A poor blueprint for digital journalism

Last week, Columbia Journalism School put out a report on the business side of digital journalism.

It begins by laying out the unpleasant reality of what the news advertising business looks like today, focusing on the mismatch between traffic and revenue. An ever-expanding share of news audiences is online, but the greatest share of news advertising revenue is still in newspapers and on TV. That pattern, gleaned from interviews with news outlets in 2010 and early 2011, is similar to what we learned in our own preliminary research in 2009 and 2010.

One thing we did, though, was to look at news consumption as opposed to simply news consumers. Because it is not just that news organizations have to serve more readers online with less money. It is that they have to serve more content to more readers online with less money, and with that money targeted to the level of the individual story. The implication: for digital journalism to be sustainable as a standalone business, for its wee slice of revenue to cover the large percentage of consumption it represents, every story must pay for itself, and must cost less.

This report, to its credit, is blunt about that reality. It explores a handful of strategies for making news pay online, but it emphasizes that each one must be accompanied by bean counting on the editorial side, beyond what will come naturally from crashing production costs.

While it takes note of sites that have managed to eke out profits on a teensy budget, its business-side focus means there’s not enough evaluation of the content these sites have produced. It asks, for example, whether the hyperlocal model can support ‘serious accountability journalism’ but then fails to establish which – if any – of the hyperlocal sites profiled (TBD, Baristanet, The Batavian, Patch) qualifies as providing ‘serious accountability journalism.’

In failing to answer that question, this report doesn’t do much to challenge the contention made by last year’s reports from both Columbia Journalism School and the F.T.C. that certain types of public interest reporting are too fundamentally expensive to fit in the new market, that they will have to be supported by the public and nonprofit sectors. [More on these proposals here.]

We believe strongly that on the business beat, there is a unique case, both ethically and financially, to be made for nonprofit funding for certain types of stories, which is why we’re doing it.

But we would still like to see more discussion of the public-interest potential of for-profit media models. There is lots of good discussion about how to make news profitable, and lots of good discussion about how to make news better, but there is not enough discussion and research that tackles these questions together. That can’t be a good thing, for the media or the public.

As for the report’s findings and recommendations on the business side, they are mostly the things we already knew:

1. News is not going to become profitable online until the online advertising industry gets much more sophisticated, and more significantly, consistent, about its metrics. Unfortunately, this isn’t really something news executives have it in their power to solve, so they’re stuck waiting for an awful lot of dust to settle.

2. The best opportunities for making money from news come from focusing on niche verticals and hyperlocal sites. To break even, the report suggests, these sites should use tracking tools to advertise differently to their enthusiast regular visitors than they do to the rest. In particular, they suggest, an enthusiast site can show its most devoted users big, expensive, roadblock ads that have to be clicked through to access the site content and charge advertisers an additional premium for accessing these users. There’s something deeply wrongheaded about suggesting that news organizations can be more successful by treating their most devoted customers to the most annoying form of advertising, by suggesting they can ‘get away with it,’ and thereby encouraging the very callousness about audience that got the media in a rut to begin with.

3. Paywalls are not a solution. The report points out how inflated the numbers for subscriptions have been and how quickly subscriptions fall off after the initial buzz has worn off, two problems we’ve noted before. Like many media wonks, the report’s authors are more sanguine about the sustainability of tablet subscriptions. But they are completely (and justifiably) skeptical of the iPad as the tablet that will make this model work, given the 30% commission Apple charges publishers for using its platform. The report notes that one publisher – Time, Inc. – has had luck setting up its own sales platform for tablet subscriptions. That is heartening, but the report doesn’t go into the details of Time, Inc.’s pricing model, subscription stats, or revenue. Not especially useful to the news exec looking to use it as a blueprint.

The main purpose of reports like this is to provide best practices and cautionary tales to the rest of us. Because it lacks qualitative analysis of the websites profiled, and sufficient financial detail, this report fails to fulfill that purpose.