Posted by: structureofnews | May 1, 2011

What Price News?

Ken Doctor has an interesting post – as he always does – at Neiman Journalism Labs about the cost of news.  Or more specifically, the fact that it’s inevitable that we’ll be able to – and want to – quantify the cost of each piece of news, or at least the cost of each type of piece of news.

This won’t be something that cheers journalists very much; after all, we’ve traditionally done best (for ourselves, at least; not necessarily for our organizations) when we stick to non-quantifiable, quality indicators as a measure of the value of our work.  But the fact that we don’t like it doesn’t mean it isn’t going to happen.

It will.  But it isn’t necessarily a bad thing – although it can easily become a terrible thing, too.  It’s all in how the information is used, and how it’s framed.

Ken’s piece starts with a discussion of how Clark Gilbert, the president and CEO of Deseret News, has figured it out at his paper:

For now, he draws upon his experience as a Harvard Business School prof and strategic consultant. From that career work, he estimates the following, general cost metrics for the content offered by news companies in print and online:

  • $250-$300 per staff-written story;
  • $100 per stringer story;
  • $25 per Associated Press story;
  • $5-12 for “remote” stories, largely written by the emerging class of bloggers

“You better know your cost per story,” he says. “That’s the kind of rigor you need.”

As focused as he is on building digital ad revenues, he makes the point directly: “You have to work both sides [revenue building, cost reduction] of this.”

Why isn’t this a bad thing, at least in theory, for journalists?  Because you always want more information, not less.  At least if you want to be a responsible editor/manager who’s figuring out the best way to deploy a finite number of people and dollars.

So what, you say, if that Pulitzer Prize-winning series blew a massive crater in your budget; it changed public policy and you’d do it all over again?  That’s a great sentiment.  But you should know exactly how big a hole it blew in your budget  and what you traded off for it.  And maybe you would have found ways to do it cheaper, or maybe not.  But why not find out, fairly accurately, what it cost?  A large part of an editor’s job is to juggle priorities and resources, and knowing what you’ve spent on any given thing helps him or her make better decisions.

(A personal bugbear: Too many editors don’t want to deal with these details, and so resort to hacking and cutting the budget at the end of the year to make ends meet, instead of managing it carefully along the way.  The head-in-the-sand approach doesn’t make a better newspaper or news product.)

Ken points to other examples, and other ways of looking at cost metrics, including at John Paton’s Journal Register Co. and the Huffington Post.  At JRC, for example:

…(Paton has) taken dead aim at the cost of getting content through the mechanics of a newsroom. Saying that about half of U.S. editorial staffs are engaged in producing content for publication — not creating it — he’s focused on changing that ratio. Instead of five of ten journalists engaged in production, he’s aiming for two of ten, to be accomplished through centralization and templating of the production functions. “Then, two or three more of the ten can create content,” he says.

Both plans will, in effect, reduce the cost of content overall. And, as with Clark Gilbert’s philosophy, the intent is to invest in unique, local, proprietary content, even though it’s far more expensive.

There’s nothing wrong, in theory, with this approach.  Lower revenues overall call for lower costs.  But there’s a danger, of course, that when times are tough, those higher-cost items get hit first – even if, as Ken points out, having some high-end, high-priced content is a critical part of everyone’s strategy.

But that would be using that information as a blunt instrument; the value in the numbers depends critically on how you use it, and getting the exact cost of each story is really only the start of it – it’s equally important to suss out the role it plays in the value proposition of the news product that’s being produced.

Restaurants  often have a very good sense of what the cost and margin on any particular dish is; drinks often are the best-margin item on the menu.  But obviously you can’t have a restaurant that only serves drinks; you need to have a blend, and an overall experience and product that makes sense to diners.  You might even offer some dishes that lose money to get people in the door.

Moreover, it’s isn’t just the dishes that people come for; they come for the nice wood paneling, the crisp tablecloths, the friendly service, or the prestige of being seen at the best table, or whatever.   So a focus on the cost of each dish – a key part of the expenses of the business, and something you can adjust relatively easily – is important; but so is figuring out what it all means in the grand scheme of things.

So it is with news costs.  Content generation is critical – but it’s only one part of the value proposition.  We need to look more carefully at the reader experience and how we’re packaging things; we need to look at how the shelf-life of the content we create and how it can continue to generate value; we need to think about how we can extract information and value out of the daily work we do.

And we need to get past the notion of the story as the atomic unit of what we create – and if we focus too closely on cost-per-story, rather than some other metric – we’ll find the frame of discussion built around an antiquated notion of news.

Which isn’t to say we should go back to the days where we stuck our head in the sand and refused to think about how one part of the paper was subsidizing another; nor is it an argument for fuzzy accounting.  For better or worse, we have much better metrics on what’s read, and what things cost.  What we should want is more numbers, not less; and better understanding of what costs what, and what brings in what value.

The trick is to then use those numbers in an intelligent way so we’re building a new, and more sustainable business model.


  1. Reg,

    One of the things that could be mentioned is that there’s currently a split dynamic in terms of news business models. In overly simple terms, you have on one hand large enterprises trying to cope with declining revenue spooling down to a level of profitability, and on the other a set of newer small operations trying come up to a threshold of profitability. Although I consider people like Ken Doctor to be well informed, it also strikes me that the predominant focus is on, to use his term, “the big boys.”

    And that shouldn’t matter except for the fact that it often also changes the focus on what should be a more fundamental issue. Changed to the extent that the question is no longer about how to save journalism, but about how to save The New York Times, or Gannett, or MediaNews.

    I say this not because of some small-is-beautiful group-hug nitwittery, but merely to point out that one of the unintended consequences of having a blind faith in large economies of scale as a solution to everything is that such a world view tends to cloud the realization that at some point those same economies of scale can become dysfunctional.

    Consider this: Ten days ago, AOL announced that it had sent out an order to all 800 of its local Patch editors that it wanted to see five to 10 new bloggers, willing to write for free, show up on each site within the next eight days. According to Patch uber editor Brian Farnham, such a “major course correction” was something the local editors would need to deal with because “you have to get used to changes and moving fast if you want to be a Patch editor.”

    Such an announcement by AOL, although I could be wrong, has the earmarks of a company making a move of tactical desperation, and not one implementing a well-considered strategy. It also raises the issue of scale in the sense of testing whether or not the Huffington Post’s original model of dependence on the kindness of strangers is going to translate to 800 separate communities.

    Meanwhile, there was also an interview last week by David Hirschman at low-profile with Howard Owens of The Batavian. Owens, who we’ve already seen has been performing the seemingly gravity-defying act of actually making a profit with a local online news website, had the usual lucid and thoughtful stuff to say including the fact that The Batavian is now seeing 6,000 unique visitors per day. What was not indicated in the interview, a matter of some critical context, is that the population of Batavia, New York is around 16,000.


    • Perry,

      You’re absolutely right. There’s any number of businesses that make sense at one scale and not at another (owner-operated diners vs. chain restaurants, etc), and much of what we tend to look at are the big boys – or at least, how or whether the small guys can scale up.

      One possible model for the future is a confederation of relatively small teams (6-10 people, perhaps), each specializing in a particular topic of coverage, that ally together to build a more comprehensive news product.

      It is true, of course, that the web does enable economies of scale; and there are some kinds of reporting that require relatively large resources to underwrite. But it’s also true that the web enables low-cost operations to start up easily and continue functioning. So maybe what we’ll see are successes at the very big and very small. But who knows?



  2. […] to torture a restaurant metaphor again.  This apropos of the recent post on how the economics of “good enough” are undermining […]

  3. […] digress with (yet another!) restaurant analogy:  Running a successful eatery requires more than just the ability to cook well […]

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