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|A Golden Age of Journalism with Drawbacks |
Nikkei Business - March 2, 2015
We in the media often write, with enthusiasm, about disruptive technological innovation, about the way in which new ideas and new technologies have forced many industries to reinvent themselves. Yet we are less enthusiastic about writing about how it has disrupted our own industry, the news media. For to do so is quite painful.
The reason it is painful is simple, and comes in two parts. First, the barriers to entry to all parts of the media have fallen dramatically: virtually anyone can be a journalist, make films and even distribute their work cheaply through services such as Twitter, Facebook and YouTube, to users all around the globe.
The potential to distribute content to more and more people, all over the world, ought to be able to make the news business thrive, if it were not for the second painful part: the business model that sustained the media for decades has itself been destroyed.
Media businesses flourished for as long as they could keep control of the main way in which all other organisations could communicate with their customers. In other words, advertising. The internet has destroyed that control. Other ways to reach customers are now not just competing with news media: they are better, as they are generally able to target advertising messages more precisely.
So media businesses’ main source of income has shrunk at the same time as competition to provide content has intensified. News and even many forms of journalistic commentary have become cheap, abundant commodities.
It is a golden age for journalism, as information is easier to obtain and distribute than ever before, but it is an age in which it is harder and harder to make money.
One of the main consequences of this, in business terms, is that news organisations need to find ways to persuade their principal customers, ie their readers, to pay for what they are supplying. In other words, having lost their dominance of advertising, most magazines and newspapers now need to build a subscription model, both in print and digital distribution.
The Economist, the global, British-based weekly for which I worked for 26 years until 2006, has been quite successful at this, mainly because it already had a business model that relied heavily on subscription revenue. Typically, during my time as chief editor, subscription revenue accounted for 40-45% of the total, while advertising revenue accounted for 55-60%.
Now that advertising is in decline, the revenue from subscriptions and individual copy sales has had to be increased. But this has not been too difficult, since customers were already used to paying fairly high prices for the publication, and the content had always been designed with a view to enable such premium pricing to succeed.
But it is not easy for traditional, mass-market newspapers. But all of them need to change. In particular, they have to change the kind of journalism they offer, the kind of content they are trying to sell. Editors have to do something they always should have done, but rarely did: they have to make their journalists think hard about what value they are adding for the reader when they write a story.
Eventually, this may well end up improving the news media, improving the work of journalists. In order to convince customers to pay for what they provide, they will have to increase those characteristics of their journalism that readers may find valuable: such as analysis, reliability, credibility, originality, exclusivity.
What we are seeing is a fragmenting, increasingly competitive media market, one in which strong brands and well-defined products that add value for readers will succeed, while products that are too general, too dependent on low-value commodity-like news will struggle.
One big question, both for Japan and for my country, Britain, about this changing media environment is what role should be played in the future by NHK and the BBC, in other words by publicly-funded broadcasters.
News and all forms of entertainment are abundant. Why should the Japanese and British publics continue to be willing to pay a fee to support NHK and the BBC?
In both countries, a cultural argument will be used to justify the preservation of such public-service broadcasters: the belief that these public broadcasters play a special role in nurturing and disseminating a common popular culture. But I suspect an argument based on news and the quality of information will be more powerful.
In an era in which media is fragmented and news is a commodity, the quality and reliability of that news will inevitably come into question. Better news may be bought by subscribers willing to pay for it. But the role of public-service broadcasters will be to provide reliable, high quality news free of charge, so that this basic value can be shared by the nation and accessible to everyone.
If so, it will become even more important that both NHK and the BBC remain impartial, independent and truly reliable.