UPDATE: Independent Contractors for Media

I’ve been writing about the inevitability of media companies moving to independent contractors for over a decade, and the signs continue to point in that direction. As revenues slow, cost-cutting becomes the only way to maintain margins, and the one-to-many need to wrap employees into one super brand will become less important in the profit-driven minds of managers. Besides, the Net – which is where everything’s going – is more receptive to personal brands than those of industry. So-called “social” media is where you’ll find the people formerly known as the audience, and big brands don’t belong there.

INSEAD’s Knowledge blog uses the Dutch model to make the statement: The Future for Labour Is Self-Employment, validating the ideas expressed in an essay that I published five years ago.

nonemployerIn 2005, we crossed a milestone in this country when the number of people self-employed went over 20 million. Data from the Small Business Administration put that figure over 21 million in the latest year for which the information was reported, 2008. By now, we expect that number is approaching 23 million, as more and more people — especially older people — set up eBay stores or find other ways to support themselves and their families online. These people are well-educated in the ways of the Web and don’t spend their marketing money in traditional ways. This figure bears watching, for while they live and work in our communities and neighborhoods, the money they earn comes from everywhere. They are a part of a new subset of our economy, and…it’s actually growing.

The economy is better than it was in 2008, and much of that has been due to the continued rise of self-employment. A Business Week article in 2011 put the number at 40 million and offered the advice that “To boost the economy, help the self-employed.” As an optimist, I believe this is an issue that Congress will have to address sooner than later. The article notes “By 2019, the self-employed will account for 40 percent of all American workers, according to the U.S. Bureau of Labor Statistics.” How can such a staggering number not include reporters, photographers and other practitioners of “the news” downstream?

Another Bureau of Labor Statistics article  published last year offers the below graph. Note that writers and photographers are already two careers with high self-employment rates.

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VCs find value where traditional media can’t won’t

money2smThe venture capital research firm CB Insights reported this week that VCs are “Bullish on News: Funding to Media/Fat Content Startups Jumps 145% YoY.” Although it appears on the surface to have nothing to do with traditional media, that’s illusionary. VCs are always looking for problems to solve, and the problem here is where, how and through whom people everywhere get their news. And it’s really not so much about content as it is money, for the Net isn’t disrupting content, it’s taking money from local communities. That includes the pockets of traditional media.

According to CB Insights data, “digital news and media companies raised $813M in 2014. In 2013, startups in the space raised $331M.”

Investors appear bullish that the new wave of media startups relying on digital technologies can create sustainable (and hopefully lucrative) business models. One such investor, Chris Dixon, a partner at Andreessen Horowitz, wrote after a $50M investment into Buzzfeed:

I believe the future of BuzzFeed – and the media industry more generally – will only get brighter as the number of people with internet-connected smartphones grows, and the internet solidifies its place as the central communication medium of our time.

That’s $813 million that traditional media companies didn’t wouldn’t spend on development, because, in part, they’re convinced their brands will always give them a seat at the marketplace table. Meanwhile, what’s really happening is that, unrestrained by competition, pureplay websites continue to siphon off millions of dollars from the neighborhoods of legacy media. This has been the constant caution of Borrell Associates research data for the past 15 years. Newspapers are dying, and local television is being artificially propped up by cable retransmission fees, while their corporate owners are unable to respond with anything other that defensive comments.

I believe this will continue unabated, until something like private local ownership of media is resurrected and stems the tide. I just don’t see it happening any other way.


Newspapers: Defending the indefensible

Newspapers and the postal service are in a tug-of-war over couponsWhat happens when one industry in disruption runs into a business conflict with another industry in disruption? Think of two huge carnivores fighting over a third helpless beast at the tar pits of LeBrea.

An editorial in the Madison Eagle newspaper of Bernardsville, NJ last week caught my attention, because it provides a new enemy for newspapers — the United States Postal Service (USPS) — and proposes the same tired refrain of a threat to freedom, if something isn’t done about it. Last month, the Postal RegulatoryCommission approved a three-year discount deal to boost use of the mail system by Valassis Communications, which sends mass coupon mailings to homes under its RedPlum brand. Newspapers opposed the deal, because it cuts into “their” value proposition on delivering coupons via the Sunday paper.

I get that this is yet another rug being pulled out from under the newspaper business, but I object to the industry’s defense, as spelled out beautifully in the Eagleeditorial:

To newspapers that count on advertising to pay its reporters and cover the news, this USPS plan is beyond alarming – it’s a threat to journalism and an informed public. Many think it will push some newspapers in America already struggling with a fragile economy and Internet competition over the edge.

If that or anything like it happens, communities across our country will suffer the most long-term harm.

…We don’t fear the Internet; we are using it, and it is vastly expanding our ability to inform the public up-to-the-minute.

But, two things to keep in mind: The most reliable and comprehensive news on the Internet is posted by journalists who work for print newspapers. Anything that weakens those newspapers will have a negative ripple effect on access to solid, accurate news on the Web.

And two: This is a media age not only in revolution, but in transition, to a future no one can fully describe. There are still many readers who aren’t satisfied that the news has really been reported and disseminated “until it’s in print.”

I’m especially struck anytime I read such hubris as: “The most reliable and comprehensive news on the Internet is posted by journalists who work for print newspapers.” Let’s ask the Pulitzer Prize winning Huffington Post about that.

Do newspapers truly believe stuff like this, that they are so important to freedom in the U.S. that their loss would be a threat to an informed public? In a capitalist economy, the powers that be simply say, “Cry me a river,” for only fit businesses are allowed to thrive. Fifteen years ago, newspapers had a virtual monopoly on classifieds, display advertising, and coupons. As each one has been stripped away, the industry has chosen not to compete with the disruptors, but instead do nothing except cry “foul” and offer a threat to freedom as the consequences of their doom.

As Lisa Williams famously wrote in 2008: “Journalism will survive the death of its institutions.” Do I really need to go into the ways it’s already happening?

We need to get over ourselves

Business Insider PageThere it was, staring at me with remarkable clarity, a headline from Business Insider on the sad state of newspapers pared with a picture from the film “All The President’s Men,” the story of Bob Woodward & Carl Bernstein, The Washington Post and, of course, Watergate. The irony? Evidence (Gallup) suggests that this event — the elevation of everyday journalists into superstar status — was the bellwether occurrence that began the downward slide of press trust in the U.S. Of course, you won’t hear contemporary journalists speak such heresy. After all, Woodward & Bernstein are the model of what it means to be the successful professional (a.k.a. “real”) journalist of today, and this is why BI used the photo.

The BI article examines new research from LinkedIn on sectors of the economy that are losing jobs.

On a percentage basis, newspapers shed the most jobs, down 28.4% between 2007 and 2011.

The good news: online publishing had job growth of 20.4%. But it didn’t add as many jobs as newspapers lost.

We’ve heard from thousands of insiders and outsiders, experts and armchair quarterbacks on what’s causing this decline, and all tell part of the story: disruptive innovations, Craigslist, the recession, failing to initially charge for content online, and so forth. But most of these are shortsighted, and the Gallup research is the only evidence that points to the origin of the decline in press trust in the country, and it begins shortly after Watergate.

I’ve written much about what I think happened, that journalism subtly shifted from a way from a career in which a single person could make a difference to one of riches and notoriety (see: “I love to be in front of cameras” below). The ability to hobnob with those they covered — and, therefore, gain status simply by rubbing elbows with the famous — became the wish of many of those who passed through the gates of accommodating journalism and communications schools. I witnessed this up close and personal in my own career. Employees who “wanted to be on TV” became the majority, and then there’s the ugly side of market-hopping, the slow shift from parochial news coverage to cosmopolitan news coverage in smaller markets as more and more Woodward & Bernstein wannabes expressed themselves for the sake of their resumes instead of the community they were supposed to be serving. How else do you explain stories of young TV reporters doing things like jumping a fence at a very small market airport to “prove” how easy it would be for a terrorist to do likewise? This kid got himself arrested, but that’s not the point.

Playing hotshot super sleuth in a place like that wasn’t even close to reporting news for the community, and the thing we’ve always failed to see about this is that people — you know, the audience — have been paying attention. It’s crystal clear to them that news people are in it for themselves and serve neither the public nor the profession. Beginning at the university level, an entire industry swung from making a difference to the quest for the big bucks (“quest,” because we never really got there, except for the few, right?), and the hell with what the audience might think.

This is why I wrote last week of the Great Winnowing that has begun, wherein the practice of journalism is having its way with a whole generation of misled practitioners. I have faith that the demand for journalism remains (and will be) strong and that people will earn a decent living at the end a really rough season for most.

Ego is a funny thing. It drives people to great personal risk, which can produce great rewards, but it can also create unrealistic expectations and turn normally sane people into preening peacocks of staggering insanity.

What has been our chief sin since Watergate? We just can’t seem to get over ourselves.

Of original sin and downstream profitability

This may be the headline of the week:

The Boston Courant: Proud not to have a website until the owner sees “a profitable end game.” Publisher David Jacobs says he has no interest in the web — at least not until someone else figures out a business model for it.

The article, in Harvard’s Nieman Journalism Lab, is a fascinating tale of a man with a niche audience who decided long ago that his publication was a newspaper, period. Publisher Jacobs is a guy who sees the simplicity of it all. “I won’t launch (a website) until I find a viable business model…We’ve never come close (to launching),” Jacobs told Callum Borchers, author of the piece. He also gave Borchers this wonderful line:

“In business, one of my philosophies has been the first pioneer into enemy territory gets all the arrows.”

How true, and it brings a warm smile to my face. There are those who would say that Mr. Jacobs is a man who resisted the temptation of newspaperdom’s “original sin,” that of giving away for nothing what people used to have to pay for.

I’ve long believed, however, that the original sin of the newspaper industry was in creating the Web version of itself in its own image, to use another Biblical reference. It’s a forgivable sin, because we didn’t know then what we know now, but the extent to which we continue in this error is another matter. The newspaper industry gave birth to the media Web and a new form of geek to manage it. These new individuals had ink in their veins and ones and zeroes in their brains, but they bore scant resemblance to their counterparts in California and elsewhere who were actually building the Web and its applications. A newspaper background was deemed essential in the creation and execution of a newspaper’s online strategy.

These people were invited to speak at conferences on “new media.” They wrote books and coined phrases. When national publisher groups met, these people were assembled to advise and teach. The newspaper industry was perfectly capable of taking care of itself, thank you very much (same with TV, but that’s another article). This is not to suggest arrogance. It’s just the way it was.

Imagine a whale oil convention a hundred years ago where the speakers about electricity only came from within the ranks of the whale oil industry. One session is dedicated to new innovations in oil lamp manufacturing where the oil is lit by a spark of electricity. Another looks at the benefits of listening to the radio while resting with the soft light and therapeutic fragrances of scented oil lamps. Still another examines innovations on the future use of electricity in steamship navigation equipment. You get the idea.

Newspapers never stopped to ask this one fundamental question: what is the best way to meet the news and information needs of the community online?

Instead, when the “real” geeks started asking the question and creating simple applications to accomplish the task, the best newspaper people could do was criticize them. Where institutions wouldn’t listen, individuals did, and so was born the tools of personal media. The term “blogger” became instantly pejorative with the newspaper industry, despite the reality that the software they used was far better in terms of communicating online.

Newspapers — and their broadcasting counterparts — have continued to bolt onto their core item after item, so that the finished product resembles more a complex Frankenstein monster than the simple money-maker that Mr. Jacobs continues to provide. This is why new media is about reinvention, not brand extension. Moreover, the venture-backed souls who are taking the money that used to go exclusively to us are quite content to “help” us bolt other things on. Meanwhile, we’re helping revenue shift to other people’s infrastructures, and so it goes.

David Jacobs recognizes his brand as a newspaper. The question for him is the same for everyone: What is it about that brand that will allow me to make money online, and here’s a hint: it’s not mass marketing.

‘Nuff said.

New Pew report should open eyes

Today’s new report from the Pew Research Center’s Project for Excellence in Journalism reveals some unsurprising but damning information about news websites that we can ill afford to ignore. Here are the key findings:

  • In-House ads, ads selling or promoting a news organizations own products, fill more space across these news websites than any other advertising category.
  • The finance industry is represented far more than any other on the news websites studied.
  • Discount or coupon advertising such as Groupon was fairly limited.
  • Most of the news sites did not feature ads targeted to consumers based on their online behavior.
  • News organizations tend to rely most heavily on static banner ads.
  • Even though search ads don’t appear on most news sites, Google’s advertising presence is still strong there.

What this says to me is that media companies continue to try and force “their” business model into a medium that rejects it. Moreover, I think this is right where Silicon Valley wants us.

Media, in its purest business sense, is an order-taker world. What we have is so scarce and so important that people call us to spend their money with us. In the good old days, regardless of which form of media we’re talking about, the sales force got into a nice rhythm of sitting at desks and counting the money. Oh I know that people will debate this, but a replacement for that rhythm is what we desperately seek today. We need something to replace it, because if we have to work harder to make and sell our audiences, the price of sale (POS) goes way up, and our business model itself collapses.

Searching for this replacement online, however, has been our mistake, because the obvious benefits of mass marketing are utterly disrupted by the Web, and mass marketing is all we know. All we’ve done is waste our time, and the Pew report makes that statement loud and clear.

Beginning with newspapers and continuing with television and other forms of media, we’ve built websites that serve (we think) the business model of mass marketing, and that has been nothing less than suicidal. So far downstream are we in this error that we can’t even imagine anything different for now, so let’s begin with a few basics:

  • Time is the new currency. We don’t care about this in the outside world, where scarcity earns us the right to stomp all over people in the name of “serving” them, but online, this is a crucial, crucial reality. We must conform our online products to this reality.
  • Do what you do best and link to the rest. In a world where infrastructure carries the monetization mechanism, it’s necessary to keep people inside that infrastructure for as long as possible. This doesn’t work forever online, however (think AOL, not Facebook), because the Web is bigger than anybody’s application. One of the oldest Web axioms is “If you send people away, they will come back.” This is a habit unpracticed by media companies, but one we must begin embracing.
  • Create “for” the Web by accepting the following: The Web is not TV. The Web is not newspapers. “The Web is more a social creation than a technical one,” said Sir Tim Berners-Lee. The Web is a three-way form of communication: up/down, down/up and sideways. The Web is real-time flows and streams, not static displays.
  • News content online must be unbundled, so that users in the network can pass it around to meet their needs to inform and share. Our need to drive users to our infrastructure is contrary to this, and we must find the courage and creativity to do something about it.
  • Advertising is content – the only new content that really matters. Advertisers are the new content makers, and we need to be exploiting our strengths as experts in the world of content creation in order to serve this burgeoning market.

There are so many things I could say about what we need to be doing, but that would take all day and then some. The point of this Pew report – and many others like it – is that what we’re doing isn’t working, and that’s being kind.

We’ll never get out of this hole unless we first stop digging.