10/4/14

Ownership transparency is not enough to solve media performance gaps

Media ownership transparency has become a goal of media reform advocates on both sides of the Atlantic, but is often simplistically presented as a solution to problems in media performance.

As I have shown in my research over time, it is not the form of ownership that matters, but the owners themselves. There are good and bad corporate owners, good and bad private owners, good and bad family owners, and good and bad foundation owners. And many owners whose media perform badly on issues of social service and public interest don’t care if the public knows who they are.
This is not to oppose making it easier for the public to know who the owners are—in some cases (especially in southeast Europe) owners sometimes hide behind shell companies, investment firms holding their shares, and even individuals fronting for them. Gaining transparency may help identify consolidation and concentration for antitrust and pluralism analyses, but lifting those veils alone is not going to solve the issue that some media owners operate media for political or personal financial gain in ways that harm the public.
The continued focus on ownership also masks the fact that many other factors create influences on media and their content. A company doesn’t have to be owned to be controlled.
Those who provide media revenue and lend media companies money matter.
The desires of advertisers skew content so that media serve more desirable demographic groups and produce a content environment that best suits their messages. It leads the media to exercise care, or ignore, news that will offend major advertisers. In some countries advertising from state enterprises and private firms is dependent upon a paper or broadcaster supporting or not challenging political figures or ruling parties. Unfortunately, in many cases, media companies and journalists comply.
Banks and other lenders that holds the debt of a media company are also in powerful positions to influence media managers, choices of the company, and content. The larger the debt, the greater the influence because it is harder to replace the firm lending the money.
Media firms owned by industrial conglomerates matter.
Government contracts given to firms that own media can influence the news content published or broadcast. In many countries defense contractors, construction companies, banks, and service firms own media. These firms receive large public contracts to supply equipment, construct buildings and roads, handle government finance, and support government operations. In these cases, the media keep the companies in the minds of politicians and the governments and the lucrative contracts keep the media from being too troublesome to the politicians and the government.
Creating media independent of economic influences is impossible. While ownership does matter, and transparency may have virtue, a host of control issues come into play that will never be addressed by merely being transparent about who owns a media firm.

8/8/14

Here’s why people won’t pay for news: No one does journalism anymore


I opened my Yahoo home page today and read the news headline “Outgunned Kurds Beg US for Weapons to Battle ISIS” and its lead paragraph.  “Interesting,” I thought, so I clicked on the item, expecting an expanded story from a news agency. What I got was the Huffington Post. 
 
“OK, they are becoming a decent news source,” I reacted. So I began reading, only to realize they gave me two paragraphs before redirecting me to Newsmax for the entire story. 
 
Newsmax is a news site established with the aid of politically conservative political figures and journalists. That doesn’t preclude them from reporting news accurately, but can influence their news choice, analysis and opinion. Nevertheless, I read the 14-paragraph story written by Drew MacKenzie. It was a sound story. However, it only paraphrased a story by Washington Post reporter Terrance McCoy, “The strongest military left in Iraq has not stopped the Islamic State.” So I decided to read the original Post story.
 
When I got there I discovered that McCoy relied entirely on secondary sources: quotes from other journalists, a statement by President Obama and a quote the president attributed to an Iraqi parliamentarian, some previous Washington Post stories, online photographs, a New York Times interview, and an essay by a foreign policy specialist.
 
4 news organizations. 4 stories. No original sources. And no fact checking, I suspect.
 
Setting aside the problems this illustrates about journalism practices today, this example of news linking underscores why news organizations are having trouble getting people to pay for news.  As this case shows, they are doing nothing new, adding nothing or little, and essentially copying each other and themselves. This gives readers nothing they cannot get elsewhere, so how can they expect people to see it as valuable. 
 
This value creation deficit is especially a challenge if news organizations want readers to pay for journalism, but it is increasingly a problem even in asking them to spend time reading free content.
 
This kind of cheap news of dubious value will cause the death of many news providers in the coming years. If news organizations don't change their behavior, it will be death at their own hands.
 

8/4/14

Loss of a competitive market is afflicting U.S. single-copy magazine distribution


Single-copy magazine distribution is undergoing a remarkably unheralded transformation and it has enormous implications for both publishers and consumers.
 
Each year about 3 billion copies of magazines are distributed to 150,000 retail outlets within a large and complex distribution channel. This is extremely important to publishers because it produces about one quarter of circulation revenue and is used to promote subscription and introduce new titles.
 
In simple terms, the system operates by publishers selling copies to wholesalers and wholesalers reselling the copies to retailers. However, retailers return unsold copies to wholesalers for a full refund and wholesalers return them to publishers for a similar refund.
 
Because of the large number of titles, copies, and retailers involved, and the geographic scale of the country, publishers and retailers have sought to minimize their effort, create economies of scale, and reduce transaction costs.  Publishers contract with national distributors that organize and manage their distribution activities through wholesalers and retailers now typically select a single wholesaler to provide all the magazine titles they carry.
 
Prior to 1955, when it became the target of antitrust action, American News Company distributed more than half of magazine titles and accounted for half of the industry’s value. In the years following, 850 wholesalers emerged across the U.S. and they were often given territorial exclusivity for the magazines they handled. This system was highly influenced by TV Guide, which sold 10 million single copies weekly in 150 regional editions and gave wholesalers exclusive distribution to the territories of those editions.  Other major publishers also wielded significant power. They were able to effectively force distribution terms and prices on wholesalers and they set cover prices that consumers had to pay.
 
Large national and regional retail companies developed during the second half of the twentieth century and companies such as Walmart, Target, Krogers, and Safeway became major outlets for leading magazines. Because of the exclusive distribution territories set by publishers, retailers were forced to do business with multiple wholesalers to get the magazine titles they wanted. As their power increased, however, these large retailers began reducing the wholesalers they used and they began seeking single wholesaler arrangements that undermined the territorial distribution exclusivity for titles. The existing system collapsed in the mid-1990s and, by 1996, only about 100 wholesalers remained in business and 41% of all single-copy sales were occurring in supermarkets and big chain stores. 
 
Ten years later, in 2005, only 4 wholesalers remained—Anderson News, Levy Circulating Company (later sold to Source), The News Group (TNG) and Hudson News Distributors. They accounted for 90 percent of the wholesale business. These four firms were subject to significant pressure about prices and distribution terms from both publishers and retailers. Although they had strong positions in the market, they lacked power because retailers selected the wholesaler with which they would do business and publishers continued to control distribution terms and compensation paid to wholesalers. Today, only TNG and Hudson remain in business and the two firms account for about 90 percent of the wholesale business.
 
The history of magazine distribution has thus moved from near monopoly in the 1950s, to competition in the 1990s, to oligopoly in the mid 2000s, and once again to near monopoly in 2014. 
 
The results of the changes are that publishers, who previously wielded the greatest power over distribution terms and prices, are now dependent upon the services of the two remaining wholesalers. These wholesalers are, unsurprisingly, demanding more compensation for their services and more control over distribution decisions and terms. Retailers are not making many price demands at the moment, but are asking for more transactional efficiencies and changes to the traditional means in which they buy and resell magazines. No one in the business is happy with each other or the system under which they operate.
 
Consumers are feeling the effects because fewer titles are being distributed in retail outlets—thus reducing their choice—and the prices of magazines continue to rise--taking more money out of their pockets.
 
The current situation is challenging the efficacy of the wholesaler-based distribution channel, raising issues of distribution pricing, who should bear costs of inventory, and how audit bureaus account for circulation. It is highly fragile distribution channel in which no stakeholders—publishers, national distributors, wholesalers, or retailers—are exercising leadership to stabilize and improve its functionality.
 
The options to the current conditions are limited and, absent remaking the entire distribution chain, it is unlikely that any solution sought will be pro-competitive.

5/25/14

Digital Consumption is Forcing Newsrooms to Rethink Staffing Patterns

The increasing consumption of news on digital platforms is forcing news organizations to rethink their news production cycles and staffing patterns.

Most journalists, like other employees, prefer a normal pattern of life—going to work in the morning and leaving work in the afternoon—because it is conducive to social and familial life and enjoying the cultural amenities that communities have to offer. This preference helped keep afternoon newspapers the standard in the U.S. until 2000, when morning newspapers surpassed afternoon papers for the first time. 

Even before that time, however, news production cycles and staffing patterns brought the majority of journalists to the office in the daytime hours, with the number of staff in newsrooms dwindling until morning papers “went to bed” about midnight. Most newsrooms then turned off the lights, and only a few larger metro papers sometimes kept a skeletal crew of police/fire reporters and photographers in the newsroom overnight.

That staffing pattern has changed little since the beginning of the digital age. Today, most newsrooms complete and upload news stories for digital sites before midnight or set electronic release times to out them up about the time the print edition is delivered. Efforts to update stories overnight for digital services is only made for the largest, most important breaking stories.

This is creating a problem in digital news provision, however, because one of the largest spikes in use of online and mobile apps occurs between 6 a.m. and 8 a.m. for most news providers. This means that the news is 8-12 hours stale by the time it is accessed--hardly the immediacy that digital news organizations suggest they provide.

This challenge is now inducing leading news organizations to rethink when and how they staff newsrooms and provide news on digital platforms.  They using the better audience metrics that are available to understand when audiences read most of their content on different platforms and reviewing when they publish most of their content on those platforms. The intent is to coordinate peak consumption with publication that keeps material fresh wherever it is accessed.

Pursuing the strategy will be easier for organizations than others. The Guardian, for example, maintains newsrooms in New York, London, and Sydney, so its digital operations can be staffed round the clock to cover international and breaking news, rotating staffing with the movement of the globe so it doesn’t have to maintain significant overnight staffing in all the newsrooms. This follows a pattern set earlier by some international news agencies and news broadcasters.

For metropolitan papers, providing morning digital news consumers with fresh content will require increased overnight staffing or cooperation with other newspapers or news agencies to create means for automatic updates to international and national news on the papers' digital platforms. Few mid-sized and small news organizations are likely to staff overnight, but may be interested in automatic update services for their digital products from trusted news agencies.

Changes in the hours work takes place will concern journalists unions where overnight local staffing is required and they will be focus on how overnight staff is selected and additional compensation for less desirable work hours.

Nevertheless, the concerns of editors of digital platforms to keep material fresh, increasing demands of consumers for immediacy—especially when they are paying for digital access, and the growing importance of digital subscription revenue all are impelling managers to rethink the ways and times at which news is produced and this will increasingly alter the patterns of staffing within news organizations.

4/1/14

The Rise of Expert Journalism in the Digital News Ecosystem


Expert journalism is playing an increasingly important role in the provision of news and news analysis. Its emergence and growth is taking away some of the functions of legacy news organizations, establishing new competitors, and creating new opportunities for cooperation. 
Expert journalism is a novel form of journalism made possible because of the developments in digital media. Written by persons with high levels of expertise, and designed for those whose interests in specific topics are greater than that of the average newspaper reader, television viewer, or digital news user, it is providing alternatives to news previously available only through print or broadcasting.
This type of journalism is practiced by scientists, economists, bankers, medical doctors, and civil society organizations focused on issues, regions, and conflicts. These producers work to provide accurate and, often, balanced content. It is also practiced by specialized professional journalists who provide news and information focused on issues such as climate science, energy, biotechnology, military affairs, and other topics. Expert journalism differs significantly from general user generated content because it operates in a professionalized environment and provides a digital location to which the public and many journalists come for information.

The growing reliance on expert journalism providers by news media and other journalists is not a surprise; many of those practicing this form of journalism were previously sources that journalists in general news media relied upon. Many established their own online enterprises so their information and ideas would less mediated by news providers and errors due to misunderstandings or abbreviation of information conveyed would be reduced.

Although some professional journalists are skeptical about this out-sourcing of news and information, research is revealing that expert journalism tends to have higher quality than general news provision.  When traditional measures of journalistic quality are employed, expert journalism tends to convey greater understanding of the topic by the writer, employ more fact checking, provide more background and context to stories, and be more likely to hold authorities, companies, and elites to account for the actions or inactions.

A variety of revenue models are emerging to support expert journalism, but the most significant seem to be paid speaking engagements, foundation support, subscriptions/memberships, and licenses for digital use by other organizations.

The rise of expert journalism is significant for the emergent media ecosystem in which commercial news organizations are increasing their focus on distribution and relying more on news, information, and commentary available from other sources. They are thus increasingly linking to articles produced by expert journalism and entering syndication agreements with them. Reliance on these sources of news and analysis can be expected to grow in the coming years.

3/19/14

4 strategic tipping points for digital content providers

Legacy and born-digital content creators are now approaching tipping points where they will be forced into deep strategic thinking and choices that will affect their future operations. Consideration of the platforms on which they operate, the platform(s) that receives preference, and the income and expenses they will bear will all inform the strategic choices.

The growth of digital consumption is forcing content creators to confront issues of offline and online consumption, but also to respond to the rapid growth of consumption on different types of digital devices—especially mobile devices. These changes are moving many firms closer to the tipping points.

In deciding how and when strategy needs to be reconsidered, managers need to watch for four critical strategic tipping points. These are points at which significant contemplation and decisions must be made or the enterprises will be put at risk by indecision:

1. When content income surpasses advertising income
2. When digital income exceeds print income
3. When mobile use (tablet, smartphone) tops desktop/laptop use
4. When income from print products no longer pays the costs of print operations
The issue of content income surpassing advertising income is important because it means that greater company attention must be paid to consumer needs and desires and that the advertiser interests must become secondary.  This represents a significant change in focus that has not been the norm in commercial media for 50 to 75 years.

When digital income surpasses offline income the question of whether a digital first strategy is desirable becomes moot. At this point digital first strategy becomes imperative and factors that may have been previously moderated moves in that direction must be overcome.

A number of content providers have already reached the mobile tipping point, where the majority of their content use and time comes from tablets and smartphones, and many others are rapidly approaching that point. At this point content production can no longer start with the version for print or desktops/laptops and be migrated to mobile devices, but needs to switch to production for mobile devices with larger screen devices and print secondary or tertiary in importance.

Those working both offline and digitally are likely to reach a point in which income from print products no longer pays the costs of print operations.  Some have already surpassed it. This will force them to confront the issue of whether to stay in or exit print. There is no simple answer to the question because it involves complex cost accounting and brand issues. When the tipping point is reached, however, the question must be considered in much the same way as digital services which did not stand alone financially in the past were supported by print.

Companies will respond to these tipping points in different ways because of their varying markets, resources, cultures, and capabilities. The important thing is that managers watch for the tipping points, consider their implications, and consciously make decisions about how they will respond to them.

1/20/14

A fundamental shift in the mode of news production

Changes in news production and journalistic employment are often simplistically explained as the results of technology, recent economic conditions, or changes in audience preferences. All these factors have played roles, but a more fundamental and consequential shift is altering the nature of news work and news production.

For more than a hundred years news production has been characterized by the industrial mode of production in which news factories mass produced news. They brought together the resources and equipment necessary for gathering and disseminating news and they relied on trained and professionalized news workers. The product became property exchanged in markets, with geographical, market, and economic factors constraining competition to provide news products.

Although some elements of that production mode remain in place, one can observe news provision splitting into two new production modes—a service mode and a craft production mode. These have enormous implications for the work of journalists and how news is provided in society.
The service mode is one in which news products (newspapers, broadcasts) are being transformed into services with news providers streaming news and information across a variety of platforms, such as print, computer terminals, tablets, and smartphones, and other screen-based devices. They are now focusing more on distributing news rather than gathering and producing it and are relying more on news and commentary produced by news services, content provided to them by the public, and links to other news providers than on their own production.

These news service providers are using pricing models that differ from those of the original product base, with varying prices for access to different bundles of platforms and different levels of access to premium and specialized news content. Pay systems such as those of Press+ and Piano Media are providing mechanism for paid access to multiple news providers—a new form of service. The shift to the service production mode follows that of the paid streaming audio and video services that have proliferated in the past decade.

The shift is making news service providers increasingly dependent on acquisition of news content produced by others, leading them to offer their content at relatively low prices, and inducing them to create better user experiences.  We will increasingly see such services offered at the national and international levels by larger news enterprises.
Concurrently, a different form of production is developing and gaining acceptance–the craft mode of news production. This is production by journalist entrepreneurs and small-scale journalistic cooperatives that are emphasizing the uniqueness and quality in their news. Those working in the craft mode are focusing on special topics such as climate or defense, employing specialized techniques such as investigative or data journalism, or serving smaller localities as general providers. Most are providing news directly to consumers, as well as providing materials to those practicing the service mode.

These new modes have important implications for how journalists work, the resources available to them, and how they organize their careers, compensation, insurance, and pensions. To date, little consideration has been given to how cooperative institutional support for news workers should be organized in this new environment. Journalists unions remain an artifact of the industrial mode of production and are changing very slowly and professional associations remain focused on issues other than work and labor. Something needs to change.

12/23/13

Media, communication and struggles over transparency

Issues of transparency are not new, but have been magnified in the information society—often because of the scale and scope of information available—and because news media are increasingly part of the story, not merely, the storytellers.

The roles played by leading newspapers worldwide—the New York Times, Washington Post, The Guardian, Le Monde, O Globo, El Pais and others—in reviewing and publishing stories based on disclosures by Wikileaks and Edward Snowden’s NSA files have thrust them into the debate about how much transparency society needs. Arguments over information they published and whether disclosures serves public purposes have been animated. These debates highlight differences in views about transparency in security matters, but they also are forcing society to address more fundamental issues about transparency involving many other issues.

Transparency debates are not just a struggle over information and secrecy, but about the bases of human interaction and experience. Transparency is a philosophical and ideological concept based on the view that disclosure is good for society. From a philosophical standpoint, however, transparency is not good in itself—like serenity, beauty, or truth—because for thing to be good in itself it cannot produce harm. Transparency, however, can produce negative consequences by harming dignity and modesty, creating surveillance and means for coercion, endangering public safety, fuelling violence and conflict, and exposing proprietary information in ways that harm economic development.

Transparency does have functional value for achieving desirable outcomes, such as understanding the environment, exposing corruption and abuse of power, promoting trust, facilitating democratic decision making, and making price evaluations in markets.  Information must be available or effective choices cannot be made. But it is not exposure merely for the sake of exposure, so it must be balanced with concepts of privacy, solitude, and security—which lead to debates about when and how transparency is practiced.

The debates taking place today are part of a highly visible struggle over transparency in information age. Digital platforms and all media are playing central roles in debates about the proper extent of transparency involving government, business, banking, and our personal lives. Media themselves are also gathering and using data from their users for their private gain, just as are other companies.

Some of the debates are occurring because of the differing norms and mores of the material and digital world. The norms of the material world tend to involve structure, authority, control, hierarchy, and formality; whereas the norms of immaterial world involve amorphous arrangements, collaboration, empowerment, egalitarianism, and informality. These differing norms and the struggles over the norms have significant implications for government, business, and personal life. They are part of a fundamental struggle over the political economy of information and data.

Wikileaks, Anonymous, and other actors are active participants in the struggle and battling powerful commercial and governmental forces that wish to impose the norms of the material world into the digital, non-material world. It is not surprising they have brought major media into their campaigns, nor should not be surprising that they have fallen afoul of state power. Activists with libertarian and anarchistic tendencies have historically generated backlashes from the state and elites because threats to power typically result in the exercise of power—a very Machiavellian response.

The debates over transparency, the use of information and data, and who should be transparent about what will grow more heated in the coming years. Media and media businesses will play important parts in the debates, not merely as conveyors of information about others, but also about the extent to which they will become more transparent on their own.

12/17/13

The deinstitutionalization of journalism

The most important change in news production today is probably the deinstitutionalization of journalism—the separation of journalism from structural arrangements that significantly influenced its development in the twentieth century.

The practice of journalism was heavily influenced in the past century by regular employment in news enterprises, hierarchical arrangements and organized beats, trade unions and professional associations, and common values and training.
 
These created strong institutional influences on journalistic work from employing organizations and professional colleagues. They provided institutional support to journalistic practices, journalistic specialization, and expanded news and information provision. The arrangements provided the foundation on which better journalistic working conditions and compensation were built.
 
The newsroom was a construction of the institutional arrangements and became the focus of journalistic life. The newsroom developed in the late nineteenth/early twentieth century after telephony altered the need for journalists to be constantly roaming the city and it has undergone several conceptual changes since that time.

Ironically, it is the development of better communication technologies and the digital era that are markedly changing the centrality of the newsroom in journalistic work. The number of journalists physically located in newsrooms is diminishing because of the ability to work fully from other locations and because of the reductions in regular employment.
 
In the new environment, the number of independent journalists working as freelancers or journalistic entrepreneurs—or within small journalistic cooperatives—is growing. There is growing pressure to expand the boundaries of the definition of a journalist to include non-professionals who regularly create and disseminate news and informational content.
 
These developments are changing the context of journalism, its norms and practices, the organization and direction of journalistic labor, perceptions of journalists’ identity, and its reward systems and career paths—all of which are visible signs of the deinstitutionalization of provision of news and the profession and trade of journalism.
 
In the twentieth century journalism was provided by insular news organizations that rarely cooperated with other news organizations, detached themselves from the society they claimed to serve, and often relied on news and information clues from elites and official sources. New, more flexible means of obtaining and providing news are emerging in the deinstitutionalized environment that rely on public accounts and data previously unavailable to journalists. Where these are taking us remains to be seen.
 
The deinstitutionalization raises a host of questions: How are these changes altering journalism practice? What does deinstitutionalization means to news, information, and an informed public?  How can and does innovation takes place in non-institutional settings? How do the transformations underway benefit journalism? How does the declining importance of the newsroom affect the institutional nature of journalistic ethics and decision making?
 
These are fascinating questions in an intriguing transformational period.

11/3/13

The cachet of communications: Why city planners are enamored with media

Policymakers worldwide believe they can create vibrant media cities and are heavily investing public funds in hopes of reaping economic and cultural benefits from media and communications developments.

They believe media cities will help improve transportation systems and the provision of a range of public services, rejuvenate existing media firms, promote entrepreneurship and innovative start-ups, and create well paying employment for a new generation of workers. Policymakers believe media cities have transformative power to modernize the economy and support renewal of industrial or urban districts. These are highly optimistic beliefs.

The biggest problem is that few cities have monopolies on information and media production although the scope, scale and types vary. If that is the case, how can one community stand out as a media city?

To be unique the city must find new ways to use communication and media to make life easier and help the public interact better with each other and society as a whole. But it is hard to keep others from adopting those practices as well. To be unique a city must provide a locale for information and media firms that is more attractive than other places. Locations with strong social and cultural amenities, skilled labor forces and supportive cultural and/or industrial policies tend to produce that result, but media cities also need a pre-existing base of media and information companies and need to build relationships among those companies and social institutions.

The idea of the media city is attractive to policy makers because media and digital products are fashionable, contemporary, and desirable. They are environmentally clean businesses and don’t produce heavy traffic and social disturbance. Policymakers also like them because they can connect the media city idea with other economic, industrial, and cultural policies such as telecommunication infrastructure policies, information and communication technology policies, and cultural policies supporting national identity and culture expression.

Political realities also come into play because media cities provide politicians opportunities that manufacturing, logistics and service industries do not. Pictures of politicians with celebrities and media proprietors tend to provide positive images and lead to access to people who can help them politically. The media city thus becomes a mechanism of political power and policies to create media cities tend to gain great political backing.

The fundamental question one has to ask is whether the hopes and benefits sought by policy makers and politicians are realized through media cities. Clearly transport and public services are improved by better information systems that inform the public and allow better management and deployment of public resources. Media cities have not, however, been highly successful at providing the value added, employment gains, and economic multiplier effects found from other types of industries. This is primarily because most information and media firms are microenterprises and dependent upon contract work.

Media cities have more successful in their transformative goals for modernizing perceptions of the local economy and renewing urban districts. They are especially effective as real estate development projects that benefit construction and building owners. But are those the best outcomes for a media city policy and the use of public funds?

There are downsides of media cities because the highly mobile nature of employment and production in information and media industries permits companies to play off competing governments for funding and tax advantages and to move when they are no longer available. Information and media firms also have higher product and firm failure rates than other industries and this tends to reduce long-term economic benefits by comparison.

The results for media cities are mixed, but they still carry cachet among policy makers. A good dose of realism is required in considering whether a media city policy is desirable in a community. To be effective, they policy must be nurtured and configured so it actually produces results beyond mere urban renewal and changing perceptions of the economic base of a city. Merely calling a place a media city is not enough.