Category: Media Business

I’m speaking next week at the Guardian’s “Changing Media Summit” conference in London, and answered a Q&A the media company has posted on the conference website. Reprinting here:

Which media companies, business and delivery models and platforms do you consider to be sustainable and which ones will go to the wall?

I’m not nearly smart enough to tell you which companies will survive. As a (very) small shareholder in the New York Times Co., and an angel investor in several online startups, I certainly hope they’ll be among the ones that last.

But some early outlines — emphasis on “early” — are beginning to emerge.

Media companies that persist in the industrial model of media, especially those reliant on advertising subsidies for content that has no basic relationship to what advertisers are trying to sell, are in the most jeopardy. Apart from the simple fact that advertising is being separated from content for excellent reasons, the industrial-age notion of distribution has been upended. Rather than creating content, and then publishing it on paper and putting it in trucks (or broadcasting via expensive towers or satellites), what we do now is create content and make it available; people come and get it. Only those media creators who understand the new dynamic have a chance at surviving the upheaval.

In the journalism sphere, I have no doubt whatever that we will replace the monopolies and oligopolies with a much more diverse and therefore more sustainable ecosystem. The enterprises will include for-profit and not-for-profit companies; and sole proprietorships and large businesses. The business models will range widely, and will be the winners from among the thousands of experiments now under way.

Those who can turn themselves into ecosystems in their own right — think Google, Twitter, etc. — will be major winners if they can become the center of ecosystems in which others innovate. When the Guardian and New York Times offer APIs to their media, they show they understand this imperative.

What does the global media industry ten years from now look like?

This will depend, in part, on how governments respond to the media and technology changes. If governments (urged on by law enforcement, big traditional media and especially back-facing copyright interests) restrict the ways we can use technology, we could easily see the Internet turned into a newer and only slightly more useful version of television.

If, on the other hand, governments allow technology and innovation to flower, we will see a media industry that dwarfs the current one in size, at least in terms of the number of people who are participating. All media will be social to one degree or another. Since information is increasingly a core feature of all products and services, media will be an even larger global industry.

What projects are you currently engaged in on a day to day basis and how are these helping to change the face of the media and technology industries?

I am spending my time on a variety of projects. The main one has been creating a digital media entrepreneurship program at Arizona State University in America, a project aimed at bringing an appreciation of the startup culture into the journalism curriculum. We believe students will be inventing many of their own jobs, and want to help them do so.

I’m also continuing my long-term work on citizen media and citizen journalism. In addition, I’ve invested in or co-founded several consumer Web companies, and have new projects in the wings. Finally, I’m finishing a new book called Mediactive, a challenge to those who create and consume media to take more responsibility for what they — and we — know.

Who do you admire in this space? Who’s inspiring you? Who’s pushing the boundaries and how?

I’m inspired by so many people that I have trouble naming just a few. But I’ll start with my students, and the students I’ve met at other campuses in America and around the world. I tell them I’m jealous of their opportunities, because they will invent the future of media and journalism.

Allow me to offer a tip of the hat to the Guardian’s Alan Rusbridger. He is a leader of exceptional talent and vision.

And what can we expect from you at the Changing Media Summit 2010?

You can expect me to listen much more than I talk, though of course I’ll discuss the things I know best. I see this summit as a wonderful learning opportunity and aim to take full advantage.

UPDATED

In the weeks since Apple announced the iPad tablet computer, the news industry and the people who watch it have been talking breathlessly about the device’s potential to help restore happier financial times to struggling journalism organizations, particularly newspapers and magazines. Perhaps the best example is a NY Times story entitled “With Apple Tablet, Print Media Hope for a Payday,” with this quote (from an anonymous source, of course):

Steve (Jobs) believes in old media companies and wants them to do well,” said a person who has seen the device and is familiar with Apple’s marketing plan for it, but who did not want to be named because talking about it might alienate him from the company. “He believes democracy is hinged on a free press and that depends on there being a professional press.”

This is laugh-out-loud stuff, for all kinds of reasons, not least the hilarious notion that Steve Jobs believes in a free press. This is the CEO of a company that practically defines the words “secretive” and “paranoid” — a company that took bloggers to court for daring to report on what sources from inside Apple have told them about upcoming products; the threat to business journalism from that case, which thankfully Apple lost, was real and scary.

Steve Jobs believes in old media, all right, as long as he can absolutely dictate the terms under which old media sells (or, to be more precise, rents) its material through the Apple orifice called the iTunes Store. The music industry discovered to its dismay that Apple’s one-price-fits-all model — not to mention Apple’s control over customer information (including addresses and credit-card numbers) — was good mainly for Apple. (To be fair, the Times story did note, amid the fawning over the iPad’s media potential, that Jobs is, as the story said, a bully.)

The App Store, through which Apple requires iPhone application developers to sell their offerings, has its own restrictions. Apple doesn’t regulate prices, though it still disintermediates developers from their customers. The bigger issue is that Apple insists on approving every app that can be sold through the store, in an approval process that is always opaque and sometimes capricious.

In recent days, Apple took its control-freakery to a new level. It unilaterally banned some iPhone apps that, in Apple’s view, were too risque for its customers, including several that depicted skimpily dressed women. The company’s excuse was that some customers found the material “objectionable,” and of course Apple wanted to make its customers comfortable and happy.

Never mind that Apple still sells pretty much the same kinds of items through big publishers like Time Warner and Playboy. That’s mere hypocrisy, however blatant.

News organizations often produce material that people find objectionable. Photographs and videos of dead people in war zones and disaster aftermaths are vital to understand the scope of such events, and they are deeply upsetting to view. Publishers and broadcasters and, more recently, digital-media providers have put them out anyway. They have every right to do so, and often an journalistic obligation.

Apple, in the role of distributor, has every right to decide what people can sell via its online store. This is not the issue.

Now, journalism organizations obviously don’t have to create apps for the iPad or iPhone. They can make their material available via Web browsers.

But Apple won’t let Flash run on the iPhone or, it says, the iPad. While HTML5 will solve some of these issues, that new standard is early in its evolution. Meanwhile, it’s clear, news organizations believe (with some experience selling apps for the iPhone) that the user experience will be better with an app, not to mention the possibility of charging money for what they produce (though they’ll be giving Apple a cut of every transaction).

Ultimately, I believe, the most important issue is whether news organizations should get in bed with a company that makes unilateral and non-transparent decisions like the ones Apple has been making about content in all kinds of ways. I say they should think hard about it, and answer either in the negative or insist on iron-clad contracts with Apple that prohibit the hardware company from any kind of interference with the journalism, ever. (As Dave Winer asked in a Twitter posting today, “Thought experiment: What happens to the Engadget app when they run a leaked Apple announcement?” (UPDATE: And Wired quotes the Washington Post (a piece from Monday Note) with another worrisome scenario.)

Understand, this is not about whether tablet computers are a good thing. They are. They will be a wonderful addition to the way we consumer and create media (more so the former, I’d guess), and I have no doubt that the iPad, like other Apple products, will set a new standard for ease of use and, in some ways, utility. (I’m a happy user of a Mac computer, for which Apple doesn’t restrict application developers’ ability to write software.)

But I watch with amazement as newspaper people drool over the iPad as some kind of industry savior. They’re putting far too much trust in a company that doesn’t deserve it.

Another not-for-profit news organization is launching soon — the Bay Area News Project. It’s a worthy and important development in a metropolitan area that’s been watching (assuming that folks are actually paying attention) the slow-motion disintegration of newspaper journalism, and I’m a big fan of the founding editor, Jonathan Weber, who’s coming back to town from his five-year sojourn in Montana.

But I’m disheartened by the news that the CEO — Lisa Frazier, who as far as I can tell has had little or no experience actually managing a news operation (she’s been a consultant to some big media orgs) — is being paid $400,000. Maybe she’s worth that much in the corporate world.

But this is an exorbitant salary for a fledgling nonprofit that will never be all very big compared to the kinds of nonprofits (universities, hospitals, major NGOs, etc.) that pay salaries of this kind. (And some of them go way over the top.)

Frazier’s pay isn’t nearly as much as Paul Steiger’s princely score at another nonprofit, ProPublica, but it’s just as over-the-top in its own way.

Please understand: I support the goals of these organizations. ProPublica’s journalism to date has been praiseworthy, sometimes superb, and I have no doubt that Jonathan Weber will lead the Bay Area project to do fine work as well.

But it’s clear that the principal funders and boards of directors of both projects have tin ears about how the public correctly sees not-for-profit enterprises — as organizations that people join not to make a pile of money but because they want to make the world better in some way. I’m not saying these CEOs should work for a pittance. I am saying that their pay scales send a message they may someday regret.

My bottom line with the Bay Area project, as with ProPublica, is this: I offer my best wishes and moral support for their journalistic activities, but I won’t donate any money — because the message I get from the CEO pay is that they don’t need my money. I’ll reserve my financial support for the ones that do.

(Photo from Pennsylvania attorney general’s website)

I talk a lot about ecosystems in my work. Here’s why I think the word is so important for the future of journalism.

Humanity has learned that diverse ecosystems are more stable than ones that are less diverse. The dangers of monocultures are well understood despite our reliance on them in, among many other things, modern farming and finance. When society relies on a monoculture that fails, the results are catastrophic.

A diverse ecosystem features ongoing failure and success. Entire species come and go, but the impact of losing a single species in a trulty diverse ecosystem — however unfortunte for that species — is limited. In a diverse and vibrant capitalist economy, the failure of enterprises is tragic only for the specific constituencies of those enterprises, but what Schumpeter called “creative destruction,” assuming that we have fair and enforceable rules of the road for all, ensures the long-term sustainability of the economy.

The journalistic ecosystem of past half-century, like the overall media ecosystem, was dominated by a small number of giant companies. Those enterprises, aided by governmental policies and manufacturing-era efficiencies of scale, controlled the marketplace, and grew bigger and bigger.  The collision of Internet-fueled technology and traditional media’s advertising model was cataclysmic for the big companies that dominated.

But is it catastrophic for the communities and society they served? In the short term, it’s plainly problematic, at least when we consider Big Journalism’s role as a watchdog, though the dominant companies have served in that role inconsistently, at best, especially in recent years. But the worriers appear to assume that we can’t replace what we will lose. They have no faith in the restorative power of a diverse ecosystem, because they don’t know what it’s like to be part of one.

UPDATED

As everyone knows, the nation’s scam artists, monopolists and market-riggers have all gone into hibernation during the worst economic crisis since the Great Depression. This has given the Federal Trade Commission the breathing room it needs to intercede in an arena where its role is, at best, unclear.

This week, the commission is holding a two-day workshop entitled How Will Journalism Survive the Internet Age? — the purpose of which is “to explore how the Internet has affected journalism.”

The agenda — bizarrely available only in PDF format; would someone at the agency who has a clue kindly tell the public-affairs people that it’s okay to post such things in HTML? — suggests great breadth. Speakers include old-guard media barons like Rupert Murdoch and budding barons like Arianna Huffington, but also many of the traditional and new-media folks whose names show up again and again in places like Jim Romenesko‘s Poynter blog. It’s an impressive list (and, disclosure, includes a bunch of friends as well as two university colleagues).

You’ll also note, however, that the schedule assures little depth. The time slots are arranged in a rapid-fire manner, with keynote-ish speakers having no real time to offer much more than their standard-issue talking points. Panels are even more lickety-split, with nine members in 90 minutes; let’s see, that’s about 8 minutes each plus introductions and no audience Q&A, or 6 minutes each if you want to (very briefly) include the audience.

The event comes under the FTC’s Office of Policy Planning. Here’s its mission:

The Office of Policy Planning assists the Commission to develop and implement long-range competition and consumer protection policy initiatives and advises staff on cases raising new or complex policy and legal issues.

One of the Office of Policy Planning’s primary roles involves competition advocacy, submitting filings supporting competition principles to state legislatures, regulatory boards, and officials; state and federal courts; other federal agencies; and professional organizations. The Office also organizes public workshops and issues reports on cutting-edge competition and consumer protection topics, addressing questions of substantive antitrust law, industry-specific practices, and significant national and international policy debates.

In addition to the Office of Policy Planning, several offices throughout the Commission, including the Bureau of Competition’s Office of Policy and Coordination and the Policy Studies unit within the Office of the General Counsel, also provide policy advice.

This has what to do with journalism, exactly?

Ah, we learn more in a Federal Register Notice (also PDF-only, naturally). The notice observes, in a promising start, that the Internet has created unparalleled possibilities.

The commission could have stopped there, and not bothered to hold the workshop. It could have recognized that we’re in the early days of a transition from one set of business models (most of which have not been very competitive) to an emerging, hyper-competitive sphere. There’s never been more reason for optimism than there is today, given the massive amount of journalistic and business experimentation going on all around us.

But the commission staff has much to fret about, spurred in large part by the incessant whining of the newspaper industry in recent times. (Could it also have been influenced by the fact that the FTC chairman is married to a Washington Post reporter columnist? No, this obviously had absolutely no bearing on anything.) The commission has discovered that the advertising model which once supported many kinds of journalism has eroded. Quoting several economists, the workshop notice says “public affairs reporting may indeed be particularly subject to market failure.”

Market failure? What about the market failure — which as far as I can tell never got any attention from a succession of FTC people during the past half-century — of the monopolies and oligopolies created by media organizations during that period? The public affairs journalism was, for the most part, a modest spinoff of the extortionate advertising prices they charged when they had near-absolute market power to charge anything they wished. Only when there’s real competition does the FTC get interested.

The commission, inevitably, is asking for opinions on whether federal taxpayers should subsidize journalism more directly than the indirect subsidies of low postal rates for print; giveaways of publicly owned airwaves (spectrum) to broadcasters; the odious “Newspaper Preservation Act” granting partial antitrust immunity to community newspapers, etc. Several of the speakers are surely going to rise to that bait with a loud Yes. (Believe it or not, meanwhile, the commission is asking if Congress should give journalism-related businesses even more antitrust immunity. Good grief.)

There’s only one subsidy that makes sense, only one that wouldn’t put government meddling squarely into the practice of journalism, an inevitable result of the direct subsidies being pushed by well-meaning but misguided media thinkers. It’s not on the agenda, however.

Taxpayer-assisted infrastructure — especially the postal system and low rates for sending publications — helped create the newspaper business, and enabled a lot of other commerce. Bring forward that logic to high-speed Internet access for all Americans, and enable the 21st Century communications infrastructure for all competitors.

As it is, we’re moving toward a market failure of frightening proportions, as the telecom industry clamps down, or threatens to, on people’s ability to use Internet connections as they see fit. We’re moving toward a media business consolidation that would terrify make any real champion of open markets: a cable-phone duopoly.

The Federal Communications Commission has jurisdiction over telecom, and is looking at the issue. But when it comes to how journalism will thrive in (not just survive) the Internet age, this should be high on any list of competitive issues of interest to agencies that push for competitive markets.

The word “broadband” is nowhere to be found in the FTC’s planning document. Coming from an agency that says it wants to promote competition, that speaks volumes.

UPDATE: Geoff Cowan and David Westphal write that governments support journalism to the tune of more than $1 billion a year, and note one particularly targeted form: legal advertising that goes to dominant print organizations. (They also claim that it’s a common myth that there’s no government support for media, but they don’t cite anyone of prominence who’s saying that.) They are all in favor of continuing government assistance, more so that I am, but at least they strongly urge that it remain content-neutral, something that I strongly doubt could happen if direct subsidies ever happen.