The Economics of Digital Journalism: What Happens When Traditional Newspapers Go Out of Business in 2039?

The Economics of Digital Journalism: What Happens When Traditional Newspapers Go Out of Business in 2039? W. R. Neuman

The Digital Dozen • Twelve issues we had better get right if independent, high-quality, professional journalism is to thrive in digital era.

1) A clear-eyed assessment of the history of journalism • Were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter • Never pick a fight with people who buy ink by the barrel

The Romanticized History

2) A shift from a posture of defense to reinvention • Worth defending? • Sure • Likely to be a successful strategy? • Not in the long run

David Lazarus San Francisco Chornicle 3/14/07 • I'll come right out and say it: It's time for newspapers to stop giving away the store. We as an industry need to start charging for -- or at the very least controlling -- use of our products online.

David Lazarus San Francisco Chornicle 3/14/07 • My thinking is that this is approaching a life-or-death struggle for newspapers, and an antitrust exemption may be the only way that the industry can smoothly make the transition to a digital future. • Put simply, we need to charge a fair price for our products, and we need to do so together.

3)The happy accident of newspaper economics Technical Medium Production Audience $ $ Advertising

3)The happy accident of newspaper economics Percent Advertising Economics • Books 0% • Movies 0% • Magazines 50% • Newspapers 70% • Radio and TV 100%

3)The happy accident of newspaper economics • Newspaper Industry Profits 25.2% • Magazines 4.5% • Books 5.5% • Agriculture, Mining, Mfg ~5.0%

3)The less happy accident of newspaper economics

3)The happy accident of newspaper economics McClatchy Co. CEO Gary Pruitt April 2006 • All those skittish investors who think newspapers are a dying industry are, in fact, dead wrong. • Far from shrinking, our audiences are growing steadily. Simply put, more people want our products today than wanted them yesterday.

4) The ideal of media diversity • Based on concept of local media market • Rethinking diversity – the paradox of critical media scholarship

5)The Sunstein thesis • The ‘Daily Me’ Icon • Behavioral studies contradict the Sunstein thesis

6) The long tail thesis

7) Ogilvy’s dirty little secret • The relationship between investment in advertising and increased sales is stunningly weak, and conditioned on a complex of environmental factors

8) Amateur hour: blogs and wikis • Don’t vilify the amateurs • Learn from them • Take a lesson from Jimmy Wales • And from Google

9) Meyer’s thesis

10) The false hope of the ‘online newspaper’ • The economics just don’t work • Shoveling newspaper content over to a web site and charging admission is a non-starter

11) Transcending the trinity • Norms of professional journalism • Wall Street’s ROI • Academic research on media effects

11) Transcending the trinity

12) A viable economic model for sustained high-quality journalism • The new model? • “ ‘Sup?” query • Personalized • Reliable • Branded • Google model

The Magic, All-KnowingAnswer Machine • Commercial 31% • Reference 26% • Popular Culture, Sports 11% • Social 10% • Sexual, Erotic 9% • Health 7% • Government and politics 3% • News and current events 2%

Amit Singhal Google Ranking Algorithm Czar You Need To Know What This Man Knows

Transaction-Based Business Model • User-Created Content • Pull Rather Than Push • Context Sensitive Search • Personalized Search

The Bottom Line • The future of news is the search engine • Not the newspaper • And not the evening network newscast

The Economics of Digital Journalism: What Happens When Traditional Newspapers Go Out of Business in 2039?