Channing Turner

MCO 525: Final Proposal Paper

November 30, 2009

Reimagining Journalism and the ‘Service’ Media Business

Model

The news media is in crisis. Massive layoffs, budget cutting,

newspapers closing and declining audiences have sent the giants of

media into a panic, spurring journalists across the country to search

frantically for solutions. The Internet resides at the core of the problem

and salvation for news, providing an explosion of innovation while

disrupting traditional processes and business models. News media is

presented with a unique challenge and opportunity to reshape the

industry. But this isn’t a choice. News media cannot simply opt out of

the future and continue with the old model. Social and market forces

have altered the way people conceive of and consume news regardless

of how editors and media moguls contend they should look at news.

The current market runs short on patience for idealistic journalists. Yet,

optimism abounds. The future of journalism is clutched between the

invisible hand of the market and the unfamiliar hand of innovation. By

understanding the causes of the crisis, surveying current trends and

reimagining journalism’s role in the market, salvation may be found by

combining new-model approaches with the conceptualization of news

media as a purveyor of services.

Rethinking the News: What is quality journalism?

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Before rethinking the future of news media, entrepreneurs must

start with what future news media should provide. What does

journalism seek to accomplish? The Committee of Concerned

Journalists sums up the traditionalist conception of journalism in their

statement of purpose: “The central purpose of journalism is to provide

citizens with accurate and reliable information they need to function in

a free society.” The Committee further outlines several core principles:

truthful information, loyalty to citizens, verification, independence,

monitor of power, dedicated public forum, making the significant

interesting and relevant, compressive and proportional coverage, and

personal conscience. These principles outline a general idea of what

news organizations and journalists have traditionally sought to provide.

Yet, to cling tenaciously to these principles ignores the real

opportunity of the entrepreneur: to rethink journalism entirely. Quality

journalism need not conform to the expectations of traditional

journalism. Many traditionalists view the product of journalism as a

commodity — stories and packages written on deadline, delivered to a

reader on a set time schedule — but newer, more-salient approaches

to future journalism see it as a service. What does the reader want out

of our service? Equally important, what services will readers pay for?

These fundamental questions provide a more open-ended approach to

news content and allow for greater business-model flexibility. They

also focus efforts on the crucial question for future news media: What
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has value? Quality journalism has value. The trick to reimagining the

media business models is to find or create quality journalism, that is,

journalism with value.

Abandoned By Ads: Problems with the old model in the

Internet age

Traditionally, the content value of news has never paid for itself.

The media business model operates around selling readers to

advertisers. Companies sell “reach,” or the ability to access people and

homes. The effectiveness of reach is traditionally measured in CPM, or

customers per thousand, and thus, mass was key for advertisers — the

more eyeballs, the more potential consumers. This formula, however,

proved very inefficient for advertisers. Traditional media organizations

boast considerable readerships, but advertisers only care about a

select group of people, namely those interested in buying their

product. The rest represents wasted marketing dollars. So, the

traditional mass-advertising model worked gloriously for twentieth-

century media companies, while advertisers were stuck with the best

they could do in a bad situation.

The Internet turned this relationship upside down. It eliminates

inefficiency by cutting out uninterested readers. Through key-word

searches and tracking techniques, it allows advertisers to focus their

message on sections of the population more likely to buy their product.

However, this boom to advertising disrupts the media’s traditional

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focus on mass audience. For example, the Web-search giant Google

sells ads that appear only when consumers search for certain key

words, and generic news sites can’t replicate that efficiency.

In addition, the abundance and diversity of media on the web

contributes to erosion of ad value by allowing advertisers a profusion

of outlets. Unlike newspaper or broadcast distribution, news

organizations don’t own the Internet. They cannot restrict competing

publications, an advance that has led to the hyper-proliferation of

media content online. Where there was scarcity, now everyone can join

the conversation, and the Internet has given all journalists a lesson in

elementary economics. Thus, as advertising values for print and

broadcast slowly decline, Web advertising simply hasn’t made up the

difference.

Opportunities Missed: Where the old guard went wrong

Failing ad value necessitates the search for new revenue

sources, but many of the traditional revenue services have already

been claimed by Web startups. Web tools and the Internet’s affinity for

cheap, effective distribution of content have stripped news

organizations of the monopoly they held over public discourse.

Accordingly, power has shifted away from big news organizations to

small startups that have unabashedly encroached on media’s territory.

In fact, the current media crises originated principally from a lack of

foresight. The old guard failed to see opportunities while sites like
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Craigslist seized classifieds, flickr photos, Facebook social media,

Twitter breaking news, Yelp restaurant reviews, Topix local news, Digg

news ranking, etc. All these services once belonged to mainstream

media, but now reside in separate spheres unlikely to be reclaimed.

On top of this, mainstream media operations unduly burdened

themselves in the years preceding the Internet by consolidating into

giant, inert conglomerates and delving deeply into debt. Zealous focus

on traditional processes combined with insatiable hunger for profits

drove news media to become extremely good at the conventional

news model. Unfortunately, that model is disintegrating and those

companies now find themselves struggling under debt and an

unsustainable pressure for high profits.

Changing Approaches: Proposed and practiced ideas for news

media

Of course, mainstream media now realizes its mistake — just as

the alarm bells come to a deafening cacophony — and as the industry

searches for solutions, an abundance of ideas have appeared, ranging

from small policy alterations to fundamental restructuring of the news

model. Most media moguls seem to support less radical — and

imaginative — approaches such as the payment-wall model. Under this

model, readers would have to pay or subscribe in order to reach news

content. Most notably, Rupert Murdock and News Corp. have

announced that online readers will soon be required to pay for news
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content. This seems logical on its face because it takes a lot of money

to produce news and giving it away for free in hard times would be

giving up a potential revenue source. In fact, The Wall Street Journal

currently operates quite successfully on a subscription basis. However,

The Journal provides very specialized content, namely business and

financial news, which has a proven value for investors and business

owners. It is unclear that general news stories can match this value.

Further, The Journal has never given away content for free and

therefore has never dealt with a transition from free to pay-only. A

decade of giving away content has formed an avid belief in many

readers that news should be free. Also, as explained above,

subscriptions have never supported mass-oriented journalism by

themselves, advertising has. Pay walls radically decrease ad revenue

by limiting the audience able to view advertisements. Ultimately, the

pay-wall model faces severe challenges and is unlikely to bring about

long-lasting change that will save the news industry.

A second strategy backed by many in the mainstream is to

partner with other media organizations and fight back against news

aggregators. This approach argues that aggregators like Google strip

news sites of advertising revenue by synthesizing stories and content

in their own search databases. However, this approach also faces

serious problems. Google offers news sites the ability to opt out of its

search engine, and some propose media organizations should do

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exactly that. However, opponents believe that vanishing from Google

will cause readers to vanish as well. Google has become such an

Internet gatekeeper that most news sites derive around a third of their

traffic from it. Should a news site choose to defy Google, many fear

readers will simply never find the content, and advertising revenue will

drop even more as readership declines.

Furthermore, many commentators advocate changing existing

copyright law to presumably make it illegal for aggregators and

bloggers to take content from a news site and recreate it elsewhere.

However, this also isn’t likely to solve anything. Barring radical, and

perhaps socially undesirable, changes to copyright, the facts contained

in hard-news stories cannot be copyrighted, and therefore, effective

protection from aggregators seems out of reach. The battle against

aggregators and copyright law seems untenable.

Experimenting with Service: Changing the business by

changing the product

Faced with the obstinacy of larger media organizations, several

smaller groups have taken more radical steps to separate themselves

from the ethos of legacy media. These approaches advocate low- and

non-profit models that could free organizations from the destructive

hunger for profits and relieve their innovative inertia. For example,

MinnPost, a nonprofit news organization established by former Star

Tribune publisher Joel Kramer, was established with the goal of

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becoming a sustainable news organization by relying on revenue from

reader donations and foundational support. Instead of forcing them to

pay for content, readers are invited to support the organization.

However, non-profits don’t necessarily solve the problem and it

remains to be seen if the venture proves effective. Kramer admits his

model faces serious obstacles in becoming entirely supported by

reader donations by 2012. On the other hand, the non-profit

investigative group Pro Public has gained major publicity for hiring big-

name journalists and collecting extensive funding from donors and

foundations. All this seems to at least show the high potential for

newsrooms supported by donated revenue. The non-profit model

represents an attempt to change the focus of news from a commodity-

oriented venture to a public service, supported by and run for the

community.

The shift in emphasis from commodity to service gives legs to

more experimental content models. One proposal comes from Paul

Bradshaw, who advocates a new content model making journalists into

project-facilitators as well as content producers. He claims “the web is

a place, not a destination” and argues that those companies that

understand how people use the Web see it as a resource and tool

rather than just a content purveyor. Creating consumer “platforms,”

tools that people can use to produce and aid in their own endeavors,

could hold the answer for news companies. Platforms have high value
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to consumers, and therefore could pull in substantial subscription or

content revenue. In addition, people who find utility and functionality in

a web platform will stick around, come back more often, and generally

use the site more, which could result in much greater ad revenue.

“Success online rests on responding to, anticipating — and creating —

the needs of readers,” Bradshaw says, not simply giving them

disconnected, 1,000-word news stories every morning.

One application of this idea could be to open up content archives

and allow consumers to find value in the organization and

manipulation of mass data — an idea the BBC has already initiated.

The BBC has discovered that media companies may not even need to

do the organizing themselves. Its approach — along with cases like

Wikipedia and open-source software — illustrates that simply allowing

users access to data provides a catalyst for communities of

collaborators to form around that platform. Providing access and

organization to large amounts of data is an untapped opportunity for

news media.

In addition to providing consumer services, Steve Buttry of

Gannett Communications advocates developing improved services for

advertisers. Simply placing ads in print and online has proved

insufficient, so he argues media should use the Internet to delve

deeper, building business networks with companies to sell products,

connect them directly with customers and provide enhanced

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communications and marketing services — a sort of hyper-advertising

relationship. An improved model for advertising would incorporate

targeted placement and advanced services designed to increase the

effectiveness of advertisements, and therefore ad revenue. For

example, if the news media truly strives to monitor and understand

community, why wouldn’t they offer that knowledge to advertisers?

Whenever media becomes involved in a community of readers, the

potential for understanding and penetrating that community has great

value to advertisers. Buttry sees local media providing services for

local businesses, which would in turn provide revenue to support

traditional news practices; however, modern online media could also

partner with geographically distant companies. National- or online-

based companies don’t need to restrict their business to only local

consumers, and Internet-savvy media companies can exploit the

opportunities of a geographically free world. They offer not only

“reach” but also knowledge and facilitation. Ultimately, the hyper-

advertising model expands the notion of whom the news can serve and

gives advertisers a good reason to support journalism.

However, opponents of the hyper-advertising model raise

concerns over media independence. Running explicit advertising

services parallel to traditional news raises concerns over objective

reporting and public interest. This view, however, comes primarily from

media traditionalists. Media have always placed ads as a source of

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revenue, and offering enhanced services merely continues in that

same vein. Hyper-advertising merely takes online advertising to its

logical conclusion. Despite some perceived biases, most media

companies still retain their independence from both corporate and

political influences. Media organizations would operate under no less

independence than they do under traditional advertising strategies —

pressures newsrooms have become quite adept at handling. American

media has dealt with bias for centuries, developing effective ways to

segregate the checkbook from the notebook.

Conclusion: A Business Model for Service

Ultimately, the answer to rethinking the media business model

doesn’t come down to one sure-fire approach — nor should it in an age

of web-enabled diversity and abundance — but a common factor

emerges from the most hopeful models: the conceptualization of

journalism as a service.

Focusing on service solves media’s problems in two ways. First, it

builds on the inherent value of current journalistic practices to create a

new, unique product. Journalists gather facts and viewpoints to present

to the public; however, in its current incarnation, generic “news” has

trouble justifying its value to readers. Synthesizing information

contained in news stories can add a great deal of value if aggregated,

organized, and presented to readers in a relevant way. Furthermore,

media sites with vast quantities of archived content already have the
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raw material to forge new services. Accordingly, the new model for

journalism should generate revenue by offering the kind of customized

information services readers need. Allow users to map out their

morning commute and provide tips that allow them to get to work

faster; organize stories on a particular political candidate or issue into

a comprehensive exposé that can then plug in readers’ views; provide

organizational resources for people looking to get involved in local

events — all these ideas revolve around providing a service.

Second, focusing on a service changes how media companies

operate by aligning their focus on current consumer values. The

Internet has changed the industry dynamic by empowering readers to

seek out what they want to know. Editors can no long afford to debate

what makes the front page each morning because readers can make

those decisions themselves. People have, even deserve, the ability to

determine for themselves what constitutes news. Consequently,

journalists must place heavy emphasis on a dialogue with the

consumer, allowing users a voice in how the company operates.

Ultimately, this will facilitate strong relationships between media

companies and their readership, allowing low- and non-profit models

that depend on alternative revenue to thrive.

The future of journalism does not reside in a specific business

model or approach to content; it rests in rethinking journalism itself.

Journalism’s core problem springs from an inability to change or build

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on traditional processes. As consumer values change, so should

journalism. By enhancing content value through the incorporation of

services, subscription and pay-wall services will become feasible.

Further, enhancing services to advertisers will increase ad revenue,

making the advertising more viable on the Web. The future of news

media will not be devotion to the news content or journalistic ideals; it

will be devotion to service and the consumer.