FTC workshop: Afternoon panel: Emerging Business Models for Journalism

This is page for 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

Now we're following along with the first Tuesday afternoon panel: Emerging Business Models for Journalism." Remarks by Steve Brill of Journalism Online are at viewable at the bottom of this page.

Lots of opportunities -- ideas from Lauren Rich Fine

Lauren Rich Fine, a former Wall Street newspaper analyst: "There are loyalists will pay pretty much any price and that's why i think Journalism Online will be successful."

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I don't think newspapers committed suicide, I don't think they ever had a chance.

"I think the ad model will work, I think we just need to broaden the definition of it." Newspapers should embrace bloggers and become the dominate local ad network in their community. There are not dominant local ad networks yet.

Newspapers have not done enough with sponsorships.

Scripps years ago tried to get into the Yellow Pages business. "But that opportunity does still exist online to create really comprehensive local directories . . . they could host these websites, they could create them for them." She is the daughter of a newspaper ad sales person -- and she says newspapers have had some of the worst sales forces in history.

NewsMax has a great business with their email marketing.

On subscriber fees: She does not believe there will be a lot of subscriptions for online news. American Press Institute did a compendium recently, and it wasn't near 10%.

Rearranging from geography to topics is what newspapers have to move to.

I'm intrigued by the concept of memberships. She cites the Pittsburgh Post Gazette.

There are commerce opportunities.

Matching content with advertisers, as with Demand Media and AOL is smart, but the flaw in the model is if you are trying to preserve democracy, giving people what they want is not going to yield what you want for democracy.

Newspapers will be able to do syndicated research and licensing revenue streams (not a very big one).

Print isn't dead. Newspapers still sell a lot of advertising. A lot of new sites being created for online only are finding -- like Politico -- that most of their money is made by printing. In the Cleveland area the Lakewood Obsever makes all their money printing every two weeks but has a strong, robust website.

WSJ's Thompson: Concubines and haggling

"Journalists should be feisty," says Robert Thompson, managing editor of the Wall Street Journal and editor-in-chief of Dow Jones & Co. "Not lapdogs with lap tops." He says government subsidies to journalism would create a class of "content concubines."

"Our intent was to provoke a debate about he value of content and then a debate about how content can best be monetized." He said the third phase will now be to figure out the exact models.

"There will be a lot of haggling over the following months and that is how it ought to be," says Thompson of the coming negotiations between publishers, aggregators and others over how to share value for content.

Chris Ahearn, president Reuters Media and Thompson Reuters

Ahearn on aggregators: "They do not always refrain from doing evil, although they say they do . . . . some do steal, outright, and the monetize it with ad networks with AdSense and that happens."

He is grapping with ways to make money out of content scarcity and content abundance. They focus on vertical markets and subscriptions -- 98% of their money comes from subscriptions and they focus on professionals. "We focus on services, we focus on things that add value - because people pay for service."

He sees a world for greater collaboration between aggregators and creators. "We see this as a new network of syndication predicated on the needs of audiences." He sees it as inherently multisource. "This is a B-to-B content network that the world needs now and one that we are building." He says: "This is not about locking people down ... about blocking search engines ... (but) letting the content creator pick the model they want."

He says they are optimistic. "We see the evolution of a new golden age of journalism and much, much more."

Josh Marshall: A business based on original report

Josh Marshall is founder and editor of the website Talking Points Memo. He says traditional news organizations are still working on the idea that they are are the sole source. They don't take that approach, although most of their 11-person staff does original reporting.

He says the concept of "fair use" is too expansive now. He thinks a common-sense standard needs to apply. When they do aggregation, when it comes to the margins, they follow a common sense standard.

Sri Kasi, The Associated Press

Srinandan Kasi quotes Ken Doctor's research that over 50% of people who read news snippets on aggregators or a home page don't click through. He says there are three reasons why the impact of the web has been severe on the news industry because of three "truths:"

News is the industry's product. "If you have described the details of a news story, you have told the news story," Kasi says.
News content has limited shelf life. So there is a brief window to attract audience.
Commercial value of individual works of news is only realized in the context of aggregations of many works of news.

Once a publisher puts news on the web, it gets redistricted and aggregated at no cost to the people passing it along. The original news gather has the cost of creating the works, "but only a fast shrinking opportunity" to monetize. "For the sake of so much that this society holds dear, that cannot be allowed to happen. Preventing it is primarily the obligation of news publishers, who must find news ways to connect with their audience and prevent the unauthorized exploration of their content."

What is the AP doing to help?

AP governance has always had conflicts about how successive waves of technology have changed the way content is distributed. The path to survival begins with three steps.

Helping news organizations find new more effective ways to monetize in the small time window while news has value.
While consumer choice may be at the disaggregated story level, the story and publisher have to be part of a larger marketplace of aggregated content and audience.
Creator of original news works have to be compensated for exploitation of their content. "Those who want the benefit of the news content must help with covering the cost."

Mark Bide, Automated Content Access Protocol

News organizations are dependent on copyright. Making a return on investment in content depends on having the mechanism to choose how that content is distributed and paid for. "If we want that content, we have to find online business models for news organizations."

"In the absense of functional business models, those who need to make a return will have no choice but to take their content or their business to some other place." He says the Internet has highlighted the importance of content. "The time has come now for this to change to make copyright work within the grain of technology rather than against it."

He manages the Automated Content Access Protocol. His focus is on creating a universal infrastructure not owned by anyone as an open standard that is available for anyone to use.

Danny Sullivan, editor-in-chief of SearchEngineLand

He started as a stringer for the Los Angeles Times in Orange County. He stumbled into covering search as a free-lancer in 1994 after leaving the Orange County Register. "I have had paid content on a website since 1997." He has a staff of two people. "We produce a good chunk of good healthy content in our topic area ... and we have done this by growing up on the web ... lead generation ... conferences . . . member fees."

He knows when someone takes a story he has written and it goes out and they won't cite him on a story.

"I love journalism and would like to see it preserved in some more productive ways rather than some of the rhetoric that we are hearing."

Jeff Jarvis: The link economy

He says now there is a link economy, not a content economy: "All you need is one copy of something and it is the links to it that bring it value." It is up to the recipient to monetize links and if you can't do that, that's your problem, not Google's.

At the City University of New York, he is developing a set of business model ideas for the new news ecology. The first thing he's studying is the hyperlocal blogger -- the local online news community. Some of them are bad business people, but they can be taught to sell ads better and do other things so they can have a sustainable business model.

Jeff Jarvis' column about his appearance

The problem with the hyperlocal business model -- there has to be a network, by a few towns or by interests to aggregate the audience. "We believe there is still a new news organization, it is much, much smaller." He thinks it will still do investigative and metro-wide reporting. Because of the link economy it can work with other players in the news ecosystem.

What is the framework that allows these things to forum? He talks about the value of volunteerism. Just the edits alone in Wikipedia up to hundreds of millions of dollars of value per year. The true value of memberships is collaboration. There is a value to promoting goverment transparency.

Their estimated, using a Boston-like market, that you could get to about 270 reporters (vs. 300 in The Globe's newsroom). It is much, much smaller. "The mogul who says I'm this big isn't going to be that big anymore."

Barrier to entry to media has never been lower than in the history of mankind. There are more voices than ever. "But, what do need is a level playing field. But I beg you, Mr. Liebowitz, stay off the lawn." It isn't a matter of survival -- if you use that word, you are talking about the perspective of the legacy players. "All I want to ask is: Stay off the lawn."

QUESTIONS AND ANSWERS

DiSanti: Asks WSJ's Robert Thompson for his reactions.

Thompson: He thinks the presentation by Google's Cohen was fine. The word search engine doesn't capture what Google does. Talking about Google is one thing -- it is a quantitative rather than qualitative measure. Google has devalued advertising in a way that it purchases it horizontally and you are getting quantititative measurements of qualitative audiences. "And one way to differentiate yourself qualitatively is to charge."

DiSanti: Asks about the B-to-B business model. She says that is implicit in ACAP. Where are publishers on the idea of a business-to-business issue and dealing with the aggregators?

Thompson: When Dow Jones was purchased by News Corp. there was a debate about whether to go free. "If we had gone free, there would be 280 or 290 fewer journalists at the Wall Street Journal now."

"Whatever the outcome, if there isn't more value or distinctly ascribe to content ... whatever you do is going to be very difficult ... and the cost to society of not having specialist journalists is going to be profound."

Ahearn (Reuters): It has never been either or, it is a question of "and." The challenge for publishers is to find those niches for what the offer and find ways to monetize that audience with dual revenue streams. "The way cable has found dual revenue streams, which is why cable now is a far better investment than broadcast."

Sullivan: You can go paid and still have Google search you. "There are so many options you have if you would just play around with them more. It is not a light switch."

Thompson: Goolge historically hasn't searched paid content.

Jarvis: They have said they will. But it is all a matter of how do you land in search results. If you are paid, you will drop in the search results.

The AP's three problems and an exchange about ethics of rewriting

DiSanti: Specialized professional news, people will pay for. Lauren Rich Fine said people will pay for the WSJ. The question is, how can you charge for content that is more general by it's nature. She asks Sri what they are thinking about at the AP.

The FTC's Susan DiSanti asks Kasi: How can you can charge for content that is more general by its nature?

KASI: "We've got a particular problem in that we are not a retailer, we are a wholesaler that has a retail base that is all over the map. So a story that is free in one place has basically eliminated the possibility of paid elsewhere. We were not imaginative I think in the 90's, we thought of content as on homogenous product when in fact there were a variety of things we could have done to value add and do different things in putting the content out."

Second problem: What do we mean by link economy. "We talk in terms of link economy: Headlines are OK, excerpts are not so OK. What do we mean by these things? If someone rewrote a story in their own words and then linked to the (original) story, and the traffic doesn't come, what do you do? Real challenges here."

Third problem: Search id described as almost an independent, and I mean independent in the sense neutral, unbiased activity. But I'm with Robert in that when you go investigate systematically run some searches what you'll find is that with pretty much all of the engines, their own news aggregation results will be the top results. So what you have is a difficulty of the power of aggregation trumping your own independent content."

"These are problems the cooperative has seen before. We have come up with models to deal with these issues and so we want to be part of the link economy ... the question is how do we make that work so that we can support not only our journalistic endeavors, but also allow our publishers, who pay for our content, to get traffic."

JARVIS: "The Associated Press does cut those links. Because its history was to rewrite and commodify news, which is what was of value for a long time. In the link economy, the ethical, moral thing to do is to link to journalism at its source and indeed, not to rewrite it. Not turn it into a commodity . . . I sympathize with The Associated Press, believe it or not I do greatly, because you are stuck, unable to have a brand and monetize that."

KASI: "I just want to correct one notion the idea that we simply rewrite is simply not true. The Associated Press has a governance structure where the members actually contribute content and that actually goes to start up this new narrative, if you will. We then follow up with our own journalism. So the idea is, it's a construct that goes back essentially to how can you break news faster. Well, if you have a pool to which people subscribe, you can start up the breaking news cycle faster . . . ."

JARVIS: "I wish you would link to original sources more, though."

KASI: "I can tell you it's partly also a technological limitation. You'll start to see a lot of that beginning to happen. If you follow our AP mobile product, which is off on one of the newer platforms, you'll see a very different offering than on the web."

Chris Ahearn (REuters Media president): Just in fairness to the AP on this. You come at me on that one too Jeff. It is a technical issue as to how wire houses were architected, to get everything out quickly and in a flat format as opposed to a rich markup format. So you will be seeing changes, from all players."

Josh Marshall, Talking Points Memo: "Can I add one quick point here. In a lot of these discussions, I find myself in some ways more on the side of traditional content producers. But on this question of AP all being original work -- that's just not true. And that doesn't mean it's not valuable. It's hugely valuable. But believe me, I like every other publisher, know lots of examples of stories that we broke that ended up being AP stories. Frequently without any mention. Maybe because the reporter saw it athe third generation or something like that. But I do think there is more of an ethic online of linking to the story, not which is necessarily the aggregated story, although that is sometimes the case. It's the story that got the reporter on the track and then added some original reporting or added some commentary or something. And it is certainly the case that stories that exist, and this isn't picking on the AP, it is across the board and everybody does this and I don't think there is anything wronge with this. There are very few stories that are birthed virgin out of someone's head. You get leads in other places. So I do think some of the appearance of aggregation is inflated on the web, not to say there aren't a lot of real problems and even abusive practices, but is inflated, because in the more traditional formats you just don't see where it came from and you think the bylined person came up with it on their own. Which is often not the case. Not that it is not of value. But very few things are truely de novo.

We pay tips to waiters, why not to reporters?

DiSanti: question for Lauren Rich Fine from the audience.

Society has trained us to pay waiters $40b or $50b a year in tips. Why can't the news industry learn how to ask for that?

Fine: "Because newspaper are lousy at marketing." She thinks the wall between news and advertising didn't allow them to work together to be successful. The unwillingness to stoop so low as to market their own product. She has always been amazed at this. It might be too late.

Jarvis: What should we be talking about?

Wrapping up, Jarvis offers what he thinks people should be talking about. There has been too much talk about replicating old revenue lines in the new world. There needs to be talk about costs, and about the waste and duplication in the news industry. There needs to be talk about advertising and about a lack of innovation. "Google created a new model in which it shared the risk with the advertisers. We're still selling scarcity."

Queried by Robert Thomson, Jarvis said he has earned $13,300 a year on his website from advertising and he made $17,000 last year, outside of his CUNY teaching salary. Of the $13,300, Google AdSense was about $4,000 of that last year.

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