The future, on the cheap

I read a post yesterday about a profitable hyperlocal news site, and here's my summary: the owners hold down costs by paying freelancers to write articles. Their secret sauce, apparently, is that unlike similar hyperlocal formulas being pushed by Patch and The New York Times, The Alternative Press doesn't waste money on unnecessary expenses - you know, frivilous journalism stuff, like hiring editors.

Result? They've got their overhead down to a triumphant $0.28 per unique user.

“We're the only profitable hyperlocal here today and our business model works,” founder Michael Shapiro told an MIT enterprise forum late last month.

So, let's review.

Shapiro is in the advertising business, and that means he has to acquire content so he can package an audience to companies that want to sell things. But quality-controlled journalistic content is expensive, and the rates Shapiro can get on Web ads are so low that if he spent money on things like editing, his cost-per-unique-user might go up to something like a dollar or more (apparently this is along the lines Shapiro estimates for his competitors), and then his working business model wouldn't turn a profit anymore.

The squeakiest irony here is that Shapiro's websites have “teamed up” with the journalism school at Seton Hall. Got that? Shapiro is touting his business model to an industry desperate to escape a continuing vortex of decline, and that model includes “leveraging” journalism students to produce content for a publication that is only nominally journalistic, at rates so low that they're essentially undercutting the professional future to which these students aspire.

Let's also be clear why the industry notices stuff like this, and it's not because The Alternative Press is the first Web operation to make money via hyperlocal blogging. They're not even the first in New Jersey. To see a great example of how it can be done well, with heart and soul and personality and obvious concern for community (in this case, Montclair, N.J.), check out Baristanet.com. It's personable and talent-rich and unique, and that's its failure from an industry perspective. You can't commodify "unique."

Legacy media executives typically aren't looking for unique. They're looking for repeatable – an industry formula for hyperlocal that reliably produces predictable results. Plug in X dollars, apply the same approach to each new market regardless of quirks, collect X(y) dollars.

There's plenty of evidence that hyperlocal can pay its own affordable freight in a low-cost blog format (duh – how many years has Lisa Williams been keeping track of that story over at Placeblogger.com?). It's a safe bet that entrepreneurial local people will continue to earn working-class incomes by blogging about their communities, making most of their money via CPM advertising.

What concerns me today is this desire to turn hyperlocal into a franchise formula, because it speaks to the fatal flaw in our thinking about the future of media and journalism. The industry's insistence on short-term, repeatable profitability seems practical on first blush (of course we've got to make money to keep the lights on), but low-cost solutions tend to devolve into races to the bottom, and with Web ad rates as low as they are, this particular race will likely be swift.

At what point do we recognize that the years we've spent chasing lower overhead have done exactly nothing to make media companies more solvent, much less to secure any kind of meaningful future for journalism in American society? Shouldn't we take a cue from Google's attack on the content farmers and resign from our industry's embarrassing campaign to wring profit out of increasingly shoddy work? Is there anyone left out there who is happy with the thought that we've met the future, and it's $0.28 per unique visitor?

There is an alternative. We can start building a 21st century approach to journalism that turns reported information into data products that accrue in value over time. There's nothing intrinsic to the craft of journalism that limits us to consuming data, and with the right tools and techniques, we can become producers of robust, unique data -- data that will make our reporting better, but also data that will create tangible value independent of whatever stories we write. 

When I stepped up my writing about these ideas in 2008 (see Section IV. The New Exotics), the ranks of journalists proposing a data-supported future for the profession were pretty thin. It's still not a mass movement, and we certainly don't all agree on every detail, but there are more people writing about these ideas, in more prominent places, than ever before. I'm hesitant to name them here, simply because I know how much I hate having my contributions overlooked and I would certainly overlook someone I admire in doing so. But here's the most recent signal (republished by Neiman two days ago) that our data-generating future is nearing mainstream acceptance: Newspapers must become hubs of trusted data in a market seeking (and valuing) trust (hat tip to Andy Rhinehart).

As Seth Godin says, ideas that spread, win. This idea -- the notion that there can be a healthier model for journalism, a more abundant future for the people who work in media, and a better media system for the communities we serve -- is spreading. 

Now that media executives are realizing that paid content schemes are not likely to reverse their companies' failing fortunes, an opportunity is emerging for people to fund and build the first practical tools for this data-driven future. I propose we get moving on that, and just leave today's cheap vision of the future to anyone who chooses to live there.

Comments

[Scott B]

You had me right up until the point you started talking about a data-driven future. With all due respect, most readers don't give a flying f--- about data. They aren't flocking en masse to spend their limited free time perusing local databases or data visualizations. It's a hyper-niche product at best.

Readers want stories -- easily-digestible local stories that are relevant to their lives, preferably with photos attached. Sorry, but data does not do that.

[Nick Bergus]

But, Scott, our local newspaper has a long-time success in its annual publication of local salaries (we're in a college town so many are available to the public). This is just a list of name and salary. Sounds like data to me. And without much value added, either.

[Dan]

Not interested in replacing stories with data, Scott. We'll still tell stories, and we'll still give those away for whatever value they'll bring as ad fodder.

But we'll sell the underlying data sets we create in our reporting. Not to general interest readers, but to businesses and nonprofits and researchers, just generally to anybody who makes (or saves) money via good information.

And while I agree that people like stories, to say that people aren't interested in data is just silly. They just aren't interested in spreadsheets and databases. That's why we have data mashups and visualizations, interactive tools that let people connect to information in easily digestible ways that are relevant to their lives. On their terms.

[Jay Rosen]

With all due respect, most readers don't give a flying f--- about data.

Oh, really?

[AnnB03]

I don't know. I can't help but feel that this data thing is as much wishful thinking as the whole hyperlocal thing.

Frankly I never saw a market for hyperlocal and I don't see a market for the type of data that I imagine a newspaper could produce without becoming an entirely different business.

And could we please have some examples of what exactly constitutes this "robust, unique data -- data that will make our reporting better, but also data that will create tangible value independent of whatever stories we write." Because right now, I don't have the foggiest idea what data it could be.

By their very nature, newspapers tend to report the exceptional and the information they create is pretty far from anything resembling a regular data stream.

Maybe there are indeed potentially strong date businesses out there, but I'm not seeing why they fit with the journalism business.

P.s. I've read several back posts looking for an example of robust unique data. If it's out there and I missed it, I'd be grateful for the link. Many thanks.

[Dan]

Frankly I never saw a market for hyperlocal and I don't see a market for the type of data that I imagine a newspaper could produce without becoming an entirely different business.

Yes. Yes. An entirely different business. A business where there is a financial connection between the quality of the information produced and the value of that information. Because no such connection exists today.

A business where information that you produced two days ago is an asset, not a liability (in the sense that to secure its value, someone must pay to extract it from your archive via search and analysis and re-contextualization).

It's for readers like you that I wrote this passage in my previous post:

"Proposing to this group that 21st century journalism could produce significant value independent of advertising is a bit like pitching heliocentrism to the Roman Inquisition in 1610. You're not just proposing a new revenue stream, you're moving the center of the known universe. Kind of a tough sell."

And could we please have some examples of what exactly constitutes this "robust, unique data -- data that will make our reporting better, but also data that will create tangible value independent of whatever stories we write." Because right now, I don't have the foggiest idea what data it could be.

You go on to say that you've read several back posts looking for an example. Wish you would have given me citations, because I keep giving examples and definitions, and people keep asking for more. I wrote 24 sub-pages for the essay I posted in February, including this one on robust data (the term "unique" refers to the idea that the data isn't collected and structured elsewhere -- not much sense in collecting and marketing information that already exists as census data).

So, examples: Data collected in reporting on fires is of value to insurance companies, fraud investigators, remodeling companies, home improvement warehouses, disaster cleaning services, safety researchers. Data collected in producing weekly calendars of events are valuable to event planners, band managers, booking agents, caterers, record companies, etc.

That should be enough of a start for an experienced journalist. Take a thing that appears in a newspaper, think about the data set it would constitute if reported both as "story" and as data, and then spend five minutes brainstorming the possible markets for that data if packaged as a focused, useful product.

Some topics won't have great value as data... so guess what? We won't change our approach to covering those things. But as we learn the business of data products, we'll change the information model for those beats, and the more value we find there, the more effort we'll put into perfecting those models. I don't know whether real estate transactions will wind up being more or less valuable than obituaries, but after we've been doing this for a while, in individual communities, we'll create workflows that reflect that value.

Also, to your point about newspapers reporting the exceptional, a reader named Anna Tarkov did me the helpful honor of excerpting a segment from my post about standards-based journalism that speaks to why reporting the exceptional ("the story") isn't good enough anymore.

Does data reporting have to be a function of news companies? Of course not. Anyone could take this up. But newspaper companies are uniquely positioned to be the first to take advantage of these opportunities, because we already have information-gathering infrastructures. I see this as a matter of adapting workflows and staffing.

We can't do that today because our current tools weren't adapted to these tasks. But making tools is what humans do.

[AnnB03]

Many thanks for your reply.

I'll go read the pieces you referenced and see if it changes my mind.

[David Gerard]

Note that this has already played out in the technical press. They pay people wages (still, slightly). But (a) there is effectively no wall between advertising and editorial (b) the writing that makes money is that which trolls for page clicks most effectively. There are still a few actual journalists there, but this is basically the model.

The scary thing for the general newspapers is that they are blatantly adopting this policy, e.g. the Telegraph in the UK, where you get points (towards not being made redundant) by getting as many clicks as possible. The Daily Mail are actually very good at this.

Thus, commercial journalism without a captive income stream seems to descend toward bottom-feeding.

[Clyde F. Smith]

Sports sites and business sites are doing really well and they use huge amounts of data though they call it stats or financial information.

Databases of mugshots and crime reports are big business for both local print pubs and incredibly successful web sites like The Smoking Gun.

I know the Guardian in the UK has been writing a lot about data journalism and their successes with it.

On the local tip, when I've checked out places I considered moving, I spent a lot of time checking out crime maps and found that much of that data was poorly displayed and not always available.

But even if it was readily available, I would have put in a lot of time on the sites that made it available. And if those data displays were connected to local stories, I'd be checking out the stories behind the data because the data never really tells the whole story.

I have yet to see a local crime map that linked specific incidents or series of incidents to the related coverage. And that's such an obvious thing to do!

So those are a few more points that support data as playing a potentially key role in journalistic business models.

"newspaper companies are uniquely positioned to be the first to take advantage of these opportunities, because we already have information-gathering infrastructures"

And so newspaper companies were the first to drop the ball and dropping the ball online seems to be their go to plan, IMHO. Watching newspaper companies struggle online has been painful and is why I rarely check for newspaper sites anymore unless a specific link comes my way.