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Awkward Questions

John Naughton used the metaphor of CS Lewis' book 'A Grief Observed' to describe the reactions of the print media to the internet and online revolution. The various stages of the Kubler-Ross grieving process are:

  • Denial
  • Depression
  • Anger
  • Bargaining
  • Acceptance.

Naughton suggested that the media industry had gone though the same kind of processes. He argued that the industry had denied those pragmatists who had talked about the coming change and preferred to believe those faith-based optimists. The result was that they missed the real story – that classified advertising was moving online and that newspapers would be left without a business model.

Also in denial, he used the example of the music industry that reacted to digitisation in 1982 by turning the bits and bites back into physical bits of plastic and shipping them round the world to record stores. The result was that the industry destroyed itself as others worked out how to offer more value to consumers.

On anger, he told of how the editor of the Wall Street Journal, Robert Thomson, calls Google a "tapeworm". His boss, Rupert Murdoch, says Google is engaged in "stealing copyrights". Henry Porter wrote recently in the Observer that:

"Google is in the final analysis a parasite that creates nothing, merely offering little aggregation, lists and the ordering of information generated by people who have invested their capital, skill and time. On the back of the labour of others it makes vast advertising revenues - in the final quarter of last year its revenues were $5.7bn, and it currently sits on a cash pile of $8.6bn."

Naughton says this is wrong: 'Google is not a parasite, but an intermediator. The Web didn't kill mediators, but made them stronger. The way a company makes big money on the Web is by skimming little bits of money off a huge number of transactions, with each click counting as a transaction. (Think trillions of transactions.) The reality of the web is hypermediation, and Google, with its search and search-ad monopolies, is the king of the hypermediators.'

On depression, Naughton said some of the discussion had taken on the character of commentary on a golden age that had probably never existed. He said there was an obsession with preserving the print product. Clay Shirky has highlighted the blind-spot that disables most media discussion about the future of news, namely the failure to distinguish between form and function. What matters is news and journalism, not the survival of one particular form (the newspaper) which - for historical and technological reasons - happened to become the dominant way of fulfilling that function until recently.

The bargaining was about the way in which newspapers jumped over themselves to show how much they were giving away and being sympathetic to the internet (be nice to the crocodile so it eats you last) and acceptance is still some way away.

He then talked about some awkward questions:

  1. He thinks there needs to be a debate about whether newspapers are as important for democracy as they think. He mentioned their failure to reveal the Enron scandal and predict WMD and the recent financial meltdown. How often does the press really make a difference and deliver fearless probing of the establishment? He did concede later that democracies require the constant and critical probing of the centres of power.
  2. He was dismissive about the media's ability to handle complex issues, how it tries to bring things down to two sides, when there are often up to 500 sides to the biggest issues of the day. What value he asked, did Nick Robinson, BBC Political Correspondent, add when he was standing in front of No 10 telling the story of the day.
  3. He thinks that we need to be more realistic about not knowing how and when things will change. He says what we are seeing and what capitalism delivers is wave upon wave of creative disruption and we are going through that now. We're only 16 years into all of this. It is incredibly new. The invention of the WWW and the Mosaic browser only happened in 1993. What would have happened in 16 years after the Gutenberg press people had asked if it would have undermined authorities or hasten the Reformation. We are in a state of informed bewilderment.
  4. Naughton argues we are suffering from oversupply, that can't and won't last. Consolidation is inevitable and probably not a bad thing. Economists say that prices of a good converge to the marginal cost and the cost is currently close to zero. He says the world will not end if some print publications go out of business. Something new will emerge, he says, and that's fine.
  5. But don't look for answers anytime soon. Broadcast radio took 15 years to find a business model (Proctor and Gamble eventually saved it with sponsored shows). It will take time. He supported Rupert Murdoch's focus on finding some answers to how to find some new business models. His News Corp. has set up a global team, based in New York, London and Sydney, to create a system for charging for online content in an environment where consumers have come to expect to get it for free.
  6. Finally he suggested that mainstream media organisations needed to do more to understand the internet revolution. He summarised it as "It's conversation stupid!" and gave an example of networked journalism where MP expenses claims spreadsheets were unpacked in a collaborative way and reassembled as a map mash-up. Journalists needed to innovate and use the tools, and listen more to the technology.

In response, Nic Newman from the BBC talked about how broadcasters had largely watched on as the print industry struggled. In many ways they had contributed to it, by extending their footprint throughout the day and beating print at their own game in many countries (for example, the BBC and CNN).

All companies, he stressed, were moving into multimedia operations – newspapers were doing video and audio and broadcasters were doing text. There was a sense in which broadcasters were different and were understanding how to use new media to supplement and complement linear, not to replace it. On the other hand there were some fundamental changes underway and broadcasters would be hit hard, just like print in the next wave of all this.

Audiences were embracing on demand and business models were being thrown in the air along with certainties that had given the UK a very strong broadcast sector for 20 years. Licence fee based on linear TV set couldn't survive. Commercial models are in trouble and there are now as many conferences on the future of TV as on the death of print.

The future belonged to those that understood and embraced the coming change; disaggregation and re-aggregation, the shift in control to audiences, the two way nature of the conversation (social media) and the need to find new business models.

Ultimately a new media industry would emerge that would involve new media companies, which won't be newspapers, broadcasters or software companies. The most successful ones will be a mix of all of those things.

"The curious thing about the various plans hatched in the '90s is that they were, at base, all the same plan: "Here's how we're going to preserve the old forms of organization in a world of cheap perfect copies!" The details differed, but the core assumption behind all imagined outcomes (save the unthinkable one) was that the organizational form of the newspaper, as a general-purpose vehicle for publishing a variety of news and opinion, was basically sound, and only needed a digital facelift. As a result, the conversation has degenerated into the enthusiastic grasping at straws, pursued by skeptical responses." Shirky: Thinking the Unthinkable