Thursday, September 2, 2010

Back to Work: Wide Open

That's the problem that no one in the news business has been able to crack. Economic models exist because you can control your business. If you can't control your business, you don't have one.

Way back in the early days of this blog, it strongly held that print was necessary as a pipeline into the reader's home. You controlled what went into and out of that pipeline. The glory of the Internet was, of course, to be that no one controlled what went in, and you controlled what you saw. Good for theory, bad for business.

But the Internet wasn't designed to be a business or a home for one. As Dan Kruger, CEO of iPhase 3 Corp., a software developer, was quoted as saying in News & Tech when asked why stories seem to be impossible to monetize:

"The design of the Web was for the unconstrained distribution of information. Every piece of Web software you use has that protocol on it. An ad is another piece of content -- stories and ads need distribution control and you cannot do that on the Web. ... The inherent design of the Web thwarts control of distribution, security, privacy or payment.

"If it was possible to get that control on the Web from all the time and attention the newspaper industry has spent trying to do so, the industry would have already achieved it."

We move on to Michael Hirschorn, founder of the TV production company Ish Entertainment, in the Atlantic, who says that the Internet as we know it is "the product of a very specific ideology. Despite its Department of Defense origins, the matrixized, hyper-linked Internet was both cause and effect of the libertarian ethos of Silicon Valley. The open-source mentality ... proved useful for the tech and Internet worlds. ...

"Ironically, only the 'old' entertainment and media industries, it seems, took open and free literally, striving to prove that they were fit for the digital era's freewheeling information/entertainment bazaar by making their most expensively produced products available for free on the Internet. As a result, they undermined in little more than a decade a value proposition they had spent more than a century building up."

Hirschorn's point is that "the era of browser dominance is coming to a close." Replacing it will be the app-based model, whether for phones or tablets: You want something, you pay for it. "For all the talk of an unencumbered sphere, of a unified planetary soul, the colonization and exploitation of the Web was a foregone conclusion. The only question now is who will own it." In other words: Utopia always fails. It's a business, son.

The utopianism that powered so much theorizing about the Internet -- Hirschorn quotes John Perry Barlow, an early proponent of digital freedom, as saying, "Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone" -- powered Surrealism and Dadaism, powered Communism, powered forms of religious ecstasy since time immemorial. But why did so many news industry leaders, not just editors but publishers, CFOs, etc., sober men and women, either fall for it or feel they had to genuflect toward it to the extent of putting their businesses and mission in mortal jeopardy?

Just some thoughts:
*The newspaper industry lost its mojo with TV news, spent decades trying to come up with a substitute for "we told you first," and thought it could find its way back.
*Newspaper people are always suckers for futurists, idealists, and anyone who makes one feel behind the times.
*Maybe these guys will be right. What do we know?
*It killed the record industry first. It must be inevitable.
*Our own kids not only don't read newspapers, but don't think we're very special for working for newspapers. We must be outmoded. Get with it.
*Maybe there really is a business model out there and we just haven't found it yet.
*Being part of "the conversation" is more important than how we make money being part of it.
*Hell, this business ain't that different from print, we're just selling adjacencies.
*Free classifieds will fail because an ad in the newspaper is worth more than an ad in a shopper. Context is everything.
*I don't understand what they're talking about, therefore they must be right.

All well and true. But I have to recall dimly what Arthur Sulzberger of the New York Times was quoted as saying a decade ago, which was something like: If I could get rid of the cost of printing, ink, trucks, drivers, bundlers, inserters, mailers, delivery fulfillment staff, etc., I'd get rid of 70 percent of my costs. (And if I could keep the same level of income...)

Certainly the Times was planning to use a lot of that to increase news coverage. But stopping the presses would have done the trick that eliminating linotypes and competing newspapers had also done: Create a period of increased quarterly earnings without much effort, and get the analysts and investors off the newspapers' back. It would have meant a few years of not managing every dime every week just to keep the stock price up.

And it would have worked, had someone noticed that the Internet was not designed to restrict the flow of information. But newspapers came early to the Internet game, and thought the model was going to be AOL -- which did restrict the flow. I can still remember our publisher saying in 2003, who knew the model was going to be search?

So the future: Newspapers will try to turn their efforts away from the Web and toward tablet and mobile apps, while at the same time denying that they are abandoning the Wild West of Browser City (because someone might yell at them for restraining information or being only concerned with money) and probably only doing so half-heartedly (because they still are wedded to getting millions of clicks, from the DNA of selling millions of papers), while still printing newspapers but doing them for senior citizens instead of trying to reinvent them, because everyone says you can't do anything but watch them die.

Everyone but newspaper executives nearly everyplace else in the world, it turns out. More to come next week.

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