Tuesday, March 17, 2009

The Recession and Journalism

From tomorrow, the Seattle Post-Intelligencer becomes an internet only newspaper, as the Hearst Corporation tries to stem losses. According to the New York Times, they will go from news staff of 165 to 20 people who will provide commentary, with the news coming from feeds (presumably from Reuters or Associated Press). The problem was this: no one buys print anymore, and advertisers are loathe to spend high rates to advertise in newspapers. But internet advertising rates are so low that they can't support more than a staff of 20 (compared to print advertising supporting a staff of 165).

The Recession combined with the Internet is creating a bloodbath among American newspapers, (and can British and European newspapers be far behind?) The best article about the phenomenon is an essay written by someone called Clay Shirky - I urge people to read it in full.

He points out that the old newspaper model was built on a barrier to entry that doesn't exist in the internet world:

"If you want to know why newspapers are in such trouble, the most salient fact is this: Printing presses are terrifically expensive to set up and to run. This bit of economics, normal since Gutenberg, limits competition while creating positive returns to scale for the press owner, a happy pair of economic effects that feed on each other. In a notional town with two perfectly balanced newspapers, one paper would eventually generate some small advantage — a breaking story, a key interview — at which point both advertisers and readers would come to prefer it, however slightly. That paper would in turn find it easier to capture the next dollar of advertising, at lower expense, than the competition. This would increase its dominance, which would further deepen those preferences, repeat chorus. The end result is either geographic or demographic segmentation among papers, or one paper holding a monopoly on the local mainstream audience."

Because of this monopoly, newspapers could use their advertising revenue to subsidize all sorts of things such as war correspondents, whether or not the advertiser wanted their money spent that way or not. But with the internet, the advertiser can target their ads. Further, because there is no barrier to entry online and so many places to put advertising, the advertising rates that newspapers can command online are way lower than in print. After all, why advertise on a newspaper site such as the Guardian or the Times, where the readers might or might not be interested in your product, when you can target the ads like a laser by placing them on the Google search results, so that only people searching for your product niche see them. Google continues to do so well precisely because the ads on their search engine have a much higher convertability into sales than ads in almost any other medium, whether print, television or other internet pages.

But there is a side-effect to this - if the revenue supporting journalism dries up, stories won't get broken anymore, apart from by Reuters and Associated Press, who should do well by everyone buying their feeds. And as a result, pretty much all newspapers will start to feature exaactly the same news.

There is only one organisation that is immune from all this - The BBC. Alone, they can afford to send correspondents to Baghdad or Timbuktu. Alone they can afford to cover every part of the planet.

This is most certainly NOT the moment to curb the BBC whether by trying to cut their income by freezing the licence fee or by trying to force them to compete for the rapidly diminishing television advertising revenue (which is being hit by both the better targetting of advertising on Google and by the ability to tape shows and fast forward through the ads) - by doing so you would curb the one last source of free independent news (one of the pillars on which our democracy rests).

Journalism benefits society as a whole, and public service journalism has never been so vital when the private sector looks like it will curl up and die. Clay Shirky asks the question, So who covers all that news if some significant fraction of the currently employed newspaper people lose their jobs? and answers, "I don’t know. Nobody knows." One answer is that every country adopts the BBC model of a license fee funded public service journalism. It's either that or accept that most of the world's news will be coming from Britain via the Beeb (I can see the BBC selling news feeds to the world in much the way Associated Press does), which will have the side-effect of making our country the centre of the planet information wise.

1 comment:

John Angliss said...

That's indeed what we're seeing - media cutting out the middleman and being directly funded for having a particular editorial line. Russia Today, Al Jazeera?, Press TV (Iran), CCTV (China) are all on Sky and this is just the beginning.