~ Archive for Journalism & Media ~

Future Business Model for Newspapers

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I love print. I’m sensitive to the paper- the texture, the weight, the smell. Did you know that thinner paper is more expensive to print than the 100g glossy ones? The paper itself may be slightly cheaper, but thin paper could tear and so the presses have to run slower. Of course, if you are shipping or making prints more than 50,000, thinner paper is cheaper- which is why you see more glossy, thick paper in magazines. Of course, magazines’ editorials lean towards the “glossier” side too, so you may see it as a chicken and egg thing. I love fonts, the graphic design of print layout, the beauty of words… all of which seem to have lesser meaning as we move into the digital age of news.

But how will newspapers survive? Clearly their current business model (relying 90% on print advertising) is not sustainable. Ethan Zuckerman suggests that newspapers’ CPM doesn’t make sense. I agree, but only because now, we have the web as an alternative for marketing. The high CPM of newspapers in the past was the cost advertisers paid not only to encourage sales of their products, but to also sell their brand, make an ego statement. It was a price they were willing to pay, and that high price barrier made advertising in newspapers all the more supportive of their ego.

Then comes along web advertising, which is, in many aspects, entirely different. Web advertising is not so much making a statement, but getting sales. Conveniently, one can track how effective one’s web ad is. Print media now has competition, and competition (in the free market) drives down the price, right? With more advertising mediums (Internet, mobile… who knows what will come next?) it’s inevitable that advertising prices go down. Newspapers should have seen it earlier- it was so obvious- and quickly adjusted their business model.

Will web ads make up for their losses? Never in a billion years. Do the math, it’s not going to work. Even if all the articles were porn-laced content that gets high traffic, it won’t work. That is why- in addition to the journalistic reasons- it’s not financially worth it to write trashy articles. It may get you a few extra bucks, but it won’t be enough to pay another full-time, quality reporter. So what do we do? You can only cut capital costs (printing, delivering, etc) to a certain extent and cutting human resources (your reporters and editors) may save in the short-term, but will put you out of business in the long term because if you don’t have good, original content, no one will bother to read you anymore.

I don’t have a solution for national newspapers, but I have a suggestion for regional newspapers– something that would only work when it is targeting a community that is geographically specific. Local papers should actively engage citizen reporting to produce real-time news only for its (free) website, and publish a weekly paper newspaper that contains more feature stories, op-eds, lifestyle stories, etc. (A couple pages can be used to publish briefs on major stories from the past week) The reason this needs to cover a small area is so people can personally relate to information that they would otherwise have no access to. National news can be obtained everywhere and it will be impossible with a small staff to cover anything better than what other papers have covered.

Social networking is a key point in getting people to visit the website, by letting them pitch tips, and participate in discussions. I found that online forums take on more life when they are hyper local, because the issue at hand is always very close to heart.

The local paper shouldn’t have more than five full-time employees and doesn’t require a huge office– it doesn’t have to have an office at all, except that the weekly paper production would be easier if the staff were together. Frankly, I think two or three editors is all that it takes to run a local paper, as long as it actively engages the community, utilizing freelancers, collaborating with local bloggers, etc.

In addition to print and web ads, local newspapers have the advantage of making money from hosting local events because it has such strong ties to the local community and its brand name. When I was running Ewhaian.com, I had no idea this could be an actual way to earn money until I saw that offline events were bringing in much more money than online ads, and that the events were not only profitable in terms of finances, but also good in bringing more content and more people to the site. Of course, this involves having people who are event planners, not necessarily journalists.

We are at the brink of facing at least a decade of degrading journalism. Newspapers have to wake up. Here is an interesting business model about a regional paper that is charging its readers and working on technology to make a “closed” web site. I don’t know if that’s the right direction, but it is an unique success case.

(cross posted on arcticpenguin)

NYT needs to change the role of shareholders

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It’s great that the market has a kind of bottoms-up thing where shareholders have a say in the management, but I think that more often than naught it’s the shareholders that really mess things up. I’m not against capitalism or free trade– I just think that sometimes people who run the business should be given more responsibility to make their own decisions, which may in certain cases, not necessarily coincide with the thoughts of the shareholders.

A recent NYT article on how a Mexican billionaire is thinking of investing in the NYT got me really angry, because according to the alleged deal, Mr. Carlos Slim Helu “would invest $250 million in the form of 10-year notes with warrants that are convertible into common shares… As part of Mr. Slim’s investment, which resembles a loan, he is expected to get a special annual dividend, perhaps as high as 10 percent or more on this investment.”

Why the *** is the NYT paying dividends when the company’s finances are staggering? I’m sure the Sulzbergers are enjoying their dividends, but now is really the time to cut those dividends and put the investment back into the company so that it stays afloat. I mean, look at the profit Google is making and it doesn’t have dividends. You may argue that Google is a tech company, but now that media is inevitably linked to technology, can one argue that the Times is not a tech company (or that Google is not a media company?)

Shareholders are about short-term benefits– those benefits could be days, months, perhaps years. But management should look at the company from a more sustainable standpoint– especially if it’s a media company like the NYT. I know many people think Rupert Murdoch is evil, but hey, that guy has a vision, and it’s not all about money. Think of the makings of the great media companies, the great film production houses… and all of those that succeeded had a very strong leader at the helm. When it comes to media, it matters who is steering, and for the Times, the biggest problem is that it doesn’t have that visionary leader. No amount of money is going to save the Times if it continues its current path.

Despite the Times’ strong statement to “go digital,” its plans for new digital business operations are very vague and general and do not seem to utilize all of its existing resources. In an analysis of the Times’ annual report, I found that the company was successful in reporting how they cut costs, but failed to present any structured plans for the group’s future. It does not tap into the potential synergy effects that its groups could have, nor explore the possibilities of how its acquisitions and other investments play into the bigger strategy. It also addresses potential problems regarding the Class B stock owned through a family trust, but doesn’t explain what kind of influence the family actually has, or draw om this situation.

When seeking new businesses, the Times must always keep their mission in mind because giving up on those values for short-term profits will sever their customers’ loyalty and lead to long-term losses that will be difficult to recover. The New York Times should especially be careful, because now, although their profits aren’t as high as before, they still have a strong patronage-perhaps one that is even stronger than before-but a couple wrong steps could easily break that down.

Arrest of Korean Blogger Rekindles Debates of Freedom of Speech on Web

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His screen name was Minerva, and he wrote on Agora, an online forum hosted by Daum, one of Korea’s top Internet portals. In September last year, he predicted that the investment bank Lehman Brothers would collapse. When it did, five days later, he became a cyber prophet, an Internet Nostradamus. Minerva then predicted that the Korean won would fall against the dollar by 50 won a day in the week of Oct. 6. He was right. Of course, not all of his predictions proved to be correct, but the few that were were enough to create a fanbase.

With rumors of his “predictions” circulating the web like wildfire, netizens looked for all of his posts, searching for clues about his identity. Many of his posts criticized the Korean government and the economy. People speculated that he was a learned man- at least in his 50s- perhaps a government official with inside information or a retired person who used to work in the finance industry. Mainstream media dubbed him the “Economic President of the Internet.”

His critique of the government annoyed authorities, and when he wrote on Dec. 29 that the government forced financial companies to stop buying dollars in order to boost the value of the won, the government issued a denial and went into investigation who this mysterious figure was. In Korea, spreading false information on the Internet can result in a prison sentence of up to five years or a 50 million won fine (about $37,000). These regulations are relatively new and are seeking to be updated, especially after a number of recent cases involving false rumors on the Internet led to suicides (example: suicide of actress Choi Jin-sil.)

The authorities got a warrant and tracked him down with his IP address, arrested him, and while not disclosing his entire name, informed the public of his status. Being a country obsessed with higher education and academic credentials, Koreans were shocked to find that Minerva, with all his knowledge of the economy, was an unemployed 31-year old man who had graduated from a two-year community college situated in a rural area of Korea. Prosecutors said that he obtained all his financial knowledge from the web and that they were not original. They pointed out that he was the “king of cut-and-paste” and that his posts were word-by-word compilations of information from financial blogs and less-known news sites. They admitted however, that while none of his posts were original, he had done a very nice job of editing the information in a logical manner.

Upset over credentials more than arrest

Foreign media is reporting more about Minerva’s rights and freedom of speech on the Web, but locals seem to be more upset about being lied to. This may be somewhat hard to understand for those who don’t know Korean culture, but the general public’s response over Minerva’s arrest is focusing more on disbelief of his credentials rather than worries of speech opression.

Many were upset that Minerva had lied about his identity–he had described himself as a former securities firm employee with a master’s degree from the US. After learning that he was not the person they thought him to be, some people started questioning whether or not it was the same person who had posted under the name Minerva– pointing out that the style and content quality of his later posts were not consistant with those of his earlier ones. He had also recently been featured in a monthly news magazine but he claimed that he had never given the interview, arousing suspicions of possible imposers.

Freedom of Speech and Anonymity on the Web

Many academics, lawyers, and human rights groups in Korea are concerned that the arrest of Minerva will empower the government to enforce stronger laws regarding content posted on the web. (Korea does not ensure freedom of speech in its constitution and has a history of struggle between media and government.) In addition to a pending amendment on punishment regarding defamatory and false speech on the Web, there are also legislative motions that would require all websites to “register” writers and authenticate personal information so that anything that is posted can ultimately be traced back to its origin.

Some scholars, however, said that this incident reflects a challenge that we all face and that perhaps Korea’s debates on regulating speech on the Web are happening earlier than other countries because of its high broadband penetration. (Most homes in Korea have a 100mbps Internet connection in the city, 10mbps for extremely rural areas; compare this with 8 to 16 mbps offered by Verizon and Comcast in the US) In an interview with the Yonhap News Agency, Sung Dong-gyu, a journalism professor at ChungAng Univ. said,

Internet culture has developed on the prerequisite of anonymity, but now that it has ripened, it is only natural that the question of responsibility arise. If Minerva’s [web] activities began to have social influence, then he must be responsible for his words.

No one is sure, however, where to draw the line.

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Update: the Korean-language Seoul News reports that Minerva had been employed twice before and was scheduled to work for another company but was currently restin in-between jobs, and that he was indignant that prosecutors portrayed him as a bum.

The Future of Media?

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For the new year I feel obliged to write about something semi-serious, or rather something professional, something other than superficial things like astrology or shopping, both of which have important meaning for me at the start of the year. Being a media pioneer in some sense (I directed a cell phone-exclusive movie six years ago and founded a SN site/alternative news portal in Korea eight years ago) and a journalist, I decided to write about my take on the future of media. As I’m making this up as I go along, please forgive me if my thoughts aren’t organized.

Facing a decade of degrading media content

I understand that many people are concerned about preserving the quality elements of legacy media amidst this evolution. (Tim Wu talks about TV shows and good reporting; Chris Baker talks about big-budget games.) I am also concerned. Not because I think legacy media will die, but because I’m afraid we will have to wait too long before people realize that they need quality information. I think it will take at least 10 years… maybe up to 30 years (based on the demographics of digital natives and their media usage trend) for people to realize what they’re missing, be willing to pay for that information, for industries to translate that cash into investing in quality data, then of course, the production of that content itself.

We are in the Warring States Period of media- a decentralization; support of bottom-up development of content, so forth. Not only is this content abundant, it is free. I love free content as much as anyone else and so much of it free (I recently discovered that even porn- something I thought people pay for- is free). It’s almost a shame that the low price of storage allows so much cr** to be published on the Web. People are having so much fun with all these freebies that they were watching 10-minute clips of TV episodes on YouTube before network companies decided that they too, had to make their content available on their websites.

But everyone knows there is no such thing as a free lunch. While I believe that the Internet has made a huge contribution to news reporting, it is creating less room for investigative reporting. Investigative reporting is more often stumbling upon information on your beat and going on a path that you don’t know where its headed. A story could be anywhere; it takes time and continuous effort to find one.

Unfortunately, news companies now don’t have the luxury to allow reporters to pursue subjects that could “potentially” be a story– unless it’s breaking news, even the NYT and Washington Post won’t send a reporter to another city (I have a first-hand experience with this.) It’s the same in TV. We see more reality shows because they cost less and take less effort to produce.

I notice already that the online magazines I write for have very different standards about writing and reporting, and more and more, people are opting to do the easy task of compiling information instead of field reporting. Interviewing, for example, is being conducted more and more through email, but there’s only so much that can derived from asynchronous dialog. Also, catering to people’s short interest span in reading online material, articles are being divided up more and more under subtitles, with shorter sentences and more wire-like reporting, encouraged by new forms of media such as Twitter. It is a shame that beauty of language and thought be lost because unlike paper, the Internet can support any length of writing, and yet, writing on the web is becoming shorter and shorter.

But in time, people will start wanting more quality content. If my dark predictions come true (10 years), most of the people who know what quality journalism is will be long gone and we will have to go through a period in rebuilding that expertise. I’m not saying that quality content will be unavailable– it will always be available to a certain extent for people with the money, but the standard for those not able to pay for it will drop.

Wake up, idealists

We have to face the reality that as more and more people use the Internet, it’s no longer a secret garden where technology optimists can prance around in a pseudo socialist environment, believing that everyone will do good. That fantasy may have worked before, but it doesn’t now, and we have to quickly accept the fact that socialism isn’t going work–not only in the sense that one ill doer could easily wreck havoc in that garden, but also the fact that we need money to tend the garden. It was okay when the garden was in your backyard and every member of the family contributed to the seeding, watering, weeding, and kept basic rules about not squashing the flowers or eating all the tomatoes. But that garden is now bigger than your backyard and you have to acknowledge the fact that if you still want nice flowers, you have to adopt new rules.

You would think that infinite freedom would give people the incentive to be infinitely creative and productive, but unfortunately that is not the case. It is not about whether people are born good or born bad, but the fact that there are bad people and one person can ruin everything for the rest. In Second Life, for example, where anarchy is the default, the most flourishing communities are those that have adopted extremely strict rules.

I’m not saying we should make the Internet a highly-regulated place, but that we should stop it seeing as a utopia. The Internet does help grassroot developments and in some societies, does boost democracy and civic participation. Yet in other societies, it only gives more power to specific groups. The Internet is unlike any media we have had; its integration with our lives is greater than that of TV or newspapers. It is not just a media, it is also a paradigm, and we need to be looking more at the impact it has on our lives and society in an interdisciplinary manner.

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