virtualeconomics

How little newspapers matter

News today is that the world's second most popular English-language newspaper, the News of the World, is to close. Most likely it will simply be replaced by a Sunday edition of the Sun (the world's most popular English-language newspaper).

Not because, like so many newspapers in the early C21st, it loses money. The News of the World makes money hand over fist (not literally of course), so much so that its closure threatens its persistently loss-making quality stablemate the Times. Printing lies about celebrities is worth a fortune and the model is replicated thousands of times around the world. 

Surprisingly easy to get children interested in newspapers

(My twins Adam - on the left - and Russell - on the right - playing with a newspaper. For those who might care it's a copy of the Telegraph. I'm sure they imply no disrespect to the Telegraph in particular.)

But is it true?

A news organisation's moral authority arises from its validation of the news. If something appears on the front page of the Guardian or the New York Times, we can be confident that people there have checked that it's right. Insofar as news sources have our trust, they have earned it by making sure that what they publish is right (and issuing immediate, full corrections when they're wrong). 

In Australia, Fairfax just sacked its subs - and with them, it threw away its moral authority as a news organisation.

Newspapers don't break news - since the plane that went down in the Hudson River to Osama's execution yesterday, news breaks on Twitter, then on blogs, then on radio and TV. Newspapers don't have the only or the best writers, they don't own the only printing presses, they aren't the only way to find out what's going on or what it means.

A news organisation's unique selling point is the process by which it verifies and legitimates information, a process on which their reputation is built (see what happened to the Mirror when it emerged their Abu Ghraib photos were fiction - the immediate and evidently permanent loss of about 10% of the readers). Anyone can write anything they like, on Twitter or their own blog or in the comments on the BBC, but it's not until a recognised news authoriity checks it out that anyone takes it as more than an ubsubstantiated rumour. If the recognised news authorities out-source that validation, taking the subbing function outside the building, all they're doing is publishing words and letting someone check if those words are true. Even I can do that, and so can you. Actual news publishers would probably be better 0ff outsourcing the writing.

Little more than a glance at the new economics of news

Strange to see Scout Analytics' latest infographic on the disparity between online and print news revenues getting so much coverage. It's obviously true, but it's also just a fairly superficial restatement of a small subset of the known facts.

Is online news worth less than offline news because less time is spent reading it (both absolutely and relatively), because of anchoring at "free" and because of commoditised online ad rates? Well...sort of. Partly. It's true as far as it goes.

First, this isn't about news.

If newspapers really cared about the freedom of the press, most of them would close tomorrow

There's been a lot of talk about press freedom of late, what with the rich and powerful taking out super-injuctions and attempts by special interest groups such as the GMC to exempt themselves from press scrutiny.

The common theme here is, of course, that as fewer people read newspapers and newspaper company revenues decline the power of news organisations to hold even the minor celebrities within their own ranks to account, let alone to talk truth to power, evaporates.

Newspapers had the power to unearth and reveal secrets because they wielded vast political and economic influence and could afford the best lawyers. Celebrities, politicians, plutocrats and even doctors increasingly think it a safe enough  bet that actually they now have the best lawyers, and even if the Sun won it for the Tories in 1992 no-one even in Wapping seriously pretends it will ever carry such political weight again. Twenty years later the Telegraph spent the better part of a year spinning out the revelation that practically every member of the lower house had systematically stolen from the public purse and the political fall-out was inconsequential - the barest handful of sacrificial imprisonments and the rest allowed to continue on their way. Insofar as serious investigative political journalism is still attempted outside the pages of Private Eye and - utterly bizarrely - Rolling Stone its key practitioners are currently being tortured by the US military or going through the slow process of being quietly shipped off to the same fate by obedient European governments. 

Always willing to try a new user interface

Visiting my parents this weekend I thought I might make use of their print edition of the Observer. After all, every weekend I follow links from @realdmitchell and @victoriacoren to their articles in there - I quite like the Observer, I read its content, it was just sitting on the sofa next to me, why not give it a whirl?

I discovered almost immediately why not. The UX is unuseable nonsense. Look at the thing! A big pile of pieces of paper stapled together into sections apparently selected by theme. I've no idea which of these sections David Mitchell or Victoria Coren's articles are in - I doubt they're considered "Food Monthly", and they're probably not "Sport" unless poker is a sport, or David Mitchell is having one of his occasional anti-football polemics. But there's no viable search function apart from a big ad on the front page of the news section for the one magazine that I'm pretty sure they're not in.

Hyperlocal is growing by shrinking

Hyperlocal is shrinking. Not the market, or the number of sites, or even the number of start-ups in the space - just a glance at the OpenlyLocal directory reveals that the sites are multiplying as quickly as ever. But the size of the communities that new local businesses and sites aim to serve are getting smaller all the time, with the latest websites and businesses launching in this space often aiming to cover communities of fewer than a dozen streets or a single postcode.

And that's potentially very interesting news for local journalists facing yet another round of newspaper cutbacks, because if smaller communities will support viable hyperlocal community websites there's potentially more jobs covering the news in those communities to go around.

In the US last year Patch.com hired more than 600 journalists (probably the most of any company in 2010) to roll out more than 500 sites to towns with populations between 15,000 and 75,000 people. But in the UK new businesses are already emerging with a plan for publishing hyperlocal community sites, with original news reporting, in towns of 5,000 people or fewer.  

Three potential discontinuities that make "steady decline" the *best* case for newspapers

So the price for newpaper companies continues to head downwards because newspapers themselves continue to enjoy a steady and gradual decline in readers and revenues as demographics and technology suck both away. At one end the old readership is simply dying; at the other it isn't being replaced as people spend the time they once spent reading the news in other ways, primarily online.

Wrong. Sure, for at least the last decade (and Philip Meyer would argue four or five decades) that challenge has been the basic reality of doing business for most print newspapers in the first world. But that steady decline is the best case scenario for print, it's what happens if everything goes well or even perfectly. The idea that newspaper companies are somehow cheap at today's prices rests on a very optimistic assumption that the future will be just like the past. Here's three potential discontinuities that instead of contributing to the steady decline scenario could wipe out one, or more, or all, newspaper businesses overnight (at least, as commercially viable going concerns - not all newspapers are run on that model of course). 

News International seeks to establish a print/online equivalence that simply isn't there

So the latest numbers are in for the Times paywall. Now eight months old it deserves, perhaps, to no longer be dubbed an experiment. Charging for people to look at the Times online is now business as usual in the Wapping fortress, and business as usual is doing...ok. Over at Paidcontent there's a copy of the full release and Robert Andrews takes a more detailed look at what the numbers mean.

At the end of the first four months behind a paywall they'd racked up 50,000 actual subscribers (people paying £2 a week) plus 105,000 other "digital purchase events" - people buying a one-day pass. Four more months on, at the end of Feb, they have a total of 79,000 monthly subscribers and a total 222,000 "sales of digital products" - people buying a one-day pass, plus sales of the Sunday Times iPad app. So, as Paidcontent notes, subscription sales have slowed down but sales overall have increased.

New York Times experiments with perverse incentives

The New York Times paywall (don't call it a paywall? Right...) is a strategic error, and not even a very complicated one.

So there's some science behind it, and the number of articles you can see before you have to pay (20) has been calculated from actual traffic data rather than just pulled out of the air, which is a good start. And it's always good to see a news org putting in some serious R&D, which at $40 million just to develop NYT's paywall definitely counts. It's not as if there's nothing about the move to like - it's considerably more thoughtful and nuanced than TimesSelect or the other, many, failed experiments in charging for (non-porn, non-finance) content that have failed over the past decade and a half.