Taken from an interview with Professor Catherine Mann, Professor of Global Finance at Brandeis International Business School.
Taken from an interview with Professor Catherine Mann, Professor of Global Finance at Brandeis International Business School.
Today in class we had a debate about how to save the independent press.
Newspapers are in desperate need of new revenue sources to offset recent struggles. Advertising revenues for the industry have declined for twenty consecutive quarters. As advertising revenues go online, they are not growing at the rate needed to counterbalance the declines on the print side. Furthermore overall circulation has declined all across the business. So how what do you do to save the independent press?
There are three fundamentally different models that we discussed and tried to find out which one could be the most sustainable one. The three models are
1. “Freemium” / Hybrid model
This is basically the “old” model as a lot of papers still have it. Almost all the articles that can be found in the paper can also be found online. You only pay for premium services, for example in-depth articles and specific searches.
2. Free / Philanthropic model
With this approach you try to get individuals or companies to give you donations in order to finance your journalistic activities. The National Public Radio (npr) is an example for a journalistic institution entirely dependent on donations. So far they have had major success with their model.
3. Paywall model
In the past years some bigger newspapers have started putting their content behind a paywall, like the Washington Post, the New York Times or the Boston Globe. The idea is to give a few “free samples” (eg NYT: 15 articles per month) and the rest has to be paid for. The reader can just get a weekly subscription (eg. NYT: $3,99 per week)
So, what model will save the future of journalism? Lets start off with the one that will most likely not save it: The “Freemium” / Hybrid model:
The Hybrid model first gained relevance when the internet started to become a more and more important tool for news broadcasting. The newspapers had to follow the trend and get an online representation. To capitalize upon the online content, newspapers started charging their readers for some of the features represented online, while most of the articles stayed free.
This approach is as old as my last season’s clothes. It is in no way sustainable, since newspapers just give away most of their content for free and cannot compensate for the losses in print advertising with the money made on advertising online.
The philanthropic model seems in theory really good but the question is: Is there enough charity to support news? Looking at the graphic from the article “Non-profits can’t possibly save the news” the answer can only be: “no”! In 2008 only 0.05% of all donations made went towards journalism. As long as can still get news everywhere, why would anyone want to donate money to journalists? The pressure is currently not high enough for people to see the need in supporting journalism. Furthermore this model would require newspapers to change their legal structure from a for-profit to a non-profit structure.
This leaves us with the paywall model. Looking at the recent developments more and more papers are implementing a paywall. So far for example the New York Times and the Boston Globe prove: it works! In the thirs quarter the NYT had 324,000 digital subscribers vs 224,000 in Q2 – a growth rate of 20% per quarter! If you subscribe to the NYT Sunday paper you pay $3.50 per week and also get access to the online website from computer and any mobile devices. This is way cheaper than only getting the online access from your computer and any device, which will cost you $8.75 per week. This strategy is clearly used to boost the circulation and with that also boost advertising sales in print.
Furthermore a paywall can lead to quality improvement. A good analogy for this is how years ago the pay-cable model brought additional content which lead to qualitative improvement. The same could be the case for newspapers: To justify paying for news online, new content is added (for example at bostonglobe.com you get some additional interactive features).
It remains to be seen if paywalls work, but so far the indications are positive and if you ask me which of the three models I prefer, I would definitely put my money on the paywall model.
The other day in my journalism class we discussed “the dark side of the web”. We basically talked about how the internet can be used to gather a lot of very private information about each one of us even though we may not be aware of it.
This reminded me of something I discussed with a friend a while back. Imagine, you open your morning newspaper and read the following on the front page:
“Dear XXX, today is the 11th of November 2008. Happy Birthday, you are now 28 years old. Allow me to address you by your first name. You may not know me but I know you very well…”
This is followed by a list of the most intimate details about XXX’s private life. Juicy pictures from his last vacation with his girlfriend are displayed and derogatory comments that XXX once made about his employer in a forum are presented to the reader. Furthermore you get to find out about XXX’s hobbies and see the embarrassing photos from the last bachelor party, before XXX’s contact details and phone number are given away.
Now imagine you are XXX and all the details that you just read about are 100% true. We may think, something like this is impossible, but in fact this story happened to Marc L *** in France: The French magazine “Le Tigre“, used the help of Google, Facebook, Youtube and Flickr, to create a profile of this very open internet user. (You can find the original french article here.)
While each individual piece of information we give away online does not seem to be that relevant, all those little pieces put together can show an incredibly good picture of who we are! Marc L*** was apparently just the unlucky one having to act as the guinea pig in Le Tigre’s experiment.
Even though we know that stories like that can happen, how come the number one social media platform Facebook keeps gaining users by the day? I personally think it is simply because we love to be social, we love to share our experiences, pictures, music etc. with our friends, even though we are aware of the drawbacks of online sharing.
But it is not just the information we voluntarily and consciously give away, there are way more ways to find information on each and everyone of us.
If you have ever bought property in the US, you will most definitely find your name, birthday and phone number on the website zabasearch.com. Sometimes even your spouses or family members are listed. Or did you ever get a speeding ticket? Just go to Criminal Searches to see your – or anyone else’s – track record for a small fee. These two websites are just examples of the many many online databases a lot of US citizens can be found on. And the best (or worst) thing is: anyone with an internet connection can access that kind of information.
Another very good illustration of how easily personal information about us can be found online, is shown in the article “How I Stole Someone’s Identity”, in which the author used a person’s information that was freely available online to break into her online banking account. He managed to break into the woman’s e-mail account by using fact from her personal blog. Once he managed to hack her e-mail account, the rest was easy.
How can this be possible? I guess, we sometimes tend to forget that everything we publish online in our own names, will most likely be saved somewhere forever and can be accessed by anyone.
But does this mean people are going to start deleting their Facebook profiles and Flickr accounts? –Probably not. However, if we do not want to find ourselves on the front page of our newspaper or realize our bank account has been emptied while we were sleeping, we should definitely make sure to be more conscious of which information we give away and which we should probably rather keep to ourselves.
The other day I came across a website called newspaperdeathwatch.com. It is a website dedicated to “Chronicling the Decline of Newspapers and the Rebirth of Journalism”, and lists all newspapers that went out of business since the website was created in 2007. Multiple blog entries talk about how Social Media is eventually going to kill the print papers for good. It got me thinking: Can we just apply the Buggle’s song “Video killed the radio star” to this situation? Is this really what is happening right now? Is social media going to kill the newspapers?
If you had asked someone twenty years ago if they thought newspapers would ever disappear from society, the answer would probably have been no. The same question asked in today’s society is very likely to get a really fragmented answer. The birth of the Internet has changed the world dramatically and also influences the position of news organisations in our society. Freedom of press is no longer exclusive to those who own one, but everyone that has access to a computer and Internet can be a journalist and spread their thoughts and stories.
Thinking back about some of the latest breaking news like the deaths of Steve Jobs or Osama Bin Laden; I found out about those on my Facebook or Twitter Wall linking me to an article on a news website. Nowadays this is the way we find out about breaking news.
Consequently the monopoly position of newspapers is jeopardised, as their business model, focused on capitalising on news, is decreasingly successful. News is available in abundance so why pay for it? I can just get it for free everywhere.
Online consumers can freely share information with their friends and consume information from all over the world created by a multitude of sources. They can create their own news world, be their own newsroom and are not impaired to ask direct questions or even start a revolution through social media websites such as Facebook and Twitter. It is nowadays so much easier to get access to some of the same sources real journalists use and become a “news blogger”.
The tables have been turned and the consumer has more power and more control than ever. The established news organisations have to find a role to play in this new diverse field. News organisations that fail to reinvent themselves will eventually disappear, as documented by newspaperdeathwatch.com.
The tendency of consumers to consume news online and not buy a paper from the kiosk on the corner has caused print sales and the newspaper’s advertising revenues to drop. Social media offers a very important communication channel and therefore more and more organisations are trying to implement it in the hope of getting a slice of the cake and obtain a sustainable position in an increasingly volatile market sphere.
This leaves the newspapers with some major challenges: One is how to capitalize upon Social Media? I did a quick search and did not find one single major paper that does not have a Facebook fanpage. But how big is the benefit actually? Does it make readers go out and buy the paper? Probably not. Therefore they need to start getting creative and find ways to make money by using Facebook. Currently Facebook probably makes a lot more money with the newspapers’ content than vice versa.
The introduction of Social Media has made it even easier for the audience to share, like and criticise any type of information that they consume, which leaves the newspapers with another challenge: not losing control of their own content. All of us can just comment on everything the newspapers put out on Twitter or Facebook and start a whole new discussion. This can be scary and demands editors to get into a dialogue with the readers.
I do not have an answer to my question raised above. As I obviously do not know where the world of Social Media is going, I cannot know its limits. For people working within Social Media, this implies infinite opportunities. For companies it implies uncertainty and an unknown sphere. I guess I just have to wait and see.
What is the first thing you do when you wake up in the morning? Some people may say take a shower, use the bathroom, have a coffee or even a cigarette. Well, the first thing I do in the morning is grab my iPhone and check my mails, my Whatsapp, my Facebook, my Twitter, my Google+ and every other platform that could have a message waiting for me. As soon as I actually get up I open my laptop and more or less check the same things again – just on a bigger screen. Sometimes I supplement this information with the latest news or the weather forecast for that day.
This daily ritual makes one thing crystal clear: I am an Internetholic!
I am not ashamed of this though and I strongly believe I am not the only one of my kind out there. People are online all the time and everywhere, aren’t they?
To make myself feel better I sat down and did some research online – of course – and made some pretty impressive findings: In the US more people than ever before are connected to the internet, Smartphone sales are exploding and almost 50% of the population have a Facebook account.
But what does this mean for our society? That the average Americans are slowly outgrown by us Internetholics? I am sure you have met a bunch of us addicts. Or, in fact, if you are reading this, you are most likely one of us. (Click here for a self check)
I personally may be spending way more time than the average person online but this does not mean I am wasting it surfing aimlessly through the World Wide Web. Actually I just found out (here) that the top activity online is browsing Social Media platforms. This means we are actually using the internet to talk to each other. Therefore in my opinion the intenet is mainly accomplishing one thing: It is connecting us!
The most prominent example this year of how Facebook connects people is probably Egypt’s “Facebook Revolution”. A bunch of Egyptians used Facebook to organize a protest on January 25th 2011, which later led to the Egyptian revolution. This does not mean that without Facebook the revolution had not happened but it definitely helped speed things up a bit.
Or lets take me as an example: I just recently moved to the US for an exchange semester. Had I been in this situation about 15 years ago, how would I ever have been able to stay in touch with my friends back home? You might say phone calls. –Yeah right, have you checked the prices for calls from the US to Europe? I would have been forced to select one favorite family member and one favorite friend, because I simply would not have been able to afford to call more people.
The intenet gives a means of overcoming this very problem. It makes it easy for everyone of us to connect with one another. You can find long lost childhood friends on Facebook, make professional contacts on Linkedin, read Tweets from your favorite celebrity or share funny Youtube videos. The opportunities to connect are endless!
I am not ignorant – I know the internet does not only bring positive things with it. Undoubtedly there are a lot of ways to waste time or even do some “unorthodox” things online and you obviously have to be aware of what information you are putting out there. Once something is out, it’s out and you will never get it back.
But the truth is: I don’t really care. And I bet most of my fellow Internetholics feel the same way. We cannot waste time worrying about what drawbacks the internet has, we are simply busy taking over the world!