The newspaper suicide pact

Primarily written Friday night at O'Hare International. Lightly edited, with links added today. --dc

I think I'll remember last week as the moment when I finally knew, with a certainty approaching fatigue, that the newspaper industry – the business and passion that both shaped and warped me over the past 20 years – had chosen ritual suicide. The choice appears grimly reached and irrevocable.

The issue is “paid content.” That's the generic term. I consider it a euphemism for an entire suite of frustrations and furies that have been boiling out of my former profession since its once-invincible business model began its final slide to the deep in 2008. On the surface, paid content is the reasonable idea that people should have to pay for the professionally produced content they consume. Its core, however, is a post-rational demand that consumers abandon their habits of the past decade in favor of new behaviors intended to restore media companies to the profitability ordained to them by God Almighty.

Does it matter that this is an idea with a known, recent history of failure? Or that human beings have no intention of paying for news they've always received for free? Does it matter that we already  know a return to the paywall-era of the early 2000s will cost these legacy media companies money they will never recoup? No, no and no.

There has been no shortage of writing debunking this, but what of it? The audience that counts in this case – media company executives – decided this future sometime earlier this spring. All that remains now are the details and marketing terms: “Paywalls” are out; “Pay Windows” are in. The wall must be easy to use, but it must also be “permeable.” And so on.

Confused? Don't be. Your newspaper overlords believe they can sell you their content if they can just get  everybody on the same page and nail the sales pitch this time. They're looking for the magic words, not the underlying logic (the tricky part? Doing all this without breaking federal anti-trust law).

This is folly, of course. Even MIT Technology Review Editor and Publisher Justin Jason Pontin concluded that news and opinion must be given away to the aggregators, and that was in an essay advancing the case for paid content.

Pontin comes from the magazine field, which suffers from similar woes but is a fundamentally different beast than the general bundling machine we call the American metro newspaper. All sorts of content can be sold online quite profitably (you can read my thoughts on this here and here), but trying to force people to pay for generic news content because your advertising rates have dropped so low they no longer cover the cost of your operations? Have fun selling that one, boys.

And sell it they are. This spring and early summer has been a continuous parade of naked emperors and specious arguments. There's the Cable TV argument. The iTunes argument. They've argued the Watchdog Case and the Piracy Case. And as the combined knowledge of the network ground each of these quickly down to dust, the salespeople moved on to the next one. Did the "blame the bloggers" approach flop? OK: Blame Google.

The worst argument I've heard so far came from Walter Isaacson, the former editor of TIME who got this party started in February with his cover story “How to Save Your Newspaper.” His paid-content call rallied the panicked executives who are presiding over the cascading failure of our industry, yet as Isaacson addressed the crowd at the “From Gatekeepers to Infovalets” conference on May 27th, he seemed almost apologetic: We can't sell much of our content, he said. We'll have to do it wisely. Isaacson isn't a stupid man. He sounded to me as much a prisoner of his words as their author.

But here's the terrible argument I mentioned: In contending that the paid-content movement was not so much about revenue per se, Isaacson used this alternate rationalization: Paid content models are necessary “to protect creativity.”

That's a pretty stunning statement, even in the favorable context of trying to save an industry in which people are compensated by middlemen for their published work. And so when I got my turn at the mic, I rose and asked him: What profit margins will these paid-content models have to generate in order to protect creativity?

Isaacson never responded to that question, unless you call staring at me with a horrified expression a response. Instead, Merrill Brown, a senior strategist at paywall-startup Journalism Online LLC, rose in his defense. It's not about a profit margin, he said...and... well... then he said some other things (you can watch it here, although I don't know that listening would lead to a more accurate paraphrase). He did eventually concede that stockholders might have certain profit expectations.

Yes. Expectations like 20 and 30 percent profits.

So can we finally, finally call this thing what it is? Quality journalism is expensive, and to the extent that it provides a public good, we will find ways to fund it. But top-heavy, poorly run, arrogant-to-the-bitter-end media companies? This is their crisis, not our crisis, and it certainly isn't about journalism.

In other words: If Isaacson wants to join us in protecting and expanding creativity and quality, welcome aboard, Walter! Because we can do THAT for an awful lot less than what it's going to cost to bail out our brain-dead media companies on behalf of shareholders and executives.

Like a lot of my compatriots, I started studying new media options with the intention of saving newspapers, not destroying them. As recently as last week, in my secret thoughts I doubted my dire conclusions. These are enormous, powerful companies, representing billions of dollars of assets. They would survive. They had to.

But clearly they don't. In choosing to go backward instead of forward into the now, these leaders are sealing their fates. My wife, upon hearing my news from the conference, predicted the companies that go all-in on paywalls will be out of business within six months of their implementation. I don't think that's rash (although, to be clear: I don't think ALL these companies will go into bankruptcy, and I stand by my prediction that the "unique nationals "have an interesting future, despite the fact that The NY Times is helping pull the paid-content bandwagon)..

Consider InDenver Times: The online-only startup launched with a plan to fund its operations via 50,000 paid subscriptions. They got 3,000. That's 6 percent of their goal.

It's actually worse than that. Newspapers that are turning to paywall plans today are gambling on a risky revenue stream that even the experts aren't predicting will provide a replacement to their lost advertising revenues (their biggest financial problem is the rapid decline in advertising rates, not the slow decline in print circulation). It's a "well, we've got to do SOMETHING" solution, not a logical, do-the-math solution. And since since most media companies are owned by shareholders, the resulting loss of confidence could be catastrophic.

What will these media executives do when that reality hits them? When these debt-burdened chains, stripped of journalistic talent by a decade of profiteering, their web traffic reduced by 60 percent by their paid-content follies, their pockets emptied by the cost of the proprietary paywall systems offered by Journalism Online LLC and other opportunistic vendors, what will they do?

Will they buck up and go back out into the fray with fresh ideas and leadership? Or will they fold, casting bitter eulogies to their own imagined glories as they exit the stage?

The chances of them adapting well to another failure are dubious. Remember, these are the same people who have acted as if there were no other options, even when those options were practically gift-wrapped for them. As if Newspaper Next never happened. As if commerce hubs and C3 and all the interesting, exciting ideas that are practically everywhere today do not exist.

They don't get it. They don't want to get it. And in many cases, they're literally paid not to get it.

America's journalism infrastructure – from corporate giants to non-profit foundations like the American Press Institute and the Newspaper Association of America – is funded by dying companies. So when you hear about efforts to save newspapers (and, by extension, journalism), understand that answers that don't return the possibility of double-digit profits and perpetual top-down control aren't even considered answers. They're not even considered.

They'll do anything to survive... so long as it doesn't involve change. Consequently, for many companies the alternatives to paywalls are no longer options because it's too late in the day.

But maybe I'm looking at this wrong. Maybe paid content is good for journalism because it's going to hasten the fall of this terrible system. It's going to create a vacuum in which innovators will be able to make a difference. Maybe the best thing these old media companies can do today is fail quickly.

This was their choice, not ours. Wave to them as they leave, and try to remember what they once were, not what they've become.

(Editor's note: Thank you to David Muir for DMing me a heads-up that I'd called Jason Pontin "Justin." D'OH! -- dc)

Comments

[Dan]

Sorry I've been so absent from this excellent comment thread. I'm in a beach house with one bar on our 3G card, and the connection goes in and out without warning.

The idea of a content fee, which sits atop your ISP bill, is interesting... and the newspaper industry is aware of it. The problem? The only fair way to distribute it would be to spread out the pool to ALL sites, based on traffic, which means it's no big win for the newspaper sites.

At any rate, getting away from everything for a few days is good. Step back just a bit and you
begin to see how transformative the present really is. We're living in an age of logarithmic advances. I have to remind myself of this, over and over.

[chano]

I have little sympathy for the newspaper industry and most magazines for that matter. There are VERY few publications that truly serve their readers, rather than their self-interest, their proprietor's whims and of course the loathed advertiser.
When key issues of public information are concerned, such the Iraq War, common coverage of human suffering rather than the ongoing story of Jewish suffering, failure to cover so many topics at all for reasons of political or sponsorship expediency, spreading mis- and disinformation at will and so much more besides.
Newspapers and mags have mostly just become vehicles to suppress truth and earn ad revenues.
Why would anyone miss them. Like giving up smoking....It takes a while to understand the change when all the shit has gone and you don't miss it and things seem better somehow.
There is plenty of news around and it is better because it has not been filtered by all those 'professionals'. The web news phenomenon is still in its infancy. It will develop fast and it will regulate itself because the web is like that. Put out lies and crap and you are history. Forget who your true sponsor is and you are history.
And thankfully, there is greater hostility to advertising on the web than on TV, radio or print. Thank goodness for that.
I have a feeling you will not post this.

[PeterJ]

This is typical of the blogger rant against commercial news media. As if newspapers are going to stick a simple "buy your journalism here" button on their websites! I find the level of analysis on most blogs to be deplorably poor, based primarily on the ill-informed views of other bloggers - chinese whispers. So often, they deal with here-and-now interpretations of events, despite the self-righteous proclamations that they are visionaries. Mostly, bloggers are the kind of people who once stuffed multiple letters to the editor in the one envelope!
Typically, bloggers like yourself preach to an audience of converts and devotees - they tend to close their minds to the possibility that exponential change will also change their current online paradigm as well as generate completely new and unforeseen business models. These models will be developed. The alternative is the evolution of a peasant culture online where information is valueless, where everyone is a huckster, where everyone makes a few measly dollars, just enough to buy a coke and some pizza to power the next opinion. Unfortunately, you can't survive on opinions, but you can eat your own words.

[Dan]

With whom are you arguing, PeterJ? Because this is a shoeleather post, not a secondary interpretation of someone else's reporting. So are you arguing with this post, or are you arguing with "most bloggers?"

And if you're confused about my thoughts what types of content can be sold online or on the pace of developments in new business models, try following the hyperlinks in this post. If you wish, I can even give you the links specifically rather than asking you to pick them out of the context of the essay. The problem isn't that there aren't options, it's that none of the functional options match the product newspaper companies want to to sell.

You're lost and you're angry. If you'd like to get unlost, I'd be happy to help you get there. If you just want to argue with "most bloggers," the most satisfying way to do that is solely in your imagination.

[Justin de la Cruz]

Great post, great site, keep it coming.

[profit lance]

Well, I don't think that a tax to save newspaper would be a good idea.

People are free to choose and if they prefer to search the same information online, the should have the possibility to go online.

Anyway, newspaper are actually been overcame by online "journal" and they should do something different to come alive..

[Johnny]

Newspapers are old news. Nowadays we have the internet. Now don't get me wrong, newspapers can still be great for advertising. But with the internet, you can reach a much bigger audience.

Nice post ;)

[james]

Well I would have to agree but journalist have to make a living as well. Everyone is just doing there job.

[james]

What are you talking about "Journalist are incapable of critical thought" That is hwat journalist do. Please keep this in mind that there are people (journalsist) who are good at what they do and there are some that are not. It applies to anybody. TO make a statement that you had made is not a fair statement.