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July 25 2011

05:28

Google faces fresh fire over web reviews

For a search giant with the business goal to "organize the world's information" it takes little to enter markets where information is sold. Financial Times refers to the recent developments in the market for customer reviews. Google's market power alone would be sufficient to change these markets entirely. 

[Google.com | About:] Google’s mission is to organize the world‘s information and make it universally accessible and useful.

Financial Times :: FT reports that Google is facing fresh protests following its decision last week to stop copying some types of information from other websites for use in its own, rival services. The reversal is the first indication of Google changing its business practices since the US Federal Trade Commission launched a broad anti-trust investigation into the company last month. A similar review was begun in Europe last year.

Continue to read Richard Waters, www.ft.com

July 07 2011

07:38

FTC does little to curb ads for fake news sites and it's getting worse

The Consumerist :: Sites with names like "News 6 News Alerts" and "Health 5 Beat Health News" steal the look and feel of websites for local TV stations. Even though the Federal Trade Commission, or FTC, recently appeared to be coming down hard on "news" sites shilling for things like acai juice, it looks like those sites are not only still around, but links to them are popping up on major, legitimate news sites.

Continue to read Chris Morran, consumerist.com

July 01 2011

21:14

US antitrust laws - Twitter investigated over dealings with apps firms including UberMedia

Guardian :: Twitter is being investigated by US regulators over its dealings with third-party companies including UberMedia, the firm behind popular BlackBerry and iPhone apps. The Federal Trade Commission, or FTC, is investigation whether Twitter's business relationships with other companies comply with US antitrust laws.

Continue to read Josh Halliday, www.guardian.co.uk

June 18 2011

19:31

Done - Microsoft gets antitrust approval to buy Skype

Reuters :: Microsoft has won U.S. antitrust approval to buy Skype, the Federal Trade Commission said in a website posting on Friday. Microsoft announced in May it was buying Skype for $8.5 billion, its biggest-ever acquisition, placing a rich bet on mobile and the Internet to try and best rivals such as Google Inc.

Continue to read www.reuters.com

May 28 2011

19:13

FTC: how should original guidelines on online advertising disclosures be updated?

Wall Street Journal :: The Federal Trade Commission has begun soliciting public comment on how it should revise more than decade-old guidelines that translate federal advertising laws to the Internet, as the agency moves to more aggressively police digital ads.

The agency said on a notice on its website Thursday that groups have until July 11 to send suggestions on how its original guidelines on online advertising disclosures should be updated to address new technologies, such as those used to target ads to users’ interests and mobile advertising.

Continue to read Emily Steel, blogs.wsj.com

December 09 2010

17:00

The Newsonomics of Do Not Track

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

Just in time for Christmas, we have cookie madness. No, not the sugared kind — the tracking kind. With pugnacious FTC Chair Jon Leibowitz taking on yet another big topic (saving media, net neutrality), we’re talking about tracking technologies — what’s fair, what’s legal, and what’s right.

On Dec. 1, Leibowitz put forward a 122-page Do Not Track proposal, officially inviting public comment due Jan. 31. Industry groups of many kinds, including the Online Publishers Association, are busily preparing responses. It’s unclear, as often the case with things digital, where the FTC jurisdiction ends and where Congress’ assent is required. There will be all kinds of twists and turns in the politics of Do Not Track (where, for instance, will the Tea Partiers stand, pro-unfettered individual liberty or anti-government regulation?), but when the dust settles, expect the following:

  • It’ll be easier for consumers to opt out of being tracked. That may be a simple one-click cookie, or something still a little complicated, but considerably easier than the multi-step approach required today. (I asked a group at NewsFoo, a tech-savvy bunch, how many knew how to turn off tracking. Only five out of 40 raised their hands.)
  • The advertising industry will seek to find new ways to further target, no matter what new hurdles are put in front them.

This isn’t an abstract debate about consumer rights or Big Brother. It’s a debate that could have profound implications for news media. If rules are re-written, we could see a re-balancing of power among news media, advertisers, ad agencies, and the ad networks. Therein may lie billions of dollars in ad spending — and revenue splits — in the years ahead.

If you attend an digital ad conference or talk to leaders in the industry, you’ll see the same PowerPoint (or Keynote): The perfection of commerce is coming soon. Ad-targeting technologies are getting smarter each day, creating better analytics about…us, collectively and individually. The coming perfection: I only get the kinds of commercial messages that make sense to deliver to me, based on all the known info about me, my reading patterns, and shopping habits. Sure, some mass branding — Coke in both Times Square and Tokyo’s Shibuya Crossing — will always be valuable. Most advertising messages, though, will be targeted. Targeted advertising is more effective, cheaper to deliver, and cuts out waste.

In that paradigm, media isn’t an enemy, exactly. It’s just friction. Media that helped deliver audiences for many decades now is a kind of friction. In the last several years, particularly, old media brands have eschewed ad networks as much as they thought they could, selling “premium” inventory. That means leveraging the authority of the news brand and its association with the deep pockets of affluent readers. We’ve seen some success there, but have to wonder how long it might last as targeting technologies get better and better. Why deal with the friction of separate media buys, if you can cherry-pick the audiences you want wherever they may be at the moment?

In classic web theory, it’s disintermediation: The connection between media and consumers is dissolving, with marketers able to reach end users more directly.

Enter a new age of Do Not Track. Maybe, in that world, news media’s role — and its engagement with audiences — becomes much more valuable. Maybe, it’s a reintermediation of a kind, as news media’s role in the shopping/buying lives of its readers re-emerges, digitally.

How might this happen? If we look at the potential newsonomics of Do Not Track, we can see at least two ways that real revenue can be driven out of the reordering of the tracking world.

First, the FTC proposal treats first-party tracking differently than third-party tracking. First-party tracking means that media, or really any company, tracks the behavior of its customers, those who have chosen to have a relationship with the brand. First-party tracking would allow online publishers to use analytics, drawn from web usage and registration data, to better target content for readers and viewers. And first-party tracking should allow some ad targeting of readers by a publisher on its own site — though that question will get muddier, depending on how Do Not Track actually works.

If publishers — especially big publishers, with the scale of audience of the Times, the Journal, Reuters, and portals — can help advertisers target consumers, then their audiences may become relatively more valuable, and advertising messaging higher priced. The “relative” here is relative to what advertisers can do off big brand sites. If Do Not Track constrains that in a significant way, that big news brands can offer relatively better targeting. That means a $10 CPM ad may be instead sold for $16, for instance, and the value of targeting can add up to tens of millions for each company annually. For a U.S. online ad industry now galloping to 17 percent 3Q growth (and expected similar growth next year) to a $25.8 billion expected 2010 final number, that targeting advantage could mean billions.

Second, publishers might further monetize the voluminous data they are harvesting. They could sell it. Data, media have come to understand, isn’t exhaust — it’s gold, if properly mined, and deeply valuable to advertisers and agencies.

Krux Digital, which works with publishers to track data usage, recently put out a report saying that “data skimming” by third-party networks was costing “premium publishers” $850 million a year. In other words, networks were placing cookies on publisher sites, alighting with lots of data that they then used to target other advertising. The number could be high (Krux has an interest in a high number; the higher the number, the more apparent need for its services), but there’s significant money left under some table, largely unbeknownst to publishers. If Do Not Track puts more power back into the hands of the publisher, then publishers may be help to re-sell the information — and that could help build toward the new business model news publishers’ need.

The FTC, of course, isn’t setting out to provide publishers with a new revenue stream. It’s trying to protect consumers.

Consequently, in industry responses to the FTC, OPA and other news industry groups have to be smart. They have to not only give lip service to being pro-consumer. They have to talk about how they can be pro-consumer, and much more transparent about how they use consumer data. They can proudly talk about delivering better news products. They can talk about improving the researching/shopping/buying experience. They can get beyond what some note as the “creepiness factor” of tracking, by offering up fundamental rules about how they’d be clear with their readers and viewers about what is being shared, what’s not and about consumer choices. They could also offer consumers incentives to share info.

They can re-establish, and reinforce, new stronger relationships with readers, in perfect synchronicity with the efforts of some to charge for digital news content.

The big opportunity, perhaps, is the ability of news publishers to transparently offer reader/consumers the opportunity to “opt in” to a wider world of reading and shopping targeting. Then, they could re-emerge, in the tablet era no less, as community and national centers of news — and commerce. Forget Foursquare; readers could check into their favorite news companies.

Track photo by HKmPUA used under a Creative Commons license.

June 15 2010

08:42

Dan Gillmor at Salon: ‘The newspaper industry essentially deserves to die’

I love newspapers. I worked in them for almost 25 years. But I’m not itching to bail out a business that is failing in large part because it was so transcendentally greedy in its monopoly era that it passed on every opportunity to survive against real financial competition. With a few exceptions, the newspaper industry essentially deserves to die at this point.

Dan Gillmor, author of ‘We the Media’ and director of the Knight Center for Digital Media Entrepreneurship in the US, argues in this article for Salon that its not journalism that needs to be subsidised – as suggested by the initial findings of the US’ Federal Trade Commission’s research into the state of the industry – but the infrastructure that makes online publishing and distribution possible.

If you want to worry about a threat to the journalism of tomorrow, consider the power being collected by the so-called “broadband” providers right now.

If we’re going to spend taxpayers’ money in ways that could help journalism, let’s make that benefit a byproduct of something much more valuable. Let’s build out our data networks the right way, by installing fibre everywhere we can possibly put it. Then, let private and public enterprises light it up.

Full post at this link…

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June 14 2010

10:02

NYTimes.com: FTC’s journalism study could ’sidestep’ making recommendations

The New York Times updates its readers on the US Federal Trade Commission’s public forums on journalism and how to save it, the last of which will take place this week.

The commission is expected to produce a final study later in the year, but the New York Times report also warns: “the commission could easily sidestep making any recommendations to Congress or invoking its regulatory powers, and instead issue something along the lines of an analysis of its findings”.

Full story at this link…

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June 10 2010

15:04

Fishbowl NY: Americans reject taxpayer-funded journalism idea

A survey conducted by Ramussen Reports suggests that 84 per cent of Americans oppose a Federal Trade Commission proposal to prop up the ailing newspaper industry with a three per cent tax on mobile phone bills.

Those surveyed also quite roundly rejected the idea of a taxpayer-funded scheme for young journalists:

Seventy-one percent oppose the creation of a taxpayer-funded program that would hire and pay young reporters to work for newspapers around the country. Fourteen percent support such a program, while 15 per cent are undecided.

Full post at this link…

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March 09 2010

17:37

Google’s Hal Varian to newspapers at FTC confab: “Experiment, experiment, experiment!”

Google’s economist-in-chief, Hal Varian, was the keynote speaker this morning at the Federal Trade Commission’s second round of hearings on the future of journalism. (The study is entitled “How will journalism survive the internet age?” Round 1 was held in December; transcripts and other material are linked here — scroll down. Not to be outdone, the Federal Communications Commission also has a project studying pretty much the same thing.)

Here’s the slide deck from Varian’s presentation, entitled “Newspaper Economics, Online and Offline”:

(Lab readers may recognize some of the slides and data as having appeared here previously. I provided some input to Varian as he prepared his talk. Varian also posted the presentation and a summary of his remarks at the Google Public Policy Blog.)

Varian took a leave of absence from academia a few years ago to take charge, among other things, of tweaking and explaining the workings of Google’s brilliantly clever auction pricing mechanisms for text ads. He’s also involved in analysis, finance, corporate strategy, and public policy.

Google has been in the crosshairs of the newspaper industry as newspapers struggle to hold onto print revenue in the face of digital onslaughts, including the text ads that bring Google the bulk of its $24 billion 2009 revenue (equivalent to about 85 percent of the entire newspaper industry’s ad sales). The industry’s biggest beef with the search giant is that it sees content aggregation on Google News as pilfering, without compensation, page views that ought to be going to newspaper sites; Google counters that it delivers a hefty share of total traffic at news sites (and that publishers can opt out of Google News if they really want to).

Varian offered no magic potion for newspapers, other than exhorting the industry to “experiment, experiment, experiment,” and to get better at analyzing and exploiting the information they can glean from their site visitor data. He began with a series of slides illustrating the dismal trend lines of the newspaper industry and its place in the media environment:

  • Newspapers’ share of total ad expenditures have been dropping pretty steadily since the 1940s, from a 37 percent share down to barely 10 percent today.
  • Newspaper ad revenue kept pace with GDP until the mid-1980s (both inflation-adjusted), but since then, it has disconnected and fallen — not just during periods of recession but during the entire 2002-2008 expansion as well.
  • Online ad revenue at newspapers has grown to just 5 percent of total ad revenue, failing to offset the declines suffered in other categories, particularly classified.
  • Circulation as been falling from its 1970-1990 plateau of about 60 million copies, but on a per-household basis has dropped steadily from 1.2 copies per household in 1947 to about 0.4 copies per household currently.
  • While television still predominates as a source of national and international news for most people, in 2009 “Internet” surpassed newspapers as a source reported by consumers.

Twenty-six percent of all Americans (46 percent of those under 50) access news by mobile phone, and an astonishing 80 percent get news from e-mailed links, Varian said. But (as first analyzed right here at the Lab), only three percent of all consumption of newspaper-generated content happens online; 97 percent is still consumed in printed newspapers. This is true whether you measure pageviews in print and online, or time spent with printed newspapers versus newspaper web sites.

Still, news consumption ranks high among online activities of consumers, with 39 percent getting online news “yesterday” (according to the Pew Internet and American Life Project, 2008), ranking it the third-most-popular reported activity (after e-mailing at 56 percent and using search engines at 49 percent).

Using Google data, Varian showed that accessing news exceeds search on weekdays, but drops to a fraction of its weekday level on weekends, when search leads. From this he concludes that much access to news and newspaper sites happens in the workplace, when consumers have time only for quick checks of headlines, not for in-depth reading.

The challenge for newspapers, therefore, is to “increase involvement in the news by turning it back into a leisure-time activity.” He sees tablets and mobile phones as helping to do that.

ComScore data shows that search engines send 35 to 40 percent of traffic to major U.S. news sites — so, assuming that this traffic monetizes about the same as other traffic, search engines must be driving 35 to 40 percent of revenue, as well, Varian said. But he suggested newspapers could do a better job using the data that comes along with the search click (the keywords used in the search), and using it to categorize the reader’s interests and tailor content suggestions and advertising accordingly.

One problem with this, I’ve found, is that about half of visits that come via search engines tend to be generic — users type the name of the paper, the URL, or a variant thereof, into the search field, using it in lieu of their browser’s address bar. But of the non-generic search clicks, Varian pointed out that most are for categories like sports, news/current events, and local (Google’s categories), which are difficult to monetize, while few are for the more lucrative areas of travel, health, shopping, computers, and electronics. “So the news narrowly defined is pretty hard to monetize.”

What about charging the consumer for news online, then? Varian’s answer:

My view is, yes, I mean, you should try for sure. But there is this difficulty that you run into when you start thinking about the economics of it is that you can really only charge for thing ifs they’re differentiated. There are a lot of substitutes for a product then it’s hard to charge for it. Then you have this problem, what economists call Bertrand competition…You get this competing down to the lowest common denominator.

So you really have to have news that’s highly differentiated in order to support a charging model. One time I thought, well, local news, that’s highly differentiated. Local football scores, things like that. Then I realized all of the moms and dads are in the audience on twitter with the mobile phones, maybe the news isn’t so highly differentiated after all, they’ve got mostly specialized industry content, points of view, analyses are not easily imitated are also a case that they can differentiate news. I’m agnostic on whether the charging will work. I think it’s worth a try, but you can only try it for something that’s going to be unique content. It’s very hard to charge for, let’s say, the weather, or something of that sort.

Varian concluded with this exhortation to publishers: “The three things newspapers should do is experiment, experiment, experiment!” He cited a few options from Google, like Living Stories and starred stories that can be followed for updates during the day.

“I’m a big fan of the new devices,” he said. The iPad, Kindle and other tablets introduce a “completely different ergonomics for accessing the news…so what I believe they’ll see is a merger of the TV, magazine, radio, and newspaper experience. You’ll have a device which will access all of the different medias. Give you a deeper — potentially deeper involvement with the news…So I would like to see this — this area develop and we’re doing what we can to help that happen.”

Finally, Varian urged newspapers to better exploit the information they have:

You know, in many cases, the newspaper website is seen as — as something that for the techies or the person who’s managing the web log [stats] is doing it just to look at how performance is working. But it’s hugely valuable information in those web logs [stats] — both from an editorial point of view and from a marketing point of view. There’s lots of interesting things that you can do when you understand why people are coming to your site, where they’re spending the most time, what they’re coming back to. It’s just extremely valuable information. I think newspapers can spend more time on analyzing that information and end up with better ad effectiveness measuring better contextual targeting and editorial targeting.

Here’s a full transcript of Varian’s remarks, as recorded by the FTC’s transcription service. (Note: This is not fully cleaned up or compared with a recorded version. I’ve inserted the slide numbers at the appropriate points.)

Wow, thank you very much for that kind introduction. Happy to be here. [1] As you heard, we’re going to talk about on-line and off line economics of newspapers. [2] And basically this is going to be mostly a fact-based presentation, looking at revenue, costs, advertising level change, composition, and so on. Most of the talk is from the data from the newspaper association of America that’s put up a lot of trends on the website, a key foundation of some of the other sources and a little bit of Google data that’s also emerged with this report.

[3] So I want to start off with a little overview of what revenues and costs look like for newspapers. And basically the bottom line here is 80% of the revenue roughly comes from advertising, 20% from sales. If you break down the cost side of newspapers, turns out that about 50% of the costs are production and distribution, that is the physical production and distribution of the newspaper, obviously it’s attractive if you can reduce your costs by 50% for any business. So the promise to the internet is just to reduce costs. I understand we’re going to hear much more detail about that this afternoon.

[4] If you look at ad spend by medium in the United States, I pulled this data from the U.S. Statistical Abstract. Of course, the big gorilla in the room is TV. You look at broadcast and cable TV, you’ve got by far the largest expenditure on advertising on those two media. Surprising enough, the next biggest thing is direct mail. Then after direct mail comes the — comes the newspapers. You look at how things have changed over the years, broadcast TV has gone down a little bit. Cable TV has grown by quite a bit, almost a factor of three. The internet’s grown from nothing in 1995 to about 5% of ad expenditures in 2008. And newspapers, As you can see, have contracted from about 23% down to maybe 13% or so. So the big changes are apparent in this diagram. And I guess the next talk is going to be perhaps some more up-to-date figures on the advertising business and newspapers. Newspapers, of course, are still about three times as large in terms of ad revenue as the internet, so there’s still quite a major force in the advertising world.

[5] This is another chart showing pretty much the same thing. If you look at newspapers, that’s the blue line, they’ve been going down since basically 1950 in terms of media share. If you look at the yellow line, that’s TV and cable. That’s been going up quite dramatically over the same period. And way down there in the bottom right-hand corner, that light blue line, is the internet which came from pretty much nothing up until the — maybe late 1990 s started to become a force in — in advertising and other media stayed more or less the same.

[6] Now this is a plot of GDP which I just put there to have a general measure of economic activity and newspaper ad revenue. And I’ve adjusted it but the consumer price index that you can see what the changes will be in the real term. So basically we have real GDP and real newspaper ad revenue. And you can see, it’s pretty much pieced back in the late ‘80 s, since then, more or less conference in the last couple of years where it took a big dropdown. By the way, the vertical grade bars are recessions. One thing to note is that typically during recessions, advertising expenditures are quite sensitive to cyclical conditions so you can see GDP dropping and advertising expenditures dropping as well. The last couple of years have been dropping outside and even more than the economy would indicate and we’ll see an echo of that in one of the — one of the later slides. The important point is that newspaper ad revenue pretty much Maxed out way before the internet came on the — on the scene.

[7] This is a picture of what ad revenue looks like by type, again, measured in constant dollars. So typically it’s broken down into four different categories, retail, which would tend to be local stores, national, which would be national brand advertising, classified, the blue segment there, and then on-line is the tiny little green segment that kind of popped up a few years ago. You can see what’s going on is retail advertising has been growing over this period. The brand advertising has been contracting and classified advertising stayed pretty much the same up until the last few years at which point it dropped fairly precipitously.

[8] This is the same chart only measured in shares so you can see the share and we’ll have a lot more clearly. I think the important point to note here is the on-line ad revenue is still — as of 2008, at least — is substantially less than 5%.

[9] What about circulation? If you look at circulation, the chart on the upper left-hand corner, the circulation stayed constant for a long period of time and drop in the last couple of years, but, of course, it’s a little bit misleading just to look at total circulation, what you’re most interested in, most likely, is circulation per house hold. So if you look at paid circulation per person, over on the right, you can see it was declining since the ‘60 s and pretty much a steady manner. The interesting thing is, if you look at ad revenue per reader, or ad revenue per circulation, it actually was increasing since the late ‘60 s with a few up s and downs in the recessionary periods and so on, but by in large increasing up until very recently in the last few years. But the ad revenue per circulation is going up even though ad revenue is going down because the circulation has been going down so much. So it’s the denominator that’s been causing this effect.

[10] And here’s another chart just showing circulation which, again, has been remarkably constant between say 55 million and 60 million copies.

[11] And here’s a chart of circulation per household, which is also been pretty stable in terms of its decline. Back in 1947, you were seeing a little over one newspaper per house hold, which I presume is morning and evening editions in many cases. But that’s gone down to something like 40 — .4 newspapers per household in today’s world.

[12] And this is the chart that — well, we just heard Susan refer to that now the internet has surpassed physical newspapers as the popular way of accessing information. I would say television is — got a pretty substantial lead on both of them. And, of course, most of the internet access is access to newspaper sites. So they aren’t, of course, the physical paper.

[13] In that same report, there were some interesting trends about getting news by phone. 26% of all Americans said that they actually access news on their phones and 43% of those under 50 — so this is yet another medium by which people can access news. But in many cases, given the interface that’s available, people are looking at weather or at current events because reading in depth on your phone may be somewhat inconvenient. I thought one of the more fascinating numbers that came out of the PEW report is that 8 80% of people get news by e-mailed links. That’s one of the more popular distribution mechanisms now. You see an interesting story, you send it to their friends. You go to the websites, you see the most mailed stories MRKS are accessed on people’s computers and now, increasingly, on handheld devices. And we shouldn’t think of a single medium per person. Half the population surveyed said they used four to six different media for accessing news. So it’s important to distinguish in these discussions between newspapers traditionally considered as the physical newspaper and, of course, all the other ways you can access news, on TV, on your phone, on your computer, your lap top, etc.

[14] Now, if you add it all up and you look at the difference between physical newspaper reading and on-line newspaper reading, you get this kind of amazing statistic that’s due to Martin Langeveld at Harvard['s Nieman Journalism Lab]. Only about 3% of total news comes on the computer. Most of it comes from looking at physical newspapers. You get nice numbers looking at the web data. This is data from the Newspaper Association Of America. People are spend 38 minutes per month on on-line news which works out about 70 seconds a day. Whereas a person who reads a physical newspaper tends to spend about 25 minutes a day. There’s also time use studies to back these numbers up. So even though accessing news on-line is a very popular thing to do, it’s actually the case that people are not spending nearly as much time on the newspaper on-line as those people are who are reading physical newspaper. Of course, they’re different populations, so you have to compare these carefully. But roughly speaking, about 3% of either page views or time accessing on-line news — sorry — 3% of the total access to newspapers is done on-line. On the other hand, it’s accessed quite often.

[15] This is from data from the U.S. statistical abstract. Also it came from Pew, that roughly 40% of adult internet users say they accessed news yesterday. And. In, if you look at those with household incomes of $75,000 or more, it’s about 53%. So it’s very popular to access that on-line news, it’s just that people aren’t spending a huge amount of time on it, at least compared to the people who are reading the physical newspaper.

[16] If you look, for example, at total number of hours per year where people are accessing newspapers or reading newspapers, it’s about — let’s see, in 2008, 168 hours per year. So roughly works out to 25 minutes a day. In terms of physical newspaper consumption — that’s the same order of magnitude as the time people spend on the internet.

[17] News — the third most popular activity on-line, sending a regular e-mail, using a search engine, getting news on-line. Those are, again, the three top things that people do on the internet, but they’re spending a lot more time, for example, reading e-mail than they are looking at the on-line news. Now this is a little bit of a paradox. Let me stop for a minute and show you the charts. The paradox is, it’s popular to access news on-line, but they don’t spend time doing it. Why is that? That’s the mystery. How much time they do it compared to physically reading the newspaper.

[18] So I pulled some Google data and I looked at the time use pattern of access to Google news. So what you got down there on the bottom are the hours in the over a couple of weeks. The two little small bumps are the weekend access. And the — the five bumps between them are the daily access. So the red line is search activities. This is how many people are searching Google for things. And the blue line is the news activity. So I plotted both of these charts from the area of — each graph is normalized to be one, so it’s measured in percentage terms.

So what’s the first thing you see in the blue line is a lot further up than the red line. What that says is that people are accessing the news during the day a lot more frequently than they’re doing searches. And if you go over to look at the weekend, you can see the searches dramatically exceed the news, people are doing searches more on the weekend than they’re accessing the news. What that suggests to me is that people are accessing on-line news a lot during business hours. It’s not so surprising that they’re not spending a whole lot of time on it because offline news reading is a leisure-time activity. You do it over a cup of coffee, you do it in the evening, maybe. Whereas on-line news reading, that’s a labor time activity. People snatch a few minutes out of the day to check the sports scores or the headlines or something of that sort. So if that’s true, people are spending much less time looking at on-line news than they traditionally spent reading on-line news because they’re doing it during working hours, much less during leisure ours. During leisure hours, you might sit and watch TV, as a matter of fact, it would be a common thing to do.

So the challenge, I think, that’s facing the newspaper industry is to try to turn that on-line newspaper access which is much more attractive way to reach a broader audience is to increase involvement of the news by turning it back to a leisure-time activity.

[19] If you look at the value of clicks sent to newspapers, according to COMSCORE, it’s 35% to 40% of the traffic to news sites. That monetizes about as well as other traffic, that means that search engines are driving about 35% to 40% of traffic of revenues, on-line news sites. Which is a substantial amount. However I have to remind you that the on-line news revenue is about 5% of the total. So even though they’re driving a substantial fracture of the on-line revenue that’s still a relatively small amount of the total revenue.

[20] One thing that’s interesting to do is if you look at a search click that goes to the newspaper site, the newspaper is sent a query — or any site, not just the newspaper site, the site is sent a query that generated that search click. And that means that the site that received the search click could direct the user to the appropriate section of the site. So you can take those queries that people are issuing when they click on news sites and ask, what are the categories? What are people looking for when they go to these on-line news sites?

And I’ve done that. It turns out that the kinds of things that people are looking for when they’re going to these on-line news sites are sports, news and current events, and local — those are the top-level categories that we use at Google categorize search clicks. But there’s relatively the same in travel, shopping, so on. And roughly the same in entertainment, computers, and electronics. I’m comparing searches that go to newspapers to just searches in general that go to sites that aren’t specifically classified as newspapers. I say newspapers, I mean sites indexed by Google news.

Now the bad thing — or maybe not the bad thing, just a fact is, that if you look at the money in on-line advertising, the money is in categories like travel, health, shopping, and consumer electronics. But if you look at the revenue that’s going to newspapers. That’s in sports, news, and current events and local. And believe me, it’s very, very hard to monetize those categories because there isn’t as much consumer dollars spent in those areas as there are in areas like travel, health, and shopping.

[21] So the news narrowly defined is pretty hard to monetize. Despite the fact that it’s popular and frequently accessed, there’s a relatively low level of involvement because of the time constraints that people face, and it’s typically not a highly commercial activity. In fact, newspapers have never made money from news. You look at where the revenue came from, they made money from the business page, the automotive page, home and garden, travel and technology, all those parts of the newspaper that wasn’t the raw news, not the newspapers. Why? You can target ads, not surprising that people who read the automotive page are interested in buying cars or people who look at the travel section might be interested in taking trips.You can see targeted ads in the physical newspaper but tied to the sections. Then it’s the revenue generated from those sections which are used to cross subsidize the actual production of news.

And what’s happened is, this has been a problem with this intermediation that now people can go directly to finance sites, to auto sites, to consumer electronics, books, to travel sites, real estate sites, and so on, so people go directly to seeking those specific sources of information, they tend to bypass the traditional sections of the newspaper and so the cross subsiization model that’s worked for many years has not really work ed now. It’s very hard to do conceptual targeting of the news. If you’re reading the travel section and you see a story about Hawaii, you wouldn’t be surprised to see ads for travel to Hawaii next to that story. If you read the news section and you see bombing in Baghdad, you’re not likely to see travel ads or anything else particularly relevant to that story. So it’s very, very difficult to do the same kind of cross subsidization we’ve seen work in the past.

[22] If you go look at advertising verticals for newspapers, you can see 20% is general merchandise, 14% financial. That would tend to be in the business section of the paper, home supplies, furniture and so on. So you look at the breakdown of where the money is coming from, then it tends to be somewhat different from the kinds of things that people are making money on on search engines and general internet advertising. Of course, all this doesn’t mean that newspapers aren’t valuable. You heard earlier — I would absolutely second that is critical both from the individuals and societal point of view. People find it valuable because people are going to look at news on-line. We see half of internet users read news on-line at some time or another. They just don’t spend a whole lot of time on it.

[23] I’ve seen this big debate on whether you can charge for news, replace the advertising model. My view is, yes, I mean, you should try for sure. But there is this difficulty that you run into when you start thinking about the economics of it is that you can really only charge for thing ifs they’re differentiated. There are a lot of substitutes for a product then it’s hard to charge for it. Then you have this problem, what economists call Bertrand competition — one seller sets it price here, one could sell it down. You get this competing down to the lowest common denominator.

So you really have to have news that’s highly differentiated in order to support a charging model. One time I thought, well, local news, that’s highly differentiated. Local football scores, things like that. Then I realized all of the moms and dads are in the audience on twitter with the mobile phones, maybe the news isn’t so highly differentiated after all, they’ve got mostly specialized industry content, points of view, analyses are not easily imitated are also a case that they can differentiate news. I’m agnostic on whether the charging will work. I think it’s worth a try, but you can only try it for something that’s going to be unique content. It’s very hard to charge for, let’s say, the weather, or something of that sort.

[24] So, in summary, if you go through and look at all of this, newspaper ad revenue is pretty much cost adjusted for dollars. The circulation per capita is going down since 1947. The really big increase of advertising revenues come from cable TV and that’s way before the internet. You do have this problem with on-line news that people are using it differently than they’ve used offline news. They tend to access it more episodically, and the challenge that the newspapers face is how can they use that to — how can they turn that deeper access to the news to the kind of deeper involvement that they would like to have? Maybe what you need, everyone said this is maybe not the news, but engagement. You need to increase the engagement with news.

[25] And the three things newspapers should do is experiment, experiment, experiment. Google has been working on doing some of the experimentations, I think a promising avenue is try to link news access during the day so you use this rather brief occasional access to stories, to a much bigger engagement, partially by shifting some of the access to leisure time.

So we’ve done things like living stories where you work with major newspapers to try to string together all of the items about a particular story as the newspaper developed through the day. Got this capability called star stories, you can look at a story and star it and then you can follow what happens in that story. Maybe look at it later when you have some free time, and other things like that. I’m a big fan of the new devices. I think that things like the ipad or the kindle and this whole group of tab let computing is going to potentially make a big difference because it gives you completely different ergonomics for accessing the news. If people are accessing on-line news at their workstation, computer, or their laptop during the day and they have a lot of things going on, when you come home, probably you don’t want to go sit in front of your laptop or your workstation at home to do the same thing. What you might want to do is sit in your easy chair and look at your tablet where you can follow some of the stories that you might have seen accessed originally at work.

Of course, this isn’t going to be a flat textural description, it’s going to be multimedia in those devices, and so what I believe they’ll see is a merger of the TV, magazine, radio, and newspaper experience. You’ll have a device which will access all of the different medias. Give you a deeper — potentially deeper involvement with the news. Because what happens with TV is you get this emotional experience from the visual side, but in many cases, it’s frustrating because you can’t go deeper in to the story because the newspaper, the physical newspaper with textural material you can go deeper in the story but maybe don’t have the same emotional involvement, get them both together, then potentially you can have a very positive and interesting and worthwhile experience. So I would like to see this — this area develop and we’re doing what we can to help that happen.

Finally, the last point is newspapers should better exploit the information they have. You know, in many cases, the newspaper website is seen as — as something that for the techies or the person who’s managing the web blog is doing it just to look at how performance is working. But it’s hugely valuable information in those web logs — both from an editorial point of view and from a marketing point of view. There’s lots of interesting things that you can do when you understand why people are coming to your site, where they’re spending the most time, what they’re coming back to. It’s just extremely valuable information. I think newspapers can spend more time on analyzing that information and end up with better ad effectiveness measuring better contextual targeting and editorial targeting. I think I’ll end there. And thank you very much for your attention.

January 06 2010

15:00

Eric Newton: Shame on us if we don’t take the steps needed to feed knowledge to our democracy

[In October, the Knight Commission on the Information Needs of Communities in a Democracy issued its report on how our media need to evolve to serve the public interest in the digital age. The effort included some big names: Google's Marissa Mayer, former solicitor general Ted Olson, ex-L.A. Times editor John Carroll, former FCC chairman Reed Hundt, and new media researcher danah boyd among them. Here our friend Eric Newton of the Knight Foundation explains how the report fits in a tradition of media self-examination and issues a call to action. —Josh]

Way back in the age of paper, in 1986, professor James Beniger, then at Harvard, produced a useful chart on the civilian labor force of the United States. It showed how the bulk of American workers had moved during the past two centuries from working in agriculture to industry to service, and now, to information. Point being: the digital age didn’t just sneak up on us. It’s been a long, slow evolution. So shame on us for not changing our rules and laws and institutions for this new age.

We were well warned. Just after World War II, the Hutchins Commission said that traditional media could do much better: they should take on the social responsibility of providing the news “in a context that gives it meaning.” In the 1960s, the Kerner Commission said mainstream media wasn’t diverse enough to properly tell the story of this changing nation. Same decade: the Carnegie Commission said the status quo was simply not working, that public broadcasting must be created to fill the gap.

After that, a stream of reports — from the University of Pennsylvania, from Columbia University and others — agreed and repeated the same three fundamental findings:

— Hutchins: Our news systems are not good enough,

— Kerner: They don’t engage everyone,

— Carnegie: We need alternatives.

Here comes digital media, and — boom! — an explosion of alternatives. And we’re all — shocked? Apparently. So let’s try it again. This time, the big report comes from the Knight Commission on the Information Needs of Communities in a Democracy, prepared by the Aspen Institute with a grant from Knight Foundation, where I work.

A new examination of a familiar problem

Why a new commission? We are now deep into the second decade of the World Wide Web. It was our hope that when our leaders were finally ready to change things, they would consider a new perspective. Hutchins, Kerner and Carnegie and the others focused on what should be done to improve, diversify, add to — and nowadays the talk is to save — traditional media.

The Knight Commission started with communities, by visiting them and hearing from their residents. News and information, the commission says, are as important to communities as good schools, safe streets or clean air. Journalism, it says, does not need saving so much as it needs creating.

As a former newspaper editor, that last point seems pretty important to me. Of the nation’s 30,000 burgs, towns, suburbs and cities, how many are thoroughly covered by the current news system? Ten percent? Five? Less? We’re talking about knowing how to get, sometimes for the first time, the news and information we need to run our communities and live our lives.

Is the Knight Commission making a difference? We hope so. The Federal Communications Commission has hired Internet expert Steve Waldman to study the agency, top to bottom, thinking of reforms with Knight’s 15 recommendations in mind. Free Press, the nation’s largest grassroots media policy group, embraced the report, especially its call for universal affordable broadband. Ernie Wilson, dean of USC’s Annenberg School and chair of the Corporation for Public Broadcasting, announced he is boosting innovation in public media. CPB backed NPR’s Project Argo in a partnership with Knight Foundation.

Community lawmakers are agreeing with commissioner and former FCC chair Michael Powell’s points about “information healthy communities,” about the role of open government and public web sites in local information flow. Commissioner Reed Hundt, also a former FCC chair, presented the Knight findings to the Federal Trade Commission.

Librarians across the country are pushing the role they can play as digital training and access centers. In addition to its dozens of media innovation grants, Knight Foundation itself took the commission’s advice: it has made more than $5 million in grants to libraries.

Taking the next steps

Now what? The policy work needs to come down to the detail level. Steve Coll and New America Foundation are among those thinking about that. How can we really spur more marketplace innovation? How can government rules and laws make it easier for newspapers to be nonprofits, treat student and nonprofit journalists equally, require the teaching of news literacy?

The hard part is ahead of us: that is, involving every aspect of our communities in this issue, governments, nonprofits, traditional media, schools, universities, libraries, churches, social groups — and, especially, citizens themselves. How do you do that? How do you make “news and information” everyone’s issue? It’s a tall order, perhaps the most difficult thing of all.

Universities could help here. Nearly two thirds of the nation’s high school graduates at least start out in a college or university of some kind. These institutions could make news literacy courses mandatory for incoming students. Understanding and being able to navigate the exploding world of news and information is as fundamental to the college students of our nation as knowing English. Stony Brook has already been paving that path. There, nearly 5,000 students have taken news literacy under the first university-wide course of its kind.

Colleges could set an example for the rest of our institutions. We are, after all, at the dawn of a new age. Who a journalist is, what a story is, what medium works, and how to manage the new interactive relationship with the people formerly known as the audience — all of these are changing as we speak. The complete metamorphosis of how a society connects the data and events of daily life to the issues and ideas that can better its life — would seem to be something colleges should want all of its students to think about.

This is hardly a short-term project. It took more than 200 years for America to change from a country where most people work growing food to one where most people work growing information. It will take time for the wholesale rewriting of America’s media policies, not to mention getting up the guts to spend the trillion dollars or more needed to remake our access to high speed digital systems and ability to use them.

Yet all of this is needed for America to become an information-healthy nation. A nation without universal, affordable broadband is like a nation without highways and railroads. We would be stuck on the surface streets of the new economy, tracing our fall from a global force to a secondary society.

More than 70 years after Hutchins, the basic story is still the same. The country’s news and information systems still aren’t good enough, still don’t engage everyone and still invite alternatives. It’s time to start doing something about this issue. Our rules, the laws, the policies — even the high school and college classes we teach — these things matter to how the news ecosystem in any given community is shaped. They can speed innovation or stunt it. So pick a recommendation — the Knight Commission lists 15 — and have at it.

[Disclosure: The Knight Foundation is a supporter of the Lab.]

December 14 2009

16:30

Are news nonprofits doomed to reliance on big gifts? A study in fundraising — and sustainability

I’ve been studying journalism nonprofits one way or another for about five years now, and I confess that in all that time, I’ve looked at their business models really as being slightly different iterations of the same species. But now, I’m not so sure.

As part of my graduate studies in nonprofit management at George Washington University, this fall I took a closer look at the finances of a dozen journalism nonprofits, keeping in mind the most pressing question for many: How can they diversify revenues and achieve some level of sustainability?

I acknowledge up front that my method was not perfect — I’ll explain at the end — but I think I’ve discovered what may be two critical distinctions within the group I studied.

First, the six nonprofits that served geographically defined communities — whether they be cities, states or regions — generally did a better job of diversifying their revenue sources than did those that attempted to speak to a national audience.

Second, among these “regionals,” there appeared to be some correlation between bigger budgets and greater diversity in revenues sources. This pattern suggested to me that there is a happy dynamic at work here — a virtuous cycle in which diversity of revenue helps create institutional heft that in turn attracts additional philanthropy in the form of major individual gifts and foundation grants.

What are the diverse sources that these nonprofits are tapping? For lack of a better descriptor, I lumped them together under the heading of “transactional” revenues — advertising, subscriptions, memberships, royalties, event ticket sales, contract research, and anything else that didn’t go under the “direct public support” line on Form 990. Some of these sources are taxable, some are not, and the difference was not always clear. Different nonprofits treated similar revenues in different ways. But I digress.

Regional news nonprofits: With size comes funding diversity

Here’s the graph that shows the correlation between average annual budget and a declining dependence on direct public support:

If this trend holds true, I think it would portend a relatively bright future for the nonprofit model as a major contributor in places like city halls and state capitals where newspaper bureaus have been emptied out. These are the places where the disintegration of the newspaper business model is most obvious to readers — and where for-profit alternatives have a hard time realizing returns on investment. Here, the case for philanthropy is clear — and so is a nonprofit’s potential to supplement its revenues with advertising and other market-driven revenues streams as it scales up its operations.

The trend also suggests a cruel and ironic corollary: The journalism nonprofits that can demonstrate the least dependence on foundations and large gifts may be the most likely to succeed in winning them.

National news nonprofits: Greater dependence on large gifts

At the same time, studying the finances of six “nationals” caused me to look at those organizations in a wholly different light.

Like the regionals, journalism nonprofits with national aspirations are feeling pressure to diversify their revenue base beyond foundations and founding donors. And at least some are looking to the regionals’ success for tactics they can replicate — witness ProPublica’s hiring of Watershed Co., a consultancy with expertise in online and grassroots fundraising. But from what I’ve seen, most depend on major gifts and foundation grants regardless of size. Here’s a graph showing average annual budget and dependence on direct public support:

As I reported here in September, Madeline Stanionis, Watershed’s CEO, pronounced herself “skeptical” of prospects for building a national network of small donors. As Stanionis said at the time, donors to political and other “citizen-powered” campaigns have been conditioned to believe that the candidate or institution that receives their donations will respond directly to their demands. But journalism does not — and should not — operate that way, she said. “I just think trying to force a journalistic endeavor into a hole created by these campaigns is not correct,” she said.

My suspicion is that the “nationals” also suffer from being one too many levels of abstraction from readers’ lives. Their reports, however compelling in their conclusions, don’t explain to the reader why city sewer rates are so high or why the state legislature just slashed school spending. As Mike Worth, my graduate advisor and GW’s former vice president for development, remarked: “The problem with the case (for philanthropy) is that it’s intellectual. Nobody ever died from lack of public journalism.” The latter might be debatable, but I think he’s got it right.

What’s the lesson here? I think there are two, either (or both) of which may be a blinding glimpse of the obvious.

First, the nationals have a solid track record of tapping foundation support and keeping it flowing over a long period. Here, I’m thinking of the Center for Public Integrity, which has relied almost exclusively on foundations and major gifts since Chuck Lewis founded it 20 years ago. Why tamper with success? The only real benefit from the time and effort required to build a grassroots network may be the added credibility of having to answer to an audience. This is doubly true for those such as CPI and ProPublica that specialize in investigative work and also claim to be nonpartisan and/or non-ideological.

The second lesson is that any effort to build a grassroots network at the national level is going to require a lot of refinement. There are simply too many competing news sources and too many requests for support. Breaking through all that background noise is an enormous challenge. Best of luck to those that try.

Except for Mother Jones

Now here’s the big exception to the rule: Mother Jones. Among the nationals, MoJo stood out in its time-tested ability to pull revenue from all kinds of sources — advertising, memberships, events and investment income. Steve Katz, the magazine’s chief fundraiser, tells me that the model is an outgrowth of a deliberate effort to define and serve a particular constituency.

In an email, Steve told me that MoJo has “worked mightily to make the case that you won’t find our kind of point of view anywhere else, and that our journalism is also rooted in a ‘value proposition’ a.k.a. a point of view a.k.a. a politics, and hence our journalism — which must stand on its own as professional grade work — is also about changing the world.”

I’ll buy that. But I also think that if you take Steve’s view to its ultimate conclusion in our current economic and technological environment, it points to a tough road ahead for news organizations trying to replicate the newspaper model of objectivity in the online world. The new national news organizations most likely to prosper are those that already have a built-in constituency — or a primary purpose other than producing journalism.

Here, I am thinking of David Westphal’s reporting on Human Rights Watch and its transformation from journalism source to journalism producer. As David noted in his recent testimony at the Federal Trade Commission: “A key point here is that not all of the new players are news organizations.” This trend raises important questions about governance and process within nonprofits — how they try (if they try at all) to insulate their news-gathering operations from their advocacy, much as newsrooms were separated from advertising departments at newspapers.

Where does it all go from here? In my view, the nonprofit model will shake out into two, three or maybe four discrete models, depending on reach and mission. Like cousins, at first glance, they’ll look somewhat alike and may get together once a year for reunions. But each will have its own distinct direction, habits, inclinations — and contributions to the public debate.

A note on the methodology: How’d I select the 12 nonprofits for my study? Frankly, it wasn’t very scientific; it was more an exercise in putting together a fact pattern. I began by listing the nonprofits I knew that (a) existed primarily to produce journalism and (b) had revenues of $100,000 or more a year, and 3) had filed their Form 990 tax returns someplace where I could find them online.

The list worked out to an even dozen, with six that I considered to be national in reach (ProPublica, Center for Public Integrity, Center for Investigative Reporting, Mother Jones, The Nation, Grist) and six that were primarily regional (Texas Observer, High Country News, MinnPost, Voice of San Diego, Chi-Town Daily News, New Haven Independent).

From there, I assembled all available revenue data from 2002 onward a developed an annual average for each nonprofit’s revenues and the percentage of revenues derived from “direct public support.” Then I plotted them on two graphs, one for regionals and the other for nationals.

December 01 2009

17:50

Tell us more, Paul

A major goal of ProPublica, perhaps the nation’s highest-profile nonprofit news organization, is to create “nothing less than a new class of cultural institution in this country,” Paul Steiger, its high-profile executive editor, told the Federal Trade Commission’s conference on the future of journalism this morning.

That’s pretty lofty stuff. And it would seem to carry a lot of implications not only for how news is created, but the regard in which a news organization is held by community leaders. Does that mean it would operate like a major metropolitan opera or a symphony? Exactly how would it build that kind of image and gravitas? And what kind of fundraising would it do? How would it work with for-profit legacy media?

I left the morning session still wondering because Steiger didn’t address any of those questions with any kind of detail. In his 15 minutes, pretty much all he said about the nonprofit model was that he doesn’t think the government should change tax law to help nonprofit news organizations and that other than doing great journalism, fundraising is ProPublica’s greatest challenge. Most of what we heard for 14 and 1/2 minutes was the same tale of woe about the demise of newspapers as social watchdogs and what great stuff ProPublica is doing to help fill the void.

I guess I expected more from the leader of what many outsiders regard as the flagship of nonprofit journalism. The model is poorly understood by many, and is often attacked with arguments that don’t hold water. One of my favorites is that nonprofits simply will bend to pressure to produce news that big donors want to read — as if a newspaper never skewed its coverage to please an advertiser.

The big problem is that a lot of journalists and publishers see nonprofits as a kind of shabby, tin-cup substitute for a real news organization. Coming as he did from his stellar career at The Wall Street Journal, Steiger knows better than anybody how the nonprofit model works as a business — its pros, its cons and how it might play a role (or several kinds of roles) in replacing what is being lost with the crumbling of the newspaper business model. Developing a cultural institution is a great vision for what the nonprofit model can be. But it can’t be a throwaway line.

I was impressed last month by CUNY’s Jeff Jarvis and his insistence on developing models with specificity. Jarvis’ approach is that even if the vision is wrong, discussing in some detail about how it might work is the best way to find what will work. Jarvis spent considerable time developing new business models for news, including one for the nonprofit sector. But he’s mostly interested in a for-profit solution. Somebody with great stature in the news business needs to take up the cause of the nonprofit model and begin explaining what it can do.

Paul Steiger should be that person.

November 20 2009

14:00

The FTC should give nonprofit news a closer look

You know the old saying about how we’re from the government and we’re here to help you? That’s what came to mind as I read the Federal Trade Commission’s notice for its workshop on journalism in the digital age.

The notice makes the case that “news organizations,” which it notably does not attempt to define, are suffering at the hands of aggregators and other online actors that have drained the fun and profit from news gathering. Among the solutions the FTC wants to examine are some that would seem to support nonprofits — tax treatment and greater public funding, for example.

Memo to the FTC: No thanks.

It’s not that the FTC’s proposed solution are so bad, though I don’t much like the idea of government funding non-broadcast news operations. It’s that they provide fresh fodder for misinformed critics who have come to the conclusion that nonprofits pose a threat to for-profit news sites and journalism generally.

Mention “nonprofit” to some of these folks, and you’re likely get an allergic reaction. No sooner had San Francisco investor Warren Hellman ponied up $5 million for the Bay Area News Project than somebody complained errantly that the new venture would rely on unpaid college students, forcing other media to cut staff to remain competitive. News flash: Old media aren’t competitive in the online age, and that isn’t the fault of Warren Hellman or any nonprofit. Others fretted that donated money like Hellman’s comes with agendas and strings attached. And advertising dollars don’t?

But I digress. Nonprofits offer a viable solution to the decline of socially responsible journalism. By design, they put mission ahead of profit. And as a result, they will live or die based on their commitment to transparency. When the government gets involved, it introduces the appearance of special favors and the potential for political interference. That’s the death of transparency.

To be clear, I don’t object to the notion of government oversight. A little can go a long way — witness the FTC’s late-1990s antitrust investigation of Intel Corp. At the time, Intel dominated the computer chip market and, along with Microsoft Corp., seemed capable of devouring anything in its path, much as Google appears today. But just before trial began in 1999, Intel signed a settlement with the FTC in which it admitted no guilt and essentially agreed to be nicer to the smaller kids in the technology sandbox.

Based on this experience, we can assume that what the FTC workshop really hopes to accomplish is to once again nudge the bullies into being nicer. I would submit that there are better ways to accomplish this goal. One might be to bring in witnesses who can explain how the nonprofit model works and how it complements the work of for-profits in journalism and other sectors.

My nomination would go to Duke’s Jay Hamilton, author of All the News That’s Fit to Sell, which is cited in the FTC notice. In the book, Hamilton makes the case that journalism is becoming a public good. He writes:

The point here is that since individuals do not calculate the full benefit to society of their learning about politics, they will express less than optimal levels of interest in public affairs coverage and generate less than desirable demands for news about government.

I do agree with the FTC that the stakes are high because unlike the great oil and steel trusts of old, the big powerhouses of the Internet are in the business of ideas. As Bill Kovacic, then a law professor at George Washington University and now an FTC commissioner, told me during the Intel case: “I think the impact is so important because its impact on information services affects everything we do.”

The FTC workshop will be held in Washington Dec. 1-2.

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