This morning I attended a breakfast eventfrom Gotham Media Ventures on The Future of News and Information at the Harvard Club in Manhattah. There were two panels and I'll break this up into two posts for readability. My notes are below; most of them are paraphrased but exact quotes are noted.
Update: You can also read complete coverage of the second panel on online media.
First panel: Established media
- Moderator: Andy Nibley, Chairman and CEO, Marsteller
- Martin Nisenholtz, SVP, Digital Operations, The New York Times
- Chrystia Freeland, US Managing Editor, Financial Times
- Tom Bettag, former Executive Producer, Discovery's Koppel Group, ABC News Nightline
Nibley: How does traditional media survive in the digital era? In the current economy, how does anybody survive? To NYT: You haven't been able to fill in the gap with digital revenues. What's the future?
Image by jdlasica via Flickr
Nisenholtz: Part of what we've achieved is to keep providing a service to the readers that extends the fundamental benefits of print into the digital era. Our audience growth is a fundamental pillar of media. "The number of people coming to us has absolutely exploded in print and online." On the word "demise": "The New York Times is far from dead." Fact: people who subscribe for two years have essentially no churn – they die, or they move far away. "You can see a path to viability over the long term." "It begins with the journalism" and that people want and need that journalism on a daily basis.
Nibley: Christian Science Monitor was the first one to give up on print and shift to online focus. There's a big question about how people pay for news.
Freeland: The business question is the central one. She took over the site in 2001, and experienced the tech bubble bursting. FT.com became a pariah. It's a reminder of how far traditional news organizations have come. "We are very digitally savvy. It's not a big deal to break stories online. We do that every day." Of about 500 FT journalists, only around 10 are online-only. The real problem is the "digital quarter" – the advertising with digital is a quarter of what we can get in print. The recession is taking out a lot of newspapers. The real place of stress is in US metro dailies. There used to be a lot of really good ones, and now they're failing. We're going to see failure after failure. But this is positive. "I think the sad truth is that what the internet exposed is an oversupply of quality content." As the supply shrinks, she hopes that the survivors will have more pricing power.
Nibley: What's the future of television news? Traditional network news is slowly eroding.
Bettag: I would argue it's not quite bleak enough for broadcasters to get into the traditional age. Websites are just companion pieces. They're making too much money. A modest proposal: If you took all broadcast producers in a room and shot them all, you'd lose two or three good people. "It's gone way too long without having a wildfire go through, but you have to get out that dead wood to get those new sprigs to grow up." They're making so much money off of advertising that there's a vested interest in keeping people as couch potatoes where you can force advertising down their throats, and in the digital age, that's not going to work.
Nibley: Why don't consumers want to pay for news?
Freeland: "I don't think that's true." They charge for content on FT.com. It's growing and they're charging more. It's been hard because there has been an oversupply. With hundreds of papers giving away their content away for free, it's harder for a more general paper like the New York Times to charge even when the content's better.
Nibley: What about the "digital quarter"?
Nisenholtz: As for oversupply, he grew up in Philly and the Philadelphia Inquirer could charge. Why can't the Inquirer charge for Philly.com? Do you think they can?
Nisenholtz: There isn't any fact to support that. Classified ads are databases – the lifeblood of local newspapers. "When the internet came along, it didn't create supply for local news. I can't think of a single local news experiment on the web that worked." When you look at what the internet has done for advertising, you have to look carefully. Display advertising in print is not dead. From a category basis, the vast majority of money that has been taken out of display has been in classifieds. "Anytime a response is required from an advertiser, you'll naturally see the internet having a significant effect." Procter & Gamble spends 2% of its money online.
Nibley: "The reason is they're selling soap. It doesn't make economic sense to use the internet to sell soap."
Nisenholtz: The automotive marketplace is going to be decimated by the internet. But not all categories in all media.
Nibley: In the online ad world, search is a large part of it. Will online advertising rise to where display/classified advertising is now (in print), or will print go down to online dollars? I think online CPMs going up and up. I think the rates will come down in newspapers. The pharma industry is basically financing network news now and newspapers.
Freeland: You have to make a distinction between general and niche, and not just for print but for TV. That's what FT is and that's where the ability to charge for content is stronger.
Bettag: Can you get people to pay for news? We're looking at an audience that will pay an enormous mobile phone bill and a huge cable bill. People will pay big money for the monthly rate of information. They'll spend if they think they're getting something that is special. News is so broad. What can we give them that will make their lives better?
Nibley: Our research shows that Millennials don't read. They absorb information with audio and video. It's just a different way.
Q: In journalism school, we talked about e-paper. Whatever the future business model is, it depends on the delivery device. Where are we on that?
Nisenholtz: We've done a lot of research on that. Print is a technology. People pay for the technology – it's portable, visceral – there are tremendous benefits. E-paper has the same potential. We've been through three generations of e-reading technologies. We've participated in all of them. "For the first time we're seeing a little bit of light at the end of the tunnel with the Kindle. We are encouraged by the amount of use that it's getting with respect to our products. And people are paying for it. But it's still very, very, very early days. It's too soon to make a generalization about it." Future devices won't be monochrome. Aplle may come out with a larger form touchpad. "You'd have to see an advertising marketplace evolve around it to and that requires scale."
Freeland: "I totally agree… Kindle is incredibly hopeful." If you took newspapers and wiped out print and distribution costs, we would all be incredibly profitable businesses.
Q: I always thought the key to survival in the newspaper business is when you realize you're in the news business, not the newspaper business. What's your take?
Freeland: We can't be commodity journalists anymore. That's a big shift. The second shift: if we have this panel five or ten years from now, we might not know who's the newspaper guy and who's the TV guy. The third thing is we need to interact more with our users.
Q: How do you see video evolving on the web? It's exploded in the past year.
Bettag: I just know it is. The number of people watching televisions is happening faster than anybody knows. Slingbox is a big example. People will pay for it if you're giving them something great. That's where the change is going to come from. iTunes pricing of $1.99 per episode is a lot of money if it's watched by millions of people.
Freeland: The internet has allowed u
s to get a tiny slice of the TV revenue pie. That pie is so much bigger than the newspaper pie ever was.
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There were lots of questions I wanted to ask. Are there niches beyond finance that work? Niche magazines are folding left and right in seemingly every genre. Do the higher revenues for online video also compensate for the higher costs of producing and delivering it? And what about the "digital quarter" question? I don't think anyone satisfactorily answered that.