Newspaper Folks Go Crying To Congress For Help

from the oh-please dept

Let’s just get two points out of the way here before getting on with this post, because they’re important, and they’re repeatedly ignored by journalists and newspaper folks who want to play the victim, rather than recognize the future (I’m not saying all newspaper folks are like this…):

  • Advertising has been the real business model for newspapers for ages. Subscriptions have really only covered (maybe/barely) the cost of printing and delivering the paper.
  • The biggest problem facing newspapers going into bankruptcy or shutting down these days is not a lack of subscriber revenue, or even a downturn in advertising (though, there has been a downturn), but the fact that they had massive debt, because they borrowed way too much money. Many, many, many newspapers are still quite profitable — but not profitable enough to service the massive debt taken on by management.

You would think that these two points would be key to any discussion on the future of newspapers, but they didn’t seem to get much attention as Congress held hearings about the newspaper industry. It’s not at all clear why Congress needs to hold hearings on this, but it’s the sort of thing Congress does. And, of course, the newspaper execs cried about how awful things are, and how they need help and even an antitrust exemption.

Oddly, David Simon was asked to speak. It’s not clear why Simon was asked to speak. He hasn’t worked in the newspaper business in 14 years, though he did write a fictional TV show, The Wire, about a newspaper. Somehow that makes him qualified to speak about the industry. Now, Simon’s a smart, thoughtful guy, but when it comes to this subject, he consistently seems to get the details wrong, even to the point of disproving his own points. In his testimony before Congress (pdf) he lashes out at the internet, aggregators and blogs for no clear reason:

The internet is a marvelous tool and clearly it is the informational delivery system of our future, but thus far it does not deliver much first-generation reporting. Instead, it leeches that reporting from mainstream news publications, whereupon aggregating websites and bloggers contribute little more than repetition, commentary and froth. Meanwhile, readers acquire news from the aggregators and abandon its point of origin — namely the newspapers themselves.

In short, the parasite is slowly killing the host.

First, Simon seems to be confusing a number of different things here. He’s flat-out wrong that not much first-generation reporting is delivered online. Plenty of it is. It’s almost silly to have to start pulling out examples. Second, “it” (being the internet) doesn’t “leech” anything. “It” is just a delivery mechanism, just like “paper” is a delivery mechanism. Again, if the internet “leeches” reporting, that’s no different (and no less ridiculous) than claiming that reporters “leech” off the people they write about. Third, while some bloggers and aggregators may just repeat stuff, not all of them do. Simon seems to be making the classic mistake that if lots of bloggers do one thing he doesn’t like, then it means no bloggers do stuff he does like. That’s a pretty basic logical fallacy that you would think such a “great thinker” on these issues wouldn’t make. Fourth, even if many bloggers do just repeat stuff, that can actually be quite a valuable service in spreading the news and getting it more attention. Fifth, what’s wrong with adding commentary? Isn’t that what Simon himself is doing? Sixth, I think plenty of people would argue that the mainstream press is known for churning up plenty of froth itself. Seventh, aggregators send traffic to sites. People don’t acquire the news directly at the aggregator, but through the aggregator. Eighth, it’s not a “parasitic” relationship if the sites get something back (such as traffic).

See? It’s amazing how much he gets wrong in three short sentences. And yet he’s the expert?

You do not — in my city — run into bloggers… at City Hall, or in the courthouse hallways or at the bars and union halls where police officers gather. You do not see them consistently nurturing and then pressing sources. You do not see them holding institutions accountable on a daily basis.

Actually, I do see that all the time. Simon apparently doesn’t know where to look. Perhaps it’s true that not every city has that going on yet, but that’s a huge opportunity for organizations to step in. We’re seeing it all over the place.

Why? Because high-end journalism — that which acquires essential information about our government and society in the first place — is a profession; it requires daily, full-time commitment by trained men and women who return to the same beats day in and day out until the best of them know everything with which a given institution is contending.

First, how often is that actually true of newspaper reporters? Yes, there are some, but there are many reporters who don’t actually seem to really know much about the beat they’re covering or end up getting played by those they do cover.

But, more importantly, Simon still doesn’t seem to be reading the right sites. There are some astounding blogs out there that are full-time jobs, that involve people returning to the same beat day in and day out until they know everything. He seems to once again be assuming that “journalist” can only mean “writes for a newspaper” and not “writes for a blog.” It’s just a delivery mechanism.

He goes on to repeat the myth that “new media” commentators believe that there is no need for professional journalists. I’m still waiting to find out who actually claims that. Almost everyone I know and read believes there’s still plenty of room for professional journalists, but that they may be working in conjunction with others. The idea that jouralism or mainstream news organizations just die off is preposterous and no one is claiming that at all. It’s just that they need to adapt, and if they don’t, other organizations can and will take their place. Journalism will live on.

Yes, I have heard the post-modern rallying cry that information wants to be free. But information isn’t. It costs money to send reporters to London, Fallujah and Capitol Hill, and to send photographers with them, and keep them there day after day. It costs money to hire the best investigators and writers and then back them up with the best editors. It costs money to do the finest kind of journalism. And how anyone can believe that the industry can fund that kind of expense by giving its product away online to aggregators and bloggers is a source of endless fascination to me. A freshman marketing major at any community college can tell you that if you don’t have a product for which you can charge people, you don’t actually have a product.

And… so we’re back to myth number 1 at the top of the post. The news business does have a product for which it can charge people: that product is the community of readers it brings together, who it then sells to advertisers. That’s always been the business of newspapers for as long as any of us have been alive. Repeating the myth that the newspaper industry is “giving its product away” doesn’t make Simon sound smart. It makes it sound like he doesn’t even understand the news business.

This kind of poorly reasoned logic is coming not just out of folks like Simon, but out of folks like the CEO of Forbes — who recently blamed Google in one of the most poorly reasoned and factually incorrect statements around. I’d dismantle that as well, except that Danny Sullivan has already done it.

So one would hope that when Google was asked to present a counterpoint to Congress, it would lay out some of these issues. Unfortunately, the actual testimony (pdf) comes off as rather weak. It basically just says “Google is a friend, we help” but doesn’t actually counter the myths and falsehoods put forth by those bemoaning the troubles facing the newspaper industry.

What we’re seeing before Congress is a scripted play. It’s not a real discussion about the problems facing the newspapers. It’s not a real discussion on how journalism will work in the future. It’s not a real discussion on the role of the press in the public discourse. It’s a big scripted play put on by a bunch of bad business execs who made (and continue to make) bad business decisions, failed to embrace certain opportunities, and are now hoping for a government bailout for all the mistakes they made. They don’t deserve it.

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Comments on “Newspaper Folks Go Crying To Congress For Help”

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RD says:

Told you

Told you this would happen (not that it wasnt blindingly obvious anyway.)

As soon as you hear the words “government bailout” EVERYONE comes rushing to the trough with their sob story.

Where is my bailout? OH thats right, I’m one of the little people. My role is to just pay pay pay more and more taxes to cover other people’s shortsightedness and bad business decisions, so they can go back to their multi-million dollar mansions and yachts and live the high life.


Anonymous Coward says:

So whats your point? What is the problem with domestic automakers?

Unions and building cars that no one wants to buy. Who is at fault? Well, the unions and government. Govt. makes them build cars that no one wants to buy (fuel efficient, little clown cars etc.)

Who know owns most of the 2 companies? The govt. and the unions. Do we see a way out here when the biggest owners of the big 2 caused their problems in the first place?

Comboman says:

Re: Re:

Unions and building cars that no one wants to buy. Who is at fault? Well, the unions and government. Govt. makes them build cars that no one wants to buy (fuel efficient, little clown cars etc.)

I think you’ve got it backwards there buddy. The American cars no one wants to buy anymore are the gas-guzzling behemoths. GM is shutting down its Hummer division and regretting that it didn’t invest sooner in hybrid technology. Toyota and Honda aren’t asking for bailouts.

Comboman says:

Re: Re: Re: Re:

actually GM is shutting down it American hummer division. Over in Iraq however, they can’t build them fast enough. It would seem only us stupid Americans let the government and wack job environmentalists tells us what we can and can’t drive.

Which only proves the Hummer is a great vehicle for a war zone (which is what it was designed for).

Your Favorite Hero (profile) says:

Re: Re:

If you’re not being sarcastic, then you are a douchebag. And I’m not in the mood to give you the benefit of the doubt. The government made them? The unions made them? Douchebaggery. Both are too damn lazy to do a thing, let alone make somebody do something. So, blame it on the big, non-functional entities rather than the people – the individuals – that were so happily insulated from decisions, content to sit it out and just pass the buck.

Someone has to stand up and take some accountability. So fine, I’ll do it. The auto industry is bankrupt and has not made good decisions because of me. I did not have the capacity to parent these imbeciles and teach ’em how to be intrinsically-motivated, self-reliant creative thinkers. So, since no one else had the time, the audacity, or the balls to try to make a decision, a very large portion of our economy is in despair (since before that Roger and Me movie in 1989, so really this came from out of nowhere).

Good luck, I challenge someone to step up and wrest this position of authority from me. But I don’t expect any of you will have the courage to take charge or accountability.

Congratulations on your lack of initiative.


Your Favorite Hero

Greg (user link) says:

Newspapers got into trouble the same way the banking business got into trouble. Long ago, major news outlet owners began to buy up smaller papers to create larger corps. in my town, the paper is work for is owned by the same company that also own two other local papers, one of which is our afternoon competitor. with so much buying, revenues were up for a bit, but the adverts started to leave and next thing you know it, revs dropped. these newspaper companies aren’t in dire straights. the mega-news corps want big bucks and they want it know. all they need to do is sit back and restructure, but instead, they are laying off journos and begging for $.

Steve L says:

Re: Re:

Funny, cause the paper I work for owns the two other local papers, and the 4 weekly papers, all in the same area. And as you said, as soon as the advertising started to leave, people started losing jobs, and the many weekly pubs they owed started combining to put out a single product, and now they really wish they could unload all of them.

Along time ago, even when newspapers were doing pretty well, my boss told me “A good circulation department breaks even.” Something we haven’t really been doing all that much of lately.

Gabriel S. says:

Full Circle

The events discussed in this article are classic examples of myopic management.

Papers were powerful in the past and have the expectation that they are somehow entitled to retain that power, regardless of ‘market forces’ and demand. It’s as simple as that. (See: entitlement)

The Print Media industry has a fantastic opportunity here, if they can focus well enough to see it. A brand-new market has been figuratively handed to them, rife with opportunity and almost infinite scalability.

Newspapers must give up this entitlement complex and focus on it’s core value: accurate and timely reporting. When revenue is the sole purpose of your organization, you cannot remain intellectually and strategically stagnant in the marketplace.

The print media has fantastic amounts of name recognition that they can capitalize upon; give the general public a reason to trust you and only you. Make me WANT to visit the AP instead of Joe the Blogger, don’t demand that I do. Refocus on being a trusted and respected outlet.

You’ll find that once you garner the attention, trust and respect of the ‘net-aware’ public, revenue and opportunity are sure to follow.

Luís Carvalho (profile) says:

Mike, one other point you didn’t remember to dismantle…

“It costs money to send reporters to London, Fallujah and Capitol Hill, and to send photographers with them, and keep them there day after day.”

I may very well be wrong, but, I am sure that everywhere in the globe, or very close by, there is a blogger, that owns a camera, or a friend that does, and can get where the news is way, way faster. And for a fraction of the money.

I don’t have sources to present, but, I’m pretty sure that this is true or very close…

Instead of fighting them, or calling them names, wouldn’t it be easier to embrace this, calling those that can write a piece of news, take some photos, do a quick interview, maybe even better then some hotshot reporter that isn’t a local and doesn’t have the feel and knowledge necessary?

But, well, that would be… smart. LOL

Just my $.02.

Anonymous Coward says:

Newspapers are going out of business because no one wants to read their mind numbing left wing dribble. If no one wants to read the pinko communist slanted rubbish that they spew out on a day to day basis, then what advertiser is going to want to spend huge sums of money to advertise their product in a paper nonone reads let alone the thought of associating their product with such garbage “news” if that’s what you can call it these days. So fewer readers = fewer ads = fewer dollars = soon to be out of business newspaper.

Oh yeah and then there’s that internet thing. Wow there’s some cool things on that there internet.

YouAreWrong says:

Holy crap, Mike. You're a hypocrite.

You repeatedly end up on the receiving end of criticism saying you have no idea what you’re talking about because you’ve never worked in any of these industries. You respond that this is irrelevant. But then you say this:

Oddly, David Simon was asked to speak. It’s not clear why Simon was asked to speak. He hasn’t worked in the newspaper business in 14 years, though he did write a fictional TV show, The Wire, about a newspaper. Somehow that makes him qualified to speak about the industry.

Now, I’m fully expecting you to say that you’ve never said this, but you did (
when we talk about music, we’re told we can’t comment because we’ve never sold music. When we talk about patents, we’re told we can’t comment because we’ve never received a patent. When we talk about the journalism business, we’re told we can’t comment because we’ve never been journalists. Of course, that’s quite silly. It’s like saying that no one who isn’t an economist can comment on business models, because only economists understand business models.

So here this guy is who worked in the biz 14 years ago, and you’re saying he shouldn’t be allowed to comment, but you’ve never worked in any of these industries and you’re saying it’s perfectly okay if you comment.

Anonymous Coward says:

Re: Holy crap, Mike. You're a hypocrite.

He’s not saying he’s not allowed to comment. He’s saying that it’s odd that he would be a representative before Congress of the newspapers.

Asking a man who hasn’t been in the business in the past decade-and-a-half when these problems actually happened to speak about the problems to the government directly is different than writing commentary.

YouAreWrong says:

Re: Re: Holy crap, Mike. You're a hypocrite.

Mike didn’t say “he’s unqualified to speak before Congress.” Mike sarcastically stated “Somehow that [lack of experience] makes him qualified to speak about the industry.”

Even then, if Mike is claiming to have some sort of expert insight, but that expertise isn’t good enough for Congress, then his opinion is not relevant. We’re not talking about his favorite flavor of icecream — we’re talking about multi-billion dollar industries that Mike has no actual experience with.

Dale Harrison says:

Faster Horses...

The future of media will not be anything that looks like the current structures…

A lesson worth remembering is that at the turn of the 20th century, people had a transportation problem…and the solution turned out not to be a “faster horse”…but a Ford.

And one should note that the Ford didn’t arise out of the “horse industry’s” R&D efforts, nor the “Horse Industry Revitalization Act” nor the horse industry’s attempts to experiment with new Business Models.

I think the future of the media business will look as different as Ford and Toyota’s operations look from horse traders and blacksmiths.

What’s historically given value to editorial content is the relative scarcity of distribution versus readers (not the Kindle kind). Newspapers have historically enjoyed natural localized economic monopolies that allowed each of them to exercise monopoly control over the amount of content (and advertising) they allowed into their local marketplace.

Monopoly constraint of distribution and supply will always lead to prices (and profits) significantly above open market rates. Newspapers then built costly organizational structures commensurate with that stream of monopoly profits (think AT&T in the 1970’s).

Unfortunately the Internet came along and changed all the rules!

The dynamics of content replication and distribution on the Internet destroys this artificial constraint of distribution and re-aligns advertising (and subscription) prices back down to competitive open market rates. The often heard complaint of Internet ad rates being “too low” is inverted…the real issue is that traditional ad rates have been artificially boosted for enough decades for participants to assume this represents the long-term norm.

An individual reader now has access to essentially an infinite amount of content on any given topic or story. All those silos of isolated editorial content have been dumped into the giant Internet bucket. Once there, any given piece of content can be infinitely replicated and re-distributed to thousands of sites at zero marginal costs. This breaks the back of old media’s monopoly control of distribution and supply.

To paraphrase Nietzsche, “God is dead. God remains dead. And we have killed him with the Internet…”

The core problem for the newspapers is that in a world of infinite supply, the ability to monetize the value in any piece of editorial content will be driven to zero…infinite supply pushes price levels to zero!

What this implies is that no one can marshal enough market power to monetize the value of content in the face of such an infinite supply and such massively fragmented distribution. Pay-walls, lawsuits and ill conceived legislation won’t allow the monopoly conditions to be re-constructed because only ONE VERSION each story has to leak out to start the cycle all over again.

Another way to think about this is that once data becomes publicly visible on the Internet, its monetizable value rapidly dissipates to zero.

This is at the core of why Google can extract $25B a year from the economy without creating ANY content…what they create is meta-data about content (which CAN be monetized)…and all that meta-data remains non-visible. Only the results of decisions based on that meta-data by their search and advertising platforms is made publicly visible.

The lesson is that Google DOES NOT monetize other people’s content…it monetizes its OWN meta-data. This is certainly one path to making the news profitable…not search per se…but various other approaches to the monetization of meta-data that’s within the reach of publishers.

So the exquisite irony is this:
In the future, the only content that will have monetizable value is content that no one is ever allowed to read! (i.e. the meta-data)

There are certainly ways to make online news profitable…and many of us are working to develop such approaches…but I can assure you they don’t involve inventing a “faster horse”…

Dale Harrison

Anon says:

The irony, although not mentioned in this article but in previous ones, is the newspaper industry trying to scare some kind of Government based support by implying that the Government will become corrupt (or more corrupt) if the newspaper industry dies. I’m sorry, when the Government is paying your wages, why am I expected to believe you’re telling me the truth about them?

Anonymous Coward says:

With the union deals that they made (which were dumb) GM can not afford to make small cheap cars here in the US. The govt. forced them to make small cheap cars so they scrimped on features and made a bunch of crappy cars that they knew they would never sell. That was ok because they made lots of money on big cars that sold in America.

Of course, the govt. wants them to make even more small cars. With gas prices down again, will Americans buy small cars? Probably not without being forced to.

jim cunningham says:

Invisible bloggers

No wonder David Simon (and most of the rest of us) can’t find the ‘great’ local news blogs you say are all around us. That’s because the people creating them aren’t professional journalists, which means they don’t know how to create interesting, comprehensive, balanced content that really informs. Most of them also don’t write particularly well. All of them confuse opinion with hard, attributed information, and gossip/innuendo with news. People who can create such content can still get paid, I hear. Bloggers obviously cannot. That might be why they are so anxious to appropriate the franchise. We need more journalists, obviously, but we are going to have to pay them, ’cause information may be free but news, the real kind, isn’t. Cute how bloggers keep citing newspaper stories about themselves as proof of their ‘credibility.’ Hmmmm.

Random Comment says:

> There are certainly ways to make online news profitable.

Yep! Just ask Google! 😀

> No wonder David Simon (and most of the rest of us) can’t find the ‘great’ local news blogs you say are all around us. That’s because the people creating them aren’t professional journalists … We need more journalists, obviously, but we are going to have to pay them, ’cause information may be free but news, the real kind, isn’t.

News magazines, like Time, Business Week, and The Economist, seem to be doing well. I’m sure they follow the advertisement dollars business model, but they’re examples of news sources that people actually pay for, unlike local news which people buy because they’re the only source of local news.

Speaking of local news, I’d posit that local news died long ago, during the days of consolidation. Really, how many of your home town officials do you know? Could you tell me something about each of the candidates on your last home town ballot? Yeah, me neither, no thanks to the so-called “local” news. My own local news will tell you who’s state governor and guide you on state propositions, but mostly covers scandals in a larger city nearby. Dunno how you define local, but, for me, that ain’t it.

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