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How charging for articles could hobble the future of journalism

May 28, 2009 by Scott Rosenberg

Apparently there was a big meeting of news executives today in Chicago under the auspices of the Newspaper Association of America. The de jure name for the topic at hand was “Models to Monetize Content” but the de facto subject of the conclave seems to be building paywalls and ending what James Warren glibly calls “the age of content theft.” Such conversation needed to take place under the watchful eye of a legal counsel to avoid antitrust problems; but who can doubt that some sort of collective action — simultaneous, if ostentatiously uncoordinated — is at hand?

We are, then, nearing a moment of real decision on the part of the beleaguered newspaper industry, a genuine fork in the road. The papers can decide to keep participating in the open Web, which would require accepting that their legacy business — the old paper bundle and the broadcast model — is going to change into something almost unrecognizable. Or they can decide to put up the walls and gates and behave as if it’s 1997 again, and the Web is just a better delivery truck rather than an intricately evolving social organism. Down one path, dissolve into the Web; down the other, secede from the Web.

These two paths map neatly onto the two camps into which you can group virtually everyone in the old argument about the news business and the Web. On one side, you have the people who feel that newspapers simply took a wrong turn on their journey to the Internet. They were seduced by the Web hypesters! They should have charged for their articles from day one! Because they didn’t, they’re in a bind now — but their only hope is to shut the door belatedly and salvage what can be salvaged. We heard this same cry back in 2000-2002, during the last Web-business ice age.

If this is what you believe, then the appropriate business strategy is a no-brainer: Start charging your readers. Start demanding that Yahoo and Google et al. pay to link to you. Then see what happens — and, I’d advise, duck as the masonry starts to crumble.

In the other camp, the one where I put my own tent, you find everyone who believes that the Web has radically and irreversibly changed the way people get their information, weakening or dismantling all of the buttresses and structures that held the old business of media together. This change is neither all good nor all bad; but it is real, and wishing it away won’t help.

I’ve argued this position consistently for years now, but here is another angle worth considering. In at least one area, the newspaper web sites of the 90s didn’t give away the store. The Web was an obviously superior platform for delivering classified ads, but newspapers traditionally made a good chunk of their revenue from classifieds, so many newspapers adopted a sort of half-hearted classified strategy: if you paid for a print classified ad, you got a web listing free. Or maybe the paper would sell you a Web classified at a different rate from a print classified.

So, in this realm at least, the papers never committed that original sin of offering their product for free. What happened? The papers mostly sat tight and figured that their brand and their prominence in their communities would outweigh the lameness of their software and their indefensible overcharging for a product that now cost little or nothing to deliver. There were big venture-funded startup companies that set out to build standalone classified businesses, and some of them prospered as for-profit enterprises. But the greatest success of all came in the unlikely form of Craigslist, a community-based enterprise led by a shy programmer who offered classifieds not as a profit-making enterprise but (in all but a tiny subset of categories) as a free service.

As a result, newspapers’ classified businesses today have been devastated. But you can’t blame Craig Newmark; if he hadn’t done it, others would have, in some slightly different form. The Web itself made that inevitable. Newspapers had the opportunity to be Craig Newmark; they couldn’t imagine that. Regrettable, but understandable.

Similarly, you can blame Wikipedia for the woes of Encyclopedia Britannica’s paper-edition business, but really, it was less that unforeseen project that doomed the bound-volume encyclopedia than the very existence of the Web itself, which gave people an ill-ordered but livelier source for much of the information they sought.

In each of these cases, no one gave the store away. The shopkeepers didn’t play along, they tried to fight. But the scope of Web-induced change made their battle mostly hopeless. And their choice to fight the Web rather than work with it meant they only hastened their own downfall.

Similarly with the pay-wall argument. I fear that if our newspaper publishers take the collective charge-our-users approach, they will not only doom their own enterprises but will also make the transition we are currently facing — from a paper-and-broadcast news world to a purely digital one — longer and more wrenching.

If news publishers today accept that their future is online and that said future will not and cannot offer the same profit margins, or support the same size staff, as a monopoly, they can still participate in building new models for the new world. Some will survive and some will fail, but all of them (and all of us) will benefit from the lessons they can teach us. But if they shunt themselves off behind pay walls, they will not only surely fail, they will also make it far harder to seed the Web with the knowledge and experience of today’s professional journalists. The work of newsroom professionals will be cordoned off into their own disconnected islands online that fewer and fewer people will visit. New traditions will evolve independent of the old ones.

I can understand that news publishers — the owners and stockholders and managers — will do everything they can to cling to a failing model, because that is the way of the business world. A revenue stream is a revenue stream; it’s hard to give it up today, even when you know it’s going away tomorrow. But the journalists who care about their own craft’s values and traditions should think twice before applauding the intransigence of their business colleagues. In the long run, it will do nothing to save their jobs. And it will make it that much harder for all of us to rebuild a vibrant and sound news tradition online.

UPDATE: Recommended reading — Steve Buttry on “Seven reasons charging for content won’t work”

Filed Under: Blogging, Business, Media

Note to Peggy: your goose already croaked

May 16, 2009 by Scott Rosenberg

Oh dear: we’re losing contact with Peggy Noonan again! As we enter a movie season featuring a cartoon about an aged, out-of-touch curmudgeon floating off from reality in a private balloon, let us not forget that we already have a similar character in journalism.

Here’s Noonan today:

Mr. Obama’s government, in all its flurry of activism, may kill the goose that laid the golden egg. This is as dreadful and obvious a cliche as they come, but too bad, it’s what people fear. They see the spending plans and tax plans, the regulation and reform hunger, the energy proposals and health-care ambitions, and they–we–wonder if the men and women doing all this, working in their separate and discrete areas, are being overseen by anyone saying, “By the way, don’t kill the goose.”

The goose of course is the big, messy, spirited, inspiring, and sometimes in some respects damaging but on the whole brilliant and productive wealth-generator known as the free-market capitalist system. People do want things cleaned up and needed regulations instituted, and they don’t mind at all if the very wealthy are more heavily taxed, but they greatly fear a goose killing. Economic freedom in all its chaos and disorder has kept us rich for 200 years, and allowed us as a nation to be generous and strong at home and in the world. But the goose can be killed–by carelessness, hostility, incrementalism, paralysis, and by no one saying, “Don’t kill the goose.”

Note to Noonan: The goose passed away last year. It is an ex-goose. Its neck was slit, over and over, by a decade-long procession of greedheads and vandals. Michael Lewis even wrote the obituary! The liver was extracted to produce foie gras that is still being feasted on in certain corners of Manhattan, southwestern Connecticut and Los Angeles. But there will be no more eggs until we figure out how to re-stock the farmyard. Indeed, Tim Geithner and Ben Bernanke are up all night in the financial labs trying to reconstitute the beast’s DNA.

I guess this cluelessness should not surprise us, given that Noonan is the same columnist who, last December, looked around and wondered why the economic crisis was not visible to her.

Still, this bears repeating: “What people fear” is not that the fragile life of the free market will be extinguished. What we fear is the lingering presence, and indeed power, of the buccaneers and charlatans who slaughtered it — and who will jump at any opportunity to strangle its successor, if they are given a tenth of a chance. Yet they are, apparently, as invisible to Noonan today as that goose-corpse was to her last December, when everyone else was gagging from the smell of its rot.

Filed Under: Business, Media, Politics

Journalism is no meritocracy — stop the presses!

May 12, 2009 by Scott Rosenberg

Like nearly everyone else in the journo-blogosphere I have been reading writer Dan Baum’s account, on Twitter, of how he got fired by the New Yorker. It is a canny PR move on Baum’s part, and the New Yorker is a fascinating enough institution that a little glance under the tent flap is hard to resist. But aside from getting a lot of extra attention, and helping promote a new book, why did Baum deliver this confessional kiss-off via Twitter?

He didn’t use Twitter in any particularly creative way, and now he says he’ll be “posting the account, in proper order,” on his website. So he’s admitting that the reverse-chronological ordering on Twitter is “improper” — it makes it harder to read the tale. Why Twitter it at all?

The answer lies in what I will call Rosenberg’s Law of New Media: Each new media form invites a new round of “firsts” that the older media will over-cover. You can see this in action from the first arrival of online interaction pre-Web, to the rise of the Web, to the rise of blogging, and now with the Twitter craze: First there was the first couple to marry who’d met on the WELL. Then there was the first couple to marry who’d met on the Web. Then there was the first couple to marry who’d met in comments on a blog. And any day now I’m sure we’ll learn about the first couple to marry who met via Twitter. (Maybe it happened already and I missed it.) And each “first” becomes the hook for some breathless story. First book deal! First company founding! First suicide!

So Baum is just shrewdly exploiting this law, gathering a crowd for his little tell-all. Can’t blame him for that. But I wish that, having gathered such a crowd, he had had something more illuminating to say.

A couple years ago Baum’s New Yorker contract wasn’t renewed, and he believes this was not because of the quality of his work but because New Yorker editor David Remnick took a dislike to him. He has posted the articles Remnick rejected so you can decide for yourself. And he offers, as a lesson from it all, the following jaw-dropping moral:

“The biggest disappointment was learning that, after all, it’s not only about the work on the page. That the writing life is not a pure meritocracy, or a refuge from office politics. All that crap still matters. Even at the top of the heap. Perhaps especially at the top of the heap. Who knew?”

My reaction to reading this observation is: If I were your editor and you ever said anything like that to me, I’d seriously consider firing you on the spot. No reporter can afford this level of naivete, and no editor’s budget should be spent on it. Reporters have to understand the world pragmatically, as it is, in all its mess and compromise; how can you trust a reporter who doesn’t even understand how his own profession works?

I spent the early part of my career as a freelancer writer, and every time I was rejected I wondered what was wrong with me and my work. Later in life I wound up for many years on the other side of the equation, as an editor, accepting and rejecting pitches and sitting in editorial meetings debating ideas. And I learned what everyone who’s done that knows: editors have to say “no” many more times than they can say “yes,” and they can’t always tell writers the reason behind the “no.” Sometimes it has nothing to do with the writer and his work; and when it does, telling the whole truth can be hurtful.

It’s hard to say to a writer, “You’re sloppy” or “You’re just not original enough” or “Your sensibility just doesn’t fit here.” Most editors don’t. The same principles apply to the hiring and firing of staff writers (New Yorker writers like Baum are typically on year-long freelance contracts); if anything, honesty is even harder in those cases.

I think none of this is news to 95 percent of people working in 95 percent of newsrooms, nor should it be. I could imagine some young writer at the start of his career imagining the New Yorker, or any other top-flight journalistic organization, as a pure meritocracy. But for an experienced mid-career magazine writer like Baum, it suggests some sort of disconnection from reality.

(There’s also this strange business of the double-byline that isn’t: On his website Baum says that all of his work is a collaboration with his wife, Margaret Knox, and that “everything that goes out under the byline ‘Dan Baum’ is at least half Margaret’s work,” but he gets the bylines because — I dunno, you read the explanation and see if it makes sense to you. Seems at the least awfully retro to me, and at the worst, pretty unfair both to Ms. Knox and to the couple’s readership.)

I don’t know why Remnick fired Baum. Maybe Baum’s pieces really didn’t fit into the New Yorker as Remnick envisions it. Or maybe, as Baum has it, it was just a personal dislike on the New Yorker editor’s part. But Baum’s clueless tweet made me think there might be more to Remnick’s side of the story. Which, quite properly, we’ll probably never know.

Dan Baum's twitter

Filed Under: Business, Media

Coll, Kinsley, Bronstein kick newspapers around

May 8, 2009 by Scott Rosenberg

At Fort Mason last night it was Yet Another Panel on the Future of Newspapers. I went because of who was on the panel: the impressive investigative reporter and former Washington Post managing editor Steve Coll; Slate founder Michael Kinsley; and Phil Bronstein, my ertwhile boss at the old SF Examiner and more recently longtime editor of the SF Chronicle. NPR’s David Folkenflik moderated. I figured it might be worth listening, and a line out the door of the hall suggested plenty of other people did too.

The good news was that the event, titled “What Comes After Newspapers?,” really didn’t waste a lot of time asking, “How do we save newspapers?” but largely accepted that their day is ending. You might think this is obvious, but too many of these gatherings today are still stuck in rescue mode. The Senate hearing this week, for example, lingered far too long on plans for saving the bottom lines of newspaper publishing companies when it should have been talking about what the Fort Mason panel concentrated on: During the next period of transition, with an old business model collapsing and a new one not yet fully in sight, how do we insure the survival of the essential civic value journalists provide — keeping the public informed snd holding institutions and officials accountable?

This is where Coll started. He said he wasn’t plumping for the preservation of newspapers: “I don’t think there’s anything magical about a newsroom, or an entity that simultaneously publishes crossword puzzles and dispatches from Baghdad. I think that’s a beautiful thing, and it’s passing.” But “embedded in the newsroom is a system of independent reporting and investigation and witnessing,” and the public has an interest in seeing that survive.

He described how the “monopoly model” of newspaper ownership over the past four or five decades supported “a body of journalistic practice built up by accident,” one in which “persistent professional activity” by journalists creates a relationship between reporters and sources in which those sources are willing to “pass risky dangerous information down the pipe” because they trust it will be handled carefully and will reach the public intact. Monopoly power gave papers like the Post the resources to resist direct pressure from the government, even during Watergate. Can small web-based operations muster the same kind of backbone?

Wait a minute, Kinsley retorted: Don’t you think “bloggers in underwear” will be at least as resistant to such pressure as big corporations with profits to protect? Kinsley described the alarm over the future of news as “a large fuss over a medium-sized problem” and took a generally sanguine view of the Web as a locus for journalism. “There’s far more pressure for accuracy on the Internet than in traditional media,” he said. If “God forbid” the San Francisco Chronicle stops publishing, “some site will come up as the curator of news in San Francisco.”

Bronstein has hung up his editor’s hat to become a blogger for his paper, but he presided over its long decline, and he sounded rueful over missed opportunities and mistakes. “We were living in our own kind of bubble…There was all this possibility, and we were not really interested in it.” He spoke hopefully about new experiments online and described the value to reporters and newspapers of having comments open on their websites. But he was left without much to say when a former Chronicle copy editor stood up and asked, simply, what plans the Chronicle’s owners had for keeping journalists employed: “Where’s the conversation with the newsroom, the public articulation from Hearst?”

Coll reiterated his argument from a January blog post at the New Yorker on behalf of a “university-sized endowment” for a newsroom, to be provided by some generous benefactor to create a public-interest nonprofit entity of some kind. Of course, such nonprofit newsrooms already exist (in print, Poynter’s St. Petersburg Times, and on the web, ProPublica). If wealthy people can be persuaded to pony up for additional such enterprises, well, the more the merrier. But it seems to me that Coll’s vision is “Batten down the hatches, the dark ages are coming — let’s be sure we keep some monasteries around to hand the manuscripts and beer recipes on to future generations.” And I just don’t think things are quite that bad. There’s too much freedom to experiment on the Web, too many opportunities to make our way quickly through whatever transitions we face.

One such opportunity, personified, stepped forward during the Q&A: A young journalist who’s started up a blog that focuses on the 2010 census. Today we call this a “niche site”; but it’s also what we used to call a beat.

Some other interesting tidbits:

Coll mentioned that in the Senate hearing, Sen. Claire McCaskill had described the value to her of the two or three reporters (out of a much larger herd) who knew their stuff and paid close attention to what her office was doing: they kept her “scared” (in a good way). All of which made me think, hmmm, isn’t this exactly what’s happening to journalists themselves, as their work gets scrutinized by a crowd on the Web — many of whom don’t know what they’re talking about, but a handful of whom actually know more than the journalists, and can keep them honest — or scared?

Bronstein disagreed with David Simon’s complaint in his Washington testimony that bloggers don’t cover City Hall: they’re there, they’re “the people we used to refer to as gadflies.”

Also, sounding remarkably like a cranky blogger, he declared: “If you’ve ever been written about, there’s one thing you know — they never get it right.”

Coll, in response to a question about objectivity, described it as “a cultural artifct that is as strange as opera,” one that arose as a side-effect of the monopoly business model, in which newspapers had to aim for a broad reach and inclusive content.

In the Q&A, someone pointed out that decades ago most major U.S. cities had many newspapers. “We survived the collapse of newspaper competition in America. Is this worse?”

Here’s coverage of the event from the sponsor, and here’s video.

Filed Under: Blogging, Business, Media

Fifteen years of epochal pronouncements

May 7, 2009 by Scott Rosenberg

In 1994 Louis Rossetto cranked up HotWired and believed he was ushering in the professionalization of the Web. It was time to rout all the anarchists and the hackers and the amateurs who thought the Internet was all about self-expression (and them). “The era of public-access Internet has come to an end,” he declared. He didn’t mean that the public would no longer be able to access the Internet, of course; he was drawing an analogy to public-access TV. Just as that once-promising avenue for citizen media had been eclipsed by the pros of the cable world, so, he reasoned, the Web would similarly leave the amateurism of its youth behind.

Nick Carr believes this is still going to happen, but many of us today understand that the opportunity the Web affords all of us to add to it lies at the heart of the medium’s identity. It’s not some minor feature of the medium’s youth that will be sloughed off as maturity arrives. It’s not some incidental efflorescence of excess creativity that will vanish once the laws of supply and demand kick in. It is what makes the Web tick. You can try to ignore that, and use the Web as a mere replacement for paper and trucks, but why bother? You will lose your readers and your future.

I thought of all this as I read reports today of Rupert Murdoch’s pronouncement that “The current days of the internet will soon be over.” Phrased that way, the prediction makes it sound like the end times are near. But the only apocalypse in sight, I’m afraid, is that of the old-line news industry, if it insists on pursuing dead-end subscription models for general-interest Web products.

There is money to be made on the Web for the providers of information, but it will never be made by locking away generic news and opinion articles and charging subscription fees to access them. Cutting your content off from the rest of the Web in this fashion robs it of its Webbiness. It’s like a movie producer in the 1930s saying, “Hey, let’s make talkies!”, but then turning off the sound in the theaters.

Murdoch, and any other publisher who shuts the gates, may well boost his bottom line in the short term. But in the medium term and beyond he is simply guaranteeing the slow decline and ultimate irrelevance of his publication. This is painful for journalists and media execs to hear, but they need to hear it — just as, back in 1994, Rossetto needed to hear that no, actually, “public access” was exactly what the Web was all about.

Filed Under: Blogging, Business, Media

Yesterday, AOL/TimeWarner; today, Twitter and…

May 6, 2009 by Scott Rosenberg

There’s a ridiculous amount of chatter in the tech blogosphere about who’s going to buy Twitter. And if the right offer comes along with enough zeros behind it, I don’t doubt that Twitter will sooner or later sell itself. But I doubt its founders are going to do it any time soon. Industry veterans understand that the day you sell your company is the day that innovation ends and “value extraction” begins.

Evan Williams knows that since he lived it. When Google acquired Blogger it secured the service’s future and insured its growth to the household name it became. (One of the many tales told in Say Everything…) But you didn’t exactly see Blogger pushing the boundaries or adding exciting new wrinkles. The innovation was done.

Google, being Google, didn’t rush to extract value. But that’s what we’re seeing now with MySpace and News Corporation. Having invested in the social network because of its market share and buzz but with little idea how to make money with it, Rupert Murdoch is now impatient to ramp up the revenue. The competition over at Facebook — still independent and still run by founders — is more focused right now on adding features and figuring out what their service is all about than in raking in the dollars. If they sell now, they know they’re likely giving up further explorations of what Facebook is (explorations that today are underwritten, to be sure, by investors who hope someday to cash out).

Meanwhile, the granddaddy of this sort of deal — the great AOL/Time Warner merger of 2000 — is receiving its final interment this week with the announcement that Time intends to fling the old albatross off its neck in a spinoff. When it was first announced, that combination was hailed as “the deal of the millennium,” but none of the people involved really had a clue about the future — not the AOL executives who shrewdly sold off their business at the peak of its market value, and certainly not the Time Warner execs who very quickly realized the two companies had absolutely no business combining forces.

AOL was never a hugely innovative company, but it was good at getting people online quickly and easily in the early days of the Web. Maybe it had a future doing the same thing in the broadband era. But from the moment AOL sold itself to Time, it ceased being a force of any consequence on the Net and began a long, slow downward slide from which it has never recovered, and from which I doubt it ever can — even with ex-Googler Tim Armstrong at the helm.

Reading about the spinoff this week reminded me of one of my most amusing experiences during the dotcom bubble. In January 2000 I was a new dad with three-month-old twins at home; elated but sleepless, I was running on caffeine and adrenaline. When I woke up to news of the AOL deal I rubbed my eyes and banged out a very quick column raising some questions about it.

Later that day I got a call from some producers at CNN asking if I would go on the air to talk about the deal. I thought, yeah, sure, as long as I can keep my eyes open… What I realized once the anchorperson started asking me questions was that I’d been cast as the deal’s Dr. Doom. In retrospect I think I was perhaps the only pundit they could get in front of their cameras who wasn’t convinced that the deal was going to reshape the Web world.

I saved video from the show. Here it is:

“What’s the problem?” indeed! I can’t claim any astute prescience; I couldn’t foresee just how quickly the boom would go bust and the deal would turn sour, and I worried more about big companies trying to strangle the Web than, in retrospect, I needed to. But I knew a fear-driven deal when I saw one and was in no mood to cheer what looked like the blind mating dance of clueless media barons.

It’s good to remember that today as the chorus on the sidelines starts chanting for new matches. They rarely work — and even when they do, they usually mean that the fun is over.

Filed Under: Business, Media, Personal, Say Everything

MySpace and Geocities — separated at birth

April 23, 2009 by Scott Rosenberg

Once upon a time, there was a Web company that was based not in Silicon Valley but in Santa Monica. It grew at a breathtaking rate. All of its content was created by its users, and though the pages those users created tended to look jumbled and messy, there was an enthusiasm embedded in all that busy-ness, and a fannish passion for pop-cultural pursuits. The company built up such a sheer momentum of traffic that a much bigger company was persuaded to acquire it for a massive sum of money at the height of a speculative Internet frenzy.

This story sounds like that of MySpace, the once-hot social-networking site for bands and their fans that Rupert Murdoch purchased in 2005. Once “the most popular Website in America,” as the title of a recent book had it, MySpace has been left in the dust by Facebook and Twitter in terms of innovation and growth. MySpace is in the news this week because Murdoch and his henchmen have just shown the door to the site’s founding duo, Chris DeWolfe and Tom Anderson, and replaced them with a former Facebook exec. It’s a recession out there, and Murdoch, who somehow believes that MySpace can be his entree to digital power, is eager to turn it around and demonstrate that it can become the online cash cow he has always dreamed of. Good luck there; I think that, even though Murdoch got MySpace for what many considered a bargain price (of around $500 million), it will prove an albatross around his corporate neck.

In fact, though, MySpace isn’t the company I was thinking of in that first paragraph. I was telling the story of Geocities — the MySpace of 1997-1999. Geocities was the most successful of the “build your own website” companies of the mid-90s (there were others, like Angelfire). Before there were blogs, there were Geocities pages, which were sort of like blogs except without the software to manage your content. Geocities pages were easy to build and really difficult to maintain. As a result, Geocities was populated fast — and nearly as quickly became a vast wasteland of abandoned digital real estate. It must have looked good on paper to the bizdev people at Yahoo in 1999, though, because they paid an astonishing $2.87 billion (in bubble-inflated Yahoo stock) for the ramshackle enterprise.

A decade later, Yahoo’s current management — facing tough times and after many rounds of layoffs — has decided to shut Geocities down. I don’t think there are too many people who will cry for this relic of a bygone era.

What I’m thinking is, there’s every reason to think MySpace will follow a similar trajectory, no matter how many executives huff and puff to try to reinflate its sagging appeal. If that’s the case, look for News Corp. to turn off its lights sometime in 2015 — about a decade after Murdoch’s ill-advised acquisition.

BONUS LINK: Harry McCracken surveys the top 15 Web properties of 1999 and asks, where are they now?

Filed Under: Business, Media, Net Culture

Mark Penn’s fuzzy pro-blogging stats

April 21, 2009 by Scott Rosenberg

I did a lot of digging around in the numbers around blogging for my book, so I’m on alert when I read a piece like Mark Penn’s look at pro blogging in the Wall Street Journal, which is getting lots of attention this morning. A little skepticism is definitely in order.

Here’s the nub of hard numbers in Penn’s piece:

The best studies we can find say we are a nation of over 20 million bloggers, with 1.7 million profiting from the work, and 452,000 of those using blogging as their primary source of income. That’s almost 2 million Americans getting paid by the word, the post, or the click — whether on their site or someone else’s.

Where do these numbers come from?

“20 million bloggers” links to a 2008 report from Emarketer that costs $695 if you actually want to know how they got their numbers (I confess I haven’t made the investment).

“1.7 million profiting” links to a promotional page for BlogWorld Expo that cites no source at all for its data.

“452,000 of those using blogging as their primary source of income” is drawn from a Mediabistro rewrite of numbers from Technorati’s State of the Blogosphere reports. Technorati’s are the longest-running and most valuable, and consistent, series of blogging studies over time, but like any study’s numbers, they can be easily misrepresented: here, Penn relies on them for the datum that bloggers who reach 100,000 uniques a month can earn $75K a year. But if you read the source, you find this:

The average income was $75,000 for those who had 100,000 or more unique visitors per month (some of whom had more than one million visitors each month). The median annual income for this group is significantly lower — $22,000.

In other words, the $75K average is skewed by a handful of outlier successes, but the great majority of bloggers who get 100,000 uniques/month earn more like $22,000. Here, the median is far more relevant than the average. Penn, of all people, knows this.

Later on, Penn’s piece cites other sources, including a Pew study and this iLibrarian post which references a 2008 study by an outfit called BIGResearch. The BIGResearch study particularly flummoxed me as I was researching my book, and in email correspondence with a company representative I got to the root of the oddness of their numbers: Their study defined “blogger” as, basically, anyone who writes or reads a blog. That’s one way to muddy the waters!

The methodology of Penn’s piece seems to be: gather as many numbers as you can and don’t worry about the fact that they are from many different sources at different times using different methodologies and even differing definitions of what it means to “be a blogger” — just toss them all together and start drawing conclusions. Those conclusions, in turn, seem to be based on a misapprehension that bloggers are by definition opinion writers. Many are, to be sure; but many others — particularly in the “pro blog” world Penn focuses on — concentrate on becoming expert sources in a particular area, or informational services, or link reviews.

My suggestion to Penn (who — full disclosure — I briefly worked for, decades ago, during my college years, when he was starting his company): You should commission a real study of blogging, using real sampling techniques, and share the results with the world. No one has done this yet that I’m aware of. You know how to do it! And we’d get a lot better information than this crazy-quilt pastiche of mix-‘n’-match stats.

UPDATE: Penn has posted an addition to his column that goes into more detail about the numbers. “I was surprised at how few studies there are on this,” he writes, “and I believe there definitely should be more. So perhaps in the future I will do some original research, but for this piece we took the best we could find and referenced every number so people would know where they came from.”

Filed Under: Blogging, Business, Media

Should Google pay a tax to media corporations?

April 20, 2009 by Scott Rosenberg

Returning from a mostly-offline spring break vacation, I find that the future-of-news debate has been going round in circles. In the most interesting turn of the wheel, Nick Carr weighed in with an elaboration of his argument that Google is a vampirical middleman, sucking the lifeblood from the media industry. His take on this trope is more sophisticated than the usual “Google took our ads, make them pay!” line from the newsroom diehards, and worth a look.

Carr quotes the point I made recently — that participation in Google’s search engine is voluntary, and any news outlet that wishes to opt out can do so easily — but suggests that this is an oversimplification:

When a middleman controls a market, the supplier has no real choice but to work with the middleman — even if the middleman makes it impossible for the supplier to make money. Given the choice, most people will choose to die of a slow wasting disease rather than to have their head blown off with a bazooka. But that doesn’t mean that dying of a slow wasting disease is pleasant.

The problem with Carr’s middleman theory is that it, too, is an oversimplification. It presupposes that the problem news organizations have with Google is that it “gets between them and their readers.” This assumes that the readers were already visiting the media company websites, and Google is interposing itself. But anyone who’s ever looked at a media website traffic report knows that most often Google traffic actually represents something precious for media businesses — new blood, first-time visitors, what the direct-marketing business calls “qualified leads.” In other industries, the media companies would be paying Google for that traffic, but Google gives it away for free.

In fact, media companies are not end-parties to transactions that Google is interfering with: they are middlemen, too, and in more than one kind of transaction. They sit in the middle between readers and the information readers seek; they also sit in the middle between advertisers and the customers those advertisers seek to reach.

Carr, standing in the shoes of the aggrieved media executive, sees Google as stepping in between the media outfit and its readers, grabbing a cut of the revenue. But put on the reader’s shoes and things look different: Google isn’t introducing an additional middleman layer but simply substituting its own, newfangled method of connecting readers with information and advertisers with readers. And if that version happens to suit the medium of the web and win the allegiance of readers, what right do media executives have to our sympathy, or to a “fair share” of Google’s revenue? They had decades to become Google themselves if they chose to.

Carr paints Google as a conventional middleman — an extractor of existing value. But Google, with its efficient, targeted text-link advertising, has actually added value to pages that previously could not be valued at all. Sure, media companies wish they’d done that themselves — I wish I’d done it, too. Now that Google has done so, they have a right to their chagrin; but they don’t have a right to a cut.

So yes, Google is a middleman of sorts, but not in the way your car dealer is a middleman. It doesn’t buy cheap goods from a supplier to mark up for a consumer. Its role in the economic system of the Web has been fundamentally additive: it has (at least in terms of its primary product, the search engine) contributed new value rather than skimming existing value.

This is when the Google Tax crowd cries, “But Google News is stealing our headlines!” Let’s put aside the fair-use argument for a minute and also defer the “incoming links have their own value” point. Even if the “Google News is theft” people were right, they are fighting over (relative)crumbs. News people who focus their ire on Google often choose to eye the company’s vast profits, mostly earned from its enormous search traffic, and then — in a rhetorical dodge that is either ignorant or disingenuous — pretend that most of those profits are earned from Google News.

In truth, Google News is an interesting but relatively small experiment to assemble a news page via algorithm rather than editor. As Google CEO Eric Schmidt seemed to admit to Maureen Dowd last week, that experiment has to date been a failure:

When I ask if human editorial judgment still matters, he tries to reassure me: “We learned in working with newspapers that this balance between the newspaper writers and their editors is more subtle than we thought. It’s not reproducible by computers very easily.”

The relevant point about Google News is that it represents a tiny sliver of Google’s business — it’s a pimple, at best a big pimple, on the balance sheet. I’m sorry to break this news to all the editors and publishers who are clamoring for a share of Google News’s revenue, but they should know that money is not going to save their businesses. And if what they’re really demanding is that Google give them a share of its total search-based revenue for the right to use headlines and snippets of news articles in Google News, then they’re batty. And they have no leverage, because Google can rightly say, “You can walk any time you wish.”

Many newspaper people seem to be under the impression that if Google, and Craigslist, and (fill in your favorite Web shibboleth here) had never been invented, then everything would be OK, and they would be free to transplant their old business model into the new medium. This is delusional. If Larry Page and Sergey Brin hadn’t invented a search engine that really works, and wedded it to a targeted advertising system, somebody else would have. If Craig Newmark hadn’t built a community of free classified advertising, somebody else would have. These functions are made possible by the nature of the Web, and they were both visible and inevitable by 1997 or so. It is the Web itself that unbundles the media industry’s products and undermines its old business model, not the actions of the handful of innovators who saw the Web’s potential and built on it.

Carr takes a long cynical view, arguing that everything will calm down and the media business will recover once the news industry’s present overproduction crisis ebbs and scarcity returns to the information marketplace. This is, for instance, what my old boss Steve Brill is trying to do with his latest venture. I wish him luck, but I think it will be a total failure. It is only the latest genie-stuffing exercise in a world where the bottle itself is busted.

Scarcity will never return to the information marketplace, at least not in its old familiar broadcast-era form. It is too cheap to distribute news today. Producing certain kinds of news remains a costly undertaking, and we’re still figuring out new models to support it, in a rocky transition that is rightfully causing a lot of nailbiting. But those new models are unlikely to resemble the ones that worked in an era when distribution could be controlled by the producers themselves — when the media executive could control both production and distribution and dictate terms to both readers and advertisers. And whatever new models emerge, they are unlikely to provide last century’s monopoly profits.

The Web of Google, Craigslist and you and me is certainly a less hospitable place for the New York Times and CBS and Rupert Murdoch. But in the long run it will be a more interesting, more diverse and healthier environment for the rest of us. In some ways it already is.

See also Mathew Ingram’s response to Carr, in which he offers a parallel argument that Google’s middleman “power” doesn’t reduce the power of content producers but instead amplifies it.

Filed Under: Business, Media

This morning I am in New York

March 18, 2009 by Scott Rosenberg

nyposthed

Filed Under: Business, Media

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