Kennesaw State University

Penelope Abernathy: News Firms Must Shed Legacy Costs

Penelope Abernathy, the Knight Chair in Digital Media Economics at the University of North Carolina, Chapel Hill, says “Everyone likes to talk about how quality news is very expensive, but it pales in comparison to what the costs to sustain a two-century old legacy system of printing and distribution are,” adding, “The first is that they really have to come up with a timeline for shedding the legacy costs.”

See this full Leonard Witt Future of Journalism series video interview and transcript below. For alerts to upcoming Future of Journalism posts sign up on the Center for Sustainable Journalism home page.

Leonard Witt:  Hi, I’m Len Witt, and I’m here with Penelope Abernathy. And I’ll let Penelope talk about who she is and what she does. We’re at the Yale conference that has to do with the new news ecology and who will pay for the messenger.  So Penelope, tell us a little bit about yourself, first.

Penelope Abernathy:  Hi there. I’m Penelope Muse Abernathy.  I’m the Knight Chair in Digital Media Economics at UNC at Chapel Hill.  I am a long time media hound. I spent the first half as a journalist, switched over to the business side after I got an MBA. And I have spent the last 20 years on the business side, working at institutions ranging from the New York Times, to Harvard, to the Wall Street Journal, to working with papers ranging in size from a small weekly in my home town of 57,000, all the way up to the Wall Street Journal and the New York Times.

Witt:  Was that Phil Meyers’ Chair that you..

Abernathy:  Yeah, I absolutely have Phil Meyers’ Chair.  There’s a wonderful tradition set up by one person that went on for quite some time.

Witt:  I’ll say.

Abernathy:  The author of The Vanishing Newspaper.

Witt:  And we put a conference on with him not too long ago called the Wake-up Call.  Those are big shoes to fill.   So tell me you’ve had a couple of papers  here that I saw.   What were the papers about and what’s your topic?

Abernathy:  I am one of those bilingual people.  I can understand what journalists are saying when they worry about the very important function they fulfilled in the 20th century, especially the latter half of the 20th century.  Through a whole range of bringing to light not only the issues the public needed to be concerned about, whether it’s health care issues right now, or whether it’s a watchdog function, such as the Watergate era. So I hear what the journalists are saying as they worry about the crumbling business foundation for what sustained that journalism, at least in the last half of the 20th century.  But I’m also trained by the business side and I’ve spent a good deal of time working with online methods of distribution for the last 20 years, beginning with NYTimes.com.  I was the SVP of planning, strategic planning, and actually set the site up and was responsible for it for the two years before it actually became an entity.

So I’m very familiar with what the economics are in this new and changing environment.  But also as a business person I’ve trained a lot on what the strategies are in other industries and how they’ve dealt with this very disruptive form of technology that’s hit everything from technology to the financial services industry.  My concern is putting the two languages together and coming up during this time of transition, trying to understand what the trends are that are emerging, and what the potential is on the other side of this storm, as some might call it, to what will be left behind after the storm departs and the waters recede.    

Witt:  So what will be on the other side? 

Abernathy:  I think a lot of people looked at the internet as starting the golden age of communication and I think we do have the potential to enter into that. I think it will be a very different business model from what was sustained journalism in the last half of the 20th century.  In reality, that was kind of an oddity in many ways.  It was based on being, for the most part for newspapers, it was based on being a defacto monopoly, a defacto geographic monopoly. The internet destroyed that monopoly.  And I think what will happen is that once they adjust to this new landscape we’ll thrive in it. 

There are a number of things traditional news organizations need to do. The first is that they really have to come up with a timeline for shedding the legacy costs. The legacy cost of primarily the printing and distribution that date back for two centuries as quickly as they can, in part because that’s the most burdensome part of the cost structure for them.  Everyone likes to talk about how quality news is very expensive, but it pales in comparison to what the costs to sustain a two-century old legacy system of printing and distribution are.  And there’s another reason for doing that.  Peoples’ habits are changing very, very, very quickly.  All number of surveys have come out to show that the Gen-Xers or the Millenials, those under 25, have already organized their lives around this new technology, and I think those who are older are reorganizing their lives around it.  So in addition to helping  the balance sheet, if traditional news organizations shed those legacy costs, it also helps position them for the 21st century.  And then I’ve talked a lot about where the new revenue is going to come from.  It’s traditionally come, 85%, from advertizing. And I think we’re looking at some combination of both subscriber and advertizing continue to support it on the other side of the storm.   There may be some market disruptions over the next 5 to 10 years, but it will sort itself out.

Witt:  So you sound fairly confident that we will have high quality, ethically sound journalism that’ll keep the public informed so they’re good actors in the public square?

Abernathy:  I think the good news is for the last two centuries, the U.S. has managed to put together an incredible system, and I’ve traveled a great deal the last 20 years on the business side for both the New York Times, The Wall Street Journal, and Harvard, and I was continually amazed at how vibrant the U.S. journalism was.   That’s based in part on that it has a system for supporting itself that’s very different. It’s based in part on the wonderful legal decisions that were made in the 20th century that supported the First Amendment in a way no other country has really supported it.  And so I think that, and what happened , too, if you look at it, while many papers have done public service, it’s also a good business choice to put together credible information and attract a community built around that credible information.  I’m relatively confident somebody’s going to figure that out again in the 21st century.  I hope the ones that were the 20th century standard bearers make the transition, and I think there’s a good indication they probably will.  I think the brands that were very dominant and well known in the 20th century should be able to transition into the 21st.  But I’m also sure others will, too.

Witt:  Okay. So you sound to be an optimist.  Is that correct?

Abernathy:   I’ve been accused of seeing the glass 95% full.

Witt:  Okay. Thank you very much.

Abernathy:  Okay, Great.

AOL’s newsroom of the future

More than 500 full-time journalists are creating content for AOL. But they don’t decide what to write in the traditional way.  Veteran reporters and editors are getting an eye-opening experience in the future of news, AOL-style.  Pages of Web traffic data are posted on the newsroom walls to let reporters and editors know how well their stories are performing, and even which stories to write.  Ads placed next to their stories remind them who’s paying the bills. Business Week reports the company is thinking about sharing quarterly profits with staffers who get the most page views. 

Business Week also looks at AOL’s big plans for hyper-local journalism. CEO Tim Armstrong believes he can succeed despite the challenges facing other large news organizations.

Paying for news online: What readers want and don’t want.

Nielsen surveyed 27,000 people in 52 countries to see whether they’re willing to pay for online content.  It’s no surprise that 85% prefer free content. They oppose paying for homegrown content such as podcasts, blogs, video uploads, and social communities.  They are more likely to pay for movies, music, games and current television shows.  Here are some other highlights:

  • 71% say paid content must be a lot better than what they can find for free
  • 52% prefer micropayments rather than full service subscriptions.
  • 79% will stop using a website that charges, if they can find the same information for free.
  • 62% believe that once they pay for content, they should be free to copy or share it.

Read the full report, including U.S. data: Changing Models: A Global Perspective on Paying for Online Content.

New Haven’s Paul Bass Tells of Flowering of Independent News Websites

Today Paul Bass’s New Haven Independent is featured in a New York Times article about journalism change. Leonard Witt did the following video interview recently with Bass for his Future of Journalism of series. Bass says, “The future of journalism I think is the flowering of independent news websites as well as the morphing of old style news rooms that were just print, or just TV, or just radio into multi-media news sites.” Watch the video interview and see the full transcript below. Sign up for Future of Journalism alerts on the Center for Sustainable Journalism home page.

Leonard Witt: Hi, I’m Len Witt and I’m here with Paul Bass, and he is publisher, editor?

Paul Bass: I’m the editor of the New Haven Independent, an online daily.

Witt: Quick question I’ve been asking several people here. What do you see as sort of the future of journalism?

Bass: I think we’re in the future of journalism. I think there’s experimentation going on all the time now, where reporters in a previous era were siloed, there were print reporters, radio reporters, TV reporters, now they’re multi-media reporters with the ability to cover more kinds of stories then they ever did before and have their readers more engaged. The future of journalism I think is the flowering of independent news websites as well as the morphing of old style news rooms that were just print, or just tv, or just radio into multi-media news sites. I hope that answers it.

 Witt: It does, and you had said in the room there about …. You run a sort of community newspaper but you still defended professional journalists, could you talk a little bit more about that?

Bass: I think that we’ve actually gone back to the beginning of what journalism was, where you actually get out of your chair and you’re no longer seeing yourself as the fourth branch of government, and you’re just going out and watching things happen, talking to people getting information, thinking about it, presenting it in a way that people can understand, and giving them the platform to do with the information what they want to as actors in a democratic, civic society.

Witt: Ok, but I think….

Bass: I think those tools of being skilled and being paid to find out information and present it intelligently, analyze it that journalists have always had, are still essential to starting that process. You’ve got to start that conversation by doing shoe leather reporting, fair reporting, in depth reporting that then gives people tools with which to decide how to act.

Witt: So it’s a sort of pro-am model that you really like?

Bass: Yes

Witt: Ok. Are you optimistic about the future?

Bass: I’m completely optimistic, because what we’re living in now is more fun than any journalism that I’ve been exposed to in 30 years.

Witt: Tell me two, one sentence … couple sentence description of what your paper is.


Bass: We are a five day a week online daily news site. We do stories throughout the day about the city of New Haven. We have editions in some other communities too. And we have a very vibrant readership of people who get involved in our stories, comment on them, send contributions; but we are a professional news organization. We produce about 100 stories a week, news in our community.

Witt: You say you pay five journalists.

Bass: Six journalists full time, six half-time, and a bunch of other contributors.

Witt: Thanks a lot.

Bass: Thanks

Second Reporter Takes Over questioning:

Second Reporter: Just one quick question we were talking as we walked over here. I used the example of the music industry. This a great time to be a musician if you want to make music but not if you’re interested in schmoozing in that industry kind of stuff. You seem to be living that example as a journalist, is this a great time to be a journalist? Maybe if you’re interested in getting out there?

Bass: Right if you are interested in doing the reporting and if you’re interested in making the music, and if you’re independent. It’s interesting to watch the marketing that is used by independent musicians through the internet. That’s bypassing the promotion companies and the large record companies you used to have to rely on to get your music out. Now if you go to a club now you’ll often see a touring band that has its website or MySpace page. Fans will find out about their music by having downloaded their music for free and they’ll make the money by having them come to the shows. 

I was at a show recently in San Francisco. I was at a journalism conference in San Francisco last month and I went to a club called The Independent. There was a band there and I had listened to the woman’s music on their MySpace page before I went. While she was there she told everybody to take their cell phone, if they dialed the number she gave them then they would then have a song sent to their email address. They would have an exclusive download of a piece of her music sent to their email address. That was the way she was distributing her music and getting herself out. In ways that you used to have to schmooze with the industry representatives and the gate keepers of large corporations in order to do that.

    Second Reporter: So how do you see that crossing over to news media?

    Bass: News Media is exactly what were doing; we’re bypassing gate keepers as independent journalist. Who with a much smaller scale without having to pay for delivery trucks, having to pay for marketing budgets, or newsprint or presses, we’re going out and just reporting it. Having the barest entry so much lower now with the cost. You can just get your news out there and build the audience from the bottom up.

    Witt: Great Thanks.

iPad turf war inside the New York Times

Gawker reports on the dispute that could define the digital future of the New York Times.  Internal factions are fighting over who will control the iPad app under the deal with Apple.  The print circulation people (“Paper First!”) consider the iPad just another way to distribute the newspaper.   They want to protect the print edition by charging $20-$30 a month for iPad content.   The digital operation people (“Bits & Bytes Rule!”) will create interactive content for the iPad, and insist the fee should be much lower at $10 a month. 

Spectators are lobbing grenades back and forth and their comments are almost as good as the story.  One reader says Times execs are “completely disconnected from reality. “  Another calls it a case of “classic marketing myopia.”

“Don’t blame the web for lazy journalism”

True words spoken by  Sir Harold Evans at the Media Dealmakers conference in New York this week.   It points to a growing weakness in conventional reporting.  Journalists are being asked to report, blog, tweet, shoot video and feed the 24-hour news cycle.  They are covering beats they don’t know much about, and running short on time.

James Hrynyshyn, who writes a science blog called Island of Doubt, warns science journalism is especially vulnerable because “they can’t properly evaluate the reliability or trustworthiness of potential sources.  The result is that sources with no credibility in the field routinely appear alongside genuine experts as part of an effort to provide balance.”

Researcher: Reading News at Work Lowers Inclination to Pay

There was a time when folks leisurely read their news over breakfast. Alas, Northwestern University researcher Pablo Boczkowski has found that now people are reading most of their news on the internet at work. Their new reading habits are such that, according to Boczkowski, it is unlikely that they will pay for the news. Boczkowski provides more details in the video interview with Leonard Witt below as part of the Future of Journalism series at the Center for Sustainable Journalism at Kennesaw State University. Watch the videos or read the transcripts from earlier interviews here. Or sign up on the home page for alerts when future interviews are posted.

Leonard Witt: I’m Len Witt and I’m at Yale University. There is a conference going on about the new ecology of journalism, who will pay for the news. I’m going to introduce somebody who’s done some really interesting research. Where do you think, before we get started, where do you think most people are spending their time on the internet and what time of day? So Pablo why don’t you introduce yourself and tell us about the work you do?

Pablo Boczkowski: My name is Pablo Boczkowski, and I’m an associate professor in the Department of Communications Studies at Northwestern University. The research you were referring to is a study that I’ve been doing, actually I completed it recently, called News at work: imitation in an age of information around us, which is also the title of the book that is coming from the University of Chicago Press in June- July of next year.

We found in the study that a significant proportion of only news consumers access only news at the time and place of work, whether that is an office environment or in their home office, and that has interesting implications for the ways in which they access the news, the kind of content they access, how they access, how much time they spend, and the conversations they have with other people, etc. And it also has important implications for how the news gets produced, and for journalists, and other news producers, in order to try to target this new time and this new place of news consumption. Because for the most part the consumption of news before the advent of the internet as sort of a massive new source of news and information, took place outside of the place of work, like in the morning reading the newspaper, or in the evening watching the television newscast.

Witt: So one of the things you said was, when you were talking about this new environment that people look at the news, they spend I think you said, they usually just look at one page at a time, correct?

Boczkowski: So what they do is most people engage in two different forms of only news consumption during the work hours. What I call the first visit of the day, which is sort of systematic, comprehensive. It is the first time that you sit at a computer, usually happens either immediately before you start your work day or during the lunch break, and it’s mostly focused on the homepages – a systematic look at one or two homepages, your preferred sites, your trusted news sources during a normal day. If there is any major news that has happened, people tend to look at other sources as well, but that’s sort of the first visit of the day. It is devoted to the homepage and then people click on a handful of headlines that catch their attention, and they tend to read not the entire story , basically they look at the first paragraph and they skim the rest. So that is what I call the first visit of the day.

Then people go back to these sites usually more then one time during the rest of the day in what I call the subsequent visits, which are much shorter in duration. Usually in a matter of seconds they want to see an update in a particular story that they were interested in or somebody in the office environment, or a friend, or family member alerts them to the existence of a particular event that might be appealing: there is an earthquake here or there is a major traffic congestion in the route that you usually take to go back home. So people look at the news for a matter of seconds, they get all the information that they need and they leave the sites. People tend to engage in these subsequent visits usually more than once a day and it’s also a way to kill time, fill time, procrastinate in the work place.

Witt: Ok, so what was the implication of that about whether or not they will pay for online news? I think you mentioned that.

Boczkowski: My sense is that given most people are looking at home pages and headlines, they click and they read the lead and the first paragraph , and then a little bit of the rest, I think most of that content is commodity content. It’s content that you can find in many sources. You just happen to go to the site that you trust the most or the site that routinely you have gone to. So what that means is that I don’t think that for this mode of consumption there is a strong argument for the proposition that people will pay for the news. Because as long as someone is providing the same commodity content for free, people will migrate to those sites rather than pay, even if the site implementing a paywall is your favorite site, people will go elsewhere.

One of my favorite examples is I teach a class for Northwestern in the sociology of online news, an undergraduate seminar. About three or four years ago, I can’t remember, the semester or quarter started in the Fall. The New York Times was about to implement the monetization of some of their content. Most noticeable, the editorials and opinion pages. And so I asked the students: How many of your read that source online? And about a quarter of the class looked at the New York Times on a routine basis. I asked again after the paywall was implemented, and it had dropped to zero, because people were finding ways of getting the same information in blogs that had repurposed that content.

So I think, despite the positive implications that this could have for the economic sustainability of things, this being the implementation of pay models, I am highly skeptical that they would work for general interest sites. They can work for financial news because people make money out of getting that information. They could work for specialty niche content. But I doubt that they would work, these pay strategies, for generalist sites.

Witt: So what’s going to pay for journalism?


Boczkowski:
What’s going to pay for journalism? Advertisement and other sources of revenue. Most likely the industry will continue shrinking in terms of the size of the labor market, and probably even the pay structure, compensation structure will probably deflate a little bit. And some of the big players will get bigger. I do think the wire services have tremendous growth opportunity at the moment, and that’s why you see all the movement in the wire services sector. CNN tried to monetize its internal wire offering for the public. The merger of Thompson-Reuters, etc. Because these organizations have enough resources, enough scale, to provide a wide variety of news items that can be quickly scanned by people in the workplace.

Witt: So somebody asked, I think the moderator during your panel said what about day laborers or people who are not sitting in front of a computer all day? Where are they getting their information from, and is that going to create a sort of information divide?

Boczkowski: Right. That’s a very good question. So, people are still getting information from print, they’re still getting information from radio, they’re still getting information from television. There is a transfer or migration of the audience online. There is no doubt about it at this point. But that doesn’t mean the previously dominant alternatives have ceased to exist or will cease to exist in the future. As a matter of fact, as I mentioned at the panel, for the population which is in the lower income strata, especially in Third World countries or underdeveloped countries where this population is very important numerically in society – for these people the media that caters to them is doing much better than the media that caters to other segments of the population. Newspapers, television, there’s such a segment of their products depending on the market. And there is evidence that for these people they’re still getting information in traditional ways.

The merchants are trying to reach them because they have income they want to spend. And traditional media makes a very important contribution to society, the well being of society, by providing information to people who cannot access other media. So though these people can access, even if they don’t work in a job where they have a computer, and don’t have a computer at home, there are still public places, say libraries, cyber cafes, call centers where they can get access to the news online.

Witt: So, when it comes to high quality, ethically sound journalism that’ll help provide – sustain our democracy and make the public square vibrant, are you optimistic, pessimistic?

Boczkowski: Realistic.

Witt: What does that mean?

Boczkowski: There will be some of it for a long time. I think the size of it, and the proportion of what they contribute will shrink, has already shrunk, and probably will continue shrinking. But there are things emerging and the interesting things to pay attention to is where the new developments that are emerging and actually replacing are actually expanding and taking us in a completely different direction. So in that sense the future is open. But as far as the traditional players and incumbents, I think they will see a significant reduction in size, resources, and important – far more than what has happened now. Far more.

Witt: Alright. Thank you very much.

Boczkowski: You’re very welcome.

More journalists use social media tools, but still doubt reliability

A majority of reporters and editors are using social media to research their stories. Here are highlights from a survey of 371 veteran reporters: 

89% use blogs for online research

61% use Wikipedia

57% use Twitter and microblogging sites

The study also shows most journalists don’t completely trust information they get from social media, and must do a significant amount of fact checking before they use it.  The study, aimed at public relations professionals, was done by Cision and the George Washington University

Mobile DTV – Watch live TV news on the move

New digital technology will make it easier to watch television from your cell phone, laptop, or a TV set in your car.  Several new devices go on sale in April.  Thirty  TV stations in Atlanta, Chicago, Los Angeles, Seattle and Washington, D.C. will be broadcasting to them.  The National Association of Broadcasters calls it “a renaissance for over-the-air broadcast TV.”   As the NY Times reports, the Mobile DTV standard can be used for 2-way communications, including voting, audience measurement and feedback on advertising. Local stations will be able to charge more for commercials and make more money.

Daily newspaper profits through recession

The Arkansas Democrat- Gazette is making money in print and online, and the paper has a formula that’s been working for years.  Since 2002, online readers have paid for content.  Publisher Walter Hussman says the paywall helps maintain print circulation. He tells CNN Money he’s not wedded to print, but print still makes more than online content.  The paper has a tradition more than 100 years old, with circulation of 170,000 on weekdays, 270,000 on Sundays, and 3,500 online subscribers.