Posted by: structureofnews | November 18, 2011

Learning – And Unlearning – The Business

There was a time – not that long ago – when many journalists not only didn’t know much about the business they were in, they were proud of that fact.   And had no desire to learn.

What a difference the collapse of a business model makes.

While sustainability isn’t at the top of everyone’s minds, it’s a lot higher on the agenda than it used to be – and thank goodness.  But there’s a lot of catching up to do – not just on the basics of the business, but as a recent profile of the San Jose Mercury News shows, also going beyond and rethinking the rules of the game.   It won’t be easy, and we’re far behind where we should be.  But increasingly there’s help – or at least a desire to help.

The Renaissance Journalism Center, in a recent survey of online journalism enterprises, found – not unsurprisingly – that most were long on journalism skills and short on business experience.  And that – also not surprisingly – money wasn’t easy to come by.

…an increasing number say they are at or approaching a crucial crossroad because the grants that funded their creation are scarce to come by on the second or third try.

Still, the journalists they surveyed are optimistic – although perhaps in the face of evidence to the contrary: The business track record of journalist-led companies isn’t exactly stellar, after all.

Nevertheless, the respondents said that journalists can make good business people. More than 86% said journalists can adapt and apply the discipline of business to an online venture.

But even if true, they’ll need training.   It’s certainly the theme of two recent reports – one from the World Association of Newspapers and News Publishers (WAN-Ifra) and the other by the Center for International Media Assistance (CIMA).

Both make broadly the same point: It isn’t enough just to be a great journalist – you have to know how to pay the bills.  But both also underscore how much harder it is to figure that out now.  In the WAN-Ifra report, Anne Nelson estimates that upwards of $600 million might be spent a year on supporting media initiatives.  But:

International aid and assistance resources have concentrated overwhelmingly on the areas of journalism skills, with an emphasis on the hot topics of the day – currently, new technologies, social media, and convergence. There is only a casual nod toward business skills and market forces that are fundamental to sustainability.

And as Michelle Foster notes in the CIMA report, lots of news managers in the developing world started out because of strong convictions and journalistic passion – not necessarily business sense.  Yet it’s business problems that are likely to undermine them.

A significant risk to being able to solve those problems is the lack of management and business skills among media owners, which can make them reactive to the economic challenges and technology-driven changes in the media environment. Without business acumen, it is almost impossible for media operators to shape, adapt, or create new practices.

That last point is especially important: It used to be relatively straightforward – not easy, necessarily, but at least straightforward – to think through the circulation and advertising challenges that any media organization faced.  There were rules of thumbs and metrics that the industry was familiar with, and a limited palette of options.

These days, the field is much more uncertain – and even the basic business rules that managers have relied on don’t always work in the face of disruptive technologies and new markets.   That’s where it gets tough – journalist-managers need to first master the basics of business, and then understand how they sometimes don’t apply.

That’s very apparent in an excellent Michael Shapiro piece on the San Jose Mercury News, once a powerhouse of Silicon Valley, now a shell of its former self.  It’s a story about how the Merc did invest in new technologies and did experiment with ways to seize the future.  It first developed Viewtron, a videotext service, and then Mercury Center, a site that could carry far more than just the paper’s content and potentially appeal to niche audiences – not far from what today’s sites do.  And all that in the early 1990s.  (So much for the image of newspaper managers being curmudgeonly dinosaurs, to mix metaphors.)

Mercury Center, (New York Times reporter William) Glaberson noted, had carried an online chat with San Jose’s mayor, offered its telephone-only subscribers recordings of Martin Luther King Jr.’s speeches, posted press releases (much to the newsroom’s consternation), and had also made available archives of all stories that had appeared in the newspaper since 1985. The archives, which came with an additional fee, had proven to be particularly popular.  (Senior Merc editor Bob) Ingle had thought their greatest appeal would be to schoolchildren working on reports. But the traffic was heaviest during the day, suggesting that the biggest users were business people eager for information about their industries and competitors.

But despite the relative success of the project, revenues were small – certainly small to a massive Silicon Valley newspaper.  And so as the company moved forward, it focused back on its core business – which meant less and less investment in new projects like this one.   The story doesn’t end well, of course.  But far more important than that is the question of why.  As Michael asks:

Why did the Merc fail to seize the future? Was this the result of greed, stupidity, timidity, and blindness, as so many who worked there would suggest? Or was it the inevitable consequence of disruptive technology, a phenomenon whose most vulnerable targets are often the best-run companies?

In The Innovator’s Dilemma, Clayton Christensen wrote of two technological forces, the more gentle of which “sustained” well-run companies.

But “disruptive technology” possessed an altogether different power, one that could unmoor the best-run companies.

Instead, it created new products that initially held little appeal to that existing market, either because the market was already happy with what it had, or because it was not ready for that innovation. In the 1980s, those newspaper companies that had experimented with electronic publishing discovered that their audiences still regarded the printed paper as the most efficient way to read and advertise.

Which meant that Merc managers, following good business metrics, should have – and did – focus on their core customers.  And in the process, gave up the future.  But should they have ignored good business sense and followed a different vision – one that in all probability won’t have shown a return for a decade?  (And to some extent still doesn’t?)  How do you justify that to your backers, bankers – or staff, who see money going out the door that isn’t being invested in day-to-day story operations?

Michael comes to his conclusion:  That the Merc could have turned the tide.

Disruptive technology is only half the story of what happened to newspapers. There is also the response. The disruption opened the path to change, and not just for small companies unburdened by legacies of success. The change could also come for those older newspaper companies willing to accept that what was happening was not so much an existential crisis in journalism as it was a catastrophic assault on the most prosaic aspect of the newspaper business: the classifieds. Tough to do in any circumstances. Even tougher at a time when things feel as if they are going better than ever.

These times, of course, are very different times.  Things certainly don’t feel that they’re going better than ever.  So in many ways it’s easier to experiment and try new things now – even things that fly in the face of business orthodoxy.   But it underscores the real challenge ahead for this generation of journalist-entrepreneurs: They have to learn the rules of business, and then learn how to break them.

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Responses

  1. Excellent article, Reg. And spot on. I use to say that “being a journalist was better than having a real job.” Almost Stalinist in my refusal to cross that iron curtain psychologically from editorial to the business side. Then I found myself increasingly without any job at all. Then I adapted. A very cogent piece. Thanks

  2. [...] There is an old saying that if all you have is a hammer, everything looks like a nail. Well, that doesn’t really bite on journalists who faced by the need to help develop new business models still are quite absent from any business related training. [...]

  3. Reg, I believe the results of this 2004 survey of top newspaper editors support your suggestion (http://www.monitoroklahoma.com/gade2008.pdf).

    Journalism > Journalism Institutions (www.journalismisgreaterthanjournalisminstitutions.com)

  4. […] to dive much more deeply into the business and technology of such ventures, and have to shed their traditional reluctance to sully their hands with such […]


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