Fixing the Newspaper Business or “Do I Have to Do Everything Around Here?”

to-do-listThis has been on my to-do list for a while but it keeps getting pushed downstream by other, more pressing issues.   The volume of whining – along with the complaints about the whining – has gotten so loud, though, I figured I’d better take an hour or two and get it done:

“#23: Fix newspaper business.”

Pay attention.  I’m only going to go through this once.

First,  let’s set the table by debunking the hysteria about “journalism in decline” and what it means for the future of our democracy; journalism ain’t going away and neither are journalists.  In fact, I will bet you that within the next decade, average compensation for journalists will be ahead of where it is today in real dollars and the number of people making a living  – above subsistence levels – will be up as well.

Note the deliberate uses of the words “compensation” and “making a living” rather than “salaries” and “working at newspapers” because at least one thing amidst the moaning and groaning is true:  newspapers (and magazines) as they exist today –  lots of people gathered in a building to produce content that is principally physically delivered via a daily (or weekly, monthly) sheaf of printed paper – are doomed.  It might take a decade or more to take down the strongest of the herd, but the hour of their death is fast approaching (I actually found a site – Newspaper Deathwatch – dedicated to chronicling their passage).

Or, in the words of Cypher, “It means buckle your seat belt, Dorothy, ’cause Kansas is going bye-bye.”

But, what’s killing the big, bad beasties of yore is not a change in human nature or some other cataclysmic shift in people’s behavior.  To the contrary, people remain just as interested as ever in knowing what’s going on in the world around them, maybe even more interested than ever now that we live in a world that is increasingly one big tightly coupled network.

“Yeah, but…” I can hear you start to say:

“Yeah, but if that’s true, why are newspaper subscriptions dropping so far so fast?”

Fact:  Yes, newspaper subscriptions are dropping, but readership is actually up when you count on-line and print readership.  The New York Times has a paid print circulation of around 1,000,000; the New York Times web site logged north of 14,000,000 unique visitors last August according to Wikipedia.

“Yeah, but news consumers don’t distinguish between reputable journalistic content and the other stuff.”

Fact: Newspaper web sites are actually among the fastest growing sites on the Internet in terms of traffic.  The Newspaper Association of America, the DC-based flacking group for some 2,000 newspapers, reported last October than their audience had grown 16 percent year-over-year.  In other words, people may surf over to Drudge, to Smoking Gun and to TotalBullshit.com (don’t bother, actually, as it looks like it’s part of a porn-themed click-farm), but they are also hitting the mainstream media’s online offerings in record numbers.

And, you know what?  Hitting a bunch of sites to get multiple perspectives on a topic, or to keep up with a fast-moving culture is a positive development.  Drudge is a scumbag, it appears to me, but his site provides value to anyone who wants to stay abreast of politics or pop culture.  Reading what Al Jazeera and Het Parool and Bob’s Blog think about the Dutch immigration issue is a good thing. Getting multiple points of view is a good practice to encourage in your kids and in news consumers as well.

Yeah, but how can we compete with the 57,000,000,000,002 bloggers out there giving away content for free and the 950,000,002 videos posted on YouTube and the 19,999,871 Tweets?

Fact:  You can’t. And, you don’t have to.  Start by recognizing that you are not in the same business with 99.9999 percent of all bloggers who are – for the most part – either irrelevant content creators (as in…“Today, I went to the Mall and exchanged my iPhone cover for one with a ‘Hello Kitty’ design…”) or are secondary content creators who exist only because someone else creates content for them to push against (as in…”Today, the Times had a fascinating article that…“).

“Secondary content creation” includes, by the way, almost EVERYTHING WRITTEN ON THIS BLOG.  The SRC is – for the most part – in the opinionating business, not the the news reporting business.  Rarely – Bill McAuliffe’s excellent post about the current state of being inside the Strib newsroom being a most notable, recent exception – do we create something that stands on its own.

(As an aside, even if 99.9999 percent of the blogosphere is full of nothing but wannabees and pirates that means there are still 7,000 sites or so producing high-quality, original content; just remember that a little competition is good for all of us).

sanchez1Instead, journalists need to learn how to use these sites and technologies and – even more importantly – the impulses behind them and the communities they create (and they are).  Rick Sanchez at CNN is doing a nice job making Twitter part of his reporting and in strengthening his relationship with his audience (he’s up to 46,000 followers so far).  Ditto how the MSM grabbed onto the on-the-scene coverage of the first minutes of the US Airways ditching in the Hudson when the only “reporters” on site were regular folks equipped with digital cameras and cell phones (see Mr. Keliher’s post on this for more details).  These technologies and trends are making journalism better IMHO (especially on breaking news).  CNN tried a potentially fun experiment at Tuesday’s swearing in by assembling thousands of pictures taken at the moment the oath of office was administered into a 3D montage of the event; not as cool as I’d hoped, but I suspect it succeeded well enough that will become a standard piece of how big events are documented (as opposed to the election night “holograms” that were lame).

These technologies – plus the Internet (which underlies everything) – are also causing journalists work a little harder to earn their livings and are – in the short term – costing jobs and earnings in their industry.  Who needs to wait for each morning’s edition of the Star Tribune to know what happened in the last 24 hours when you get that news in real time from every direction?  And, if we don’t need this sort of news from the print edition of the Strib, do we need the Strib journalists who report it, edit it, illustrate it and lay it out on the page?  The harsh but honest answer is, “Not so much.”

Truly, though, this transformation – painful as it is on an individual level – is not a bad thing, any more than the rise of internal combustion engine displacing the use of animal and human muscle was a bad thing.  Yes, lots of jobs in the calorie-based economy – groomers, saddle-and-tack makers, coachmen, horse shit picker-uppers – went away but they were more than replaced by jobs in the new petroleum-based economy.  And, oh yeah, our overall standard of living has risen to incredible levels.  The networking of our world offers similar opportunities (and challenges).

But…we still need – and want – journalists to tell us why it happened, what it means, who did it, what could happen next and how it relates to the other news of the day.  We need them to add content in the form of explanatory illustrations, commentary from “experts” and contextualization so that we know that something has happened 36 times last year – or never before.  And, we need them in more places than ever before; instead of one “cops” reporter covering the Minneapolis crime beat, wouldn’t it be cool to have 4 or 5?

The problem, in short, is not that people no longer need journalists or want what journalists produce; the problems are 1) the economics of the current model and 2) the distribution and display of content.  Both will be fixed within the decade and the result of this process will be a “disintermediation” (yes, it’s a real word) of news gathering, reporting and  distribution (including an erosion of the importance of the credential “professional journalist”) but ultimately more reporting, more coverage and better pay for working journalists.

The big losers over the long term?  The people who own the means of producing journalism today: the Avistas, the Zells, the Sulzbergers, the Murdochs, the Slims.  I ain’t losing a lot of sleep for them.

OK, it took too long to set the table – just like it does at home – but now that it’s laid out, let’s talk about Thing 1 and Thing 2 – economics and the distribution and display problems  – and how I think they’re going to be fixed.

thing1Thing 1: Economics

Newspapers have made their money from way back by selling their readers’ eyeballs to advertisers – display advertisers ho sell the stuff that fills in the spaces between the news content and classified advertisers who used to populate the big thick sections at the center of the paper.  Subscription revenue for a daily newspaper is by comparison a relatively small stream and is largely there to subsidize the cost of home delivery.

Unfortunately, neither revenue stream seems to work in the on-line world.  Display advertising revenue has not migrated on-line along with readers and classified advertising has been nearly killed with sites like craigslist, job sites like Monster.com and the auto sites.  As far as subscriptions go, with the exception of the Wall Street Journal, no daily newspaper I’m aware of has successfully implemented a subscription charge (the New York Times has tried several versions but failed with each and there has been a general movement among newspapers to put all archived material – generally anything two weeks old or earlier – behind a pay-by-the-article fence).  As a result, newspapers have ended up giving away their product (and an arguably superior version of it) for free on line.

At the same time, of course, print readership is in free fall which reduces revenue in the real world (but declining numbers of subscribers does very little to reduce costs, newspapers being – as Tony pointed out last week – a high fixed-cost business). This means advertisers won’t pay as much money for a smaller number of eyeballs, particularly ones that skew so old.

To survive this inflection point (which is a far-from-certain-thing; how many buggy manufacturers made the jump to automobiles, after all?), news providers need some way to capture revenue from their on-line readers who ain’t buying the cow today because they’re getting their milk for free.  The all-you-can-eat monthly or yearly subscription model doesn’t seem to work so the solution is…

Micropayments.

A micropayment scheme is one in which tiny payments – for purposes of this discussion, let’s assume less than 25 cents, but a purist would say a micropayment is less than 1 cent or the smallest denomination of local currency – flow from a buyer to seller.  These tiny payments are insignificant on an individual basis, but aggregated add up to real money.

Here’s how it might work for newspapers; consider this snapshot of Thursday’s Star Tribune homepage:

strib1

Today is a pretty typical news day here in the Twin Cities and there’s the usual mixture of breaking news – the Oscar nominations, the SUV kamikaze run on Planned Parenthood, new unemployment numbers and the AG’s lawsuit against Allina – and features like the skyway for sale and Sid’s column.  In today’s world, all this content is free to users.

In a micropayment world, however, click on the link to any of these stories and a tiny, variable payment would flow from user to provider.  The skyway story costs 1/10th of 1 cent.  The unemployment story is 3/10th of a cent, Sid’s column is 1/2 a cent (and overpriced at that), reading about the Oscars will set you back a whole penny, the SUV story is 2 cents and the Allina story is 10 cents (more on why later). In the micropayment world, a user hitting all of these stories might send 13.9 cents to the Star Tribune‘s achingly bare coffers.   No logins necessary, no extra steps, the transaction creates very little friction to the current point-and-click process (see below for a longer discussion on this point).

Less than fourteen cents probably wouldn’t have paid for Sid’s coffee back when he started in the news business (actually, I think it was the price of a steak dinner back then), but is it really relevant in today’s world?  You betcha.  Remember those stats way, way back at the beginning of our story: 14,000,000 unique visitors per month at the NYT, fast-growing MSM web sites, etc; even little numbers are meaningful when multiplied by big numbers.

This is not just theory.  Micropayment systems are already in use in on-line gaming environments, in the Skype calling plan and on the Internet through companies such as Wallie and ClickandBuy. Micropayments also exist in the real world:  those of us who use MNPass or an analogous system to avoid toll booths are already micropayment participants.

So, to paraphrase Charley Partana, “If I’m so fucking smart, why am I so fucking poor?”  Why hasn’t anybody in the newspaper business figured this out and done this?

sidneyharris_miracleweb

Setting aside for the moment my smart-ass answer that it’s because there isn’t a lot of innovation in the mahogany row offices of most media companies, there is still a little work to be done in this area.  OK, maybe a little more than a little.  But doable.

As the cartoon suggests, there is a missing piece to this path to economic salvation and that’s the inability of the current financial system to handle such tiny transactions on a cost-effective basis.  If you’ve ever wondered why there’s a minimum purchase for a credit card transaction at many retailers, it’s because the credit card network charges fees to vendors for its use.  There are lots of fees, in fact, and their collective impact makes it cost-stupid (beyond cost-prohibitive) to use the credit card network for transactions of a couple of dollars or less.

There are, however, a couple of ways around this.  For example, you could build from the ground up a new system to handle these micropayment transactions.  That would be massively expensive, take years and be a very speculative proposition.  Let’s not go there.

More likely and more achievable would be to do what Skype and MNPass and the other current users of “macro micropayment” systems (i.e. ones with transactions above a penny) are using:  each user “banks” a certain dollar amount with a micropayment transaction clearinghouse – let’s say $100 – which also keeps track of the transactions to be debited against each user’s account (I haven’t modeled  what sort of additional traffic load this would add to the Internet, but my gut tells me we could process a helluva lot of transactions with the same bandwidth required to download one episode of Lost from iTunes).  At the end of the month or whenever it makes economic sense (like reaching a certain dollar threshold), the books are settled and aggregate payments of all those little transactions flows to each news provider.

My perception of the obstacles to this solution are less technical than they are political.  Which system?  What features?  Who develops it? Who owns it?  Why yours and not mine?  Nobody, it seems, wants to reach for this ring alone.

So, do it together.  I’m not sure if they need it, but I bet the industry could get permission from the Justice Department for a very narrow anti-trust waiver to discuss the creation of a micropayment standard for such transactions.  That would ease everyone’s fears about looking dumb and let the standard be developed in the open.  And, theoretically, it could work not just for the newspapers but for lots of “content” like images, audio, video, other types of writing.

In fact, I posit that one of the reasons micropayment schemes haven’t worked yet (as this excellent overview from 2005 notes, there have actually been two or three generations of efforts in the last 10-15 years) is because they’ve needed the buy-in from a U.S.-based industry like the newspapers.

OK, bear with me, we’re in clean-up mode on Thing One and will be moving on to Thing Two in just a minute.  What the hell, if you’re still reading after 2700 words, you’re either a masochist or you’re…something weirder.

I mentioned adding “friction” above and it’s worth circling back to as it’s one of the reasons cited for the slow adoption of micropayment schemes.  In addition to ease-of-use issues, which I’m confident a well-designed system can handle, the two big challenges are privacy issues and what Wikipedia calls the “mental transaction cost of each micropayment.

Privacy in this context means the ability to make micropayment transactions from the consumer end so that nobody knows when I click on the link to “read” the Britney Spears article at Playboy.com (go ahead, click it…you know you want to).  In all of the current generation of micropayment schemes, such anonymity is possible and the operators purport to be able to launder each transaction so that vendors don’t know who’s buying from them (please note, though, that privacy is a relative thing; if the IRS, the CIA or the NSA come knocking that your micropayment vendor’s door, you can pretty much count on the fact that they’ll give you up in a heartbeat).

The other challenge – the mental transaction thing – refers to the notion that each one of these purchases, no matter how small, carries overhead in the form of decisionmaking by the user as in,  “Is this content worth the price?”  Economists and psychologists tend to believe that the collected weight of these decisions adds up to a big pain in the ass that would impede use of micropayments.

If you’re a MNPass user, you might recognize this dilemma as you’re zipping toward the HOV lane divider and trying to decide to jink left and pay $1.25 for the HOV lane during rush hour or to jink right and save the buck and a quarter but run the risk of hitting traffic.  If a couple of us can’t decide fast enough and hit the center barrier at 70 mph, you can look for “mental transaction ban” legislation to be introduced.

I haven’t seen any data on this, but I’m convinced this problem can be solved with the use of individually set, persistent (as in set them once and they stay in effect until you change them) limits and thresholds on the size of micropayments.  When you sign up for your micropay account, for example, you decide that you will one-click purchase any content that costs less than 10 cents.

Using our Star Tribune homepage as an example again, that means that of the six stories you’re interested in reading that day, five of them would have simply opened up when you clicked on them and the micropayment purchase would occur invisibly to you.  For the sixth story, though, the one about Allina, you might see a pop-up dialog box with a message like:

content-box1

Feeling rich?  Dial your threshold up to a quarter.  Tight this month?  Set it at a penny.  Want to be notified when you spend more than $1 in a 24-hour period, 50 cents on one site or $10 a month?  Point and click.

Now, why is the Allina story 10 cents?  The answer is at the heart of the wonderful opportunity news content providers have by disassembling their content and selling it piece by piece: variable pricing.  New organizations will be able to price segregate almost without limit. Price segregation sounds bad, but it isn’t.  Not for consumers or providers.

Who’s going to read a story about an Allina lawsuit?  Lots of business types, particularly those with ties to Allina or the healthcare industry.  Just like business travelers, business news consumers are relatively price insensitive and an Allina employee in particular is probably not going to think twice about paying 10 cents.  They are willing to pay more…and should.

The newspapers will be crappy at this sort of pricing at first because they won’t have an institutional expertise at it, but they’ll catch on pretty quick.  And, because the transaction is being conducted over the web, they’ll get lots and lots of data to help them refine their models. And, once they get the basics down, they can start embroidering by adding loyalty discounts, corporate deals, pricing by geography, etc.

Who knows, they may even reach the Holy Grail of variable pricing…individual pricing in which everybody has a different price based on his or her reading history, purchasing patterns, etc.  Given all the shit I took from the media during my time at Northwest for our variable pricing efforts, I’d find that amusingly ironic.

…Whew…

OK, that takes care of Thing One, which is by far the harder of the two Things to deal with IMHO.  Thing Two, distribution and display, is much simpler because it requires no “insert miracle here” moment.  In fact in many ways, as George Allen used to say, “The future is now.”

thing2Thing Two: Distribution and Display

The distribution gap is already mostly closed for the vast majority of Americans and other residents of the most developed countries.  Electronic distribution is almost everywhere already, either through the ever-expanding patchwork of wi-fi hotspots or through the use of the cellular networks which are already faster than their wired predecessors were just a decade ago.  Other countries are even further along this road than we are.  Some holes to fill way out yonder and in tunnels and elsewhere, but getting there.

In other words, it may be easy to walk down to the corner and put 75 cents in the news rack to get a copy of the Wall Street Journal, but it’s even easier to sit on your ass in your nice warm office and surf to wsj.com or download it in 30 seconds to your Kindle (more on this device below) via Amazon’s “WhisperNet” cellular service.

As far as display goes, let’s pause for a moment to pay homage to the reining champ: paper.

Despite the fact that it’s boring (think Dunder-Mifflin for God’s sake), there are definitely some very good things about this “technology” even today.  It’s cheap, disposable, recyclable, portable, flexible and – when used for news – has a density of information that no current digital display technology can match.  It has a format that allows for both intense and casual reading, it doesn’t require batteries, a cord or access to a network.  If you drop it, you pick it up and keep on reading.  If you drop it in the puddle, you throw it away in the recycling bin and replace it for 50 cents via a ubiquitous distribution system of newstands, vendors and racks.

And, paper provides the intangible that I value very highly: the serendipity factor of finding something you didn’t know you were looking for.

These advantages keep print newspapers in the game – try reading a newspaper on your laptop while standing up on subway sometime to see them in action – but their advantages are narrowing daily.

But, lest we forget, like Mark Antony come to eulogize Julius Caesar, “I come to bury paper, not to praise it.” Its time on stage – at least as far as the newspaper business is concerned – is rushing to an end.  We still have a little work to do before the electronic world outshines the real. Even so, there’s a clear, well-defined path that will – I believe – pull us even and then ahead of paper.  Let’s take our bearings and see where we are.

kindleThe Kindle is version 1.0.

For those who have missed the introduction of this device, the Kindle is the brainchild of Jeff Bezos and the wacky gang at Amazon.  It is essentially an electronic reader into which you can pour hundreds of books along with newspapers, magazines and other written contact.  It plays MP3s and connects to the world via a cellular network.  No will be shocked to learn that I’ve been playing with one for the last year or so.

As you can tell, the Kindle is butt-ugly and not much of an analog for paper.  It’s too small, doesn’t match the resolution of paper, can display only black-and-white (grayscale actually), etc.  It is best suited for its main purpose, reading books (for which it is well-suited).

But it does work for newspaper reading.

You can download the daily New York Times and the Wall Street Journal in less than 30 seconds from anywhere you get a cell signal.  The text is readable, the layout and organization is navigable. The cost is comparable to the print edition.

But, it ain’t paper.

What I really want is something with all the great qualities of paper enumerated above and the advantages of digital – dynamic content, interactivity, storage capacity, etc.

Here comes Version 2.0.

pl A company by the name of Plastic Logic has been creating quite a buzz for itself over the last six months with pictures and demos of it scheduled-for-this-year product: the Plastic Logic Reader (there’s a name developed by engineers).

As you can see, the Reader is a big step up from the Kindle as we now have a form factor on par with a magazine or a tablet of paper.  Tiny enough, in fact, that some reviewers have worried about losing it in the recycling.

amazon-kind-vs-plastic-logicThe bezel around the edge houses power, wi-fi, storage and other administrative functions and serves to add stiffness to the display (it really does bend).  Screen resolution is supposed to be about 150-175 dots per inch (pixels per inch really), still a far cry from what printing presses can do (your typical magazine prints at 2500 dpi) but substantially better than most computer displays (it uses the same “ink” technology as the Kindle).

The Reader is supposed to start dribbling out in the second half of 2009 with consumer sales beginning in 2010.  Us gadget lusters are very excited to get our hands on it.

But it still ain’t paper.

minority-report-epaperWhat we’re waiting for is Version 3.0, an evolution that is more than a few years away (but less than 10) and it looks something like the USA Today imagined in Minority Report or – just as interestingly – like the Daily Prophet in the Harry Potter series.

Sir Arthur C. Clarke, one of my childhood heroes for writing really interesting science fiction (try Childhood’s End (1953!), 2001 (1968!) or Rendezvous with Rama (1972!) for some ideas that will cook your kid’s 12-year-old noodle), famously said, “Any sufficiently advanced technology is indistinguishable from magic.”  Of course, Sir Clarke was a little ahead of his time; he anticipated it all in 1961.

hptype_prophet

Now, skeptics will point out – correctly – that electronic paper will not ever replace its low-tech predecessor when the price disparity between the alternatives is so large.  A Kindle – if you could buy one as they’ve been sold out since before the holidays – would set you back $359 (you can buy them on eBay or Amazon’s Marketplace if you’re really interested but be prepared to pay a premium).   No word on pricing for the Reader but “not cheap” is probably a good guess.  You can buy lots of newspapers for the same amount.

Correct, but ultimately fixable as electronic paper will follow the same price curve that all technologies follow in the current age:  through the floor at an accelerating rate.  Between 1980 and 1990, for example, the price of 1 megabyte of hard drive storage dropped from  approximately $700 to about $10 (today, that same amount of storage will set you back $0.00002).

Once the technology is developed, the manufacturing process is optimized and the demand is established, the price of digital paper will fall just as quickly if not faster.

…[PAUSE]…

OK…shockingly…that’s it.  Let me wrap up by reviewing the preceding 4,543 words: 1) journalism is not dead, dying or irrelevant; 2) micropayments are the answer to the economic discontinuity afflicting newspapers, and; 3) advances in distribution and display technologies will make digital paper a reality and a viable alternative to paper.

Got it?  Now, please somebody go do it so all the journalists can quit worrying about their future and so that something important doesn’t slip by unnoticed while the industry is navel-gazing.

Me, I’ve got to get on to some of the other entries on my to-do list like #17 (program Roombas), #8 (empty receipts from wallet) and #4 (tease cat).

#23: Fix newspaper business.

– Austin

94 thoughts on “Fixing the Newspaper Business or “Do I Have to Do Everything Around Here?”

  1. Dennis Lanag says:

    Personally, one of the most amazing essays I’ve read on the subject!! But, heck, I have to print it out to fully absorb it. (It must have at least a couple fatal flaws.) Nonetheless, an absolute knock-out!

  2. Here I thought “Lanag” was a new reader — our fourth!

    Micropayments might be the best method to extract payment from consumers for content, but there’s that obstacle of getting consumers to pay for content. What if the Strib and the PiPress adopt a micropayment strategy and MinnPost keeps its not-for-profit, MPR-like model?

    Plus, there’s the addressable but still difficult issue of people like me, folks who don’t have a work-life balance but rather a healthy work-life integration (thanks to Shel Holtz for that line). I’m almost constantly consuming content, and much of is professionally produced. There’s one hell of a fuzzy line, too, between what I’m reading “for work” and what I’m reading for me. You talked about the mental transaction cost; thinking about paying for work stuff or reading stuff that might be more on the personal side while at work and keeping all that straight — sounds like one hell of mental cost.

    And when you say electronic distribution is almost everywhere already, let’s be clear: Not everyone has access to the Internet. I believe the last study I saw cited (sorry, no link or even much certainty on this) said about 15 percent of the world’s population has Internet access. Sure, most of the newshounds, the people who are more of a drain on the current Web-news-for-free system, do have Web access, but it’s worth pointing out that many don’t.

    Micropayments might indeed be the future. I also see a lot of potential in the MinnPost model, too. Perhaps some combination thereof — not within the same organization but across the industry — is what the future might look like.

    Great post, Austin. Go tease the cat.

  3. Ellen Mrja says:

    “Then a miracle occurs,” indeed. Wow.

    “Jon — This was an outstanding post, stunning in its originality, thorough in its research and and flawless in its presentation. A+ “

  4. Jon Austin says:

    MK –

    The existence of other economic models shouldn’t hurt a micropayment scheme and you could even have a hybridized scheme in which a site uses both.

    On the mental cost issue, the low-tech way to deal with it (and the way we will deal with it in the early days of micropayment) is to set your preferences so low that the cost of reading anything is irrelevant (my threshold – I think – is a penny; I’ll pay a penny to read anything and not feel bad if it turns out to be worthless). My gut tells me that most content is going to have be priced at a fraction of a cent, but we’ll see (I hope).

    The high-tech way is to use some sort of cookie analog to identify your profile to each content provider who would then dynamically adjust pricing for you individually each time you visit. Thus, you might only pay $0.0003 for the Britney “interview” because you have historically been price sensitive about purchasing porn. I, on the other hand (literally in this case), get charged a buck because my profile suggests I’m price insensitive when it comes to the purchase of porn.

    And finally on distribution, I did say, “…already mostly closed for the vast majority of Americans and other residents of the most developed countries.” You are absolutely right that there’s lots of disconnected people out there and this idea won’t do much for them.

    – Austin

  5. Dennis Lang says:

    While the culturally transformative power of the technology is likely irrefutable, I hope we hear from some active career journalists with the perception of their own future.

  6. As an arrogant (naive) undergrad in the Mass Comm department at Mankato State, I informed the then department chair that I would never work as a print journalist because radio was superior.

    Four years later, I was a cop reporter for a daily newspaper on the East coast followed by a stint as state editor for a wire service before moving on to magazines. It was at one of these magazines where my boss informed me in 1994 that in 5 years print would be dead and everyone would get their information electronically. The man was a bit ahead of this time.

    I suspect that as long as there are good journalists & reporters writing, there will be an outlet for their work — print, electronic, whatever.

    An interesting side note — on Friday, the French President, Nicholas Sarkosy, pumped 600 million Euros into the failing French newspaper industry in order to prop it up. Included in this is a newspaper subscription for every person under the age of 18. An interesting version on government intervention, yes?

    Jon – this is a great piece of work!

  7. Dennis Lang says:

    Thank you Kris M. Of course only possible, as Jon also suggests , if the new technologies can generate sufficient revenue to support a profession where anyone with a cell-phone can “report” and be accessible free. I don’t know, but suspect, that despite an unabated appetite for news there are lots of “good journalists and reporters” who are not writing because of the diminution of paying outlets for their work.

  8. Ellen Mrja says:

    Kris: Another government bailout…but not for big investment houses or auto makers?

    And imagaine! Encouraging persons 18 years and under to read newspapers. The French might not know how to win wars without our help but they might be on to something here.

    Thanks for — once again — providing us with a Euro perspective. It adds much to these discussions!

  9. Jon Austin says:

    Check out the Economist‘s most recent edition for a very cool story on display technology. The future may be closer than I think!

    – Austin

  10. My point about media outlets using micropayments existing alongside outlets that are still free is this: Again, going back to the mental cost thing, there’s a *huge* difference in perception between a price of $0.00 and $0.0001. It’s far, far greater than the difference between $0.0001 and $0.0002.

    That’s not to say that micropayments aren’t a good idea, but just as we see now with the struggle of online ads not pulling as much revenue as print ads, it will take some time and some fight to get to the point where micropayments work well for a significant group.

  11. Dennis Lang says:

    Fascinating. Last week you folks–I think Ellen–posted a link to a new model for an on-line newspaper. “Global” something, and an accompanying critique. Where is that? Thanks.

  12. Ken Kadet says:

    Jon, that post was just a big ‘ol bowl of media junkie M&M’s this morning. Thanks!

    I’m with Mike re: the mental cost of micropayments. I agree with the idea, and it fits with what I’ve been arguing — that journalists have to get readers to pay for what they produce. But the real challenge is, “who goes first?” The first organization to try it will be the focus of the entire internet. “The free economy/ informationwantstobefree” folks will ridicule. Most others will cock their heads to one side and say, “interesting…but everyone else is free…probably won’t work…” Maybe, as you say, it works as a kind of membership/donation thing.

    I will say that those digital paper readers look awfully cool, and paying to subscribe…or a micropayment-based usage fee– to something formatted for that reader would be something that I and many others might just get behind.

  13. Ken Kadet says:

    And by the way, after all that work, how did Ellen and Bruce muscle you out of the way to talk with David Phelps? 🙂

  14. Dennis Lang says:

    Yes, sadly with all sections seemingly conjoined into one (St. Paul Edition) this morning I must have overlooked it among Sports; CJ; and the Obits.

  15. Dr K says:

    There’s an emphasis in this discussion on fixing legacy newspapers as opposed to creating something de novo that works better. The most likely scenario for success will involve something new, not presently on our radar.

    The best way to conceive of the new model is to divorce oneself from thoughts about how to preserve the profession of journalism or how to save the Strib’s bricks and mortar.

    I never really understood Google’s business model until I started paying for Google advertising. The same goes for linkedin.com Both are ingenious. Both have nothing to do with traditional notions of media or journalism.

    Start with the end-user and back into the business model. That’s how you’ll find the next Big Thing (and I’m no Donny Deutsch).

  16. Ellen Mrja says:

    Dennis: http://www.globalpost.com I like it because it is not just shovel ware of a newspaper onto a monitor. Have you ever seen the Las Vegas Sun? Check it — probably my favorite online newspaper.

    Dr. K: This is probably the most intriguing idea you’ve come up with all day — “start with the end-user and back into the business model.” You’re on to something there. If only we could figure out what that model is we’d all make a lot of money and save journalism.

    BTW: Did you know Google exploded into the largest communication channel ever without advertising itself? Imagine that.

    Ken: When Phelps phoned, he phoned the university. They referred him to me, so it’s not like I’m known as the Goddess of Knowledge down here or anything like that. But, we had a great talk..we’ve talked before..and I reminded him that years ago I had taught his son Nate journalism. Nate is a reporter now in Wisconsin.

    But how Benidt managed to weasel his way into that story is beyond me. Frankly, I’m sort of getting tired of dealing with minus 25 degree windchills and trying to warm up my fingers long enough just to pound out these blog posts while Benidt phones his in once every 2 weeks from the Keys AND THEN has the nerve to tell us all about what he’s drinking.

    I move that Jon Austin become the new leader of our pack. Do I hear a second?

  17. Dr K says:

    Ellen – you’re right: Google captured eyeballs first, then incorporated its ad model. It captured eyeballs by making its search feature indispensable and superior.

  18. Jon Austin says:

    If nominated I will not accept; if chosen, I will not run; if elected, I will not serve.

    OK, let’s deal with the free vs. paid thing…I think the Brothers K (Kadet and Keliher) are over-estimating people’s price sensitivity at the micro end of the scale. By definition, micropayments need to be below the threshold of, “Who cares?” to work. If you can get to that level, there is no functional difference between free and paid.

    Try this experiment…go to the mall and put a penny on the floor in a spot where it’s clearly visible. Count how many people walk over the penny without bothering to pick it up. Their indifference to the penny is the mirror of people’s indifference to a well-chosen micropayment (and if you want a control experiment, put a quarter down and see how long it lasts).

    Too off-beam? Then let’s consider iTunes. Why have more than 6,000,000,000 songs been purchased there in less than 6 years when lots of free alternatives exist? There are lots of reasons, but part of it is the pricing scheme. I’ll take a chance on a lot of speculative music at 99 cents a throw (which is why I end up with 9 different versions of “Angel of the Morning”).

    Forget “information wants to be free” (it’s not a reference to “without cost” anyway but instead about ownership); consumers know in their heart of hearts that they have to pay for something of value (TNSTAAFL). iTunes won because they gave consumers benefits – legality, consistent quality, ease-of-use, breadth of selection – at an attractive, unobtrusive, discretionary price point.

    Newpapers are failing, IMHO, not because because they aren’t providing consumers benefits, but because they aren’t pricing their products appropriately. They’re like the car companies that put the engines in front because that’s where the horse used to be.

    As to who wants to be the pioneer and go first (Mr. Kadet’s other point), that why I think they should get an anti-trust waiver to create the common standard that they can all adopt (as could any digital content creator). Christ, baseball has a permanent exemption; couldn’t we argue that this is a slightly more pressing issue than keeping free agency out of the clubhouse for 100 years?

    Finally, check out the links in the comment from Bill Densmore about halfway up the page (it got caught in our spam filter for half a day or so). Turns out smart people have been thinking about this stuff for a lot longer than me.

    – Austin

  19. Above, Kadet mentioned that “information wants to be free” line. But there’s more. The quote goes like this: “Information wants to be free. Information also wants to be expensive … That tension will not go away.

    As for the difference between zero and not-zero, see this. It’s about venture funding for technology, not saving journalism, but it explains the concept I was mumbling about above. I believe this is true: The difference between free and not free, regardless of the smallness of that difference, is dramatic.

    Of course, the article I link to above basically explains the point, it doesn’t justify the point. And of course, Austin’s experiment above about watching people ignore the penny makes sense. I’m sure most folks would completely disregard that one cent. And I’m not saying that a micropayment system won’t work because of this “penny gap” (the big difference between zero and not-zero). I’m just saying that I believe the penny gap exists.

  20. Gary McVey says:

    Thanks for your thoughtful post, Jon. I live near Seattle and look forward to sharing this with some folks at the Seattle Post Intelligencer, which recently announced it will stop printing if a buyer can’t be found within 60 days (now less.) And we all know how many people are seriously interested in buying newspapers these days. They’re leaving a light in the window by saying the Seattle PI could live on as an online product. Time will tell. Thanks to you, Bruce and the other Rowdies for helping keep our brains working and our B.S. detectors well-tuned. Cheers.

  21. Dennis Lang says:

    Somewhat related to Jon’s article and maybe more appropos to Mr. McAuliffe’s earlier, is this thought on the state of journalistic writing. Journalist Gary Andrew Poole, writing in the current issue of “The Coumbia Journalism Review” laments the passing of great sports writing, once considered a hallmark of fine journalism in general: Red Smith, WC Heinz, John and Ring Lardner, Roger Kahn….

    “You read Red Smith and said Wow! Today you get 400 words of basic game story. You miss detail, anecdotes, how the participants think and decide.” Gone is the in-depth narrative. Today’s journalist, faced with the necessity of the rapid-fire story, precipitated first by ESPN and more prominently the web, finds himself chasing blog-based rumors and blogging themselves. “The bigger story is left wanting, and the more literary aspirations of the writers dashed.” Quality suffers.

    Might this be a futher consequence of the passing of the newspaper? I don’t imagine the brilliantly researched, reported, and artfully, compellingly developed narratives of “The New Yorker” or “Vanity Fair” that Bruce Benidt might have used as models for his magazine writing courses are equally applicable to blogging.

  22. David McRaney says:

    No, this will not work. Sorry.

    No one is going to sign up for micropayments.

    I want you to read this carefully: NO ONE IS EVER GOING TO PAY FOR NEWSPAPER CONTENT ONLINE NO MATTER THE QUALITY, NO MATTER THE PRICE.

  23. Jon Austin says:

    David –

    Your dramatic use of capital letters is pretty persuasive, but for those of us not able to leap from premise to conclusion so nimbly, can you give us the long-form version?

    Thanks.

    – Austin

  24. Jon Austin says:

    Dr. Keliher –

    Thanks for the link to the VC blog and it does highlight a challenge that I admittedly skimmed over. The biggest obstacle is not – IMHO – the micropayments themselves (I still believe that if they’re priced right and the system uses persistent preferences they won’t be an issue), it’s getting people to sign up in the first place – to give their credit card number over to somebody and to create an account with some entity.

    I think this problem can be addressed by having the industry act in concert to develop and implement the standard.

    According to a release issued today by the NAA, here are the top 10 newspaper sites:

    NYTimes.com
    USATODAY.com
    washingtonpost.com
    LA Times
    Wall Street Journal Online
    Daily News Online Edition
    Chicago Tribune
    New York Post
    Boston.com
    SFGate.com/San Francisco Chronicle

    What would happen if they and another 100 or so news sites went on the micropay program? I’m guessing that people – particular you youngsters who don’t know anything different since you’ve grown up this way – would grumble but sign up and then forget about it.

    If we want to speed it along, maybe the government can pay for a one-year subscription to the service for everyone turning 18 (similar to what the French are doing for print newspapers).

    – Austin

  25. Dennis Lang says:

    Wow, look like staggering numbers to me. But you’re thinking that the “Times” on-line 34.6 miillion annual “unique visitors” evaporate without a prepaid subscription? Too much of a leap for the consumer even on the micro-pay basis?

  26. “I don’t imagine the brilliantly researched, reported, and artfully, compellingly developed narratives … are equally applicable to blogging.”

    Dennis, your concern is legitimate, but I’d like to take one second to remind you of the article on which you left that comment — 4,500 words of smart, well-researched, thoughtful writing. Just one little example of who intelligence can survive beyond the four walls of, say, the Star Tribune.

    And Austin: I’m with ya, but I hope you’re kidding with your suggestion the government get involved with trying to float the journalism business.

  27. Dennis Lang says:

    MK–Fabulous point about the professor’s article. It is all of that–an extraordinary exception–and belonged in print rather than the necessity of scrolling down this monitor. I think very few writers can sustain 4700 words, or 10 percent of that, on the internet. Heck, Jon even built a tension line into it in that occasionally whimsical voice of his to keep things flying along. I certainly can’t attest to the efficacy of the mico-payment solution but think Jon’s article would shine in some very fast company. Would have made a terrific companion to that oft quoted (by me) Eric Alterman piece that the “:New Yorker” ran in March. it’s not the walls it’s, I guess, the medium that’s important in expressing ideas of this complexity to a mass audience.

  28. Jon Austin says:

    Dr. Keliher –

    The French are bailing out their newspapers – stupidly IMHO. If we were going to do it (not sure we should), I’d hope we’d do it more intelligently. A jumpstart to making micropayment accepted might qualify, but the line was mostly tongue-in-cheek.

    – Austin

  29. I believe that you are seeing this through the eyes of a news junkie. The average Joe will not be attracted to micropayments. And believe me, even some news junkies will be turned off by it. The psychology of buying will be a major stumbing block. People want to know upfront what their bill will be. The hits will add up, meaning some folks will pay more than they anticipated. Some will sign up and then tag stories to Digg and similar sites, where the freeloaders will go for their news.

  30. Andy/Mediatide: Thanks for stopping by. I’ve been enjoying the Sledzik-Curran Social Media Project. For those who aren’t aware (perhaps of most interest to those in the PR space), check out http://mediatide.wordpress.com.

    Sure, perhaps a micropayment system is geared more toward news junkies, but is that bad? Again, perhaps there’s some hybrid model that allows for the freeloaders to get what they want and the junkies to get what they need. Of course, this would have to be a better system than the all-or-nothing Chinese wall known as “Times Select.” That didn’t work too well.

  31. Newspapers have “freeloaders” now, of course, in households, subways, lobbies and break rooms.

    I’m curious where Austin would have set the micropayment for this article, and whether he would’ve changed the rate as traffic built.

  32. Dennis Lang says:

    Hey, I’m pretty sure somewhere in Austin’s 5,000 words he invoked the name of George Allen. He of “The future is now” fame. Now, when is the last time we saw that name in print (pixels)? Great touch with totally obscure reference. Remember who his QB was when the Rams lost to the Vikes in the ’69 NFL Championship game? (This is kind of a trivial aside.)

  33. PM says:

    OK, I’ll admit it–I was a subscriber to “Time Select”. As such, I am sure that makes me a news junkie and a patsy for Austin’s proposal.

    My thing is being able to do research–getting into the archives and searching there, and Times Select was the only way to do that online. I am certain that for others, the current stuff is what they will pay for. Some of us don’t mind waiting a day (or maybe even a week) for analysis versus the noise that passes for news….

  34. Well, when I need my fix, I need it ASAP! Bu then, while visiting a magazine website today, I meandered into a photo area that requested 0.99 cents per visit and I found myself quickly backing away.

  35. Jon Austin says:

    Lots of us used to steal music until iTunes (and others) gave us a viable path to go legit. Not to say people still aren’t stealing music, video and other content but most folks feel more comfortable on the straight and narrow.

    The leap to micropay is much less that zero to 99 cents. Let’s hypothesize for a minute that the average reader consumes 10 stories a day at an average cost of .5 cent. That’s a nickel a day, a $1.50 a month, $18 a year.

    And I don’t think you have to be a news junkie to want to know what’s going on. Did anyone notice the appearance of lots of televisions in public spaces post-9/11? Go to Israel sometime and notice how obsessed the culture is with news. People want to know when something happens, is about to happen, why it happened, how likely it is to happen again.

    And, yes, there will be freeloading, just like today I can – tediously – burn my iTune library to CD and transfer them to other devices or buy third-party programs that do it in bulk. I’m not much inspired to do so, though, because Apple has made it so easy for me to have my music with me pretty much wherever I go.

    I’m not a Digg expert by any means, but I don’t see it as freeloading. Digg aggregates links to content on other sites. Click on that link and you execute a micropayment.

    As to how I would have priced this content, I probably would have either priced it at zero or I would have set up a tiered pricing – cheap to anyone coming in from a consumer domain like comcast.net and pricy to anyone with a news domain (startribune.com for example).

    And, yes, I did invoke George Allen albeit from his Redskin days. Was it Roman Gabriel beneath the center for the Rams?

    – Austin

  36. Ellen Mrja says:

    Austin’s too humble to say it so I will:

    Nieman Journalism Lab (Harvard) has commented favorably on Austin’s post here. It also has given us a pat on the back for having thoughtful comments. http://tinyurl.com/cfdywr

    Kudos, Rowdies!

  37. I wouldn’t want to shoot down an imaginative idea, but perhaps challenge you to make this happen yourself.

    But it’s like reading with the meter running, and as much as people like a la carte pricing, they’d rather pay a cable bill than pay-per-view.

    People actually do subscribe online, they just pay a different carrier — the ISP, who does the actual delivery.

    Anyone who wants to be paid for delivering the news should probably be in the mobile broadband business.

    The talk of e-readers is based on past forms, not future needs. It assumes that news must come in the shape of a page. But many people get news all day long without looking at a page. And if we had a fancy bendable, foldable screen, would we read an inverted-pyramid story in the shape of a newspaper page, or would we play games and order pizza?

    We can’t corner the market on news. It’s not like frozen orange juice in the movie “Trading Places.” What’s to stop a blogger from dropping a quarter and blogging about the news? We’d need Major League Baseball’s lawyers to keep control of the pictures, descriptions and accounts of the game.

    This idea has a chance, but keep in mind that there are three reasons why iTunes works for Apple that have nothing to do with newspapers.

    1. The alternative was illegal.

    2. iTunes was easier than free.

    3. Apple is gifted at building a passionate community around its products.

    It’s not inconceivable that the everyday production of news could yield premium products, such as tangible keepsakes, that can be sold through a streamlined digital template like iTunes, where the product can be assembled without added expense, after it’s been purchased, in lots of one at a time.

    But if I pay five cents for a story, and I don’t read the whole thing, can I have rollover pennies?

  38. Sev says:

    Very thoughtful discussion. I’ve wondered for some time why this couldn’t be instituted. News junkie, NPR contributer, former Times Select contributer- I don’t see the free rider problem as necessarily a problem. A lot of us understand that good journalism isn’t free and gladly contribute. NPR is still in business. The whole thing could be started as entirely voluntary. I’d sign up.

  39. Jon Austin says:

    Mr Cubbison, who writes a very worthwhile column for the Syracuse Post-Standard‘s on-line entity, makes some valid points in particular that we don’t have illegality in the current situation to incent people to adopt micropayments. His other two points – making micropayments easier than free and creating a passionate community of users – I submit, though, are addressable.

    On the easier-than-free thing, Mr. Cubbison is reminding us that iTunes gives us more than just music for our 99 cents. They give us a familiar, friendly interface, a consistent level of quality and one-click buying (anybody who remembers the fun of using Napster, Kazaa, Limewire or has had fun with BitTorrent or its clients knows what I’m talking about).

    Micropay could offer similar benefits to news consumers in terms of eliminating the proliferation of registration and log-in procedures that are common at media sites (they may be free, but they still require you to register and log-in to get to the content). It could also make it possible for content providers to offer other products (high-resolution photos, for example) with minimal fuss.

    And, on the passionate community thing, I submit such a community already exists – and that it outnumbers Apple’s fanatics; you know, all those people who call themselves “news junkies?” We just need something to organize us.

    And, finally, a note about interface. Mr. Cubbison is right that we don’t have to limit ourselves to the paper metaphor in our brave new world; I’m betting that within 10 years, there’ll also be a viable heads-up display built into glasses that, coupled with near-perfect voice recognition (or maybe gestures) will constitute another way of receiving and sending information.

    But, that said, there’s every reason to believe the paper metaphor will survive this technological transition as it’s survived all of the prior ones pretty handily. In fact, before we called it the “paper metaphor” we probably called it the “clay tablet metaphor” or the “cave wall metaphor.” The act of communicating information in a two-dimensional format seems pretty constant in our species’ experience.

    As a complete non sequitur Mr. Cubbison, if you’re still monitoring this thread, I’d love to know what’s going on with Destiny USA. I had a brief involvement with that project about five years ago that rates an entire chapter in the book I’ll never write!

    – Austin

  40. Ajay says:

    Man, you pretty much hit the nail on the head with this article. I think the parts you’re missing are about how the social organization of news gathering will completely change with micropayments, though you kinda hinted at it when you said the newspapers may not be around. As a technologist who’s trying to solve the micropayments problem, I’m confident we’ll get there, it’s just a matter of time. This long winter where we haven’t setup such a system just goes to show the stupidity of techies, not to mention the deep ignorance of their supposed sages such as Shirky, Odlyzko, or Chris Anderson, and really illustrates the generality of Goldman’s aphorism about the movie business: Nobody knows anything.

  41. Brian and Sev, thanks for your thoughtful comments. Brian in particular clearly illustrates, at the very least, the logistical difficulties in getting paid for information on the Web.

  42. Jon Austin says:

    Ajay is right that I did skim over what happens to the lives of journalists and the culture of journalism in the future (though at that word count, I couldn’t be accused of skimming over much).

    Two words: “journalists unplugged.”

    My bet is that journalists are going to be increasingly independent and become – to use the too-precious concept of the 90s – personal brands. Some journalists will become consumer brands – the Friedmans, Woodwards, even the Hartmans and Shelbys – that end users seek out because they like their stuff (it’s interesting to note that Mr. Friedman and Mr. Woodward already operate their own sites that have very little to do with their ostensible employers – the New York Times and the Washington Post).

    Others will become business-to-business brands; I suspect relatively few people know who Paul McEnroe or Dave Phelps are, but professional journalists know them as exceptionally talented reporters and know that when they produce something it’s worth a look.

    So…hypothetically…I could see a day when Dave Phelps doesn’t work for the Star-Tribune and Tom Friedman doesn’t work for the New York Times – but they both are still producing journalism and earning more money to do so than they are now (and enjoying some quality of life benefits that come from not having to lock yourself in an big downtown office for nine hours every day).

    In this scenario, Phelps and Friedman would be “news producers” and the Star-Tribune and the New York Times would be “news wholesalers” or maybe “news retailers.” (Let’s set aside for now whether either the Strib or the Times is still technically publishing a printed newspaper at this point).

    Friedman sells his content to consumers at micropay levels via his own web site and via RSS. He also distributes his content via a licensing agreement with the New York Times where he gets 75 percent of the micropay revenue and the Times gets 25 percent.

    Phelps, on the other hand, has a “first-look” agreement with the Star-Tribune because they value his stuff so highly, but his content is also regularly bought by other news wholesalers/retailers – AP, CNN, KARE, MinnPost among others – because they recognize the quality there as well and because they know their audiences read it (even if many of them don’t register Phelps as the author).

    Maybe there’s even a virtual marketplace that’s developed that lets news producers and wholesalers efficiently transact this business. Phelps’ sales to other media outlets would in multiples of whole dollars rather than micropayments, but he might negotiate for a split of the news wholesaler’s micropayment stream from a particular story if he thought that was more lucrative. A great piece of exclusive reporting that goes viral on a global basis could be a financial windfall for both producer and wholesaler/retailer.

    In this world, the credential “professional journalist” matters less to a news producer than his/her reputation for quality work that consistently consumed.

    Yes, lots of news producers will go lowbrow and look to feed the mass market’s endless appetite for crotchless Britney uncoverage, but that oversupply of producers will drive down content prices and disincent more producers from joining the pack. At the same time, though, the beauty of the ubiquitous internet (plus Google) means that the much smaller – relatively – audience for “analysis of earmark spending in Obama stimulus bill” is still a big – in absolute terms – group of consumers. It’s the long-tail theory applied to journalism – if we can free the business from thinking that wholesale/retail piece is where a big chunk of the revenues (and costs) stick.

    – Austin

  43. Dennis Lang says:

    I wonder if this idea of content production and distribution might mirror in any way the transformation of commercial movie production and distribution over the last fifty years or so. At one time monolith production companies–MGM, Warners etc,—owned all the talent held within their respective domains, and the channels of distribution. These days it’s independent talent–screenwriters, directors, art directors, actors, cinematographers, editors, hiring out their services, then coming together to produce the work.

  44. Ajay says:

    Again, great analysis, Jon, you might be better off working as an investor, as I suspect that most who are in these businesses do not understand any of what you’re talking about. The only point where we may differ is about the staying power of the traditional newspaper businesses, I think they’ll disappear very quickly (again, think buggy manufacturers). On the other hand, if you read some of the press clippings of CEOs like Larry Ellison or Scott McNealy from the ’90s, they were all saying the same thing back then. When the bust came however, nobody in tech acted on those predictions to make them happen, showing that they did not have the courage of their convictions about the new world of information they had all been talking up. Also, the media crowd hasn’t exactly embraced the micropayments startups that have come and gone, maybe for good reason as they usually weren’t too user-friendly but I’m not sure the media people rejected them for that proper reason.

    Similarly, let me push you a bit about how strongly you believe in this vision, since you say you’re in PR today. My prediction is that in a world drowning in information, the PR business dies. Similar to how you can go to any popular tech shopping site and pull up thousands of reviews on any tech product, EVERYTHING will have its own review pages. In such a climate of total information, you can no more manage public relations than you can herd cats. If you really believed in this future of total information funded by micropayments, you’d follow that reasoning to its logical conclusion and keep an eye out on what you’d do once the PR business is soon dead. Presumably you could always get back into software, since another tech boom would be going strong then.

  45. Ajay, I’m curious to learn more about what you perceive as the role of a true, ethical and effective public relations practitioner? What in that job description makes you see its place in the worlds of business and communication dwindling?

    I see the exact opposite, with little if any doubt in my mind — which I just might need to address in a separate blog post.

  46. Ajay says:

    Let’s see, Mike, PR people write press releases, try to manage interviews, and generally try to influence business decisions that might affect the public image of their client, does that about cover it? I’m not surprised that you disagree that your profession is being obsoleted, but I doubt that you’re right. In the 20th century, information mostly traveled along huge broadcast channels, so PR people could try to influence public opinion by showing exactly the right angle of their client so they looked best on TV, print, etc and by manipulating those channels where they could. In the 21st century, information goes from anyone to anyone with unprecedented reach, specificity, and speed; the word of mouth that always existed has now been amplified so much that it will soon be the most powerful force by far. When that happens, you and Jon are out of jobs, though I’m sure smart guys such as yourselves can always land other jobs. 🙂

  47. Your case is based on fragmentation of the media, which makes it hard to control a message or a perception of a client. I can’t argue with fragmentation, but the idea of controlling a message is a narrow, shallow view of PR.

    I’ve never done a bit of work that’s aimed at controlling a message. The best I can do is work to have my clients’ perspective be a part of those conversations that are going on all over the place. And to be clear, there aren’t really *more* conversations now; we have have more conversations that are more visible than before.

    That said, fragmentation of media and audiences, if anything, gives PR people *more* work to do! It’s not that I don’t believe our jobs will disappear; it’s that I can’t even *imagine* that being the case.

  48. Jon Austin says:

    Ajay (and Mike) –

    I’m not ignoring this interesting branching of the thread and do have a point of view on PR, dead or alive, but I’ve been too damed busy this week to post anything substantive.

    Longer letter later as Judy Bluhm would have put it.

    – Austin

  49. Ajay says:

    Yes, but how are you making sure your client’s message is part of those conversations? Are you going out and taking part in lots of conversations? I contend that you do so by controlling the message on the broadcast channels, so that those conversations are shaped by the information from broadcast channels. There is not only more visible word of mouth today, there’s far more of it, as I can post information online for anyone to see even if nobody in my immediate circle cares. As time goes on, we’re increasingly routing around the broadcast channels; word of mouth will soon be the most powerful force by far. I claim that you have no hope of accomplishing anything at that point, so companies will ditch PR as a useless expense. I don’t think we’re quite there yet but micropayments will enable information to be monetized, leading to an explosion of information online, simultaneously striking a deathblow to your profession.

  50. Most of my clients have never been on the receiving end of attention from a broadcast channel. My clients, up to this point, have been largely business-to-business service and software providers — niche operations, to say the least. It’s hard enough work to get a reporter’s attention, let alone try to “control” the minimal amount of coverage they get.

    Perhaps a president’s PR staff works hard to control a widespread, broadcast message. Little ol’ me? I’m working hard to help my clients be a part of a much larger conversation. And in fact, we often do that by “increasingly routing around the broadcast channels,” to use your words. That quite accurately describes a large part of my work.

    And note the use of the word “increasingly.” I expect we’ll be in demand for quite some time. Because we’re not message controllers; we’re message distributors.

  51. Paul Gustafson says:

    Hi Jon,

    I read your piece all the way through. How many people did that? Man, you need an editor! Bruce could help you.

    Having never been in journalism, or so I surmise from your biography on this website (are you holding out?), I find the headline of your posting presumptuous in the extreme.

    And, we should note your former employment as chief spokesman for Northwest Airlines at a time when that operation was not lacking for testosterone at the higher levels. That might explain the headline.

    Nonetheless, I find some truth in what you say. But not as much as you would have your readers believe.

    Obviously, the media owners and journalism professionals are floundering. A new model must be found. Everybody who has thoughtfully considered the dilemma knows that. Duh!

    But what model? And when?

    The “when” is important because this nation faces crises right now the likes of which we have not seen since WWII, or the Great Depression. And right now our major media giants – New York Times, Washington Post, Los Angeles Times, the networks – are on the ropes. To say nothing of the major regional media outlets, such as the Strib, the PP, the major local TV network affiliates, etc. All in danger of collapse.

    This is a time when serious journalism is much in need. Not infotainment. Not “the stories I want to read because they look sexy or are scandalous.” Rather, the Bad Stuff and the Important Stuff.

    The stuff that tells me my school district is bad, or my neighborhood has crime problems, or my state is cutting essential services, or my country is in hock to China for 2 trillion dollars.

    Now, I agree with you that journalism needs to be paid for on the internet. I understand why newspapers like the Strib and PP decided they had to give their stories away for free on the internet. It turns out, I believe, that was mistake.

    But the pay-by-the-story-only model destroys good journalistic enterprises.

    There’s a great temptation to just let readers buy what they want to hear: just the stories that attract them. Well, that’s what they have already. They have Fox. They have MSNBC. They have a growing national network and local TV affiliate news system that does more infotainment than news.

    The truth is, we need honest news brokers who will give both the good and the bad. The feel-good sells on a story-by-story basis. The bad and thoughtful stuff that we need to hear doesn’t – or not as well. Or not enough to keep us informed the way we should be.

    I don’t care much about the medium. And I believe that most journalists – even at the Strib where I worked for 27 years or PP – don’t care if their work is tied to a printing press, or a TV/radio studio, or the internet.

    You mentioned the pleasure of reading a newspaper because it gave you stories that you had not expected . My guess is you would that you would not have bought those stories on-line because you did not know what they were about, or how interesting in looking at a headline they were.

    One of the most important functions of large news operations is that they have perspective, and are considering all kinds of information. Then they tell you what they believe is most important. They prioritize the news. They give you a mix.

    People can argue, from day to day, if their media outlets got that right. But do they have to time to figure that out?

    In the 21st Century, the issue isn’t how much information is available. The issues are how reliable is it, and how to prioritize it. Who has the time to do that in a busy day? Those are the key commodities that the big media offer.

    You never got to the short-term future here in the Twin Cities. That’s critical. I think it is this: one major newspaper in the near-term that goes to a 3-4 day-a-week printed product with a robust internet site, and the beginnings of a pay internet system.

  52. Dennis Lang says:

    Way to shake them up Professor! (Gee, is it possible ex-Stribber Mr. Gustafson totally missed the glib irony of your headline? Go tease the cat. Fine framing for an uttrerly provocative, deeply contemplated piece.) As well expressed if not more so than anything the seasoned media-gurus have regurgitated lately. Debatable? Of course. But gutsy–and intelligent. We like that. A lot.

  53. Ellen Mrja says:

    Barron’s blogger Eric Savitz is repeating a Reuters’ report that Newsday will soon begin charging for its online content. That comment was made by Cablevision’s COO Tom Rutledge to analysts.

    Cablevision, which owns Newsday, bought the paper last May for $650 million. Savitz said it today “wrote down the acquisition by $402 million.”

    Perhaps the execs are going over Jon Austin’s proposal for micropayments as we speak…

  54. Back in 1998 both Nicholas Negroponte and Jakob Nielsen predicted widespread adoption of micropayments “within 2 years”. In the 11 years since then MANY micropayment schemes and companies have arisen and disappeared but to no avail. Advocates of the mental transaction cost problem cite this as evidence that they are right.

    What would you consider as evidence that you are right and that micropayment schemes represent a viable business model for news content providers, and when will we see it?

    People have been trumpeting fanfares for micropayments for a LONG time now (11 years on the internet is geological time) but where’s the meat and when will it arrive?

  55. Jon Austin says:

    Peter –

    You’re right, micropayments have been around even longer than the web and there have been several generations of efforts to establish them with little success. I am totally guessing, but I will posit three probable causes:

    – Bad interface and implementation (certainly true of some of the earlier implementations I looked at when writing the original post).

    – Bad pricing models. Most of the systems I’m familiar with aren’t true micropayments (which I define as anything where the payment is a fraction of the lowest unit of currency) but are instead macropayment systems (which I define as anything where the payment is a multiple of the lowest unit of currency). Macropayment systems are probably a priori above the mental transaction barrier for lots of consumers.

    (For the record, though, my idea is not a true micropayment system but is instead a variable pricing system that prices content across a range that reaches down into micropayments and up well into the macropayment realm as well).

    – Lack of critical mass. This one is – I think – the most likely suspect. If one content provider implements a micropayment scheme, lots of consumers will simply shift to other providers. If a bunch do it in rapid succession, that consumer behavior becomes more difficult.

    This is why I think the newspaper industry (or content creators in general) need a limited anti-trust exemption to develop a common, open-source micropayment standard. This would NOT allow them to conspire to set prices and coordinate implementation, but would give everyone a common platform and spread development costs across a bunch of organizations. Then, once the standard is developed, the anti-trust exemption expires and every content provider makes its own decisions about if and when and how to implement micropay. My bet is that under that scenario, one big content provider would jump in, three others would announce they were in that afternoon, a dozen more within 48 hours and hundreds within the month.

    – Austin

  56. William Dewey says:

    Perhaps there is still room for some subscription revenue for an online newspaper, with subscribers — members, if you will, as in public radio — receiving a daily one-page email of the top headines and/or breraking news bulletins. Maybe they should get a break on microprices, too.

    If direct display advertising can’t be sold at the same rates as in print publications, get creative: clickable in-depth ads. If the advertisers don’t have the technical savvy to do them, there’s another revenue source for the paper: hiring out their own techies.

    As for supporting journalists, there is already better technology for paying them microroyalties. They get part of the microprice for their work. That would take some payroll burden off the paper — maybe we should call it a journal instead — and it would allow lots of people to be part-time journalists without giving up their day jobs and still be compensated for news-gathering and interpretation.

    Wish us all luck — journalists and readersalike.

  57. Another danger with micropayments is that they might actually work.

    In the conventional newspaper model there are lots and lots of stories and columns and there’s no good way to know which of them is actually being read. This can be a good thing because currently many newspapers cover stories more out civic responsibility than ROI. A good example of this is small-town local government.

    I chaired the trash and recycling committee in my town of 30,000 for several years. The ONLY reporters who covered Town Hall – planning committees, budgets, contracts, etc, were local newspaper reporters – the town weekly and a daily paper from a nearby small city of 100,000. The resulting stories were dry and routine and probably had very few regular readers – If 100 people a week read those stories I’d be flabbergasted. But the PRESENCE of the reporters was keenly felt by all of us. In a micropayment world the negative ROI of those reporters would be too much to ignore so they would disappear. We’re about to enter the Golden Age of small-town municipal corruption.

    1. But if, suddenly, there’s *no one* covering those small meetings, don’t you think someone, somewhere — a blogger, a reporter for an online news site, a weekly news publication, a concerned citizen who just heard of this software called WordPress — will see an opportunity for a return on his or her investment and start covering those meetings?

      Sure, maybe not with the same level of effectiveness as a daily newspaper reporter, but if those meetings are worth covering — not worth covering in an ROI sense but worth covering for the sake of the community — I truly believe it’ll get done.

      1. Dennis Lang says:

        Interesting point from Mr. Nelson (beautiful website by the way): the danger of news driven primarily by consumer interest. Actually, isn’t this happening already? Celebrity driven. Also the notion of some blogger attending a community meeting to record it for a few doesn’t quite impact the way a journalist for a recognized publication might, even if it still only attracts the interest of a few. Leading again to the question of how do we establish the “relevance” of a subject? I imagine if we were writing about anti-terrorism in 1980 that subject would be irrelevant–not much consumer interest then.

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