before you could see the content. But you have to keep coming up with new tricks. The paid model didn't work economically. At their peak they had 90,000 subscribers, which wasn't going to sustain the news operation as they had it. They kept the membership alive for offline events -- it is one-eighth of their revenue but it is something.
Their brand is original reporting and cultural criticism and reporting. They are learning to do better aggregation "like the Huffington Post, so I'm not pointing fingers." Open Salon -- where the public can post -- is getting larger and larger everyday. They are creating a food site.
Alex Jones: Does HuffPost allow their content to be aggregated? Could you break up and recreate the Huffington Post at your own site?
Linda: "I'm not sure why we'd want to ... but sure!"
Melinda Henneberger: "It's not that there's anything wrong with aggregation per se. Readers Digest was an aggregator.
Goli Sheikholeslami: WashingtonPost.com
Alex Jones: What is the Washington Post solution?
Goli Sheikholeslami: The problem with advertising on the web is that advertising works really well in print. It is a direct-response model on the local level. It drives foot traffic. That has been replicated with online advertising yet. She doesn't think display advertising is going away. But it is one of the revenue streams that will continue to be very important to our business. There is no silver-bullet solution that will save us. They have multiple revenue streams and they are all advertising based.
As to subscriptions: There is this debate about pay wall no pay wall. It is not that black and white. If they could get 5 million to pay them every month on their site, they would be done. But getting some number less than that would not sustain the news organization.
Dan Okrent, Time Inc.: "When you are saying 5 million that is because you are just still trying to print a newspaper. You are putting it in gas vehicles and delivering it. But the only cost we have to cover is the cost of the newsroom." If the NYT were willing to charge $21 a month online they would cover the newsroom.
Sheikholeslami: "My job is to sustain the news gathering organization that is the Washington Post."
Okrent: "Newspapers are trying to protect circulation revenue for the product that isn't going to exist down the road. And what we need to do is to say we can eat it, but we are going to get to this other place, because we have a product that is worth it."
Questioner: What about separately charging for the online piece?
Sheikholeslami: "The problem is when you model it out, in our model there are not enough people who are willing to pay to sustain it ... the solution is not all or nothing, the solution is what are things we can create for people."
David Bennahum, Center for Independent Media
Alex Jones now introduces Devid Bennahum of the Center for Independent Media:
26 journalists, $3M a year. "We couldn't meet our payroll if we had to do it entirely as a for-profit. His model is operation as a non-profit but develop your earned-income streams. Long-term sustainability for journalism is a hybrid for-profit, non-profit model for the foreseeable future.
Their approach: They are developing regional niches. Including Colorado, Minnesota, Michigan, Washington, D.C.
If you are in a non-profit model, you do have to pay attention to who links to you and who refers to you and how much page views you have. The more impact you have the more your journalism adds social value to the community -- "our journalism caused x, y, z to occur." Those kinds of stories create tremendous interest and so it creates a virtuous cycle of support.
One of the problems is how you measure success in the non-profit sector. There has to be work done on that. As an online news network they have the ability to diversify. If you are operating in only one community, you have only a small number of foundations interested. "You can't really sustain the work as a hyper local nonprofit." Also, they have one engineering team that services six websites and one administrative backbone. They spend $400,000 on Minnesota Daily, vs. MinnPost, which he says spends $1 million.
"Nonprofit networks have a real opportunity; standalone sites have a really limited opportunity."
What Google told Bennahum
He got an unsolicited call from Google saying, you are leaving money on the table, make these changes and you'll make a lot more money: They set up an entire column dedicated to ads. They put an ad between story and comment fields. And a few other changes. "It increased revenue by 300% just by listening to Google."
"Now why are they doing this? Because they make money off of use. We run their ads ... they make money when we make money."
Kevin Klose (former NPR head, now at Univ. of Maryland): "Everything you have said resembles the NPR system -- both network and local. Every one of these separate radio stations has their own development office. They will have to consolidate that at some point. They get corporate and philanthropic money and they get listeners paying for it because they feel it is part of their life values. It is a very kind of sequence that overlays you.
In 10 years NPR has gone from 10 million users a week to 27 million users a week.
Bennahum: Why have NPR and The Economist gone up. Why has Fox news the most profitable cable news operation?” And the answer is that all of these things have explicit or implicit points of view. He thinks that where it is going.
Klose says actually many surveys show NPR readers do not skew politically.
Discussion about this top: There is not a consensus of agreement around Bennahum's assertion.
Zephyr Teachout: WikiPedia is the biggest growth and it doesn't have a point of view.
Discussion about the network economy and how it works.
Karp: A lot of local news sites now have an awful lot of drive-by users.
Geoffrey Cowan: An idea -- If you were running the Harvard pension fund -- would you invest in anything you have seen today? It may be the best investments, despite all these attacks, may be in the conventional media. Every Tribune Co. publication is making money now on a cash flow basis -- because they are in bankruptcy and don't have to pay off any debt.
Phil Balboni: He says he has 20 successful, smart investors who he firmly and passionately believes will be rewarded.
Scott Karp: He is an investor-backed company and he expects to make money, too.
Sherry Turkle: She asks her 13-year-old what do they watch that the used to watch on television. She watches it on AMC. They watch it on Comcast on Demand. They watch it on surf the channel. They watch it on the AMC website. They buy the DVD or watch it on Netflix, they watch it on Hulu and they Tivo it. They buy it on iTunes. That's nine profit centers, only one marginally not legal, for the same piece of content. "As I listen to these people happy to pay over and over again for the same material.
Scott Karp: You just need nine distribution channels. The newspaper is one. How about iTunes for news? How about Hulu for news. There are a lot of options for new distribution models for news that need to be looked at.
Bill Mitchell: Went to a community meeting in Ann Arbor to talk to people about what life is like without a daily newspaper. What people tend to think about when they lose or aspire to a particular way of interacting with news, have people thought about ways of attaching value to the experience of interacting with news and are their ways to generate revenue around that experience?
Joan Walsh, Salon: "What Arianna realized before a lot of us is that there is this culture out there, there are people who live to write. To give them a platform to right and give them help to make it better is not merely exploitation. If real journalists partner with their audience, bring in a source, and give him or her a blog (as Salon has done) you've created a sense of community that leads to sustainability.
David Bennahum: There are effectively "citizen journalists" on the ground who are contributing to some of their eight sites to cover things they can't afford to cover. People will pay money to get that training. "These are things we need to explore."
Outside the table: Abernathy and pay models
Alex: Brings in people sitting outside the table.
They have come up with three things:
- Look at legacy cost -- a plan for coming up with managing legacy costs. The print newspaper isn't the optimum way to deliver news to the new generation.
- Look at how you rebuild community -- that can be networking, or a whole range of things.
- There will be whole tons of new forms of advertising that will come out. Mastering those other forms will be critical.
Alex Jones: Do you see profound change resolving all this in 1,2,3 years? Or are we headed for a long period of uncertainty?
Balboni: "I'm a fairly unabashed optimist about it. This could be the great historic moment for journalism to be reborn using the Internet. More journalists need to seize the moment . . . All the ingredients are there except for the courage and determination to go out and make it happen . . . The key is going to be to find ways to engage users in paying for content." Devote more time to nurturing creative ways to meet similar needs.
Scott Karp: The economic meltdown helped accelerate things. People are in a position to try things that are transformative, because there is no other choice. You have your mind open to "Who knows what would work right now."
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