The recession killed journalism – and saved it
Over the last few years, thanks to the global economic crisis – encapsulating everything from the 2008 housing crash to today’s ongoing euro zone sovereign-debt debacle – much ink has been spilled about the reshaping of the world’s economy, especially about the domestic job market.
Actually, scratch part of that last sentence, because less ink has been spilled, at least according to the results of a recent report by LinkedIn. The media business has been in overdrive, especially during this 2012 election season, but it’s now pushing pixels, not paper.
According to the data studied by LinkedIn, the professional social network, the newspaper industry experienced a 28.4 percent shrink rate between 2007 and 2011. The death of newspapers is not exactly a new phenomenon, so I’ll spare you yet another detailed recap of the print and economic climate that led to this broadsheet apocalypse.
But contrast newspapers’ huge drop with the gain experienced in the second-fastest-growing industry, according to the same LinkedIn data: online publishing. New-media companies posted a staggering 24.3 percent gain, coming in only behind the “Internet” overall. Look at the chart below and compare the green online publishing dot with the red newspaper dot.
In other words, reports of the media’s death are premature, at best. But more important, it’s unfair for any old-media advocate to say that the revenue model for media (or any industry moving toward digital) is broken. Yes, the companies and publications that power media look quite different than they used to, but these news organizations are still reporting the news.
And that truism is at the crux of why newspapers are in a bad spot. They have been trapped in a terrible mindset that they are in the business of selling newspapers. The leap from paper to digital may be vast, but to newspaper publishers, it seemed like vaulting to a different business entirely, one they were loathe to get into. No matter what kind of lip service newspapers paid to the digital transformation, the most prominent paywall model out there, that of the New York Times, still protects print subscriptions with a tiered digital pricing strategy – one so annoying that it motivated its former digital design director to complain publicly about the entire signup process.
The lesson online media companies have taken from newspapers’ slow, public death is to move beyond the idea of selling the product. Online sites are selling their audience. It’s a simple twist of the equation, but one that changes everything about how a media company is run. A CEO who has realized that her audience – her customers – is the most important thing the company has will stop at nothing to give those customers what they want. Anything to make them feel as if they’re getting value from the company. And although she’ll monetize their aggregate value with advertisers and marketers, she’ll also protect them from underhanded sales pitches or confusing pricing strategies that infuriate the web-savvy.
All this means that the information an audience wants is now a company’s most important asset and the one that needs the most investment and care. In other words, the fear that the online media represent the death knell of serious reporting is 180 degrees from reality. Online media companies (including my own, though it falls into a different LinkedIn industry category) have been investing serious cash in upgrading the quality of their reporting and have made no secret of gunning for their print counterparts when it comes to journalism awards, including the granddaddy of them all, the Pulitzer.
What has changed about journalism in the digital era is the near-instant feedback the best-of-breed companies have regarding whether their audience is actually paying attention. All online media companies invest in real-time analytics; the best online media companies crunch the hell out of the numbers to understand their audience. Some print nostalgics treat the mere existence of this data as a mortal sin that eventually warps all journalists into pageview chasing producers of bikini slideshows.
But when reporters do groundbreaking journalism, they get email and comments from readers and interested parties. When their work is very good it often becomes the basis for documentaries or books. Newspapers have benefited from this halo effect for years – they just haven’t quantified it. Leave it to an industry of sentence writers to be afraid of attaching numbers to their feedback.
These numbers provide the sharp picture that marketing and circulation departments have been after for years. But because they have often been lower than anticipated, especially before mass quantities of Americans came online, they scared publishers into girding their print products at the expense of the digital innovations. Meanwhile Yelp, Facebook, Google and, yes, LinkedIn had room to grow into multibillion-dollar forces of online media and advertising.
In a different world, the two dots at the top and bottom of the LinkedIn chart wouldn’t exist. Instead you’d see one dot in the middle, as newspapers shifted more resources and employees toward their digital efforts. But companies don’t often work that way – they get caught in the Valley of Death – the one Harvard business professor and Silicon Valley guru Clayton Christensen has written about in countless books and articles. Instead of innovating for the next business cycle, these companies die crossing the Valley, wringing every last drop of cash out of the last cycle, leaving holes in the economy that startups try to fill. And there’s just no reason to think newspapers as they exist today can reverse course or buck that trend.