November 10th, 2008

The market and the internet don’t care if you make money

by

The title of this post comes straight from the mind-blowing mind of Seth Godin, preaching to the book industry (promoting his book Tribes), but he could just as easily be preaching to anyone in media:

[T]he market and the internet don’t care if you make money. That’s important to say. You have no right to make money from every development in media, and the humility that comes from approaching the market that way matters. It’s not “how can the market make me money” it’s “how can I do things for this market.”

and

The market doesn’t care a whit about maintaining your industry. The lesson from Napster and iTunes is that there’s even MORE music than there was before. What got hurt was Tower and the guys in the suits and the unlimited budgets for groupies and drugs. The music will keep coming. Same thing is true with books.

When I read this, I thought immediately of many assumptions the newspaper industry is making as the decline of its business model accelerates:

  • There has to be a new business model to support journalism with the same profit margins as newspapers have enjoyed in recent decades.
  • There has to be a way for newspapers to “reverse” the declines.
  • Newspapers will eventually find a way to make their web operations as large and profitable as their print operations once were.
  • Newspapers can’t be permitted to die, because then journalism will die.

But the reality is that all of these assumptions may be wrong.

Why? Because the web and the market don’t care. The web is the most disruptive force in the history of media, by many orders of magnitude, destroying every assumption on which traditional media businesses are based.

But the market should care, you say. What would happen if we didn’t have the newspapers playing their Fourth Estate watch dog role?

Here’s the bitter truth — the feared loss of civic value is not the basis for a BUSINESS.

The problem with the newspaper industry, as with the music industry before it, is the sense of ENTITLEMENT. What we do is valuable. Therefore we have the right to make money.

Nobody has the right to a business model.

Ask not what the market can do for you, but what you can do for the market.

Every conversation about reinventing a business model for newspapers begins, it seems, with a question about how to find a way to pay for what we value in the current product. In other words, how do we find a way to keep doing what we’ve always done and make as much money as we’ve always made?

I’ve rarely heard anyone start by asking what the market values. Where are the pain points in the market? How can we solve problems for people?

You know, business 101.

At Jeff Jarvis’ conference last month on new business models for news, I heard more out-of-the-box thinking in one day than I’ve had in the probably past year. But everyone had to constantly shoo the sacred cows out of the room.

I’ve been accused in recent months of Google worship, because I keep coming back again, and again, and AGAIN to Google’s business model.

Why? Because it’s the most successful media business on the web, by many orders of magnitude.

Why? Because Google solves a big problem for consumers. It helps them find stuff on the web they could never find on their own. And it solves a big problem for advertisers. It lets them buy traffic.

So what’s a problem in the market that newspaper companies could solve? When I know what I’m looking for, Google helps me find it. But when it comes to news, I don’t always know what I’m looking for, because, well, it’s NEW. And I want the best of what’s on the WHOLE web, not just what one news brand has to offer.

That problem is still largely unsolved.

And it’s just one example (and you can disagree about whether its a problem).

But Google as an icon is a double-edged sword. Google gave birth to the most destructive, soul-sucking, innovation-destroying notion in media today: monetization.

Nobody thought search was a business, until Google found a way to “monetize” it. Now everyone with something big, e.g. Facebook, YouTube, Twitter, etc., assumes there must be a way to monetize it, like Google did.

Newspapers and other traditional media put their content online and try to “monetize” it. We have it, therefore it must be worth something.

We’ve got lots of page views, therefore they must be worth something. We’ve got lots of ad impressions, therefore they must be worth something.

But here’s the problem — so does everyone else.

Everyone is chasing more TRAFFIC.

You know, just like everyone wanted “eyeballs” in the 90s.

We’ve got some traffic, let’s monetize it.

But, frankly, the market doesn’t give a shit about your traffic.

So what does the market care about?

Networks.

The web media market is a giant network. Google figured out how to harness the network. But nobody else has yet.

That’s not surprising. Media companies can only think about their own properties, their own content. They can’t let go of the monopoly control business which the web has already destroyed.

Since you made it this far in this post, I’ll tell you a secret, since this post was not meant to be defeatist, but rather a swift kick in the head.

So here’s the secret. Legacy media companies can’t create a new business model for news and journalism by themselves.

They have to work TOGETHER, to build a network — a giant network of much smaller pieces, loosely joined.

I’ve said this before. And I’ll surely say it again.

But most of the media company executives who read this blog will shrug and go back to trying to figure how to prop up their monopolies.

And those monopolies will continue to crumble faster every day.

I’ll write more about networks and media company collaboration in another post. In the meantime, I’m going to watch the the web’s disruption continue to blow up everyone’s assumptions (including whatever assumptions I still have left).

Newspaper CEOs are meeting for a closed-door summit this week. Maybe someone will forward them this post. Or print it out and set it on fire in the middle of the conference table. Whatever works.

And as for Journalism, I’m less worried.

I’ll repeat Seth: The lesson from Napster and iTunes is that there’s even MORE music than there was before.

We’ve got highly entrepreneurial, creative, and driven people like David Cohn — who’s launching spot.us this week — working hard outside of newspaper company walls to invent new models for journalism

Journalism will find a way. Even if the industries that once supported it do not.

It took the ruination of the Bush Administration to create the right conditions for electing Barack Obama. Sometimes it has to all be torn down before you can begin to build it back up again.

  • I'm just a blogger and writer not a journalist. As I read the ideas and solutions to save the Newspaper business, I could be wrong but it seems many ideas and solutions ignore traditional journalism and want them to become blogs or 'how to' websites. God forbid.

    When I read a newspaper I want the hard news first and the other stuff second. I want them to present the news, not school me. A lot of the stuff newspapers present these days as front page news is silly if I place it in the context of hard news and what use to appear on front pages.

    I miss the stubborn conviction of the Newspaper Industry to be journalists and the ego that made them go out and get the news for me to read. They make mistakes. They are flawed. There is arrogance and what else is new. That covers most businesses.

    To do away with the traditional mission and model in my opinion will be the death of newspapers and real news.

    Help sections are fine. Lifestyle, wonderful. But there are magazines for that. I want to know what is going on in the world, the serious stuff and I want it to come from people who have a passion for what they do and a professional way of telling me about it. I don't need to fall in love with them.

    At this rate it looks like advertisers will rule the world. I'm old enough to remember when it was almost impossible to pass by a newsstand without being drawn to the headlines leaping out at you.

    Now, I rarely buy a newspaper. If serious journalism goes away what's left?

    God help us if they turn into non-profit organizations. Are they suppose to cover the war in Iraq on donations? Will reporters need fundraisers to keep their jobs?

    Call me old fashioned. I like going to the newsstand or store to buy a newspaper. I like having the option of subscribing to have it come to my door.

    I want to drink my coffee at home with the sections of the newspaper strewn all over the sofa and coffee table.

    What I don't want is to sit in front of a computer screen scrolling for news. I sacrificed a lot to buy a sofa, to sit on it, read books and newspapers in the comfort of my home.

    As far as saving trees which is another argument. God created seed to replace trees. Killing off newspapers will not save trees. They need water and we're running out of it. Looks like newspapers won't be around to report it though.

  • Mark

    I believe that Google's CEO already asked if journalism should be a paid profession. Yeah. But when I asked them to use one of their applications for free, they refused. Why? According to Google's "visionary" network philosophy, there should not be any artificial protection of content: applications just like articles shold not be copyrighted. Or is this an example of pure double standard in the new Web economy proposed by Google?

  • CMyers

    Great article!

    Michael, I have to say, as a fellow writer, I understand what you're saying, but it seems you're looking at this as if it's about the writers. It's not. It's about the business execs running these media companies. Sorry, but I doubt they believe in civic duty as strongly as you or I, or fellow writers who have upheld the standards of ethics and integrity in this industry. Their bottom line is profit. They somehow think that they're entitled to profit because journalists have made print news such an important part of our society. But the fact is, journalism will continue (even if redefined) with or without these business executives and their dinosaur business models.

  • NewsReader

    Some advice from a decades long consumer of news:

    1. Rediscover objectivity and/or self-identification of bias. But it sure would be nice to have option #1 available, at from an AP style fact gathering organization.

    2. Find subject matter specialists who can report, not the other way around (which obviously doesn't work). This used to be much more common in the bad old '50s. For example, most military and business "correspondents" actually had backgrounds and/or experience in the fields. It made for good, in-depth reporting that does not now exist.

    3. Try to remember that government and politics are not the only story. The Fourth Estate actually facilitates the growth of bigger and more intrusive government by making the front section (print) and overwhelming dominance on network/cable news. For example, notice how "business" is relegated to its own back lot as if it was only for investor geeks.

    4. Perhaps most importantly, globalize the news networks (not TV, the generic sense). This does NOT mean the CNN style top down operation, but a network built from the ground up. Newsflash: there are quality national news organizations all around the world, to say nothing of born and bred bloggers. We live in an English speaking world, use it, FGS. It will take time and energy to construct this network, but it can be done.

    BTW the networks working together will wind up multiplying the confusion and inefficiency rather than solving it. That is NOT the road to go down.

  • Rubin confesses: "You’ll never find a journalist worth his or her salt who will tell you with a straight face that they got into journalism for the money. They got into it because they felt a calling that is every bit as strong and relevant as the one that some feel toward becoming a part of the clergy or even to run for national office."

    And that is exactly what is wrong with everyone who has this attitude. That's what has squandered trust and credibility. Sow the breaking wind, reap the whirlwind.

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