Talk to the New News conference, Wheeler Centre, Melbourne Friday, October 9, 2015
In the last phase of my career as a journalist - I’ve just published my memoirs, A Life among Budgets, Bulldust and Bastardry - I, like many journos, have become greatly exercised by the challenge that the digital revolution presents to the continued existence of “quality” or “serious” journalism - journalism that has a serious intent, even though it’s perfectly capable of seeing the funny side of things. The ABC’s journalism is serious enough, but since it’s already electronic I don’t see it as being under the degree of threat that faces the newspapers. I’m not sure how the traditional tabloid papers will survive, but I’m concerned mainly about the two papers I work for - the SMH and The Age - and also the Financial Review and The Australian which, according to Eric Beecher, between them “provide most of Australia’s coverage of politics, justice, economics, business, science, health, welfare, public policy, international affairs, arts, culture and ideas”.
There are two issues of concern: first, finding a future for the occupation of journalist in the digital world, but second, ensuring the news media continue to fulfil their “higher purpose” of reporting important information about our society that otherwise wouldn’t be brought to many people’s attention, and helping to hold governments accountable to the public. It’s the news media’s higher purpose - rare, maybe even unique, among profit-making industries - that makes its survival a matter of great importance for the community, not just to those who make their living from it.
Of course, this isn’t the first time the practice of journalism has been disrupted by changes in technology, though I doubt any previous change has been as disruptive as this one. It’s possible that in a decade or two we’ll look back and wonder what all the fuss was about, but at present we can’t know whether things will turn out well or ill and, in any case, it may well be that all the agonising and debating we do will play its own part in ensuring the ultimate outcome is satisfactory.
One thing I don’t fear is that the public could ever lose its interest in news. Humans are curious, pattern-seeking, threat-searching and intensely social animals, so an insatiable desire to know the latest news - and to know it as soon after it happens as possible - is hardwired in all of us. Humans have been seeking out news since we sat around the camp fire yarning after a hard day’s hunting and gathering.
So I don’t doubt that news will survive in the digital age. But that’s not the same as saying the present “legacy” providers of news are bound to survive - particularly those formerly oriented to providing it on dead trees. A knowledge of previous waves of technological change in any industry makes it easier to believe the place of the old, huge, lumbering incumbent suppliers will be taken by new smaller, more flexible and more innovative suppliers in the changed market for news. That would be bad news for all those journalists presently employed by the legacy news outlets, but not necessarily for the consumers of news, or for journalism’s fulfilment of its higher purpose.
In all this I don’t want to be seen as imply that the digital disruption of the news media is a bad thing. I have no doubt that, like most widely adopted technological advances, it is bringing considerable benefits to users. To take one simple example, the move of classified advertising from broadsheet newspapers to the internet has hugely improved the quality and flexibility of classified advertising, while also hugely reducing its cost to people taking out ads. The problem is that this difference in the price of classifieds is what used to be used to pay the wages of journalists on broadsheet newspapers.
To the legacy newspapers, the challenge of the digital revolution comes at two, interrelated levels. One is the shift of readers from newspapers to the various online platforms: the website, the tablet apps and, increasingly, the mobile phone apps. The other is the shift of classified and display advertising from newspapers to online platforms. The newspapers’ online platforms have captured only a small part of the shifted advertising, with much of it going to search engines and social media sites. In any case, the prices received for digital advertising are very much lower - exceptionally so for ads on mobile phone.
I’d be delighted if time proved me wrong, but I don’t doubt that newspapers’ days are numbered. That’s likely both because of the continuing shift of advertising to online and because most of the younger generation favours screen-based information and simply doesn’t read newspapers. I don’t know of any survey evidence, but my guess is that few people younger than baby boomers still read newspapers - and not even all the oldies do. To me, the only uncertainly is how long newspaper revenue will continue to exceed newspaper costs and thus how long before they are closed. Two years? Five? Ten? Probably sooner than 10.
At present, however, newspaper revenue from advertising and cover price accounts for about two-thirds of total news-related revenue at Fairfax Media. The challenge facing the company as a purveyor of news is clear: to build up digital revenue - from advertising and subscriptions - to the point where it more than covers the editorial and other costs of a digital-only news provider. The challenge is less daunting than it seems when you remember that the newspaper revenue comes with considerable costs in addition to the wages of journalists, in the form of printing and physical distribution costs. Obviously, we won’t have to raise sufficient digital revenue to cover the cost of printing and distributing the papers when we no longer produce them. By the same token, however, the considerable costs of printing and distributing make the challenge of getting the digital-only business up to critical mass more urgent. That’s because the two-thirds of total revenue coming from newspapers won’t need to fall all that much further before it ceases to cover the printing and distribution costs and thus makes it no longer profitable to continue printing papers and earning newspaper advertising and cover-price revenue.
So the key question is, what do we have to do to greatly increase our digital revenues? What changes do we have to make not just to our digital platforms but to our journalism - our news offering, if you like - to get our revenues up to where we’ll soon need them to be? Well, one approach would be to focus most of our effort on increasing our advertising revenue while collecting whatever subscription revenue comes our way. An alternative approach would be to focus most effort on increasing our subscription revenue, while being more targeted in our efforts to attract ad revenue. I call the first approach Plan A - because it’s closer to the approach Fairfax is actually pursuing at present - and the alternative approach, Plan B, because it’s the one I believe we’ll have to turn to if Plan A can’t be made to work. Let me describe the features of these rival “business models”.
Plan A
Plan A is the approach most likely to instinctively appeal to journalists because, on the surface at least, it seems to involve no fundamental change in news gathering as we’ve always done it. Indeed, it actually involves a return to journalism as it used to be practiced. The main change seems to be in the way we package the news for a digital age, rather than in the nature of the news we report.
From a commercial perspective, the plan involves maximising what critics call “clicks”, but digital editors prefer to call “page impressions” or, with a slight refinement, “unique browsers”. It’s believed that what digital advertisers want is “reach” - the biggest audience possible - and their preferred measure of this is the monthly total of unique browsers.
How do you get lots of clicks? Well, not so much by resorting to click bait or “churn” - appropriating the successful stories of other news outlets - but by reverting to the breaking news business. You focus on reporting the big stories of the day, getting them onto the site and apps as soon as possible, then improve your offering with side-bar stories, pictures, graphics, videos and commentary as soon as they can be organised.
For the most part your competitors are offering essentially the same stories you are, but you hope that your timeliness, the quality of your reporting, photos and videos, combined with the reputation of your masthead, will win you more clicks than the others. It’s clear some headlines attract more clicks than other headlines, so much attention is given to writing the best ones.
The digital delivery of news is so new that outlets are still experimenting with different ways of presenting it and users are changing their behaviour in response to developments in technology, meaning the news environment is ever-changing and digital editors aiming to keep increasing their clicks are continually responding to these changes.
A declining proportion of clicks is from people coming direct to our website, with more coming via referral from social media such Facebook and search engines such as Google. Fewer people are using the site and an ever-growing proportion are using their mobile phone app to check the latest. As digital readers’ habits over the course of the day change, so does the need to update our platforms. We haven’t quite got to the point where they’re updated 24/7, but we’re getting closer, with journos now working early and late shifts and more effort being made to respond to the recent surge in Sunday browsing.
By their nature, digital platforms provide numerical feedback in real time about the popularity of particular stories and general topic areas. Responding to this feedback is a big part of the way we try to get more clicks.
All this says there’s more change in the way we package our news than in the stories and topic areas we cover. We still chase every story we believe our readers will find newsworthy. So I think most journalists and editors remain reasonably comfortable with this response to the digital challenge. Journalists like to compete with each other, and they’re attracted to the simple, objective, numerical and frequent measure of their success provided by the click count. It’s the closest the digital world provides to the old newspaper world’s ultimate measure of journalistic success: circulation. It seems to replicate the old bargain between journalists and management: our contribution to the company’s commercial success is to maximise circulation; how you convert that circulation into revenue is up to you and none of our business.
This is Plan A, but I have worries about it on two levels. First, I’m not sure it’s sufficient to secure our future financially. It’s not clear to me that simply maximising clicks will gain all the revenue we need to more than cover the cost of our news gathering effort. Too much of the advertising revenue in the digital world is captured by the two social media and browser giants that presently dominate the provision of breaking news. And advertising rates seem sure to shrink rather than fatten as users move to getting most of their news via mobile phone.
Further, I find it hard to believe that “reach” - maximum eyeballs - is the most advertisers want from us, much less the most valuable thing the quality news media are capable of offering them. My guess is that advertisers and ad agencies are just as much at sea in the digitally disrupted world as the former newspaper companies are. If advertisers aren’t sharp enough to see that we’re capable of offering them something more valuable than mere “reach” we should be doing more to educate them. We should be developing and promoting “metrics” that better demonstrate what we’ve got to offer advertisers.
Plan A doesn’t sufficiently “leverage” the serious news providers’ brand, reputation and following. Presumably, we’re hoping our reputation for trustworthiness will bring us more clicks than go to the former tabloid papers or to the digital upstarts. But is this the best we can do? In the old world the readership of the serious press came predominantly from the best-educated and most highly paid part of the market, known to advertisers as the ABs. Our circulations were always smaller than those of the tabloids, but our charges for ads were always higher because of our clientele’s greater buying power. We got the ads from David Jones and Myer, they got ads for the weekly specials at Coles and Woolies supermarkets. Can it be true that up-market advertisers are no longer willing to pay a premium to advertise on up-market digital news platforms? Alternatively, is it true that, by our efforts simply to maximise clicks from all comers, our clicks have become worth little more to advertisers than the tabloid sites’ clicks?
Another advantage of attracting a predominantly AB audience is that these are people well able to afford a digital subscription should they judge the service we offer to be of sufficient value to them. But if we’re simply trying to maximise clicks by offering breaking news that’s just faster and better than all our many competitors, why would this be something many people would be willing to pay for?
But this question of quality - of seriousness - brings me to my second and more important worry about Plan A: will it allow us to adequately discharge our higher purpose - a purpose that not only contributes to the quality of the nation’s governance but also provides serious journalists with much of their job satisfaction?
Editors committed to the Plan A business model may deny it, but it’s hard to see how aiming to maximise clicks by beating our competitors on all the big breaking stories of the day leaves much room or resources for self-initiated, proactive reporting. For investigative reporting and the search for scoops that tell Australians things they wouldn’t otherwise find out about how they are being governed. Room even for the vast amount of news that usually falls into the important but not terribly exciting category, including a lot of the topics on Eric Beecher’s list: science, health, welfare, public policy, international affairs, arts, culture and ideas.
Putting the great bulk of our resources into fabulous coverage of the great excitements of the day puts too much of what we do into the lap of chance occurrence and the efforts of governments and other vested interests to use the media for their own ends. It doesn’t leave much room for anything but the most immediate, top-of-the-head comment and analysis. It favours the emotional assertion of strong opinions, not the careful weighing of pros and cons. It leaves little room for mature reflection, for the how and why as well as the who, what, when and where. It feeds the ever-shorter attention span, leaving too many news stories only partially digested. Nor does it leave much room for newspapers to exploit their former strength of having well-known columnists - “personal brands” - who help distinguish your outlet from its rivals and attract their own crowd of loyal followers. Such columnists contribute not quantity of clicks but quality of “engagement” - users who stay on the page not 30 seconds but however long it takes them to read most of an article.
Plan B
So what’s the alternative approach that offers legacy serious newspapers a better chance commercial survival and continued discharge of their higher purpose? As I outline in greater detail in the last chapter of my book, Plan B starts by accepting that the digital revolution is leading to the “commodification” of news, which leads inevitably to the bifurcation of the news task. A basic news service is now available from any number sites. It’s all much the same and it’s almost always free. It’s so freely available that you can’t charge for it, nor can you expect that, by being a little better than all the others, you’ll attract a disproportionate share of the eyeballs and advertising revenue.
Plan B accepts that, once the present period of multiplying news sites gives way to a period of consolidation - as some platforms survive but most run out of money - the journalistic task will divide into two: a smaller number of journalists producing the basic, breaking news, working mainly for the wire services and the ABC, plus a smaller number of journos working for outlets that specialise in adding value to the commodified news produced by others.
This other category of news outlet adds value by using more experienced and more specialised journalists to add background and analysis. Value-adding makes news less incremental. Rather than adding to the confusion, it seeks to dispel it. It limits its value-adding to a narrower range of topics, giving great emphasis to reporting “local” news - city and state politics, transport, health and education - where the competition from other sites is least. It pursues exclusive stories and investigative reporting. It highlights the contribution of its big-name columnists, using them to attract loyal readers.
Commercially, it focuses most on revenue from subscriptions, while adding high-end ad revenue attracted by its AB audience. The gated access to value-adding, exclusives, investigations and name-brand columnists gives people sufficient reason to buy a subscription. And the value-adding is what does most to continue the news media’s discharge of its higher purpose.
If I’m right in believing Plan A is unsustainable, leading to continued rounds of redundancies, it will be only a matter of time before the legacy providers of serious news gravitate to Plan B - provided, of course, they don’t run out of money or damage their brands too badly before they complete the transition. Should they fail, however, I don’t doubt that various new, unencumbered and enterprising digital platforms will arise to fill the need they left unmet.
We won’t have to destroy journalism in order to save it, but I fear we will have to change the way it is practiced more radically than we have so far.
