Hundreds of global experts in the media industry gather each year in
Perugia, Italy, to talk about the past and future. Some of the items on
the schedule look particularly interesting, so I have started putting
together my personal agenda.
Picard: News organizations need to focus on creating value for users
Picard: Your content has to be exclusive and specialized.
Now that Google, Facebook, and other tech platforms have taken away most of their ad revenue, news publishers are realizing they need to get revenues from users to stay afloat.
Well, good luck with that. Most of the paywalls or freemium products they have created are doomed to disappointment.
Publishers will have trouble breaking their bad habits. They have been so busy delivering mass audiences to advertisers with increasingly frivolous or sensationalistic content, or delivering profits to investors by cutting key editorial staff, that they may not have the know-how or talent to produce content valuable enough that people will pay for it.
How should a media executive manage the business during a time of disruptive technological change? Alfonso Nieto
attempted to answer that question in his book "Letters to a newspaper
publisher," written in 1987 when newsrooms in Spain were moving from
typewriters to computers. His comments have acute relevance today.
Alfonso Nieto, University of Navarra portrait
In this letter to a fictitious newspaper publisher, which he titled "The dwarf and the giant", Alfonso Nieto criticized media owners, managers, and journalists for failing to take into account the problems and the needs of their readers. Nieto saw the media industry as arrogant, looking down on the public and their viewpoints.
Beyond that, the media viewed their audiences as merely market segments to be lumped into groups based on age, gender, income, occupation, or other attributes that they could monetize.
The arrogance
The media used a language, he believed, that emphasized their superior education and social position rather than trying to create a more intimate connection with their readers. This could very well describe the traditional media today, which have been losing readers and TV viewers because they focus much of their attention on the conflicts among political parties rather than finding solutions.
How should a media executive manage the business during a time of disruptive technological change? Alfonso Nieto attempted to answer that question in his book "Letters to a newspaper publisher," written in 1987 when newsrooms in Spain were moving from typewriters to computers. Nieto was one of the pioneers in the discipline of media economics, and his writings have acute relevance today, when the media world has been disrupted again by digital technology. He was rector of the University of Navarra 1979-1991, where I now teach.
Alfonso Nieto worked as a consultant to media executives in addition to teaching, and in this book he wanted to go public with his advice without violating any confidential information. So he created a fictitious news executive to whom he wrote a series of letters with some down-home advice. He wanted publishers to think not just of their business results and their investors but also of their publication's impact on employees, the audience, and democratic society as a whole.
(It is interesting to note that the Business Roundtable, an organization of business leaders in the U.S., recently advocated a major change in management philosophy in line with Nieto: take into account all stakeholders--employees, customers, suppliers, and community--not just the shareholders.)
Cees van Riel is an internationally known scholar and consultant who has spent much of his career studying how to measure the reputation of organizations and use the data for better decision-making.
During a recent chat with faculty at the University of Navarra, he talked about how a growing body of research links the financial performance of a company with its reputation as corporate citizen and community leader.
Leaders must speak up
Companies whose leaders and employees specifically say what they stand for, and back that up with their behavior, emerge as leaders in their industry by all sorts of tangible indicators, including but not limited to financial performance.
"You have to say yourself what you stand for," Cees said. "If you don't, no one will believe you."
Cees's observations made me realize that news media have done a terrible
job at informing the public about the importance of what they do,
namely investigating deeply to discover the truth and informing the public in a democratic society.
News media organizations should be taking this insight to heart, but often they view it as unseemly self-promotion. They assume everyone views them as an authority, as the purveyors of truth and guardians of the public interest. And, of course, they're wrong. Almost everywhere in the world, news media have low credibility. (Trust explored in more depth here.)
This post is part of a study that identifies 20 media
organizations from 16 countries and four regions --Eastern and Central Europe, Western Europe, Latin America, and the United States-- that have developed sustainable business models
for high-quality journalism.This list is by no means exclusive. The examples were chosen
to present a variety of solutions to this challenge. We welcome comments on
other media we could have included.
Between fines and recovered funds, journalists get results
Lately a couple of us here at the University of Navarra have been looking for models of high-quality journalism that are sustainable. As it turns out, many of the best news organizations that are thriving are doing investigative journalism.
Readers like this type of journalism, which holds the powerful accountable for their actions, makes them responsible for serving the public rather than themselves.
In a 2016 article, two leaders of global investigative journalism organizations made the case that investigative journalism actually has a great return on investment, ROI.
"Over the years [Organized Crime and Corruption Reporting Project (OCCRP)] has accepted $5 million in funding from the U.S. and other governments. The return on that funding? With $2.8 billion recovered in fines and seized assets by various governments, the payoff is over 56,000 percent (or a 560-fold return)".
The authors of that article were David E. Kaplan, executive director of the Global Investigative Journalism Network, and Drew Sullivan, one of the founders of OCCRP.
This blog post started out as an explanation to my friends and family
in Cleveland and Columbus, Ohio, why their local newspapers had become
shadows of their former selves. Why their newspapers were so thin. Why
news coverage was so shallow. Why they felt like they weren't getting
their money's worth.
And we will get there in a minute, but first, some good news. It was heartening to see the Knight Foundation's recent announcement
that it was committing $300 million over five years to strengthen
journalism, from the ground up, by focusing on local news and on
encouraging collaboration.
“We’re not funding one-offs. We’re helping to rebuild a local
news ecosystem, reliable and sustainable, and we’re doing it in a way
that anyone who cares can participate,” said Alberto Ibargüen, Knight Foundation president.
Gradually,
civic minded individuals and organizations have realized that the loss
of local news coverage threatens democracy and citizen participation.
Citizens don't know what's going on, which leaves elected officials
unaccountable for how they provide services and spend the public's
money. “Reliable news and information are essential for people to make
democracy work,” said Jennifer Preston, Knight Foundation vice president
for journalism.
Money talks. Put your money where your mouth is. Show me the money.
We have lots of expressions that equate money with crebility and trust. How people get and spend their money is often the most credible expression of what they value and who they are.
We attribute so much value to money and to the way it expresses our true beliefs that historian Yuval Noah Harari declared in his bestseller Sapiens: A Brief History of Humankind:
"Money is accordingly a system of mutual trust, and not just any system
of mutual trust: money is the most universal and most efficient system
of mutual trust ever devised."
By extension, this belief in money as the best measure of value of everything in modern society -- the loss of a loved one (insurance payouts), the salary of a teacher or a CEO, a barrel of oil -- has led us to trust markets too much.
In fact, many studies have shown that the media marketplace puts great value in misinformation, disinformation, sensationalism, gossip, and entertainment (Pew, Reuters Institute, Science Advances), as measured by revenue and profits generated from advertising. This is how social networks like Facebook and Instagram make their money.
The network effects that destroyed traditional news organizations are benefiting digital startups, which can grow virally and generate outsized impact in their communities.
My teaching colleagues are experts on the economics of the media industry, and we recently had a lively debate on how to reverse the financial crisis of journalism. The collapse of the industry's business model is endangering the institution of journalism-the Fourth Estate, a counterweight to power--by eliminating journalists and media coverage, especially for local media.
Doctor details a number of initiatives by non-profit and for-profit organizations aimed at filling the gaps in local news coverage involving hundreds of media outlets. But using the standard industry metrics, it doesn't a appear to be sufficient to plug the gaps in the short term without significant changes in the way news media do business. Entire communities are losing news coverage of any kind, a pillar of democratic institutions.
Predicting the future has always been a dangerous business in the creative industries. As any economist will tell you, products like books, movies, TV shows, and music are "experience goods", which can only be evaluated after they are purchased or experienced.
Making predictions or recommending strategies is especially difficult now with rapid technological change disrupting every creative industry. This theme appeared in several of the presentations at the Creative Industries and Media Management Conference held at the University of Porto, Portugal, Sept. 19-21. The conference was organized by Paulo Faustino of Porto and Nova universities.
--Michal Glowacki, professor of journalism at the University of Warsaw, presented preliminary findings from a study of the dynamics of organizational culture in public media that identified success factors in what he calls creative media clusters.
The following text is a translation from the Spanish version of a lecture I gave at the University of La Sabana in Bogotá, Colombia, on Aug. 22.
My lecture, in Spanish, starts at the 6-minute mark of the video.
Journalists today have the opportunity to create the future of the industry. But to do so, we have to change some of our long-held beliefs and attitudes. We have to create new business models (O, those awful words!) and learn to say some words without blushing.
This need to change comes about because of the nature of our profession, which for most is a vocation. As journalists we have to keep our distance from political and business interests to maintain our credibility. Still, as a group we can be arrogant, self-righteous and holier-than-thou (I include myself in this criticism). We tend to view ourselves as high priests of an exclusive profession and bearers of a special ethical standard that few others can live up to. We see ourselves as purer, more objective, less affected by the prejudices of the mere mortals we cover.
That is at least part of the reason we have trouble in the new world of entrepreneurial journalism, where we can start and run our own news operations. If we want to go out on our own, we have to recognize for the first time that journalism is a business and that someone has to pay the bills. All of this involves getting our hands on the first dirty word: money.
1. Money. The very word makes us cringe because we associate it with dirty things like influence peddling, lobbyists, bribery, corruption and other topics of our investigative journalism.
But money is the fuel that drives any journalism organization. Without money, journalists can't be paid a decent salary. They can't buy a house, clothing, food, medicine. Without salaries for talented, experienced people, there is no high-quality journalism.
For those who could not attend the annual convention of the Spanish Journalism Society (SEP, Sociedad Española de Periodística, in Malaga, Spain, May 24-25, below is a summary of my keynote address. (Here are slides of the English version, presented Sept. 22 at the Creima Conference in Oporto, Portugal.)
The talk focused on two major trends in digital journalism that are taking place in many places around the world. The slides highlight examples of media from France, Holland, Mexico, the U.S., Germany, Peru, England, Colombia, Argentina, and Brazil, among others.
Photo by José María Legorburu
1. Publishers are pivoting toward users and away from advertisers and investorsas their main source of financial support. The business model that depended on advertising to support journalism is moribund and nearly dead. The automated buying and selling of advertising is controlled by the duopoly of Google and Facebook, which have more and better data about news publishers' users than the publishers' themselves. Publishers have no way to compete with that dominance of programming and targeting of ads. It's time to burn the ships and not look back.
2. Amid the flood of junk, misinformation, clickbait, and false information, the added value of a news organization will spring from its credibility. News media need to build credibility and trust by interacting more directly with their audiences, listening to their audiences, adopting transparency about their owners and investors, detailing their funding sources and spending practices, and, above all, doing investigative journalism that holds political and business leaders accountable for their actions.
Alfredo Triviño has worked largely behind the scenes on some of the biggest digital media projects for some of the biggest brands in the world. But you might not have heard of him.
Alfredo Triviño: users will own the media, in every sense
He spent seven years in senior management roles at News Corp., ultimately as director of innovation, where he worked on development of a pay model for digital journalism and on long-term editorial and commercial growth strategies. (He is a 1999 graduate of the University of Navarra School of Communication, where I teach.)
He was invited to give the closing keynote address last week to the annual conference of the Spanish Journalism Society (SEP, Sociedad Española de Periodística). He ruminated casually about trends he sees in the worlds of digital journalism and digital commerce, mixing some English terminology into his Spanish presentation. Among the shifts he sees:
A shift from journalism and commerceto journalism vs. commerce. That is, the two will operate in separate worlds. Journalism will depend on the support of user communities rather than advertising. Brands will create their own digital media rather than publishing their messages on TV, radio, and in print.
A shift from paid editorial (subscriptions) to shared ownership. By this Triviño meant that groups of users will form around a topic of shared interest--local news of a community, a social issue, or a shared cultural interest, for example. They will be active participants rather than passive consumers. They will interact with the journalists, suggest topics to editors, share their knowledge, create content, contribute money, and support the mission of the publication because they feel they are part of it and it speaks for them. "This is ours; we own it".
Readers now supply more than half the site's revenue.
Josh Marshall started out as a political blogger in 2000, made a business of it in 2003, won a George Polk Award, and has managed to stay independent through all the wild swings of the digital pendulum.
So his reflections on how to transition from an advertising business model to paid subscriptions have a certain authority.
He talked about the evolving business model of his site, Talking Points Memo, in a 47-minute podcast with Digiday Editor Brian Morrissey. Among Marshall's observations that are relevant to other would-be news entrepreneurs:
Small, independent news sites cannot rely on scale to drive revenue. They need a strong relationship with their users. Many digital media organizations that have massive audiences will not be able to make the transition to paid subscriptions because they don't have that relationship, he believes.
Many of the 26,000 paid subscribers to TPM, which are now supplying just over half the site's revenue, pay because they support the mission of the publication, which "draws on readers' knowledge to break stories." The sales pitch for the $50 Prime product is that you get "warm, fuzzy feelings from supporting independent journalism".
Email has an intimacy that TheSkimm has used to build a loyal base of 7 million subscribers.
Digiday has a weekly podcast about the business of digital media, and two recent interviews with founders of startups had nuggets of wisdom applicable to any media startup.
1. Passion for a topic that you can develop in a way that no one else is doing.
a) Amed, then a consultant for McKinsey &. Co., began writing a blogin 2007 that talked about fashion as a business. He felt that no one was exploring the meaning of the numbers behind the leading fashion businesses. Over time, he developed a loyal audience who began suggesting ways he could monetize that audience.
b) Zakin and Weisberg were both 25 years old and producers for NBC television news when they decided in 2012 to launch TheSkimm. They were frustrated at the time that none of their friends were seeing their best work. Their friends didn't watch TV news. So they started an e-mail newsletter that aggregated what they thought was the most significant news that young professional women like themselves needed to know for their professional and personal lives.
2. Build community first. Opportunities for monetization will present themselves.
a) Amed told Morrissey that he had been blogging about the fashion business for years in his spare time and had to hire an assistant to handle all the inbound traffic and questions. It was only after six years, in 2013, that Business of Fashion launched their first commercial product, a careers platform in which brands could advertise themselves and their open positions to the publication's audience. This platform was financed with $2.1 million from various investors.
Now that Facebook has made clear that it will not be promoting journalism to its users, all of the publishers who were getting much of their traffic there should look elsewhere. (Frederic Filloux of Monday Note has one of the best analyses of the company's announcement.)
What now? Well, there are several tactics and strategies that publishers can take to replace what they have lost (and will lose) from Facebook's pivot away from news. (I have also written about such strategies in Spanish.)
1. A tactic: start an email newsletter with links to your content. Think of it as a walled garden that protects you from Facebook.
Daily, weekly, or monthly newsletters create a more intimate relationship with users. Some publications have several on different topics, such as technology, business, public safety, or politics that users can select from. Local news sites in particular can benefit from daily newsletters.
The links to your content send users directly to your site, and any ad revenue goes to your business rather than Facebook. Many digital news publishers report higher response rates from email subscribers to offers of subscriptions, premium content, or memberships.
2.Focus on the quality of users instead of the quantity: relationship rather than scale, engagement rather than volume.
The metrics of the "attention web" focus on showing the
value of the audience's relationship with the media brand rather than
with an advertiser's product.
An organization I work with that promotes development of independent media in Latin America, SembraMedia.org, recently asked me to make some predictions for 2018.
I really had just one: Credibility will be the new currency of journalism in 2018 and the years to come.
But to explain, here are that prediction's corollaries:
1. Independent media--those based on serving the public rather than turning a profit---will grow in importance through revealing corruption and holding authorities accountable. There are many examples. In the U.S., organizations such as ProPublica and Texas Tribune; in Spain, eldiario.es; in Peru, OjoPúblico; in Colombia, Connectas and La Silla Vacía; in Mexico, Aristegui Noticias and Animal Político; in Argentina, Chequeado; and hundreds of others around the world.
2. These independent media that serve the public first rather than political or economic interests will gain credibility by challenging the powers that be. That credibility will have economic value that will be monetized through support from NGOs, foundations, consumers, wealthy donors, and service-oriented organizations.
3. Journalism will continue its transformation from a business to a public service, and traditional media that view journalism as a business will accelerate their own decline. The traditional media's focus on maintaining profit margins will cause them to continue gutting their staff, their products and their services. They will have neither the will nor the means to make the needed investments in personnel and technology to transition to the world of multimedia, interactive, multiplatform, interactive journalism. (There are a handful of exceptions.)
Forget about the big numbers of total page views per month or unique users per month.
Fans are engaged and willing to give their time and money.
Those numbers are misleading and meaningless. They had meaning only in the days when the media business depended on mass media, massive audiences, and products aimed at the masses.
That was when the news media depended on advertising.
Today the business of media is all about touching potential customers with personalized, customized messages. It's about identifying the small number of people who are truly fans of your publication or the stars on your team. It's about strengthening the emotional attachment people have to your brand and its mission.
How the big numbers mislead us
In their very successful campaign to reach 1 million paid subscriptions for their digital-only edition, the Washington Post learned that the users most likely to subscribe came to their site three times a month.
Recently I was invited to give a lecture at the University of Malaga--"The audiences are in charge: Are publishers listening?" The audience had students in their doctoral, master's and bachelor's programs, as well as a number of faculty.
Below is a summary of the presentation.
1. The marriage of convenience between advertising and journalism is over. For proof, look no further than the graphic below, which shows that newspapers in Spain have lost more than 500 million euros in ad revenue since 2009, and that includes the revenue they get from digital. (The U.S. is very similar.)
In the future, news media will need to develop a deep relationship with their users. The important thing will be not the quantity of eyeballs reached, as measured by page views and unique users, but the quality of the relationship with the users.
