Tuesday, April 28, 2009

A tale of two very different journalism start-ups

One journalism start-up tries to restore things to the way they were. The other is looking to a different future. Bill Grueskin, academic dean at Columbia University’s Journalism School and a former managing editor of WSJ.Com, compares them in this guest post.

By Bill Grueskin

You can learn a lot about where journalism is headed by looking under the hoods of two new startups.

The companies – Journalism Online and Publish2 – share a common goal, to help save journalism. But they couldn’t be more different in they ways they’re organized, the backgrounds of the executives or the solutions they offer.

Journalism Online is a weeks-old venture founded by Steven Brill (founder of American Lawyer), Leo Hindery (former telecom chieftain who was the partner of Newsosaur Alan Mutter back in their cable-TV days) and Gordon Crovitz (ex-publisher of The Wall Street Journal, where he was my boss when I was managing editor of WSJ.Com.) Their group vows to provide streamlined ways for publishers to generate online circulation revenue.

In the other corner is Publish2, run by two young guys you may never have heard of, Scott Karp and Josh Korr. Karp ran digital strategy at The Atlantic, and Korr helped develop a Web site for the St. Petersburg Times, but their combined experience is a pittance compared to what the Brill/Crovitz/Hindery team can muster. Still, their company has raised $2.75 million in Series A venture funding and $1 million in venture debt.

The two likely don’t see each other as competitors; indeed, they’re rarely cited in the same article or blog post. But I happened to interview Crovitz and Karp separately one day last week, and was struck by their widely different visions of journalism’s future.

Crovitz is a thoughtful (as in Rhodes Scholar-thoughtful) gentleman who oversaw much of the growth of the Online Journal. In our interview, he outlined a four-pronged strategy, ranging from providing a commerce system for publishers to devising aggressive marketing plans to sell subscriptions across the board for multiple outlets. His group also wants to help negotiate licensing and royalty deals with aggregators, which may explain why they brought attorneys David Boies and Theodore Olson to the company’s board.

Crovitz believes a coordinated effort to build subscriptions could bring scale and lower costs. In the late 1990s, when a one-year WSJ.com subscription cost $49, the incremental cost to serve a new subscriber was $8, Crovitz said. By 2006, the price of that subscription was $99 while the cost of serving the subscriber had dropped to 85 cents.

Brill, who is Crovitz’s co-founder, told Paid Content recently that the technical side of this venture hasn’t been hashed out. “We’re talking to a whole variety of developers,” Brill said, adding that launching an e-commerce site “isn’t rocket science.” (Actually, having seen the pitfalls of an online commerce system, I’d say rocket science is pretty close to what they’ll need, especially if this is going to work across multiple content-management systems.)

Toward the end of our interview, Crovitz brought up an interesting insight. He said his firm would also try to address the “more complex issue” of how publishers long enjoyed “a direct relationship with readers. Now we’re entering an era of multiple devices, and it’s not clear publishers can maintain their relationships with readers online. The device sometimes has the relationship, not the publisher.”

Which gets us to Publish2.

Karp, the venture’s CEO, agrees newsrooms are in a terrible fix, and identifies similar issues about publishers and readers. In the media business, he says, “it’s the package that’s valuable, not the individual article. … Newspapers used to own the distribution channel; they used to be at the front end.” But now, “Google and others have taken over distribution. And newspapers are at the tail end, which is the least profitable.”

Karp wants news organizations to get back to the distribution business by sharing their own content broadly and surfacing others’ content aggressively. That goes against the instincts of many journalists, but even when reporters buy into it, the process in most newsrooms is clunky (lots of cutting and pasting, with links often stuck under the ads). So Karp offers a platform to make that process as seamless as possible.

To see this in action, Karp cites coverage of floods last January in Washington State. As high waters inundated highways and breached levees, editors who ordinarily would compete with each other used Publish2 to learn what other news organizations were reporting and to sharing that content as part of their overall reports. A fuller explanation of that effort appears here, and an example of how this looked on one of the sites appears here.

The idea of journalists surfacing links from other sites isn’t new. What is different is that Publish2 enables sites to fuse content sharing with the reporting process, and it also provides ways for journalists to surface the links they gathered in the reporting process. “Collecting links should be a work product,’’ Karp says. “Newsrooms can use and publish those links instead of throwing away that research.”

Karp is rolling out an ambitious project to track spending in the federal stimulus plan, marrying reporters’ content and citizens’ tips, but – and this is important – always through the lenses of journalists. He calls this as a “new ecosystem” of news, that is, a way of understanding that the Web empowers sharing of information, and that journalists have a special role to play in identifying worthy content and evaluating the quality and credibility of others’ reporting.

To participate in Publish2, you go through a short approval process that includes adherence to an ethics code with standards designed to “separate journalism from marketing, PR, paid advocacy or personal expression, which on the web are increasingly difficult to differentiate.”

So, which vision will succeed?

As Crovitz demonstrated at Dow Jones, a subscription strategy can generate substantial revenue and define a uniquely valuable audience.

But as I wrote a few weeks ago here, it’s very hard to ask readers to pay for a publication you’ve trained them for more than a decade to expect to be free. Is there a single example of this having worked in the media business – or any business? (Readers, feel free to cite examples in the comments section.)

Too often, this strategy is portrayed not as a business case, but as a moral argument, viz., good journalism costs a lot of money, and so readers ought to pay for it. That entails its own risks. Or as Jonathan Landman, deputy managing editor of the New York Times, told alumni of Columbia’s journalism school Saturday, "Imposing a pay wall could be risky without being bold."

Karp’s business model is also uncertain. He foresees paid, commercial applications of his platform, as well as building a broader advertising network among news organizations.

But what Publish2 also represents is a vision of how journalists can take advantage of each other’s strengths and readers’ knowledge, creating content that transcends what any one newsroom can do.

Right before Karp came to my office last week, he visited the New York Times’ newsroom and made a quick convert in Michael Moss, an investigative reporter. Moss has been writing about food safety, and he asked Karp for ways to maximize reader attention to his investigative work.

Karp turned the tables and “suggested reframing the issue by thinking of ways to generate interest before the stories run,” Moss said. So Moss put out a direct appeal to readers for tips.

While Moss says he got at least a dozen “substantial” leads, what was more important is that he is creating “a community of people who are interested in food safety. … They like that they are participating in the creation of investigative stories.”

So there you have it: One new firm seeks to generate much-needed revenue by building a platform for subscription services, another seeks to generate new forms of journalism with a platform to share and distribute content. It’s hard to reconcile those two visions of journalism’s future.

* * *

Here’s an addendum to the points by Crovitz and Karp on news organizations losing their preeminence in the distribution channel. According to Sharon Waxman, Google CEO Eric Schmidt is saying his company will launch an algorithmically based filtering system in six months to surface news “the reader is looking for without knowing they’re looking for it.” That sounds like a turbocharged Google News, personalized without all the muss and fuss of setting it up.

Both the New York Times and Washington Post will “get this treatment,” Waxman writes ominously, and “Google believes it will be able to sell premium ads against premium content.” Will the news organizations make more money? Not directly, said Schmidt, adding only they might get more traffic from Google, which they can monetize on their own.


Blogger Matthew Terenzio said...

These fellows may have a great traditional news background.

If there is one thing we've learned it's that doesn't necessarily translate into being successful online.

I searched for Brill to discuss the venture and can't find a blog or a social network account for him.

Is that the type of person that can steer modern journalism?

Scott Karp, however, is well entrenched into social media and blogs, so if I had to pick from the two, I'd go with Publish2.

That said, I think there is no "answer" to news companies woes.

The answer is for emerging journalism to answer the call by embracing the new paradigm.

How? The tools are everywhere. If you can't figure out how to share information with the vast set of tools available. Give up.

How to make money? Name me a successful web voice that can't figure out how to make a living through books, speaking engaements, events and lastly (and I do mean lastly) a small portion of their income from online ads.

It's pretty easy when you look at it that way.

6:57 AM  
Blogger DigiDave said...

I do take point with this part: "In the other corner is Publish2, run by two young guys you may never have heard of, Scott Karp and Josh Korr. Karp ran digital strategy at The Atlantic, and Korr helped develop a Web site for the St. Petersburg Times, but their combined experience is a pittance compared to what the Brill/Crovitz/Hindery team can muster. Still, their company has raised $2.75 million in Series A venture funding and $1 million in venture debt."

From whose angle?

I had never heard of the people from the other startup. I knew who Scott was by reputation well before I met him. (disclosure I am an advisor to Publish2.com).

I also think their experience is a pittance depending on what you are looking for.

Who has more experience in the old and annoyingly slow bureaucratic newsrooms? Maybe the first group.

Who has more experience setting up websites, building new applications, etc? My money is on the second lott.

Both seem interesting. I tend to have a bias for online ventures rather than ones that sound like they are made from within and for bureaucratic institutions - but I wish them both success.

8:49 AM  
Blogger Unknown said...

Everyone who cites the Wall St. Journal as an example of how subscriptions can work fails to take into consideration that its subscribers are largely businesses and corporations. The execs who peruse the WSJ online don't pay for their own subs, and that's what makes it apples and oranges.

10:11 AM  
Anonymous Neil Budde said...

Why does journalism need one model to succeed in the future? Isn't that part of the reason the news industry got into trouble -- that it was looking for one single answer. The truth is that many models will succeed and that news will flourish if they do. But if we insist on pushing all journalism through one approach, then it will only succeed if that one approach succeeds. We don't need to let a thousand flowers bloom, but at let a few dozen different species get growing before we mow some of them down.

10:27 AM  
Anonymous Melissa Ludtke, Editor, Nieman Reports said...

You've presented a good glimpse at two powerful and divergent ideas about where the future of journalism might reside. It might be that aspects of each survive and possibly even thrive. In reading your words, I was reminded of a Nieman Reports' story Josh Korr wrote in the Winter 2008 issue. Josh edits The Wire, the online link journalism project at Publish2.

Entitled "A 21st Century Newswire -- Curating the Web with Links," Korr observed that "the great thing about the Web is that you don't have to pay anyone to help you bring great stories to readers -- just link to ones already there." (The rest of what Korr wrote can be found at: http://www.nieman.harvard.edu/reportsitem.aspx?id=100710)

His vision underscores, I think, the point you've made here about how these two notions diverge; in one, the search is on for a way to support the invaluable creation of content; in the other, the intent is to find ways to better use the Web to enable reporters to share among themselves (and others) the fruits of their labor and thus provide a very valuable continuous cycle of resources as a news story emerges and grows.

Note: Nieman Reports uses Publish2 as a tool to invite its visitors to populate its "Across the Web" section on the home page with links related to stories published in each issue of the magazine.

11:28 AM  
Anonymous Amanda Spake said...

I think Melissa Ludtke has summed up not only the key points in this piece, but one of the main debates going on right now about the future of journalism -- assuming there is one.

And that is that some groups of journalists are desperately searching for "a way to support the invaluable creation of content," while others, with paychecks apparently, are content to look for "better ways to use the web to enable reporters to share..the fruits of their labors."

Speaking from the point of view of one of the thousands of formerly employed reporters and staff writers out here--I'd really like somebody to spend alot more time, effort and creative thinking on finding better ways to pay for my labors and my "content"--before they concern themselves with sharing it.

There's plenty of "sharing," on the web. The Internet has dealt a major blow to "intellectual property" rights and copyright protection.

Everybody and their brother is coming up with new sites to package and repackage the "content" that a dwindling number of journalists produce. They may not be as helpful or creative as Publish2.

But the central problem remains the same: who is starting up new sites that will actually hire journalists or pay reporters a decent wage for producing journalism?

So I'm curious as to what makes the folks at Publish 2 sure that there will be enough solid journalism five years from now to "share?"

10:05 PM  
Blogger Unknown said...

You asked for examples of media companies that went from giving away a product to charging for a product. The closest examples are in cable tv.

CNN used to be provided free to operators, but then they realized that it was not sustainable, so they charged the operators a subscription fee, who over time, put CNN into one of their "pay tiers" for consumers.

Local TV news used to be free, now the best local TV news (in many urban areas) tends to be the cable system's local news channel -- which sustains itself through fees and ads.

MAde for TV movies used to come free, now if one wants to see them one needs to pay for HBO or Showtime.

While the costs may not be sustainable, free radio is being somewhat replaced by pay radio in the form of satellite radio.

No, these may not be examples of a company all of a sudden putting up a "pay wall," but they are examples of media companies that can charge turning out to be more viable than older models that do not charge.

3:24 AM  
Blogger Matthew Terenzio said...

Amanda Spake said: "I'd really like somebody to spend a lot more time, effort and creative thinking on finding better ways to pay for my labors. . ."

So would the rest of the unemployed world. You, like them may have to change professions.

Not trying to be harsh, but if there is a market for journalism, there will be paychecks for it. If not, there won't.

6:00 AM  
Anonymous T Heller said...

Matt posits an unhelpful -indeed, circular- 'proof of concept', to wit:

"...a successful web voice that (...) make[s] a living through books, speaking engagements, events and lastly (and I do mean lastly) a small portion of their income from online ads."

But would that someone really constitute a "successful web-voice"?

P.S. excellent posts by Melissa and Amanda. Thank you both.

7:35 AM  
Anonymous T Heller said...

...and another unhelpful platitude from Matt: "if there is a market for journalism, there will be paychecks for it."

He seems to overlook the vital role of a journalist's supporting infrastructure. It's more than a keyboard or pad & pencil, you should know, Matt.

Not every journalist should be expected to function as a lone wolf, selling stories on the streetcorner as if they were apples or pencils. Not even Publish2's Karp expects that.

7:41 AM  
Blogger David said...

(Actually, having seen the pitfalls of an online commerce system, I’d say rocket science is pretty close to what they’ll need, especially if this is going to work across multiple content-management systems.)And there you've hit upon one of the hidden issues with the online subscription-based biz model.

Recent experiments with Google checkout & Magento have been an extremely painful learning experience.

Setting up e-commerce solutions for content creators who want to sell the fruits of their labors online is no walk in the park. When you start diversifying with multiple products, across multiple sites - and then kick in the issue of foreign currency conversion... you quickly realize that the Devil is not hiding in the details. He's right out front, basking contentedly and giggling.

Sure, e-commerce is still in its infancy, while selling content through newsstands/home delivery has had a couple centuries to work the kinks out of its distribution/return/revenue workflows. But the desperate dash towards an online subscription-based biz model ignores the fact that significant technological challenges exist (see the early problems of InDenver, where paying customers were begging to be allowed to subscribe, only to find the e-commerce platform kept bombing out on them).

12:03 PM  
Blogger Matthew Terenzio said...

T Heller,

If you think success on the web is based upon monetizing a web page, I can't discuss this issue with you because for nearly 15 years I've been gaining access to the greatest minds around and they don't necessarily monetize their blogs in that fashion.
That's an old school way of thinking.

As Doc Searls puts it, "He makes money because of his blog, not with it."

As far as "the vital role of a journalist's supporting infrastructure," well I do think more and more people will be working independently or on a contract basis in the future.

But that doesn't mean there won't be any companies.

I've said it before, that many small markets need only around five reporters that also take pictures, a more technical individual that also contributes contents and a salseperson.

Now if you run that lean, I think you can eek out a business, but that is a far cry from the bloated companies that are incumbents.

That's mostly because of all of the overhead of dealing with a print product, but not wholly. (Photos being a prime example.)

Hey, I'm not trying to be a wise guy here, but anyone that thinks they can sit back and purely concentrate on writing one well-written article a day is not going to make it over the fence to a world where compiling databases, posting video, and interacting with the communities is the coin of the realm.

If I end up wrong about that, no one will be hurt.

1:39 PM  
Anonymous Anonymous said...

The problem with both these approaches is that they try to keep the professional journalist at the centre of things. It's like buggy whip manufacturers designing automobiles around a buggy whip, in the hope that their industry will survive.

Journalism is dead: a murder-suicide. Between Craigslist and journalistic incompetence, this job description has no future in the mass market. Best get used to it and deal with that.

2:46 PM  
Anonymous Craig Roberts said...

Amanda, in her comment, said this: "But the central problem remains the same: who is starting up new sites that will actually hire journalists or pay reporters a decent wage for producing journalism?"

I'll give you an example, but let me get this off my chest first.

Neither of the examples cited by Bill in his post here are about creating new businesses around original content - both are attempts to make something modern and sustainable out of the existing business model of newspapers; both rely on content produced by professional journalists (and by professional I mean paid - which doesn't always mean they are good journalists...). Amanda's point I think is a good one - someone has to employ the journos, whether it's as employees or freelancers.

One of the problems with a lot of the writing on "the future of journalism" at the moment seems to me to be based on the idea that the demise of the newspaper means the death of journalism.

I think these are two separate questions. Newspapers as we know them are probably doomed beause the business model doesn't work in today's media landscape: newspapers are typically owned by large corporations with bloated cost structures that just can't be sustained, especially as advertisers cut back on print spend. But journalism, despite what I've been reading (mostly in newspapers, funnily enough), does not occur exclusively in newspapers. Let's not confuse the product with the delivery mechanism.

Anyway, I work for a small publishing business in Australia - an online startup which is employing journalists and, we believe, developing a business model that will be sustainable and profitable even as our competitors are firing hundreds of journalists and salespeople.

The business I work for publishes two websites - www.BusinessSpectator.com.au and www.EurekaReport.com.au.

Eureka Report is a subscription-only online publication which has been operating since 2005, employs four full-time journalists and editors plus a handful of paid contributors, and is profitable in its own right. Business Spectator was launched in November 2007 by the owners of Eureka Report and some "refugees" from print journalism - three well-respected business writers - with the backing of some external investors not involved in journalism.

Business Spectator employs 11 full-time journalists, including cadets and some young talented editors. We are training up a new generation of journalists who will never work for a newspaper, but can learn their trade from some of Australia's most experienced journalists.

With a combination of wire service stories (which we pay for), original reporting and high-quality commentary and analysis, we've built up an audience that is loyal, engaged (about 12 minutes average session time per visitor - double our nearest competitor), and highly attractive to advertisers.

The scale is small in Australia compared to the US(we do about 300,000 uniques per month) but we are ranked competitively among the websites of the mainstream Australian newspaper publishers' websites (including Rupert Murdoch's The Australian). We have achieved this in 18 months with almost no marketing other than a bit of SEM and lots of word-of-mouth.

Without the legacy cost structures of newspaper companies, we are able to produce high-quality journalism and attract an audience that enables us to generate good advertising revenue. Combined with the subscription revenue from Eureka Report, we are well placed even though the economic downturn is hitting bottom lines everywhere. The newspaper companies are suffering hardest though, while we are still growing.

I'd be interested in any other examples around the world of media companies hiring journalists and creating original content for online. As someone else commented here, there will be more than one business model for journalism online; ours is only one attempt, and it is still early in our development. I'm pretty confident that the old newspaper model won't be the one to rely on, though.

2:05 AM  

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