How the iPad *might* Save Journalism

14 04 2010

A bit of departure from philosophy, but wait for it, I’ll squeeze in some game theory at some point, as I do with most conversations. You should see me order coffee.

There’s wailing and gnashing of teeth about the future of journalism. I hear it. Being a journalist myself, I have occasionally wailed and gnashed along with the chorus. Then there’s the ‘iPad will save journalism’ rally, led by ex-Australian News Ltd. Grand Moff, Rupert Murdoch. And in response, there’s the ‘no, the iPad won’t save journalism’ gang. It’s all happening.

What surprises me is the lack of sophistication in much of the commentary about this issue. Don’t get me wrong – it’s complicated and the media faces an unpredictable future – but there are some important elements that seem to be frequently overlooked, particularly when discussing the curly issue of charging for content. When these are factored in, charging for content, particularly on tablets and the iPad, becomes a much more viable prospect.

Unsustainable

First, why would anyone want to charge for digital content? Well, simply because today’s business model for many newspapers and magazines that have accompanying websites is unsustainable.

Print media traditionally has a mix of three main sources of revenue: copy sales (paid directly by the reader); advertising (paid for by third-party organisations); and classifieds (paid by sellers of goods). Some, such as low-volume specialist magazines, emphasise copy sales and advertising targeted at a select audience – trade magazines (like my own) even forgo copy sales to focus exclusively on advertising revenue. Some, such as high-volume mainstream magazines, emphasise advertising targeted at a broad audience, and use that revenue to subsidise cover price. Some, such as newspapers, have all three, with classifieds providing a big chunk of money.

There have been two seismic shifts in the past 15 years. One is the movement of classifieds to online, a clearly superior medium for such content. The other is the posting online of content that once was exclusive to print. This has radically changed the revenue landscape. Classified revenue in print has plummeted. So has copy sales, as people have less need to buy print products to get the information they want. As a result, advertising has followed those eyeballs online – although there’s some evidence that online ROI is weaker than print ROI for some products.

So, what we now have are very expensive media institutions that were shaped by the pre-internet high-revenue landscape now trying to do the same job with dramatically lower revenues. And they’re giving away much of their expensive journalism free online. There was hope online advertising would bring in enough revenue to even things out, but it hasn’t. Basically, a revenue model with no print classifieds, reduced copy sales, reduced print ad revenue and marginal online ad revenue doesn’t pay the salaries of dozens, if not hundreds, of journalists, designers and management.

SEO and the Race to the Bottom

The cost that we, the reader, have had to pay is reduced quality of journalism. One need only browse the Sydney Morning Herald website (I won’t link to it – I don’t want to inflate their hits and have them assume people actually like their work) to see how far online news had gone in the race to the bottom; the SMH page above the fold is typically dominated by celebrity gossip, emotional button pushing, outrage, sex, scandal and other vacuous tabloid news. Scroll down and there’s substance, but the overwhelming contempt I feel forces me to close the page before I get that far.

There’s a good reason this trash is making headline news – SEO, or search engine optimisation. SEO is basically journalism in reverse. Instead of looking for a story that is of significance to your readers, you look at what they’re searching for, then feed them more of that. So if people are searching for “Tiger Woods”, do more stories with “Tiger Woods” in the headline. Google will reward you. But if there’s news happening outside of Tiger’s pants, and no-one is searching for it, it’ll be buried, if it’s even reported at all.

SEO is feeding us trash – and we’re to blame. It’s a vicious circle that is destroying the quality of many online news outlets – but they have no choice but to peddle this crap because advertisers aren’t intelligent/discriminatory enough to ask about anything more than page views and unique browsers – they don’t care who is looking at their ads, as long as there are more of them looking.

No surprise Rupert wants to charge for content online. But – and here’s the game theory – it’s like a game of chicken: whoever starts charging for content first, loses. They lose because readers can access similar content free on other sites, so the paywall site gets no readers, no online subscription revenue and no ad revenue. That’s why people thing it’s insane for Rupert to charge, particularly if he charges first. But, the current model is unsustainable. So, if no-one charges first, they’ll all eventually fail. Hence, chicken.

iPad assumptions

Enter the iPad and tablets. They provide an opportunity to charge for something that isn’t just the same old content that one can find on thousands of sites online. For one, tablets allow the content to be properly designed, giving a better reading experience. They also allow for serendipity – the discovery of new and unexpected content that is to one’s liking.

Serendipity is a crucial feature of print – you come for the cover story, you stay for the other articles you didn’t even know were in there when you bought it. Hey, that’s what editors do – we anticipate what the reader wants to read before the reader even knows it themselves. SEO murders serendipity. Tablets bring it back. And with it, something worth paying for.

Note that the web isn’t going anywhere. And, largely, it’ll still be free. But tablets give an outlet for paid content, with an effortless purchasing method (which is crucial, and is Apple’s biggest trump card via iTunes and the App Store), and it doesn’t succumb to the SEO race to the bottom.

The big unanswered question is: what are people willing to pay for e-magazines and e-newspapers? A lot of the speculation going around at the moment hinges on the answer to this question. And some speculation just gets it plain wrong. This piece of dubious research makes the following assumptions:

  • iPad owners are early-adopters that consume a lot of content so let’s say 50% of them subscribe to two iPad magazines each.
  • Magazine subscriptions on the iPad are higher than print subscriptions (most magazines plan to charge more initially), so assume an average $15 per monthly subscription.

As a result of these assumptions, they conclude that the iPad won’t save magazines:

Even if iPad sales soar past expectations and reach, say, 16 million units over the next two years total magazine subscription revenue would equal about $2.8 billion per year under the above case scenario.  That’s less than 30% of annual circulation revenue for the entire magazine industry and only about 10% of overall industry revenue (circulation + advertising).

But the assumptions are deeply dubious. That magazine subscriptions are higher than print subscriptions today is an anomaly – an unsustainable artefact of the strange times in which we live. Print is hurting, so publishers lower the subscription fees to get more eyeballs and lure in more advertisers. Far from ideal, and probably unsustainable for many publishers. iPad subscriptions are high because the iPad is new and early adopters might fork out a premium to see what it can do. When tablets go mainstream, prices will come down. They must.

Trivial purchases

So, change the assumptions – maybe to be more in line with the music industry’s experience with iTunes, or the games industry’s experience with Steam and other online outlets – and things change. If tablet subscriptions are cheaper than print, people will buy more. At some point there is a threshold where the increased number of sales means greater revenue. And I believe that threshold can be reached.

The key is making the product inexpensive enough that it becomes a trivial purchase, like many of the discounted games from online games outlets. Make six month mag subscription >$5 and many people may pay even if they think they might never read it. It’s so cheap, it’s just easier to buy it on a whim and have it there for good. And they might subscribe to 5 or 10 or 20 magazines this way. That changes things.

And it might even save journalism. Hey, we’ll likely never go back to the pre-internet high revenue days. But there will be enough revenue to pay for writers to produce quality content, designers to make it look good and we can just forget about print and distribution costs. It’s crazy enough that I think it just might work.

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6 responses

14 04 2010
Tom Rees

I think the traditional model of distribution is dead. I don’t want to subscribe to a single magazine, I want to read articles from a variety of sources. What I want is a trusted portal, which selects and links to articles that fit my interests. I don’t want to pay for access to a newspaper if I’m not going to read most of the articles.

So if a pay-model is going to succeed, it’s going to be paying for access to individual articles. Perhaps by paying a monthly lump sum to a ‘portal’ site, which then negotiates with individual content providers for access.

14 04 2010
Tim Dean

Interesting idea. That could be one way subscriptions go. I don’t think it’ll be the only way though. I still think there’s life yet in the role of an editor to act as a filter and bundle together content in a skilful way – serendipity and all that. We might see less fat in editorial – less filler that isn’t really very interesting. But even your model would need an ‘editor’ to select and link. The question is what is the revenue model for such a business?

15 04 2010
James Gray

The media has been shaping each person’s interests to superficial topics and it would be nice if that could be reversed somehow. Not only do we need to invest money in journalism, but we need to know how to invest it wisely.

We need serious investigations of politicians to figure out all the secret deals and decisions being made, but there are other important events that the media has decided not to discuss. Nietzsche said something about how unimpressive the media and newspapers were at his time, and I would like more improvement than merely getting things more like how they used to be.

16 04 2010
dmabus

Atheists,

but you have NO ANSWER TO DEATH… therefore you FAIL…

THE DEATH TRAP

http://abcnews.go.com/Nightline/FaceOff/
********

THE REAL QUESTION:

DOES ATHEISM HAVE A FUTURE?

AND THE ANSWER – NO!

http://www.disclose.tv/forum/does-ath-ism-have-a-future-no-t19859.html

Atheists,

Repent and turn to God.

20 04 2010
Tim Dean

Hi dmabus. Not sure why you’ve posted this in this thread – seems there are plenty others on this blog that would be more appropriate.

A few questions for you in response: why do you think atheism has no answer to death? And why is having an ‘answer’ to death even relevant in this context?

For the record, secular and scientific perspectives have got a thorough explanation of death. In evolutionary terms, life is a mechanism used by genes to propagate. Death is helpful towards this end, because otherwise we’d overpopulate. Life is also redundant to this end once it has procreated and helped its offspring to continue procreation. If we lived longer, we’d also be investing a lot in one life, which is riskier than having multiple generations over that time span – natural selection has favoured a lifespan long enough to survive and procreate. That doesn’t mean that what has evolved is good or bad – this is just an explanation of the existence of death.

Psychologically, death isn’t experienced, as experience requires life. At death, to our best knowledge, consciousness is extinguished. However, we fear dying because, again, that’s an evolved mechanism to encourage us to live long enough to procreate; if we didn’t fear dying, we may not survive to procreation age.

That said, genes are effectively immortal. They survive death by being passed on to our offspring.

I don’t see anything too incomprehensible about this picture. There’s plenty of rigorous evidence to back it up. Doesn’t mean the picture might change, but it’s certainly better justified than notions of an afterlife.

As for whether atheism has a future: are you asking whether it *does* have a future, or whether it *should* have a future?

I think it’s very likely to have a future – as long as people keep questioning religion and believing in atheism, it will continue. And I can’t see that changing.

I also think it *should* have a future – although, as I’ve argued on this blog before – I don’t think atheism is an alternative to religion. Atheism is a negative thesis and it doesn’t propose any positive thesis of its own. I would suggest a replacement for religion will be a positive secular worldview – and I’ve argued this point many times on this blog.

Oh, and demanding I repent and turn to God isn’t terribly persuasive for me. I stopped believing in a personal God a long time ago. I’m happy to explain my reasons, but I’m not at all interested in trying to persuade others to believe one way or another. I have better things to do – like try to conceive of an alternative to religion that helps people live a good, moral life.

20 04 2010
James Gray

dmabus,

It is inappropriate to tell people what to believe without an argument. Atheists could tell you to repent your belief in God just as easily as you can tell them to repent. Do you think that it would be appropriate for atheists to go around and tell everyone else to become an atheist? If not, I don’t understand why you think the rule doesn’t apply to you.

Consider that philosophers are the closest thing we have to experts in whether or not God exists and they do not agree. Many philosophers don’t believe in God and there is not a single peer reviewed argument for God that philosophers agree to have proven his existence. A well informed rational person can be an atheist.

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