Time for newspaper folks to fight back

Here's how we rally

      Newspapers & Thinking
      the Unthinkable

Back in 1993, the Knight-Ridder newspaper chain began investigating piracy of Dave Barry's popular column, which was published by the Miami Herald and syndicated widely. In the course of tracking down the sources of unlicensed distribution, they found many things, including the copying of his column to alt.fan.dave_barry on usenet; a 2000-person strong mailing list also reading pirated versions; and a teenager in the Midwest who was doing some of the copying himself, because he loved Barry's work so much he wanted everybody to be able to read it.
   One of the people I was hanging around with online back then was Gordy Thompson, who managed internet services at the New York Times. I remember Thompson saying something to the effect of "When a 14 year old kid can blow up your business in his spare time, not because he hates you but because he loves you, then you got a problem." I think about that conversation a lot these days.
The problem newspapers face isn't that they didn't see the internet coming. They not only saw it miles off, they figured out early on that they needed a plan to deal with it, and during the early 90s they came up with not just one plan but several. One was to partner with companies like America Online, a fast-growing subscription service that was less chaotic than the open internet. Another plan was to educate the public about the behaviors required of them by copyright law. New payment models such as micropayments were proposed. Alternatively, they could pursue the profit margins enjoyed by radio and TV, if they became purely ad-supported. Still another plan was to convince tech firms to make their hardware and software less capable of sharing, or to partner with the businesses running data networks to achieve the same goal. Then there was the nuclear option: sue copyright infringers directly, making an example of them.
   As these ideas were articulated, there was intense debate about the merits of various scenarios. Would DRM or walled gardens work better? Shouldn't we try a carrot-and-stick approach, with education and prosecution? And so on. In all this conversation, there was one scenario that was widely regarded as unthinkable, a scenario that didn't get much discussion in the nation's newsrooms, for the obvious reason.
   The unthinkable scenario unfolded something like this: The ability to share content wouldn't shrink, it would grow. Walled gardens would prove unpopular. Digital advertising would reduce inefficiencies, and therefore profits. Dislike of micropayments would prevent widespread use. People would resist being educated to act against their own desires. Old habits of advertisers and readers would not transfer online. Even ferocious litigation would be inadequate to constrain massive, sustained law-breaking. (Prohibition redux.) Hardware and software vendors would not regard copyright holders as allies, nor would they regard customers as enemies. DRM's requirement that the attacker be allowed to decode the content would be an insuperable flaw. And, per Thompson, suing people who love something so much they want to share it would piss them off.
Revolutions create a curious inversion of perception. In ordinary times, people who do no more than describe the world around them are seen as pragmatists, while those who imagine fabulous alternative futures are viewed as radicals. The last couple of decades haven't been ordinary, however.    Inside the papers, the pragmatists were the ones simply looking out the window and noticing that the real world was increasingly resembling the unthinkable scenario. These people were treated as if they were barking mad. Meanwhile the people spinning visions of popular walled gardens and enthusiastic micropayment adoption, visions unsupported by reality, were regarded not as charlatans but saviors.
   When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based, while employees who have the temerity to suggest that what seems to be happening is in fact happening are herded into Innovation Departments, where they can be ignored en masse. This shunting aside of the realists in favor of the fabulists has different effects on different industries at different times. One of the effects on the newspapers is that many of their most passionate defenders are unable, even now, to plan for a world in which the industry they knew is visibly going away.
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The curious thing about the various plans hatched in the '90s is that they were, at base, all the same plan: "Here's how we're going to preserve the old forms of organization in a world of cheap perfect copies!" The details differed, but the core assumption behind all imagined outcomes (save the unthinkable one) was that the organizational form of the newspaper, as a general-purpose vehicle for publishing a variety of news and opinion, was basically sound, and only needed a digital facelift. As a result, the conversation has degenerated into the enthusiastic grasping at straws, pursued by skeptical responses.
   "The Wall Street Journal has a paywall, so we can too!" (Financial information is one of the few kinds of information whose recipients don't want to share.) "Micropayments work for iTunes, so they will work for us!" (Micropayments only work where the provider can avoid competitive business models.) "The New York Times should charge for content!" (They've tried, with QPass and later TimesSelect.) "Cook's Illustrated and Consumer Reports are doing fine on subscriptions!" (Those publications forgo ad revenues; users are paying not just for content but for unimpeachability.) "We'll form a cartel!" (...and hand a competitive advantage to every ad-supported media firm in the world.)
   Round and round this goes, with the people committed to saving newspapers demanding to know "If the old model is broken, what will work in its place?" To which the answer is: Nothing. Nothing will work. There is no general model for newspapers to replace the one the internet just broke.
   With the old economics destroyed, organizational forms perfected for industrial production have to be replaced with structures optimized for digital data. It makes increasingly less sense even to talk about a publishing industry, because the core problem publishing solves - the incredible difficulty, complexity, and expense of making something available to the public - has stopped being a problem.
Clay Shirky divides his time between consulting, teaching, and writing on the social and economic effects of Internet technologies. His consulting practice is focused on the rise of decentralized technologies such as peer-to-peer, web services, and wireless networks that provide alternatives to the wired client/server infrastructure that characterizes the Web. Current clients include Nokia, GBN, the Library of Congress, the Highlands Forum, the Markle Foundation, and the BBC.

OKAY, NEWSPAPER FOLKS. It's time to pick ourselves off the ground and fight back. There is plenty of time left on the clock, and our fans -- more than 100 million loyal readers in the United States -- are pulling for us to win. So here's how we rally.

First and foremost, we have to ignore those self-proclaimed pundits and cynics who believe that newspapers are dead. They are dead wrong. Sure, newspaper companies face serious challenges. But we also have serious opportunities to re-engineer ourselves as quality content creators for local print and online audiences that advertisers still desire.

As we are seeing during this punishing recession, overhauling the economics of newspapering while experimenting with new business models is a daunting task, but it's starting to happen in cities and towns all over America, especially where executives and editors possess the requisite vision, confidence, creativity and entrepreneurial drive to succeed.

The truth is that right now every media company is hurting and under tremendous pressure to innovate and grow, including Google, Yahoo, Microsoft, the broadcast networks, cable giants and radio conglomerates. No one -- not even MySpace, Facebook or the latest new media darling -- is immune from these severe contractions in the advertising marketplace. Newspapers may publish article after article about the problems they are experiencing, but they are not suffering alone.

Fortunately, the economy eventually will improve, and businesses will start spending more, even on newspaper ads. The price of newsprint will come down. New print and online revenue models will emerge. Organizational efficiencies will help the bottom line. And well-run newspaper companies will succeed by fighting hard, experimenting and evolving while tuning out those armchair critics who revel in the thought of a society without newspapers or news.

Second, newspaper companies need to capitalize more aggressively o n the valuable information that their newsrooms singularly p! rovide t heir communities and our country. In these uncertain, complex times, trusted, compelling content has the potential to be more essential for readers and online users than ever.

And if you don't believe us, ask yourself: Do most Americans still care about what goes on in their community, in their country and around the world? Is there still consumer demand for in-depth news, analysis, opinions, sports results and cultural coverage? Are the sharply shrunken TV and radio news operations in local markets really able to compete with the journalistic resources of a good newspaper? Are people looking for credible sources of news as it becomes increasingly difficult to separate fact from fiction on the Internet?

In the past year, newspaper journalists have blown away their competition with critically important and defining coverage of two wars, a historic presidential election and the worst economic meltdown and financial scandals in our lifetimes. In municipalities from coast t o coast, newspapers have excelled in their watchdog role as a protector of the public interest by bringing down corrupt politicians, exposing government waste and fraud, and injecting much needed accountability in our schools and social-service agencies.

In short, quality content is still king, and newspapers own the best news-gathering operations in their individual markets. Nearly all local news originates from newspaper journalists, which remains a huge competitive advantage if used the right way.

Newspapers can increase their revenues and reach by investing in more content creation for different audiences, not less. The more compelling articles and information a newspaper and its Web site can offer, the longer readers and online users will be engaged. The longer that consumers are engaged, the more exposure they will have to ads in print and online. The more attention the ads receive, the better the advertisers' responses typically will be and the more those ads wi ll be worth.

Bottom line: Creating a more attractive expe! rience f or newspaper and Web site audiences enhances advertising revenues. Conversely, cutting back too much on content while raising prices to readers and advertisers accelerates audience declines, which in turn undermine advertising revenues. It's pretty much impossible for any business, including newspapers, to increase market share and profitability by decreasing the quality of its product and driving away customers.

Third, the newspaper industry needs to re-examine how to protect and monetize its valuable print and online content.

Are online aggregators plagiarizing our work and profiting mightily by selling their ads around our content without giving us a cent? Or are they driving enough traffic and revenue to our Web sites that we justify the risk? While Google CEO Eric Schmidt was quoted recently as saying, "All information wants to be free," it's clear that the issue is not so simple -- especially as Google continues to sell billions of dollars a year worth of advertis ing around original newspaper content.

Finally, newspapers should improve the quality of their sales and marketing. While it's easy to blame what ails the newspaper industry on disruptive technologies, such as the Internet, newspaper companies need to revitalize their sales and marketing strategies and keep upgrading their personnel in these vital revenue-producing areas. Newspapers too often lag behind their competitors in understanding the ever-changing needs of their customers, whether they be advertisers, readers or nonreaders.

Many newspaper sales forces still are unwilling or unable to sell their value against competing media. For example, newspaper sales forces frequently struggle to extol the virtues of print advertising.

In fact, print ads may be poised to see a resurgence in value in the advertising community. They aren't skipped over by TiVos and DVRs, whose growing household penetration is destroying the television industry's revenue model. They don't sc ream at you for 20 minutes every hour like ad-saturated comm! ercial r adio. They don't cookie you, track your keystrokes and violate your privacy while selling your personal information as do many of the more manipulative Internet sites out there.

Plus, the Internet advertising world is suffering mightily from an overabundance of inventory and rapidly eroding CPMs (cost per thousand impressions ---- with M standing for the Roman numeral for thousand), which are dropping like a rock toward zero. Remember, the return on investment and effectiveness of newspaper ads are well documented by extensive research. The value proposition is there, but it needs to be delivered to advertisers with impact and consistency.

In our rapidly changing society, newspapers, in print and online, can turn things around, reassert their relevance to readers and advertisers, and stage a comeback. It won't be easy or for the faint-hearted. It will take a lot of hard work. Not every new idea or strategy will succeed. But it can be done as long as we don't give up. We can't win this tough battle if we don't believe in our mission and in ourselves.

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