Friday, December 15, 2006


We don't know all sorts of things about the business future of online media, but there's one thing that's already quite predictable: the eventual profit-margins in 21st century media are likely to be far less generous than the fat and complacent margins to which we grew addicted in the 20th century.

I'm confident about this because we already know that the Web is inherently competitive, and in any type of competition, small margins of quality and success produce outcomes that are wildly disproportionate. This is why baseball franchises will spend millions of dollars on a free-agent pitcher who offers only the prospect of a slight improvement in the rotation's overall ERA. On such tiny margins are championships won and windfall profits earned. One might think that this is a rather obvious observation, but one would be wrong.

Here's why our industry doesn't get it: Modern media executives -- not to mention investors in traditional media companies -- earned their fortunes by wringing every possible dollar out of their properties. The rise of corporate ownership in the 1980s and 1990s certainly cut a lot of non-productive fat from newsroom budgets, but the last of the fat disappeared a decade ago. Every cut since has been to quality, and the cumulative effects are now apparent. Mention this in certain carpeted hallways and you'll get funny looks, because "quality" is a subjective concept to these people -- not nearly as tangible or meaningful as the highly objective concept of profit.

So while media executives will always talk about public service and editorial quality and civic duty, their aversion to invest in their products is a much more meaningful impulse. And why shouldn't it be? Newspapers have returned double-digit profits for decades with almost no visible correlation to editorial quality. To put it bluntly, the return-on-investment on "quality" has been so minimal for so long that it's now barely worth consideration. So long as newspapers remain local monopolies, this isn't likely to change.

Consequently, media companies of late have been far more interested in adding new publications and products (without adding staff) than they've been in improving the quality of their core enterprises. If newspapers make 10 to 15 percent profit no matter what you put on their front pages, why worry about the various erosions now besetting the industry? Squeeze your staff and production capabilities harder and get your growth out of new products.

This works up to a point -- specifically, to the point at which these local monopolies break apart into multiple competitions for suddenly elusive market share. I'm convinced that the truly significant shakeout change in our industry over the next few years will be this shift to a truly competitive media economy.

The current economy rewards shallow-minded journalistic shoddiness. The coming economy will punish it mercilessly.

Consider: If the choice between city hall coverage is a choice between two clickable links, one that belongs to your paper and another that belongs to a start-up competitor that treats city hall coverage seriously, how long will readers continue to click the link that finishes second in terms of quality? What will it take to get that click back once you've lost it?

In that kind of competition, suddenly quality isn't an afterthought -- it's the entire game.

When you see things this way, you wonder: Why aren't media companies investing more money to secure those clicks today and into the next decade? If media Goliaths enjoying 15 percent profits in 2006 routinely invested half that money in quality improvements, they'd be well positioned to head off the inevitable future challenge from an army of Davids. Wouldn't they?

But investing in quality content just isn't an option in the current financial climate, and even when corporations think ahead to emerging technologies and media, they almost invariably wind-up fixating on the cost-cutting potentials of new media tools.

Consider this Frank Ahrens piece from earlier this month in the WaPo ("A newspaper chain sees its future, and it's online and hyper-local") about Gannett's decision to push the Web-first concept out to its subsidiaries.
The chain's papers are redirecting their newsrooms to focus on the Web first, paper second. Papers are slashing national and foreign coverage and beefing up "hyper-local," street-by-street news. They are creating reader-searchable databases on traffic flows and school class sizes. Web sites are fed with reader-generated content, such as pictures of their kids with Santa. In short, Gannett -- at its 90 papers, including USA Today -- is trying everything it can think of to create Web sites that will attract more readers.
Some of those ideas are excellent, and the shift to a Web-first publishing model is inevitable. But the star of the Ahrens article isn't a good idea but a truly bad one:
Darkness falls on a chilly Winn-Dixie parking lot in a dodgy part of North Fort Myers just before Thanksgiving. Chuck Myron sits in his little gray Nissan and types on an IBM ThinkPad laptop plugged into the car's cigarette lighter. The glow of the screen illuminates his face.

Chuck Myron is one of more than a dozen "mobile journalists" -- mojos -- for the Fort Myers News-Press. He doesn't have an office or even a cubicle, so his car is his newsroom. The paper's parent company, Gannett, hopes the mojos' local focus will drive readers to its community-specific Web sites.

Myron, 27, is a reporter for the Fort Myers News-Press and one of its fleet of mobile journalists, or "mojos." The mojos have high-tech tools -- ThinkPads, digital audio recorders, digital still and video cameras -- but no desk, no chair, no nameplate, no land line, no office. They spend their time on the road looking for stories, filing several a day for the newspaper's Web site, and often for the print edition, too. Their guiding principle: A constantly updated stream of intensely local, fresh Web content -- regardless of its traditional news value -- is key to building online and newspaper readership.
Let me clarify: Training talented journalists to use laptops, recorders, cameras, camcorders and all manner of associated hardware and software isn't a bad idea. Pushing reporters out the door with these tools in order to produce more crap more cheaply is a bad idea.

Because that's what the corporate idea of a "mojo" is: a combination print writer, still photographer, radio host and TV production crew, all wrapped into one isolated, overwhelmed package, rolling endlessly from one meaningless chicken-dinner story to another. Not an evolution in journalistic capability, but a way to have one person do the work of three while pocketing the difference. Quality be damned.

The "mojo" concept isn't something that Gannett just invented, either. In March while attending the Western Knight Center multimedia reporting seminar at UC Berkeley, we were introduced to a television reporter whose station changed hands and was placed under new management that delivered the following ultimatum: Only those employees who could operate both in front of the camera and behind the viewfinder would continue to receive paychecks.

Gone were the days of broadcast teams of two (reporter/videographer) and sometimes three (reporter/videographer/producer) professionals. Now this reporter (who also had to take a pay cut) is her own producer, her own camera operator. When she needs a "two-shot" at an interview, she has to set up the tripod and film herself pretending to listen to the subject. She even transmits from remote locations and must solve any technical problems that arise. So she's her own engineer, too.

The great irony is that these low-cost tools now enable freelance journalists to compete in media arenas that were once the sole province of well-funded professionals. Instead of three local news channels, the Web offers the opportunity for dozens. One would think that media companies would understand that skimping on quality actually encourages competition from motivated amateurs, but again, one would be wrong.

In the week after the Ahrens piece ran, links to it were sent to me by no fewer than three other journalists. You could practically hear the gears in their head cranking through the possibilities, wondering, "Is this good? Is this bad?" The answer is neither: tools are tools. How we choose to use them determines whether they are good or bad.

The good news for those of us in the business is this: media isn't going away, and people with talent, ethics and commitment will be more valuable -- not less -- after the transition. On the other hand, the survival of publicly traded media mega-chains is another matter entirely.

If you're wondering how your company will stack up, here's a good test: Is your management investing in quality content or looking for vapid new ways to cut corners? Are they innovating or copying? Are they acting like scrappy competitors or vaguely annoyed sleepwalkers?

Answers, please, on a postcard...