Newspapers: Hastening Their Own Demise
April 24, 2008
I dreamed of Darwin. I think my semiconscious was mulling about survival and adaptation. The financial news from the newspaper publishing world was interesting. Losses at Gannett, McClatchy, and the New York Times suggest continued worsening of their financial weather. You can point and click through the remarkable financial picture by running this query on Google News.
To add insult to injury, Moody’s Investors Service, according to CNN.com, downgraded the New York Times Company’s senior unsecured ratings to ‘Baa3’ from ‘Baa1′ and its commercial paper rating to “Prime-3” from “Prime-2”. This is the difference between a premier league soccer team and a third-division squad playing for beer. The news story I read reported that Moody’s said the New York Times had a “stable” financial outlook. If the first quarter results are stable, I must not have a good grasp of how financial whiz kids think. (Please, read this story quickly. These CNN.com links disappear quickly.)
Enterprise search systems can ingest news and information from third-parties. Some news organizations sell live feeds directly into companies. The information is then indexed and made available to employees within the enterprise search system. Over the last few years, I’ve seen an increase in the use of news on Internet sites first as a supplement to commercial vendors’ news and now as a replacement in some organizations. Are commercial news vendors, newspapers, and legitimate commercial aggregators losing their grip in this important market?
I think newspapers are. It may be too soon to tell if outfits like the Associated Press or giant combines will be affected as well. The digitally adept may be able to deal with Darwinian forces. Others won’t be so fortunate.
Every few months I bump into an executive from a New York publishing company. Some of these titans of information work for media companies with newspapers; others labor within the multi-national combines that own professional publishing companies. A few ride the air currents rising from the burning piles of unsold books, magazines, peer-reviewed journals, and controlled-circulation publications.
Viewed as a group, the financial picture is clear. Consolidation is inevitable. I dropped my subscription to the Financial Times because I was getting three deliveries a week, not six. The FT’s hard copy distribution system was incapable of delivering the paper on a daily basis to my redoubt in rural Kentucky. No apologies and no explanations were forthcoming after three years of complaining to my elusive delivery person. My emails to the FT customer center went unheeded. At a trade show, a chipper Financial Times’s booth worker tried to give me a tan baseball cap with an embroidered “FT” logo. I returned the hat to the young person saying, “No, thanks. I have a Google cap and that is already broken in.”
Three Sources of “Real” News
I want to steer clear of the well-worn theme that Web logs provide an alternative to “real” journalism. The best Web logs from my point of view are those written by individuals who were or could have been cracker jack journalists. I worked at the Courier-Journal & Louisville Times in its salad days. I also worked for the fellow once described to me as “the most hated man in New York publishing,” the sharp-as-a-tack Bill Ziff. Mr. Ziff created three media conglomerates and sold each at the peak of their valuation. He would still be working his magic if age and illness had not side lined him. The best Web log writers could have found a home at either the CJ or at Ziff when these outfits were firing on all cylinders.
I want to take a look at three exemplary news services in a cursory way and then offer some observations about why the newspaper publishers who are losing money are probably going to continue losing money for the foreseeable future. If Rupert Murdoch’s legal eagles are reading this essay, calm down. I am not discussing News Corp., the Wall Street Journal, or the likely takeover of Newsday.
First, navigate to a site called Newsnow. I haven’t kept up with the company after speaking with executives a couple of years ago. The service provides a series of links to news grouped by categories. The center panel presents headlines and one sentence summaries of the major story. When I visited the site this morning (April 24, 2008), I had a tidy line up of items relating to the mortgage crisis affecting Europe. An important point is that even on my real lousy Verizon high-speed, use-it-anywhere wireless service–Newsnow loads quickly and is not annoying.
Second, navigate to EU Feeds. Across the top of the splash page are tiny flags. Most of these won’t mean anything to an American born in Peoria, Illinois. Too a few who have traveled farther than the nearest Costco, these flags, when clicked, display the headlines for a different country. Try it. Here’s what I saw this morning as I was catching up with the recent happenings outside the United States. Unlike Newsnow, which is a commercial operation, EU Feeds is a project of the European Journalism Centre http://www.ejc.nl/.
Third, take a look at Newscribe. (The one thing I don’t like about this service is its cute url.) This service provides headlines and includes links to videos. I like the break out of key stories by category. The technology headlines are particularly useful for me. The angle the site takes is that volunteers write summaries and post them.
These sites have several features in common. First, none is annoying. The commercialization infection has been ignored or rendered irrelevant by each of these sites’ business models. Contrast that to some of the sites with fly overs, pop anders, and in-your-face wiggling banners. Second, the functionality of these sites is basic and direct. Click a link; get more information. There’s no effort to make a Web page look like a printed page in a glossy magazine. Finally, these sites pull together information from branded information sources; that is, commercial publishing operations. Publishers for either traffic or some other compensation play ball with these aggregators.
My hunch is that these sites exist because legitimate news companies want to “keep their oar in” or “get their feet wet”. This is admirable, but I think it has had a delaying effect on more imaginative thinking. Now it may be too late.
Observations
I am concerned that my observations are likely to be quite different from the received wisdom about commercial news and the financial outlook of news publishers. Let me offer my views despite this worry.
First, publishers who participate in these aggregation services are making a case for consolidation. If any of these sites generates significant usage, it will be because individual publishers cc operate to make clear that no single source of information is likely to have enough oomph to attract eyeballs on the Web. Whatever benefit an individual publisher gets by participating in an aggregation service is likely to do more harm to the publisher than good. The exception, of course, is a roll up that buys enough publishing operations to have the heft and mass to pull traffic without having to rely on other publishers’ information.
Second, the quality of these three services and their relative obscurity makes it clear that sites with lots of traffic such as Google, Microsoft, and Yahoo are the de facto news organizations of the future. If traditional publishers go out of business, these outfits and maybe a handful of others are the hails to the traditional newspaper business. Again the exception is Mr. Murdoch because he may end up being one of the two or three publishing combines that doesn’t feel pressure from the Microsofts, Googles, and Yahoos of the world.
Third, the convenience of a headline and overview approach to news represents what I call “the news service of the future”. The traditional newspaper is wrong for this interval in history. Those who read it constitute a minority audience. Advertisers may want to reach niches, but newspapers are wrong for that type of marketing. The majority of Web sites that make news into a video game experience are equally wrong. News is a type of information that deserves a fast-access modality. The whirring and clicking of many US news organizations’ Web sites turns off users. It takes too much effort to get the gist of what’s happening.
To wrap up, I think that American news organizations are in for increasingly harsh economic times. Consolidation is inevitable. Unless there’s a reversal of the trends I have identified, tomorrows news leaders will be companies like Google, Microsoft, and Yahoo. These three companies may not know they are the tomorrow’s news companies, but I think these three firms will respond to their users’ behavior. Traditional newspaper companies seem incapable of making this adjustment. The fittest will definitely survive.
Stephen Arnold, April 24, 2008
Update, April 25, 2008
A person in Canada called me and suggested I add a link to Rocket News. This is a publicly-traded company with a number of innovative and useful services. The news headlines are available at RocketNews.com. RocketNews continuously analyzes 60,000 news sources, including newspapers, websites, trade journals, scientific publications and more. Stephen Arnold, April 25, 2008
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