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June 15 2010

08:07

Media Release: News Corp invests in newspaper paywall business Journalism Online

News Corporation has announced an investment in Journalism Online, the company founded last year by former US newspaper executives Steve Brill, Gordon Crovitz and Leo Hindery to help newspapers charge for their websites.

“We’re especially pleased with this investment because News Corp. is the industry leader in making the case that there is value in journalism online for which readers will be willing to pay,” says Crovitz in the release.

Journalism Online says its Press+ system will offer newspapers and publishers a range of paywall options from metered access, such as that used by the Financial Times’ website, and give users a common login across the sites it serves.

In September, Nieman Journalism Lab reported that Journalism Online would take 20 per cent of subscription revenue after credit card fees. The move by News Corp underlines its commitment to charging for content online, as shown by new paywalls for the Times and Sunday Times websites.

In the same release, News Corp also announced that it is buying Skiff, the e-reading platform developed by Hearst Corporation.

Full release at this link…

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June 07 2010

08:26

Martin Moore: #futureofnews is ‘not so bleak, but not so rosy either’

Great post from Martin Moore, director of the Media Standards Trust, on paywalls, business models and collaboration in journalism. The post is worth reading in full, but some of the important points Moore makes include:

  • The future of advertising as part of a newsroom’s business model:

The paywall is not the only way to sustain the digital newsroom. Advertising – much maligned by many – could yet make online non-paywall newspaper content viable within 5 years.

  • The problems with paywalls:

Even if paywalls provide a secure financial future for news organisations – which right now seems unlikely – they will reduce the pool of shared information, and cut those news organisations’ content off from the openness, sharing and linking that characterises the web.

But perhaps most interesting in the post is Moore’s own suggested model for news and revenue – the ‘carrier pigeon model’:

In this model you let people share, link to, recommend, search, aggregate, and even reuse your content – you just make sure it’s properly marked up and credited first, so you can keep track of it, and develop revenue models off the back of it. You do this with – excuse the geek terminology – “metadata” (…) I call it the “carrier pigeon” model because the news doesn’t just go out, it comes back.

Full post at this link…

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June 04 2010

15:02

#fong: New business bootcamps for journalists from Adam Westbrook

Freelance multimedia journalist Adam Westbrookauthor of this book and this blog, is planning a series of ‘bootcamps’ to come up with new business ideas for journalism. The idea for the meetings, which Westbrook will host in his own London flat, follows the success of the Future of News Group – a network and series of events set up by Westbrook to discuss, debate and find new ideas for journalism and journalists.

The first Future of News Business Bootcamp will focus on making money from reporting on the developing world and human rights and will run on Tuesday 22 June. The group is limited to six people and the deadline to apply for a place is 11 June. To secure a spot, you need to email a pitch to Adam Westbrook explaining why you need to be at this bootcamp, what your interest in this niche is and (in one line) give an idea for how the niche might be made into business.

“The meet-ups have been running for about six months now and the group has more than 300 members so it’s been going really well. When I set it up I wanted it to be a forum for actual new ideas to emerge, rather than more talk about the future of journalism. The individual meet-ups have been great but I got the sense they’d reverted back to the speaker/Q&A format we see at all the other conferences. I thought of ways I could bring them back to the main mission of the group and realised smaller groups are often better for brainstorming and ideas. They’re going to be really focused sessions, diving straight into what the business models could be and how to package them into profitable products. Fingers crossed one of the bootcamps will bring up a gem,” Westbrook told Journalism.co.uk.

If the first session goes well, Westbrook says he’ll look into holding other ‘bootcamps’ for travel journalism, sport journalism, environmental journalism, local journalism and more.

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April 24 2010

19:27

Combining micropayments and the social web

In the quest for a new business model for journalism, Geoffrey M. Graybeal and Jameson L. Hayes, University of Georgia, made a case for a micropayment model at the International Symposium on Online Journalism.

Their micropayment model is based on the notion of the social web. Their model has four strands.

First is the idea of microearn which functions like a rewards program. A user pays for the article, but by sharing on it their social network, he/she earns rewards.

Second is using the social web to disseminate content. Third is local focus, through providing content for a community that no one else is providing, and a newspaper can decide the cost of content. This could work like the points currency that Microsoft and Wii use that lets gamers pay for content.

And fourthly, there is a need for a centralised banking system, so that users can exchange these new “currencies” or points.

These are all interesting ideas but I wonder how practical it is, and whether this is an approach that is too radical for the news industry.

It is also based on the idea that people will pay for news online, which is disputed, to say the least.

Time to read the paper (PDF).

March 09 2010

10:09

Print’s advertising problem – tying one hand behind its back

Last week Karl Schneider, Reed Business Information’s Editorial Director, spent an hour chatting with students in my Online Journalism class. Most of it is available on video here, but of particular interest to me was a point Karl made about how Reed separated its online advertising into a separate company very early on, and are now reaping the benefits (embedded above).

“Because we had print businesses to protect we spent at least as much time worrying about not doing something on the web that would undercut the money coming in in print as worrying about ‘How do we make this new stuff grow’ … One of the big revenue streams for us was recruitment ads … So when we started to do online jobs one of the big challenges was ‘How can we do this without damaging all of the money tied up in print?’ And very quickly we realised that if we worry about that, we’re going to be rubbish at online job ads, because we’re always going to be operating with one hand tied behind our backs. And we’ll be competing against pure-play onlines who won’t have that worry.

“So what we ended up doing was setting up our online jobs advertising operation as a separate business and allowed it to compete head-to-head with our print business, and it caused all sorts of internal arguments – but it was absolutely the right thing to do because we’re making more money now out of online jobs than we ever did from print jobs. Less per job – there’s a lot more job ads – but it took separating it off [as a separate business] to do it.”

I’ve written about this problem before. Although on paper there are economies to be made by combining print and web ad sales, that’s not a strategy for future growth.

Instead, it appears to result in a prolonged addiction to the dying cash cow of print ads (and, anecdotally, a frustrating experience for advertisers wishing to move money from print to online). Judging by the recent research into magazine ad sales in the US (image below), the magazine industry may need to listen to Karl’s experiences.

87% of ad staff work across both print and web

09:36

RSS feeds, advertising and selling attention

Media organisations who only offer partial RSS feeds might be interested to look at a couple of posts from 2 websites with different experiences of monetising their feeds. First, Jason Snell of MacWorld:

“RSS doesn’t generate revenue directly. There are ads in RSS, sure, but they’re cheap and lousy and don’t have remotely the return as ads on web pages.”

Then, John Gruber of Daring Fireball (cached here if you find it as slow as I do):

“The ads in most sponsored RSS feeds are indeed cheap and lousy. The ads in DF’s [Daring Fireball's] RSS feed are neither. They’re priced at a premium, and have attracted (if I do say so myself) premium sponsors.

“If you’ve got a model where revenue is tied only to web page views, switching to full-content RSS feeds will hurt, at least in the short term. The problem, I say, isn’t with full-content RSS feeds, but rather with a business model that hinges solely on web page views. The precious commodity that we, as publishers, have to offer advertisers is the attention of our readers. Web page views are a terribly inaccurate, if not outright misleading, metric for attention. Subscribers to a full-content RSS feed are among the readers paying the most attention, but generate among the least web page views.”

Snell’s response: “What works for [Gruber's one-man] kind of site doesn’t necessarily work for our kind.”

It’s also worth noting the tertiary benefits of full RSS feeds. Offering full RSS feeds makes it more likely a developer is going to create something useful out of it (expensive development time for free), bringing more readers and attention to your advertising or, in the case of the BBC (which may have licensing issues holding it back), fulfilling its public service remit.

Do you or your organisation do anything interesting with your RSS feeds? Are they full or partial? I’d love to know.

(Note, OJB uses the <more> tag to to ensure the homepage isn’t dominated by a single post. Unfortunately, this results in partial RSS feeds. Some day I’ll sort this.)

March 01 2010

09:42

When your website is a platform you can collect taxes

A good example of how seeing your website as a platform for other people to do things can lead to one of the oldest business models around: taxes. From TheNextWeb:

“Facebook still has one major trick up its revenue-sleeve: taxes. With companies such as Zynga raking in millions from the Facebook platform, Facebook could easily implement a 10% tax with little damage to its community, instantly raising tens of million more in revenue.”

January 29 2010

17:35

GlobalPost Expands Partnerships, Struggles with Pay Service

A year ago, GlobalPost launched online with an ambitious mission to "redefine international news for the digital age...with a decidedly American voice." The idea was to hire freelance stringers around the world to report back to the U.S., and thereby fill the gap left by the closure of traditional media's foreign bureaus. While the site has forged important partnerships with CBS News and others, its hybrid business model of online sponsorships and a paid premium service has been slow to gain traction.

philip balboni.jpg

When I spoke to GlobalPost CEO Phil Balboni last year, he was confident that an online-only news operation could be leaner than a legacy one. "We can do it on the web, where we can reach our audience very inexpensively and [we've developed] a business model that allows us to be profitable without having to jump over the moon," he told me.

One year later, Balboni said he is proud of the work done by the army of GlobalPost correspondents in 50 countries, including World of Trouble, a massive report on the global economic crisis that included work from 20 correspondents. The site also broke the story that U.S. military aid to Afghanistan was helping enrich the Taliban.

"I think we succeeded in our first year by bringing back great international coverage, with extraordinary reporting," Balboni said. "We now have a legion of freelancers, and have had 4 million unique visitors in all of 2009. Our goal was to hit 600,000 monthly visitors to our site, and we exceeded that with 750,000 visitors last November, and 618,000 visitors in December."

life death and taliban.jpg

Balboni was also happy with the growing number of syndication partners for GlobalPost's content. Last September, GlobalPost announced a partnership with CBS News that has brought in more exposure and pay for its correspondents, some of whom have been featured on the "CBS Evening News." Not only did Balboni promise to be a non-partisan outlet, he delivered with partnerships with outlets across the political spectrum, from Huffington Post to Reuters to Newsmax. GlobalPost headlines are even featured on Fox News commentator Bill O'Reilly's home page.

Seth Kugel, a GlobalPost correspondent based in Brazil, told me the CBS News partnership paid dividends for him.

"I have made a decent amount of money from the partnership with CBS, which shows that they are being pro-active about getting us opportunities with their partners," Kugel told me via email. "I really feel GlobalPost understands reporters and does everything they can to support us, within their limited means."

Business Model Challenges

While the site has established itself as a player in the news business in its first year, it has also struggled to bring in steady revenues from its premium Passport service, which has just 400 subscribers. The site initially planned to charge $199 per year for access to special content from correspondents and inside information. The price is now down to $99 per year, with a discounted $50 rate for seniors or academics.

Balboni told me Passport members especially liked being included in the story-making process via a feature called "Foreign Desk" that allows them to suggest topics and story ideas to editors. But he also said GlobalPost did not meet its revenue goals in its first year, hitting the same wall as other media companies during the economic meltdown. Balboni said GlobalPost is revamping Passport and will announce something on that front in the spring.

So far, Balboni said advertising is bringing in about 70 percent of revenues, with syndication deals and Passport bringing in 30 percent. He hopes the split will move closer to a more ideal 50/50. "The less dependent we are on ads, the better," he said.

Steve Safran, editor in chief of Lost Remote, has worked with Balboni in the past as a consultant to GlobalPost and at Balboni's previous venture, the New England Cable News network. Safran says Balboni succeeded in establishing GlobalPost as a respected news site.

AlanMutter.jpg

"GlobalPost has had a successful first year by any measure," Safran told me via email. "I dare say that this, its second year, will be even more critical. This is when we'll see if the the site and its reporting can keep growing to a point where it's clear whether this is a successful business model."

Alan Mutter, a media consultant and Newsosaur blogger, was also impressed with the ambition, scope and seriousness of GlobalPost, but took issue with the tone and content.

"The work typically is solid, but often prosaic and seldom distinguished," Mutter said via email. "You can get more up-to-the-minute news at Google News and many of the articles seem to lack the political, economic and strategic insight that characterizes the best of foreign reporting...I suspect they will get better and find their voice as time goes on."

Support for Correspondents

One of the challenges for GlobalPost is keeping its corps of freelance correspondents happy. The correspondents receive stock options in GlobalPost, as well as about $1,000 per month to produce one 800-word reported piece per week in addition to blog-like "Notebook" entries. That pay is not nearly enough to cover living expenses for most correspondents, who must field other full-time or freelance gigs to survive.

Jean MacKenzie.jpg

Jean MacKenzie is the GlobalPost correspondent in Afghanistan who broke the story on U.S. aid going to the Taliban. She told me via email that the exposure she's received while being a correspondent for GlobalPost has been satisfying. But she had to run an NGO that trains journalists in Kabul in order to make enough money.

"I have relished being a reporter again, and I believe that having to produce my own stories has made me a better trainer as well," she said. "The downside, of course, is the lack of adequate financial compensation, which keeps me from being able to devote as much time as I would like. In order to live and work in Kabul, which is a surprisingly expensive environment, I have to have a full-time job in addition to GlobalPost. That makes things a bit frustrating, since I sometimes cannot get as deeply into the story as I would otherwise."

Kugel, the Brazil correspondent, also has to juggle other freelance writing work with his GlobalPost reporting. Kugel said he would appreciate getting paid more, though he's thankful that the company has covered some expenses, in addition to the extra work for CBS News.

"Of course, I would like to be paid more, and there have been times where I've put in many days on a story and realized that my hourly pay was something god-awful," he said. "But most stories are not like that, and these days [GlobalPost] has gotten much more flexible about allowing us to do major projects that pay more, and give us expenses to work with...I should note that no one can live off what GlobalPost pays, but that is part of the model: we're freelancers that devote ourselves part-time to GlobalPost."

David Carr, media reporter for the New York Times, is amazed by the diversity and quality of the content at GlobalPost, but worries that correspondents who come from legacy media backgrounds might not be able to pass the torch to a new generation of seasoned reporters.

"Many of the best people who file on GlobalPost are correspondents who gained years or even decades of experience while living in far-flung lands on the nickel of MSM outlets," Carr told me via email. "Those operations now find themselves in reduced circumstances and as a result have cut their global news efforts and the people who make it happen...I'm thrilled to still be reading the work of many of them, but once that generation of talent that was sustained and educated under an old media paradigm peters out, where will the talent come from?"

While GlobalPost has done a good job establishing its credentials as a serious, non-partisan news organization, it still has work to do in exploiting the online medium. Balboni said they had plans to integrate Facebook more deeply into the site, the way that Huffington Post has. And while they have increased video reports to at least two on-location reports per week, the videos are still not embeddable.

"In many ways, GlobalPost piggy-backs on other organizations, since a correspondent is forced to use resources from other jobs (Internet, housing, drivers, translators, etc.)," MacKenzie said. "This is not exactly fair. But as I have said, these are teething problems that will have to be worked out if the organization is to progress. GP will have to have dedicated reporters, not stringers who have to chase a million other gigs in order to survive. For now, we are all feeling our way forward -- can this new model work? If it does, it is an exciting step for journalism."

*****

What do you think about what GlobalPost has accomplished in its first year? What do you think it could improve, and would you be willing to pay for a premium membership? Share your thoughts in the comments below.

Mark Glaser is executive editor of MediaShift and Idea Lab. He also writes the bi-weekly OPA Intelligence Report email newsletter for the Online Publishers Association. He lives in San Francisco with his son Julian. You can follow him on Twitter @mediatwit.

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January 19 2010

20:00

The Search for a New Revenue Model in Journalism

My writing on PBS Idea Lab was introduced to me as a way to publicly discuss the growth of Spot.Us, my Knight News Challenge project. I've received kudos for being honest in my blog posts. I'm comfortable talking about where Spot.Us is falling short, and where we are exceeding expectations. I think we are doing a bit of both -- and trying to adjust to succeed more and fall short less. Hey, that's the nature of iterative projects, which I've always said needs to be at the heart of Spot.Us as a new concept.

So let's keep that bit of honesty alive in this post in order to talk broadly about journalism. (If you just want the updates on Spot.Us, scroll down to the bottom.)

Robert Niles at OJR wrote two recent, fantastic pieces. In the shadow of The Economist's article proclaiming this to be "The year of the pay wall," Niles wrote "there is no revenue model for journalism" and that "doing journalism is an act of community organizing."

Doing journalism as an act of community organizing is something I've been writing/thinking about for a long time -- ever since Assignment Zero first failed. (Its failure only becomes more beautiful and poetic with hindsight). But I want to focus on Niles' first point.

"There is no revenue model for journalism."

That's not an easy thing to say. Probably not good cocktail conversation at a journalism mixer. But let's entertain Niles for a minute.

He says there are three main ways publishers can make money.

  1. Direct purchases, such as subscriptions (or pay walls), copy sales, and tickets
  2. Advertising
  3. Donations, including direct contributions and grant funding

Niles then proceeds to break down the three and concludes, "Publishers must take a sober look at these three options and decide how best to maximize their income opportunities within them."

Others might disagree with Niles and cite a plethora of other revenue streams (see: How to turn journalists into profit centers), but I don't think we can outright dismiss Niles's point of view by dreaming up other revenue streams outside of these trusted few.

Keep in mind the tone I mentioned earlier: Honesty, both the good and the bad. So let's take a good long look at just the headline. Certainly, Niles didn't mean there were no revenue streams. He simply meant there is no new revenue stream to pluck out of the sky aside from those main three.

But let's take his headline to the extreme for a minute. We can keep these three revenue streams and, as the trends show, entertain the idea that journalism just isn't sustainable. That's what I did in a thought experiment while witnessing the back and forth banter of two friends on Twitter, an exchange that was archived by Deanna Zandt

My response to 'journalism mimics art' in full was captured in a bit of a rant:

....a hard cold truth might be that [journalism] isn't sustainable.

But you know what - even if journalism isn't sustainable in that classic sense it doesn't mean it will disappear. There are plenty of endeavors that have NEVER been sustainable in the true sense of the word.

I use poetry as an example. Poetry in and of itself has never been sustainable in the way we might think of other goods and services.

Are we afraid poetry will die? No. Has it ever even been scarce?

I think we could extend this [lack of sustainability] to almost all of the high arts (as opposed to pop arts).

One of Clay Shirky's most profound and popular posts about newspapers had this to say:

The expense of printing created an environment where Wal-Mart was willing to subsidize the Baghdad bureau. This wasn't because of any deep link between advertising and reporting, nor was it about any real desire on the part of Wal-Mart to have their marketing
budget go to international correspondents. It was just an accident.

And while we all agree with the wisdom of this, we seldom take Shirky to task. If Wal-Mart won't subsidize journalism, somebody else must step up. But perhaps whoever that is won't have profits and sustainability in mind.

I'm not proposing that we just give up, all join co-ops and grow dreadlocks (although that would be cool with my internal hippie). What I am suggesting is that, in this age of experimentation, which we all agree is happening, there are certain assumptions we make that steer the direction of our thought.

One of those assumptions, and I claim this all the time, is that there will always be a market for news and information. That marketplace is in flux and hard to pin down at the moment, but people want accurate and thorough news and information. If this assumption is true, then journalism will be sustainable once we figure out the marketplace again and how to "sell" the news.

Compare this to poetry, where there is little demand. There is no robust marketplace and poetry is not "sustainable" in the true sense of the word. Instead, it is traditionally professionalized through patrons of the arts.

The Relative Importance of News and Information

In conversations with people that conduct audience research I've come to realize that news and information is not as important to the average reader as it is to folks like you and me (bloggers, journalists, news junkies, etc).

Here's what they tell me: two times a week. That's how often people have the urge to dive into civic issues at the local level. Of those two times it's unclear whether or not news and information is even desired, or if it's just the urge to tutor the kids at your local school, or do some public gardening, etc.

I wonder how often people feel the urge to hear poetry?

I don't claim to know any truths about the value of journalism and original reporting. Hey, I'm biased! I'm just suggesting that, as journalists, when we have this discussion we should recognize our bias and tendency for over-valuation.

In that vein, I want to follow this train of thought to an extreme. For me, it's often helpful to think in extreme examples and then determine the factors that lead to one or the other extreme. I could very easily write a blog post where the value of news and information is compared to food (three times a day, please) instead of poetry. Following that path would give us different conclusions.

So fear not! No truth has been discovered in this post -- it's just an attempt to shake things up.

Spot.Us Updates

1. The Redesign is making progress -- It's always slower than you want it to be. But so is transportation. One day, we'll just be able to snap our fingers and, presto-insto, be somewhere new.

2. Pitches are coming in and going through the pipeline -- We still need to figure out a better way to keep pitches on a deadline. A last resort would be to start deducting money from pitches that go past deadline, but that is a last resort. I'm sure there are other measures we can put into place to make sure deadlines are met. By the way, the newest pitch comes from a very cool Peter Byrne who wants to investigate the UC Regents.

3. The iterative process continues.
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December 22 2009

08:59

Internet news as a market for news lemons

This article frames the problem of news dissemination as a problem of market lemons, analogous to the issue raised by George Akerlof in 1970. Framing news as a mechanism of vetting common knowledge as opposed to entertainment allows one to see that instant common knowledge in the byzantine and uncertain way in which humans communicate and live in is unattainable. Given this frame of the problem a potential solution is posited which allows traditional newspaper companies to serve and focus on the role of validating news rather than simply creating or capturing it. The most value added service that traditional news organizations can provide is validation of truth and quality assurance.

“It is hard to get the news from poems, but everyday, men die miserably for lack of what can be found there.” (William C. Williams)

Introduction

Gauging quality of entertainment is fairly simple and self-evident. Consumers know instantly whether a product is entertaining and consumers continue to pay attention if they find the material to be entertaining.

News providers tend to serve both an individual’s desire for entertainment and information in one product bundle. Although it is very easy for consumers to test the quality of the entertainment component of news it is much more difficult to gauge the information quality of news.

Consumers face the intangible dilemma of assessing whether news is accurate or true, which poses a problem of asymmetric information for consumers.

Despite the availability of virtually infinite potential news sources and automated search engines, the search costs of getting the truth are too high. Human beings are bombarded with information throughout the day and despite the ease of search engine technology only 28% of the internet is actually available for search (Barabasi, 2002). The internet is growing in content exponentially and current computing cannot search the majority of the internet.

The threat of news becoming a market for lemons is an important issue worth exploring as news serves to provide a gatekeeping and watchdog function in democracies.

Although it might appear that the advent of increased competition for news via independent and unbiased bloggers on the internet would improve news quality this may not be true in practice. Without a way to assess the accuracy and quality of the information the market of news on the internet tends toward a market for news lemons.

Shleifer’s research on the market for news shows that competition is not enough to ensure accurate news and that, ironically, competition results in “lower prices, but common slanting toward reader biases” (Shleifer and Mullainathan, 2005).

Shleifer posits that ‘a reader with access to all news sources could get an unbiased perspective’ and that ‘reader heterogeneity is more important for accuracy in media’ (2005).

That said, the issue of search costs of consumers has not been explored as in practical terms as no reader has time to read all news sources to form a perfect model of unbiased information.

The problem of assessing the validity of news quality is in essence the ‘market for lemons’ problem raised by Akerlof (Akerlof, 1970). The market for lemons phenomenon relates to ‘quality and uncertainty’ and news is clearly a business in which “‘trust’ is important” and, as Akerlof points out, “Informal unwritten guarantees are preconditions for trade and production” and “where these guarantees are indefinite, business will suffer” (1970).

The aim of this paper is raise the issue of the market for internet news lemons as the quality of free information served piping hot on the internet is ‘indefinite’. When the quality of a good is unknown consumers are willing to pay for it, assuming it is not reliable, and thus this drives sellers with a good product out of the market as the consumer is unable to determine high quality from low quality goods.

Akerlof showed the detrimental effect of markets for lemons using the case of used cars in the 1970s where people with good used cars could not obtain the price their car was worth and would not sell their cars, thus leaving the market full of lemons in a self-fulfilling prophecy of sorts. Similarly, any market for good where the quality of the product is uncertain tends to a market for lemons.

This phenomenon has been at play in the mortgage securities market and is no different for news as a product.

Towards a definition of news and newspaper quality

News as a system for humans provides the following affordances to humans:

  • connects people with information,
  • provides branding of perceived truth,
  • helps support democracy and its ideals, and
  • fulfills an entertainment component via narrative integrity.

The narrative integrity itself has recently been criticized by Taleb as it encourages readers to build unrealistic assessment of risk in financial and other aspects of daily life (Taleb, 2005). Newspapers in general tend to either exaggerate or under-represent risks faced by individuals and are not sound guardians from a risk management point of view.

Quality for a news product is a perception of validity and truth amongst peer groups that consumers communicate with. Most consumers of news want to know what is going on. What is big? News thus functions to provide roles of gatekeeping, watchdog, anti-corruption, and in general a sharing of true facts of interest to human communities in relation to purported values and themes.

The existence of a strong free press has been associated with lowered corruption across nations (Brunettia & Wederb, 2003). In a study of government ownership of the news media, which is the case in 97% of countries, it was found that per ‘public choice theory…government ownership undermines political and economic freedom” (Schleifer, Djankov, Mcliesh & Menova, 2003).

Scoping News

For the scope of this work the emphasis will be on the non-entertainment quality aspects of news as a product. This is consistent with Shleifer’s definition that the ‘quality of [news] information is its accuracy. The more accurate the news, the more valuable is its source to the consumer. Pressure from audiences and rivals force news outlets to seek and deliver more accurate information, just as market forces motivate auto-makers to produce better cars’ (Shleifer, 2005).

Hamilton’s book on the economics of news highlights the fact that news is meant for rapid commoditization, it is information good and is a product of network effects (Hamilton, 2003). Per Hamilton’s point, speed of delivery, accuracy, and relevancy seem to be desirable characteristics of news as a product (2003).

If we step back and look at this, news is really a mechanism of generating ‘common knowledge’ within a byzantine environment where quality and truth are uncertain.

Taking this perspective one can see that the work in artificial intelligence and philosophy conducted by Halpern and Moses is relevant in this context (Halpern etal, 1984). Halpern and other students of common knowledge find that in practice it is impossible to guarantee reliable and true common knowledge in real time. The closest one can get to is almost common knowledge (Halpern etal, 1994).

Given the complex nature of the problem of common knowledge in a distributed uncertain environment Halpern et al point out that the modeling of time is critical in achieving eventual common knowledge. One way to look at this is, given that a consumer wants common knowledge, they should wait a sufficient time until a news story can be vetted. The expectation of instant and true knowledge is a pipe dream, as Eugene O’Neil would say.

One side effect of the current market equilibrium for news is the segmentation of the market for news into the following groups of people:

  1. people who don’t read the news,
  2. people who the read news to interpret facts to suit agendas i.e. politicians, lobbyists etc, and
  3. people who read what they want to believe and are aware of it.

I believe this segmentation exists due to high search costs for the truth.

I personally don’t read the news much at all. If I am interested in a topic I research the field, get input from experts, and make my own inferences. I of course do not engage much in casual conversation. For the majority of citizens who do, news is an invaluable source to relate with others and share experiences of ‘true events’ and common knowledge.

Noted anthropologist Roy Wagner has pointed out the pervasive problem of information which humans grapple with:

“Persuasion, from the days of Aristotle onwards, never works as it is intended to and has its greatest effect on the persuaders … To the extent that the vast, worldwide communications industry, the media, the internet or Web, the ubiquitous ’sensory’ modes and guidance-circuitries use ‘information’ or ‘communication’ as code words for what is really going on, we live in a world that is actually created by a failure of persuasion.

“This means that we live in a world of information-stealth – the half truths of our lies and the lies of half truth  - or what the CIA, or at least its critics, would call disinformation. I wouldn’t be kidding you, now would I? Disinformation has a far more ambiguous or ambivalent effect than persuasion ever could have and is both more informative and communicative than its buzz-word surrogates. It works on a ‘leakage’ principle, partial truths leaked out in the telling of deliberate lies and deliberate lies leaked in the telling of partial truths. It is motivated by goals and objectives that have nothing directly to do with either belief or conviction on one hand or doubt and cynicism on the other; it offers deniability with both hands. ‘It is either half true,’ as the Viennese aphorist Karl Krauss said of the aphorism or ‘one and a half times true’.

“We are unconvinced (e.g. apathetic) on one hand, and overconvinced on the other, and the middle ground is the most contested of all … Disinformation rules the world, and it does so through ‘deniability’. We know for a fact that every single trade, occupation, and especially profession has its secrets, known to its initiates and unknown to others.” (Wagner, 2000)

The last piece applies to journalists as well.

Potential solutions: a new business model for news

To date innovation in news has been focused on either transforming traditional media into high tech companies, which is unlikely, and the adoption of the market niche strategy of hyperlocal news.

The model of niche and differentiation/specialization has potential but is perplexed with the issue of changing interest and taste. How does one know which hyperlocal news is of interest? With limited time and highly contested attention spans hyperlocal news is a difficult to maintain proposition. That said, given non-profit and community support it can work as a niche solution.

The solution we propose here is targeted to larger well established news players and is a novel approach to the problem.

Traditional print sources like the Washington post etc. have a platform and reputation for checking and ensuring high quality information. The expertise that existing print media companies have can be used to focus on validation and authentication of breaking news stories, as on the internet there is no authority for the validity of news.

One innovative solution to the market of news lemons problem might be for traditional news papers to create reputation-based blogging spaces where stories are tested and validated before publication. This is consistent with the work of Yamagishi who studied the market-for-lemons problem in online trading and found an online reputation system to be a useful solution to the problem (Yamagishi, 2002).

Yamagishi noted that online trading results in “information asymmetry” which “drives the … market into a lemons market” (2002). This is analogous to the problem of news consumption.  Yamagishi’s analysis segments reputation into 2 forms: positive and negative reputation. Yamagishi finds the openness of internet trading precludes negative reputation and  “promotes positive reputation as an effective means for curtailing the lemons problem” (2002).

An important aspect of understanding why negative reputation is not effective on the internet is that it is too easy to switch and create new identities. Thus methods of “inclusion” which validate positive reputation are critical to combating the lemons problem (2002).

Per Yamagishi’s suggestion, existing newspapers with positive brand reputations have value as providers of positive reputation in an open market of internet news.

An enterprise devoted to assuring quality of the news could be a new hybrid form of existence for traditional newspapers in which the goals of the news system is preserved.

The price differential paid to the news companies would be based on their quality of checking and not on slant of the news or sensational quality of it.

Under this model papers would specialize in news domains with expertise and offer objective validation stories. For true objectivity the influence of advertising profit would need to be removed. Perhaps the advertising revenue would accrue to content providers who provided the stories along with advertisements which underwrite the authors. The news intermediaries who select the stories based on quality and validation would be paid only for quality assurance.

A successful example of dealing with ‘cyber lemons’ was that of an ‘online intermediary’ used by China’s largest online consumer-to-consumer trading site, which built a “credit evaluation system to serve as a quality-intermediary and reputation” (Pan, 2005).

In short, several eBays for news, specializing in different news domains, would serve to mitigate the lemons problem.

The newspaper industry must face the disintermediation of its power to dictate the news agenda. The notion that a few, supported by commercial advertising, would decide what was newsworthy was paternalistic and with the disintermediation of this component the responsibility of what to pay attention to falls on society. This issue itself is best tackled through education and the fostering of civic and democratic ideals in youth.

Dhruv Sharma is an independent scholar in the fields of organization behavior, risk management, artificial intelligence, and systems engineering. A graduate of the McIntire School at the University of Virginie, he holds a Masters in Systems Engineering and a Masters in Organizational Development from Marymount University.

Special thanks to George Akerlof for email discussion of the idea and also guidance of areas to research and focus.

This article is dedicated to Emma Brown, a greater writer and journalist and George Akerlof, the great economist.

Citations:

  • Akerlof, GA. (1970) The Market for “Lemons”: Quality Uncertainty and the Market Mechanism. The Quarterly Journal of Economics, Vol. 84, No. 3. (Aug., 1970), pp. 488-500
  • Barabási, A.L. (2002) Linked: The New Science of Networks, Perseus, Cambridge
  • Brunettia, Aymo & Wederb, Beatrice (2003) A free press is bad news for corruption. Journal of Public Economics 87 (2003) 1801–1824
  • Hamilton, James T., (2003), All the News That’s Fit to Sell. Princeton, NJ: Princeton University Press
  • Halpern,J.Y. and Moses,Y. (1984). Knowledge and common knowledge in a distributed environment. Journal of the ACM, 37(3):549–587, 1990. A preliminary version appeared in Proc. 3rd ACM Symposium on Principles of Distributed Computing
  • Halpern,J.; Fagin, R; Moses,Y. and Vardi,MY (1994). Common knowledge revisited. Theoretical aspects of rationality. Proceedings 6th Conference. Retrieved from http://www.cs.cornell.edu/home/halpern/papers/ck_revisited.pdf
  • Schleifer, A. Djankov, S., Mcliesh, C. Menova, T. (2003) WHO OWNS THE MEDIA? Journal of Law and Economics. vol. XLVI
  • Shleifer, Andrei & Mullainathan, S. (2005) The Market for News. The American Economic Review
  • Taleb, N.N. (2005) “THE OPIATES OF THE MIDDLE CLASSES” Retrieved from http://www.edge.org/3rd_culture/taleb05/taleb05_index.html
  • Yamagishi, T. Masafumi, Matsusa. (2002) Improving the Lemons Market with a Reputation System: An Experimental Study of Internet Auctioning. Retrieved from http://joi.ito.com/archives/papers/Yamagishi_ASQ1.pdf Hokkaido University
  • Wagner, Roy (2000) “Our Very Own Cargo Cult”. Oceana

December 03 2009

18:10

Best of Twitter: FTC Workshop Discusses Future of Journalism

For two days this week, some of journalism's most high profile executives and experts descended upon Washington, DC, for "How Will Journalism Survive the Internet Age?" a workshop hosted by the FTC.

One exchange of note came between Rupert Murdoch and Arianna Huffington, who spoke separately but did a good job of representing two divergent points of view. Murdoch kicked things off with a paean to paid content.

"In the new business model, we will be charging consumers for the news we provide on our Internet sites...The critics say people won't pay," he said. "I believe they will, but only if we give them something of good and useful value. Our customers are smart enough to know that you don't get something for nothing."

He also took aim at aggregators and websites that he said misappropriate content.

"Some rewrite, at times without attribution, the news stories of expensive and distinguished journalists who invested days, weeks, or even months in their stories, all under the tattered veil of 'fair use,' " he said. "These people are not investing in journalism. They are feeding off the hard-earned efforts and investments of others. And their almost wholesale misappropriation of our stories is not 'fair use.' To be impolite, it's theft."

Later, Huffington took her turn at the mic.

"It amazes me that Murdoch and Brill and the pay wall team at the [New York] Times continue to believe that people are prepared to pay for news online, despite the recent survey showing that 80 percent of U.S. news consumers say they wouldn't bother to read news and magazines online if the content were no longer free," she said.

Huffington also stood up for citizen journalists, bloggers, and other groups that she felt were maligned by Murdoch. "The contributions of citizen journalists, bloggers, and others who aren't paid to cover the news are constantly mocked and derided by the critics of new media who clearly don't understand that technology has enabled millions of consumers to shift their focus from passive observation to active participation -- from couch potato to self-expression," she said.

Their speeches were only a small part of the event, and we've culled the best and most interesting tweets about the workshop to offer a sense of what struck home with people. We removed the #ftcnews hashtag from most of these tweets, and cleaned up some typos. You can read the raw feed of tweets on the workshop by going to the Twitter hashtag #ftcnews.

Morning Session: Day One

ereuben RT @jeffjarvis: Murdoch: "Let aggregators desist +start employng own journalists." Let news orgs desist & do own mkting, then. <YES


DebGH Good to see all players in one place at FTC hearing, but seems the usual suspects are giving us the usual spiel. Where's the "wow"?



AccuracyInMedia A question? Someone got to ask a question at #ftcnews? Oh, wait, it was just FTC Chair Jon Leibowitz. Way to engage the public!



Riversiderider No consumer groups reps here. Only biz insiders & professors paid by donors.



TonyFratto RT @jeffjarvis Scripps brags about building a new printing plant in Florida. // Building it next to the typewriter factory, I hear.



amandachapel @javaun "The low barrier to entry means amateurs can hop on, but there pros here too" Like water and a farmer watching a tsunami.



candacejeanne We are 1 month away from 2010. Here's a #newyearsresolution: Let's finally stop calling it "new media."



jeffjarvis FTC bureaucrat: you are leading the witness and betraying your legacy protectionist prejudice.



DebGH Finally: News media biz models must have quality product for success -- crap in a fancy package is still crap.

spj_tweets Huffington at #ftcnews: calling aggregators parasites and thieves is the news industry equivalent of "your momma wears army boots."


javaun Huffington: having glenn beck not searchable on google is good for democracy, bad for business.



jen_mcfadden Arianna might be giving the ballsiest FTC testimony ever.



paidContent Murdoch: Ask consumers to pay for products they consume. Gov't power should promote innovators, not prop up failure.

Afternoon Session, Day One

jcstearns Irony of pundits who tell govt. stay out of journalism & lobby for policy changes benefiting them bit.ly/6EDovD via @jeffbercovici

jpshankle Trying to tweet fairly neutral but not clear if most presenters understand aggregators, links, or internet conceptually at all

Danny_Glover Lem Lloyd of Yahoo just used the word "taxonomy" at #ftcnews, so I'm officially tuning him out. Unofficially, I've been bored a while.

SaveTheNews Brill: "The whole idea of government makes me uncomfortable except for the IRS reforms Len Downie describes."

yelvington In the boom years, the Net was occupied by rainbows and ponies. Now it's full of vampires and kleptomaniacs.

Edgecliffe Robert Thomson: govt handouts would create new class of content concubines

LeavittDC Solid advice from Reuters: "Stop replicating things that are already done by people who, frankly, do it better than you."

SaveTheNews People keep talking about the low bar of entry to online publishing but roughly 40% of America doesn't have high speed internet.

jcstearns Mike Bloxham says those of us who frequent future-of-news events like #FTCnews are freaks of nature. / Knowing laughter in the room.

spj_tweets From #ftcnews: Are newspapers like typewriters (i.e. dead) or bicycles (i.e. adaptable and vibrant)?

sydneyin140 Can someone explain why FTC can hold a thoughtful wkshop like this while the FDA still thinks the internet is radio with pictures?

Blasiol2_uwm #ftcnews is ravaging my thesis topic.

Morning Session, Day Two

jessdrkn Rosenstiel: revenue of newspaper from print is like sands of hour glass where one day it will be gone

bobwyman The faith in "Journalistic Exceptionalism" is no more healthy than are the many similar nationalistic or faith based prejudices.

AccuracyInMedia Rep. Henry Waxman now speaking about "the future of journalism," and he's not even on #Twitter. Clueless and backward.

dannysullivan Government's going to have to be involved in one way or another. waxman on journalism reform #ftcnews no he didn't say obamapaper :)

jen_mcfadden I'm sorry, Rep. Waxman, it will be solved by itself. It's called capitalism. Bring on the start-ups.

tgdavidson Dumb thought of the day, from Waxman: Have cities fund news! How might that work in Balt., Mayor Dixon?

wrldtree Interesting presentation at #ftcnews by Gentzkow that show that newspaper closings leads to less voting, at local and national levels.

jen_mcfadden "Journalism encourages people to act in their role as citizens" So do new tools like seeclickfix.com - need to think more broadly

tgdavidson More proof the #futureofnews won't be created at a conference: RT @jcstearns Only two software developer in the room at #FTCnews


jessdrkn Eric Newton, Pres, Journo Program, Knight Foundation: journalism does not need saving, so much as creating



Tracyvs The Big O!, Recipes, and Networks: What the FTC's Journalism Summit isn't Talking About http://bit.ly/6Pcwae

pilhofer Starting the Joaquin Alvarado fan club. The guy utterly, totally, completely gets it.

alisaamiller Eric newton fr knight. It's professional ethics. It's about firewalls. The fear of more govt funding and prejudicing content =bogus

Afternoon Session, Day Two

keverhart Pubcasting reform workshoped by FTC panel: there's more to it than expanding newsrooms. http://tinyurl.com/yb2qwz2

digiphile Spotty wifi fix: Stenographer tosses 3G USB modem to US CTO Chopra, who hands it to @pilhofer & @ericuman. Public-private coop FTW!

SaveTheNews At #FTCnews @pilhofer says "I'm a reporter by trade and a nerd by avocation"

sydneyin140 Journalism not content, it's what people take into their minds and hearts. It took 2 days at #ftcnews before anyone used the word "story."

sdkstl PBS.com's Seiken: added a "failure" category to performance reviews. If an employee doesn't fail enough, gets marked down.

sydneyin140 Oh dear, bdcst union rep missed the memo: "A person tweeting from a news scene is not a journalist."

martindave Missing from the debate: Not enough diversity focus on serving the truly needy in our society. Poor, elderly, youth esp children.

PotatoPro My view: journalism may turn from a job into a skill. Like "public speaking" you write in you area of expertise

jmhaigh To recap #FTCnews this will get sausaged into summary doc, consensus points highlighted, collab w/FCC & proposals @ part deux, springtime?

densmore53 Aggregation of #ftcnews FTC journalism event running notes at: http://bit.ly/5ymuoj #rji

Jessica Clark directs the Future of Public Media project at American University's Center for Social Media. There, she conducts and commissions research on media for public knowledge and action, and organizes related events like the Beyond Broadcast conference. She is also the co-author of a forthcoming book, "Beyond the Echo Chamber: Reshaping Politics Through Networked Progressive Media," due out from the New Press in February.

This is a summary. Visit our site for the full post ».

November 29 2009

09:12

FAQ: How would paywalls affect advertisers? (and other questions)

More questions from a student that I’m publishing as part of the FAQ section:

1. If News Corp starts charging for news stories, do you think readers would pay or they would just go to different newspapers?

Both, but mostly the latter. Previous experiments with paywalls saw audiences drop between 60 and 97%. And you also have to figure in that a paywall will likely make content invisible to search engines (either directly or indirectly, because no one will link to them which will drop their ranking). Search engines are responsible for a significant proportion of visits (even the Wall Street Journal receives a quarter of its traffic from Google). Still, some people will always pay – the question is: how many?

2. A newspaper website which introduces paid content is very likely to see a decline in number of visitors. How would this affect advertisers and the amount they agree to pay to that website/newspaper?

Advertisers will pay more per user, firstly. Both because they will know more about that user through registration details (and therefore advertising will be more targeted), and also because they know that that user has paid to see content, making them both more engaged and likely to be more affluent.

Of course, there will be fewer of those users, so the challenge is compensating for the loss of quantity through the increase in quality.

3. In your opinion, how could the concept of ‘charging for content’ affect the quality of journalism?

The interesting thing about the recent announcement by the editor of The Times is that he said they wouldn’t charge per article because that would influence their commitment to expensive journalism such as covering Sri Lanka.

An optimist would hope that charging for content would mean that a news organisation would focus more on unique journalism that doesn’t replicate what is available elsewhere for free. Sadly, I don’t think we’ll see that happen, at least in the near future.

It’s worth pointing out that many web operations churn out content because the advertising rates are so low they need to get as many views as possible.

On the flip side, if your paywall is preventing you from attracting enough readers to fund decent journalism, then you save the same problem.

More generally, putting up a paywall means that your journalism is seen – and criticised – by fewer people, which I would argue does present a quality issue. The future of journalism is collaborative, so if you’re putting up barriers you’re not enabling that opportunity to tap into the enormous knowledge in your former audience.

4. Do you think other newspaper publishers would follow News Corp and start charging for content or there would always be “free” places for news?

If News Corp makes it viable, then yes, others will surely follow. Until then I think almost all will sit back and see what happens with News Corp. But there will always be free places for news for a range of reasons: firstly, publicly funded organisations like the BBC and those with a social remit such as The Guardian; secondly, those funded by voluntary or foundation income such as The Bureau of Investigative Journalism and organisations like Amnesty; and finally, passionate citizens and those who simply like to chat.

5. Do you think that ‘charging for content’ is a vital business model which would last for long time?

I think it’s a business model that can work in some circumstances, if managed intelligently. The FT, for example, seems to be making it work, mainly because that content is financially valuable (I’d argue it’s information they’re charging for rather than content) but also because they’ve not cut it off entirely.

But broadly I think it’s the most difficult model because people never paid for ‘content’; they paid for a package and a service that included content. They bought a newspaper, not ‘the news’.

As for its longer term viability, as the means of production and distribution become more widely available, and advertisers themselves become content producers, it’s going to be increasingly difficult, and we’ll see increasing pressure on government to legislate to shore up publishers’ monopolies because of that, I fear.

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