New Media Types Have It Wrong About Newspapers
The growing troubles at The New York Times Company have bloggers talking. Henry Blodget, who used his mathematical genius to demonstrate that Apple stock was a buy at $127, wrote that the New York Times is “running on fumes” and “appears to be burning more than it is taking in.”
Nice to see that Blodget can still do basic addition and subtraction even if he still doesn’t know when to buy and sell a stock.
I wrote about the newspaper industry’s woes in a recent post on E-consultancy, but it’s Mark “Rizzn” Hopkins’ discussion of the topic that I wanted to address here.
In a post recently, he wrote:
The problem remains, though, that they have a very top-heavy editorial structure, and need to make strategic cutbacks that will allow them to maintain the same editorial output without so much overhead. We talked about this on one of the last Mashable Conversations episodes that Sean and I put out.
As we said in that episode:
This is a year in which newsprint looks far more likely to collapse than we’ve ever seen before. Meanwhile, top-tier blogs continue to prosper and find their niche as virtual magazines. Traditional media magazines seem to see the writing on the wall and are looking to meet New Media halfway.
He went on:
I don’t think that the New York Times is un-savable, but I think that the print edition and the print-based business model is dead. If you need proof that a transition can be made, simply look to the tons of online-only publications that well into the black (like the one you’re now reading).
Yes, everyone, Mashable and other “online-only publications that well [sic] into the black” provide the perfect model for the New York Times and other struggling newspapers. Isn’t that obvious?
Back to reality.
Let’s put things in context.
First, the number of blogs making any money of note is relatively small. And that money is still modest in relative terms. Examples:
- In 2007, it was reported that TechCrunch generates $240,000 a month in revenue. For argument’s sake, let’s assume it’s generating double that today. That would work out to just under $5.75 million in annual revenue.
- According to one source, ContentNext, the publisher of PaidContent.org, generated “a few million” in revenue in 2007. The Guardian bought it for $30 million earlier this year.
- Looking outside of the “tech blogosphere,” our friendly disgraced Wall Street analyst (Blodget) estimates that the Huffington Post is probably going to pull in around $4 million in revenue in 2008.
All of the numbers seem in line with each other leading us to the conclusion: some of the most successful blogs are multi-million dollar businesses.
Which brings us to my second point: there’s still not enough millions to engage in the type of journalism that the New York Times engages in.
While nobody would disagree that newspapers like the New York Times need to reorganize and retool, the bottom line, as I’ve mentioned before, is that good journalism is labor-intensive and therefore cost-intensive.
Even if Mashable, for instance, was generating $10 million a year in revenue (which it almost certainly isn’t), I think everyone would agree that it would be impossible for Hopkins and his team to duplicate the efforts of a respected newspaper.
While blogs like Mashable and TechCrunch often do a very good job at covering a generally narrow subject (Internet startups), this is not the same type of high-level “journalism” that the New York Times engages in.
It may come as a shock to some people, but a post about a useless startup or 200+ online tools to survive the economic crisis is not exactly a replacement for the type of insight one is going to receive reading the Wall Street Journal.
At the end of the day, it all comes down to scale.
Without any disrespect to blogs like Mashable, they’re playing ball in a different league. There’s nothing inherently wrong with that, of course, except when individuals like Hopkins try to pretend that the strategy that works for a team in the A leagues can be applied successfully in the major leagues.
When I see Michael Arrington reporting from the streets of South Ossetia or Mark “Rizzn” Hopkins interviewing John Paulson of Paulson & Co. to get his thoughts on the state of the financial markets, I just might change my opinion.
When I see original, timely and insightful reporting in the blogosphere on a daily basis (instead of regurgitated press releases and posts written by individuals with no skill), I just might change my opinion.
Until then, it’s no surprise that newspaper websites are reaching record audiences and achieving record usage metrics. And it’s no surprise that election followers turned to mainstream news websites to track the recent presidential election in the United States.
The reality is clear: newspapers aren’t struggling because individuals have suddenly decided that the product of good journalism isn’t needed since blogs (many of which simply regurgitate mainstream news and add half-assed opinions) are providing a better product.
In the simplest of analyses, newspapers are struggling because changes in consumption habits are largely incompatible with their cost structures.
They’re doing well online but it isn’t enough. Online revenue is, after all, finite, and it’s not enough to offset the declines in print revenue.
Comparing “new media” outfits (i.e. blogs like Mashable) to companies like the New York Times is like comparing a Cessna 400 to a Gulfstream G650. They both fly but try getting from Dubai to London in the former.
At the end of the day, how companies like the New York Times can rebalance the economics of their businesses while still maintaining the ability to engage in quality journalism is not known. Whether some of these companies will even survive is not known either.
What is known: the New York Times isn’t going to survive by becoming Mashable or TechCrunch or the Huffington Post.
If Mark “Rizzn” Hopkins wants to argue that I’m wrong about this, I pose a challenge.
Starting December 1, I’d like to see Mashable cover a subject that is far more mainstream and complex than technology startups: the financial markets.
We’ll compare the breadth and depth of Mashable’s financial coverage from December 1 through the end of January 2009 against:
- The Wall Street Journal
- The New York Times
- The Associated Press
- CNBC
- Bloomberg Television
- MarketWatch.com
- CNNMoney.com
If Mashable is nimble enough, deep enough in the black and “transitions” to online are made so easily, a leading technology blog like Mashable shouldn’t have any problem mounting a serious effort to expand its new media empire into a far more lucrative market, right?
absolutely well written piece. i’ve said for a long time that once the paper web sites get their online acts together, blogs will feel the pain.
Before I go too far into this with you, Drama, I wanna ask you with no sarcasm or insult implied whether or not you’ve either worked at a professional news organization before, or have any professional insight into the inner workings of a mainstream news organization.
For the record, I do.
Mark: Would merely working for an organization like that give you any insight though? Wouldn’t you have to be an editor or someone with enough responsibility to manage the content so that it will please the target audience?
Graham, I’ve worked at a number of different levels at old media institutions. I’ve never been an EIC, but I’ve been in positions responsible for program direction, as well as being involved with the production of the content.
The most educational position I’ve ever held with old media organizations would have to be when I was hired as a consultant with the goal of increasing the value of their online efforts. The completely backwards thinking of most old media institutions virtually guarantees they’ll never make it in the current ecosystem.
I’ve done a number of comparative pieces far more in depth than the ones that Drama references here that show exactly how an Old Media institution can provide the depth of current coverage while subsisting on a much smaller budget than they’re accustomed to.
The truth is, most of the money made in old media doesn’t go to pay the grunts doing the work. Someone who worked for one could tell you that.
Mark: to answer your question, I have not worked at a professional news organization. I know people who have.
While I respect that you have insights that I and others who haven’t worked at a professional news organization don’t have, I think this has far less relevance to the analysis the newspapers’ financial situation than you think it does.
I think we both agree: newspapers need to adapt and retool. Part of this means finding ways to do more with less.
That said, you cannot run the New York Times or Washington Post with $5 million in revenue. You cannot run the New York Times or Washington Post with $10 million in revenue.
What works for Mashable isn’t going to work at the New York Times. What works for TechCrunch isn’t going to work at the Washington Post.
There’s a reason that the Huffington Post licenses content from AP. There’s a reason that Henry Blodget’s Clusterstock is a clusterfuck of regurgitated mainstream finance content.
While there are certainly ways to reduce overhead at newspapers, hiring top-notch reporters costs money. Providing global coverage costs money.
Running a newspaper is about more than just covering the salary of the “grunts doing the work.” It’s about giving those “grunts” the resources they need to engage in the highest form of journalism. It’s about providing editorial oversight to ensure that quality remains high. Bottom line: it’s about much more than cranking out content and paying salaries.
At the end of the day, the point of this article was to point out that what works so well for blogs like Mashable won’t work for newspapers. Like I said, it’s like comparing a Cessna 400 to a Gulfstream G650. They both fly but one, by design, has far more limited range.
As for not making it in this “current ecosystem,” I hope you realize that the problems newspapers are facing aren’t due to the rise of blogs that are taking their place. It’s that people are consuming their content in a fashion that has eliminated much of the revenue generated by the previous primary means of consumption.
I reissue my challenge. If running a profitable online news business is so easy, I’d love to see blogs like Mashable step up to the plate and expand into far more lucrative and mainstream markets like finance.
My cynical observation is that it’s easy to criticize newspapers like the New York Times and to cheer their demise but far harder to actually try to do what they do and compete with them. That’s why nobody is doing it.
I think we may need to agree to disagree on this one. Looking at the staff page of your typical newspaper shows you how much bloat goes on there. Reporters are typically under-utilized, and have far too many editors and managers. Too much of the capital is focused at the top.
Blogs don’t typically have this problem. Systemic to the New Media concept is staff that wears several hats. Those in charge of video also edit the night shift. The business manager is also the weekend editorialist. This almost never happens in heritage media.
What you hint at and dance around is true – the class of organization the New York Times is does not equal the class of organization typical in the New Media. This is only an issue of maturity, though. Most new media publications haven’t been around 150 years, so it’d be pretty hard for them to have the range of coverage that the Times has.
That by no means dictates that it’s impossible under the new media business model.
Quite honestly, if I were in a position to pick up the guantlet you lay down, I just might. Alas, I’m only associate editor at Mashable, and as such lack the authority to do what you challenge.
Mark: I think we both agree that newspapers can cut costs and that they have to cut costs.
You, however, seem to believe that newspapers can cut their costs beyond what I think most would argue is feasible. Once again, you can’t do what the New York Times does on a $10 million/year budget.
While I appreciate those who wear many hats, a newspaper that is tasked with covering world affairs is not going to find individuals with the level of skill required to perform multiple job functions as you seem to think is possible.
The journalist who covers Asian politics is not going to serve as your accountant. Your top ad sales representative is not going to turn into your finance editor after lunch. Your CEO is not going to cover the Manhattan beat on Tuesdays.
Specialization exists in the most demanding professions for a reason. Just as I would never expect my chef to handle my accounting, I would never expect a video editor to act as an editor.
New media has its advantages and its limitations. So does “old media.” Let’s not pretend that this isn’t the case.
I have yet to see any new media enterprise that can be relied upon to come up with what the New York Times or Wall Street Journal publish on a daily basis. The breadth, depth and quality just doesn’t exist in new media.
New media can do niches (like technology) very well and occassionally, new media outlets provide worthwhile opinion on the “news” that is developed by entities like the New York Times.
But when it comes to investigative journalism, expertise and front-line reporting, new media just isn’t there.
Tell Pete that financial news is much more lucrative than technology startup news. If you can pull off half a MarketWatch.com, I see no reason why he wouldn’t make the investment and let you run with my challenge.