"As you can see, opportunity abounds."
A client looking to invest in media asked
me earlier this month for advice on what might replace failing newspapers. My
response? There are plenty of interesting ideas in play, but
the first meaningful test won't come until a major American city
loses its only metro daily. So wait.
That's because metro newspapers are taking up
the market space in which the innovation he's looking for must occur. Newspapers may be failing, but most do a passable job of limiting serious competition in their markets. What succeeds in the shadow of an established metro, therefore, may not be what ultimately winds up contending for the market positions vacated by Old Media giants.
I think that's decent investment advice, but Clay Shirky's March 13th essay on the end of the newspaper era placed some urgency on the question “What Comes Next?” And since I'm a recovering newspaperman who's been studying and writing and speaking about that question off and on for the past four years, I figured now might be a good time to stake out some useful predictions about the future of American journalism to 2020.
I. AFTER THE FIRE (2009-2010)
To imagine what might happen next, it helps to think first about the likely short-term future for our established media institutions.
The future of newspapers is mixed. The unique web/print nationals (NYT, WaPo, WSJ) could rebound as early as 2010 (see item No. 2). Local papers that serve communities of up to 30k readers should remain marginally profitable in the short term and improve with the economy. But the hybrid beast known as the metro daily is in trouble, and most will not survive past 2010 in their traditional configurations.
Cutting back days. A few metros could succeed as intelligent world/national/local aggregators. Some might lurch along zombie-style as scaled-back copies of the original. But many will follow this pattern: A rejection of Associated Press membership, followed by a breaking up of the metro daily into several “local” papers that publish on different days. The website will be live every day and the presses will stay busy, but you'll only get “your” paper one to three times a week.
No more monopolies. The survivors will be those companies that learn to accept competitive annual profits in the 5 to 8 percent range. Upside-down companies that are leveraged against the expectation of 15 percent profits don't have a significant future.
Fewer people doing the same stories. Most of the newspaper jobs lost in 2009 will not return after the recession, and while most cities will generate enough revenue to support a professional press, watch for a wave of cooperative agreements between competing media companies and the popularization of the term “our broadcast partners.” Five competing reporters covering the same routine house fire is an inefficiency the new economics will not support.
Breaking up the business. Though I've not heard this discussed elsewhere, I won't be surprised if newspaper companies begin outsourcing either their newsgathering or their printing/distribution. Vertical integration now works only if you're properly capitalized, competently managed, and very good at each task. Most newspaper companies aren't.
II. TRENDS, SIGNALS & INFLUENCES
There are quiet forces in play today that will profoundly influence the shape of our future -- and nobody knows what that shape will be. Pay attention to them – just don't expect these ideas to draw the big headlines during the short-term resolution of our current “crisis.”
Open Source wins. Open Source solutions and platforms will push proprietary systems to the brink simply because of the rate at which they adapt to change and innovation. Pay attention to the Big Media attempt to monetize this Open Source principle through the proliferation of news APIs, but don't expect it to succeed unless these APIs give developers and end-users more freedom.
Semweb foundations. Though the Semweb revolution is unlikely to break out in the public consciousness before 2011 (when it will likely be called Web 3.0), watch for companies and startups that build their news platforms on informatics-friendly systems. These are the companies that will grab the first sizable newsmedia profits from sources other than advertising and paid subscriptions. Smart outfits, no matter their funding or model, will redefine their primary product as semi-structured data, with narrative storytelling as a subset of each file.
Evolution matters. Rapid advancements in mobile technologies, wireless networks and user interfaces change user expectations and cost structures far more rapidly than adoption rates alone might indicate.
Advanced tools change everything. In October 2006, Eric Schmidt announced that Google would produce a real-time fact-checker for political statements within five years. Though many assumed the CEO was joking (and he might have been), a fact-checking informatics tool is likely well within the short-term capabilities of the search giant. Revolutionary advances do not produce incremental changes. If your sword is bronze and his sword is steel, you die.
III. THE KNOWN COMPETITORS (2009-2014)
My prediction? The next decade will see great diversity in terms of media funding, mission and identity. Ask not what business model is best: Ask what business model is best for your mission.
Newspaper industry pipedreams. Most of the ideas clustered around newspaper boardrooms and industry think-tanks today are unlikely to succeed in the existing environment. Paid access to web news, "premium” classified ads, customized papers, multimedia ads, e-editions, user-generated content, Web-based “TV” stations, bundling newspaper subscriptions into cable TV packages, etc. They'll fail for the same reason companies favor them: They re-iterate the “we-control-everything” status quo. And yes, that would apply to Dan Gillmor's "news cartel" idea, too (I say this sadly, as I've been a Gillmor fan for years). We're not adjusting. We're rebooting.
Web-only news sites. Local news is more expensive than state/national news on a per-reader basis, and Web advertising generates only about 15 percent the revenues of print. But newspaper advertising departments don't emphasize web sales and physical printing and distribution costs dwarf the cost of web publishing. There's already one great national example, plus this well-known “print-secondary” pub. But working local examples have existed for years, and the Silicon Valley sweatshops show no signs of fading.
Premium content. Sorry, newspaper executives – your general content doesn't qualify. But passionate or profitable niches (fantasy sports services, ESPN Insider, WSJ Online) offer proven successes, and there's at least one functioning example of my Intelligence Briefing Model.
Tabloid Bottomfeeders. You can't talk success stories without mentioning Drudge. Gawker Media, TMZ, etc., fall into similar categories. These sites, funded by basic web ads on big traffic, are likely to generate the first drafts of most 21st century celebrity “news.”
Shared infrastructure. If you build an efficient means of selling, targeting and delivering advertisements, then all you need is the right content on which to place them. It's been done nationally. Can it be replicated locally? Perhaps more significantly: If you've got any kind of organizational infrastructure that can be shared with multiple content producers, you've got a business. Think of this as the business of content enabling, not content providing.
Non-profit news. It's worked (at some level) for PBS and NPR, and there are new models for general and investigative news organizations funded by civic-minded institutions. Could this concept be extended to government-run media? Possibly... although I wouldn't look for that on the federal level any time soon.
Sponsorships and micro-sponsorships. Remember the days when attorneys couldn't advertise? To get around that, lawyers used to “sponsor” symphony orchestras to get their names mentioned in concert programs. Sponsorship-based advertising offers some sustainability advantages over traditional CPM/CPC ads and lets content producers spend more time producing than selling. Micro-sponsorship (asking users for some level of annual or monthly support, with or without some tangible benefit) is another interesting revenue source.
Volunteers. Call them amateurs, bloggers, citizen journalists, “pajamas-clad rabble,” whatever – much of the journalistic writing, editing and producing we'll see over the next 10 years will come from people who will not be paid directly or substantially for their work. Yes, this will affect the rates others will be paid, but no, this is neither bad for democracy nor civilization.
Interest-funded journalism. We already have plenty of examples of interests – economic, political, religious – contributing to journalism. Look for much more of it, in many more direct ways, and expect to see some of these relationships becoming extremely valuable. Why shouldn't the Sierra Club sponsor journalists? Why shouldn't the Republican Party subsidize particular bloggers? If the American Petroleum Institute can spend millions on PR, advertising and political lobbying, why shouldn't the Union of Concerned Scientists go beyond press releases and start funding, distributing and placing original content? Tired of trying to communicate your profession's expertise to mainstream media? Why not hire some communicators and bypass the mainstream press entirely?
Efficient copyright licensing. One irony of our nightmarish copyright “system” is that it serves to prevent the affordable, safe licensing of content. For instance: While everything on Xark is licensed via a CreativeCommons agreement that allows you to republish and remix what you find here for non-commerical purposes, that CC agreement doesn't offer an efficient way for commercial users to buy rights to my content. So long as most copyright acquisition is left to individual, open-ended negotiations between attorneys, I'm unlikely to be offered many small payments for commercial reuse of my content. Creating a system to accomplish that task without individual negotiations could be a breakthrough for the development of a functional information economy.
Direct subsidy. Mark Cuban wants a newspaper in Dallas because he understands its value to his product (The Dallas Mavericks). Are there businesses and entities besides professional sports teams that benefit from detailed and extensive mass-media attention? If so, it's easy enough to imagine coalitions forming to promote and sustain certain types of coverage. The fun part? Imagining the rules under which such a publication would operate.
Premium accounts. Chris Anderson's piece on the "free" economy does a good job of explaining how a minority of users who upgrade their accounts can pay the freight for the majority of freeloaders. For this to work, news outfits must offer something other than restricted news content. So what have you got to offer?
Give the pixels, sell the cotton. Know how webcomics creators get paid? Not by restricting access to their panels, but by selling t-shirts and posters.
Intelligent aggregation. Human aggregations of relevant content add value by improving the signal-to-noise ratio and scanning all relevant media, including coverage from bloggers, Tweeters, etc. The more diverse the mediascape, the greater the need for this service. Likely result? Many aggregators, each with a different combination of revenue sources and relationships to the content producers they cover.
IV. THE NEW EXOTICS (2010-2020)
Truly disruptive technologies tend to be the ones that change our fundamental ways of relating to the world. The competitors listed above are essentially analogs to the current media system, funded in ways that might relate more efficiently to the new media economy. But what's likely to change the game?
Information scalability. The No. 1 issue in modern communication is the superhuman rate of expansion in global information production. Mainstream media in 2009 attempt to deal with this problem by artificially limiting the “meaningful” sources of information and then applying “news judgment” to that limited stream. The engineering trick for journalism will be to create systems that scale the true global flow of data to levels that can be used comfortably by humans. This will be accomplished through information architecture, informatics, artificial intelligence, exotic findability structures, taxonomy/folksonomy systems, smart archival and curation techniques, plus multiple reputational and credibility scoring systems.
Machine readability. Modern mainstream media is geared to produce information that can be easily understood by humans. Limited metadata is then affixed to it during the publishing process, and these documents are then archived in ways that place many of them in the realm of the “dark web.” For information – and journalism – to become flexibly useful, this order will have to be reversed. This means journalists will produce machine-readable XML files first, with the human-readable narrative existing as a sub-set of that file. Why? Because machine-readability is not only more useful, but more profitable, because it allows the creation of...
Information products. A set of documents with analog descriptions of locations has no additional value. A dataset of every GPS coordinate, coded for relevance and subject, from every news “story” you produce in a year is immensely valuable for multiple purposes. My prediction? News organizations will give away their human-readable documents and sell their datasets, either directly to developers and researchers, or indirectly via their own informational products. Want to see an overlay with all the information related to a neighborhood before you buy a house? Will that be Visa or PayPal?
Mashups. Most information products will take the form of a mashup, but mashup development will not be limited to for-profit data comparisons. It's easy to imagine a graphic interface that would allow news-service subscribers to configure their own personalized mashups.
Automated data-enrichment. Manually marking-up data is slow, brain-numbing work that's prone to human error. The answer? Use automated analysis to generate much of the machine-readable metadata.
Data publishing. Machines don't read stories the way humans do, which means that optimizing content for automated information streams will require separate publishing formats for human- and machine-optimized data. This means we'll need protocols and XML formats, but the payoffs are significant.
Intelligent Agents. Machine readability via Semweb lets computers talk to each other in their own language. Once that foundation is in place, users should expect a rapid proliferation of free intelligent agents from various vendors, including news organizations. You'll program one agent to find you great travel deals, another to spot trends that could influence the value of your investments. Agents that learn from your choices could act as your romantic matchmakers, or do something as simple as selecting your morning headlines. Intelligent agents will be the primary way in which individual humans configure their interests and actions in the Web 3.0 world and beyond.
Predictive Intelligence. Modern journalism is based on the idea that impartially telling “both sides” of a story is more useful than “taking sides.” This approach has limited value in an information-rich environment where the goal is finding the signal in the noise. Credibility, therefore, is likely to move toward information sources that demonstrate their understanding of events and situations via predictive accuracy rather than claims of non-predictive objectivity.
Virtual businesses. Since the primary challenge for businesses in the 21st century will be managing the pace of change, it no longer makes sense for most companies to be in the “business infrastructure” business. Consequently, we should expect that “the news business” will largely cease to exist as vertically integrated structures (a.k.a. “silos”). A likely replacement? Networks of sources, contributors and “competitors” who share much of the same contracted infrastructure. Do the three TV stations in your market each need to support a stand-alone engineering department? How many printing presses does your market need to support its competing print publications? And so on.
Value-added revenue. Traditional news media is in the business of serving sellers while pretending to be in the business of serving users. One way of realigning that system is to invent “news” organizations that fund their operations largely by getting paid for adding value to transactions on behalf of the buyer. By the way, I've been playing around with an idea for such a business in my spare time.
SO WHAT'S NEXT?
Journalists tend to think of the future in terms of their jobs, and from that perspective "What's next?" is another round of layoffs. Sorry, folks. Do the math.
But take a slightly longer
view and "What's next?" is a decade of
experimentation, opportunity and chaos. Some of the funding sources may
appear exotic, but most of the “successful” business models (in
this instance, "successful" means capable of sustaining a journalistic enterprise) from
the coming decade will be little more than smart outfits that figure out
how to accomplish their mission while keeping their costs down. Doing this will require a great deal of cooperation, plus a
willingness to enter into relationships that our Old Media ancestors
Old Media executives don't recognize
many of these alternatives as valid, but that's likely because
they're looking at media business models from the perspective of
“What can save my company?” But that's not the question we're asking..
And finally, I think we can safely expect that
this diverse, open-source, networked-media future is going to be
radically reorganized within the decade by the rise of information
technologies that many news-media competitors will not be able to replicate. It
is possible, if not likely, that many of the “successes” of 2012
will be swept away before 2020.
So when people ask me, “What should I do to prepare for the future?” I suggest they just wrap their brains around this idea: The current meltdown is just a warm-up act..
SUNDAY, MARCH 22, UPDATE: In case you missed it (and who am I kidding? Everybody missed it), here's my attempt to explain the demise of the newspaper industry last year in single-page cartoon format. Click on the image to see it full-size. - dc