Ftc-panel-state-of-journalism

FTC Panel: 'The State of Journalism Today and Tomorrow'

This is a page from rough, contemporaneous notes of today's U.S. Federal Trade Commission workshop: "From Town Crier to Blogggers: How Will journalism Survive the Internet Age," held Dec. 1-2, 2009, in Washington, D.C., at the FTC's 601 New Jersey Avenue offices. Your scribe is Bill Densmore, a fellow at the Donald W. Reynolds Journalism Institute at the Missouri School of Journalism. Of course we've tried to provide accurate quotes and summaries. But the FTC has stenographers recording all of the testimony and that should be your definitive source. The home page for this coverage is http://www.newshare.com/wiki/index.php/ftc

Mark Contreras: What's happened to the newspaper model?

Contreras heads newspaper operations at the E.W. Scripps Co. and is a vice chairman of the Newspaper Association of America's board.

Print generates $500/year per eyeball. Online produces about $75 a year. The $500 covers a commitment to journalism. Scripps online audiences are growing 30% to 50% per year. For every dollar spent on Internet advertising, traditional media loses three dollars, he says one recent study found.

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• Editor & Publisher story on Contreras' remarks . . . / . . . FULL TEXT of Contreras remarks

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Internet allows selling specific audiences to advertisers -- but online consumers are concerned about online privacy. It's important to address the competitive marketplace across all media. He says there needs to be a marketplace solution for licensing and fee-payments for online news use.

Creating one gold-standard definition of online audience woudl be helpful.

Tonda Rush, attorney, former National Newspaper Assn. prexy/ceo

She talks about the decline in the postal subsidy to newspapers, and changes in retailing that has reduced display advertising. She talks about the NNA membership -- small dailies and weeklies.

Martin Kaiser, American Society of News Editors

Kaiser, editor of the Milwaukee Journal, describes reporting the paper did documenting child-abuse cases not followed by government. As a result, reforms have resulted in "At this point, the audience interrupted me, by breaking out in applause."

"They know accountability reporting is vital for our area around Milwaukee, Wisconsin."

Bryan Monroe, Medill School: Technology, diversity, hope in future

Monroe says new journalism ventures are less diverse and more white. "We are starting off on the wrong foot," he says. At the same time, "new America" is becoming more richly diverse. It's doesn't make economic sense to write-off a third of the nation as a market.

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• Bryan Monroe's remarks in a HuffPost column

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By 2023, half of all U.S. children will be non-white and by 2042, minorities will become the majority. U.S. children now have biracial friends and are exposed to diverse views.

Nina Link, president Magazine Publishers of America

She's glad that magazine's "lean back" reflective point of view is represented at the FTC workshop. Difficult times for the industry -- especially news, business and technology publications. "It is clear that our traditional business model has been disrupted." Print advertising pages are down dramatically and YTD revenues down 20 percent. Cause: "Advertisers migration, and fascination, with all things digital." Some good trends:

• Good success selling print subscriptions online
• Growth in e-commerce revenue
• E-readers are wonderful potential opportunity for advertising and paid content

"On the other hand, we are concerned about the dominance of a few big players" and she says publishers have to have the authority to "to be able to work together" to counter that.

Fred Young, retired senior VP-news, Hearst Television Inc.

Young says he represents the broadcast perspective. He makes a particular point to say that local TV will survive the loss of Opra Winfrey.

David Westphal: USC Annenberg School/former McClatchy editor

Westphal, a former McClatchy Corp. Washington bureau chief, now is a researcher at the Univ. of Southern California's Annenerg School. He has been spending much of the last year covering the emergency of local online news communities (LONCs) around the United States.

He sees rapid growth in investigative reporting non-profits in Massachusetts, Wisconsin and elsewhere. University journalism schools are becoming increasingly important providers.

Robert Picard: Media economics expert

He's prepared a background paper that is online. His key point is that the long term trends in the industry have been set for two decades and in the main have not changed as a result of the Internet -- the trend is a gradual decline.

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SUPPLEMENTAL PAPER TO PICARD'S REMARKS

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Last year the U.S. newspaper industry as a $55-billion industry with average 12% pre-tax profits that now has a $3 billion slice of the online advertising market.

He does say that the strategic position of the industry is declining. He says he's reviewed ideas for antitrust exemptions or copyright changes and says he thinks neither of those are a good idea.

Jonathan Knee: Columbia Business School

Jonathan Knee, director of the media program at Columbia (Univ.) Business School, says the reductions in fixed costs of delivering the news is what has caused the fundamental disruption in the newspaper industry. Previously high fixed costs allowed newspapers "to be the only game in town."

Who are the winners of increased competition? Potentially the consumers, says Knee. He says those who complain about the new competition need to be viewed with some skepticism.

"I think if you are honest about the information you can get today, the ability to collect and distribution is much greater than it was before," Knee says.

Questions and answers

FTC Commissioner Leibowitz is now moderating and asking a series of questions.

How long will print newspapers survive? FTC staffer Susan Desanti asks Mark Contreras of Scripps newspapers.

"You are talking to somebody who's company is just completing a brand-new printing facility in Naples, Fla., because we believe in the essential form," says Contreras. "Audience is not our issue. Print circulation is declining, but if you look at what's happening with online audiences our audiences have never been bigger."

"And yet we don't have a defined standard of what a unique visitor is," says Contreras. As in his remarks, he encourages Congress to play a role in establishing a "gold standard" for advertising measurability."

Contreras: TV advertising revenues grew like a rocket ship once advertising measurement standards were put in place. The current chaotic situation doesn't help content producers.

DiSanti asks Jonathan Knee: In his book, he maintains content doesn't lead to entry barriers, and entry barriers are what give you the market power to get higher revenues. How do you see this pattern evolving. Murdoch says content is key. Is it really?

Knee: Yes, content is valuable to those who consume it. But are the businesses those in which you can get super-normal returns in the future?

Rush: The essential business model of small papers is not broken to the extent it is with big papers.

The FTC's DiSanti asks Bryan Monroe of the Medill School of Journalism what is going on with mobile. Monroe talks about LCD's in barbershops in Chicago pumping in ads and soon journalism. There's another one in Silicon Valley. Both are run by young African American engineers.

Monroe says there needs to be more of a network for minority engineers and entrepreneurs to trade notes, and that will lead to more investment.

Contreras: Consumption of headlines much more prevalent than deep consumption. "There is far less consumption deep and vertically . . . that indicates to me that the headline is far more important." He says the headline is critical -- he implies more critical than the story, but then backtracks syntactically on that. (Densmore observation: This cuts both ways. If the headline is what people really consume, does that mean news organizations that produce the news that leads to the headlines have a right to demand compensation for headline lines? Or, does it mean the aggregators can just run the headlines and the underlying news organizations are out of luck?)

There is now some discussion about copyright protection and your scribe missed the point, but the jist seems to be that getting any international changes in copyright law -- either more open or more restrictive -- is unlikely.

There is now a broad discussion underway with questions from DiSanti or Leibowitz and discussion across the panel. Westphal notes that the LONCs he's studied are staying very focused and that allows them to achieve their mission.

"We believe that the paid for content online, that genie is out of the bottle and that will be a very tough one to stuff back in," says Nina Link. "In general we believe that most of the content is going to continue to be free." But she says there may be paid content on the mobile and e-reader platforms -- that there will be higher CPMs for advertisers and more advertising models -- location based, couponing and the like.

DeSanti: To get content to the consumer, there is usually some intermediary you need to negotiate with.

Contreras: Scripps has an agreement with Amazon -- one third goes to the content provider, one third to Amazon and about one third (via Amazon) to the cell phone provider. "We are used to dictating the price," but in this case, in order to participate, they have a set menu they have to conform to. This is an ancillar revenue stream "which we are excited about."

Leibowitz: Notes there is competition to the Kindle coming.

Picard: Newspapers are efficient for a mass audience, but it is terrible for niche audiences. Only 15% of what is spent in the newspaper industry is spent on gathering the news. The rest goes to something else. As the world changes, some of the non-news costs will be shift to intermmediaries -- and he thinks that might open up more money to be spent on the news.

"Keeping the paper alive today is not the readers, what is keeping the paper alive today is the retailers, who don't do that well on the Internet, yet," says Picard. "That may change.

Monroe notes that what's behind the rumored NBC-Comcast deal is the desire of Comcast to have access to content. There isn't enough content. And there is a firehouse out there of information, but not all of it good.

Nina Link: Says devices are getting cheaper and cheaper and cheaper. "As they get cheaper, in a sense they get more commoditized and what is going to differentiate them is content."

Picard: Says the history of newspapers from the 19th century is that they had all kinds of ancillary businesses that financed journalism that had nothing to do with the news -- printing services, advertising services, even a musical band.

Westphal: Notes that New West has a profitable conference business. He says some news organizations are working at doing contract research for hire.

"We have had newspapers that opened fudge shops to keep the paper going when the biggest industry left town," says Tonda Rush. "It's a social mission wrapped in an economic model."

DeSanti: Goes back to the question of the aggregators?

Contreras: If you play music at a bar, you have to license the playing of that music through ASCAP or BMI.

DeSanti: What would you suggest as a legal mechanism to do that? People don't usually pay unless they have to.

Contreras: He suggest: "(A)n ASCAP or a BMI model, arranging with other players." At Scripps, getting paid for content has very limited audience results and even scantier revenue results." They would favor going business-to-business rather than business-to-consumer.

Kaiser: Talks about a business model. A month ago, they had a story that a wife had ovarian cancer, and the husband had no insurance, he joined the Army. The story got picked up by Yahoo and they had 1.7 million page views. Their record before for any story was 300,000 page views. "We've got to figure out a business model for that."

It's 11:43 a.m. and the first panel ends. Arianna Huffington up next.