The changing media landscape

Let the Internet evolve on its own terms. I don’t believe in the blessings of integrated newsrooms. My experience is […]

Let the Internet evolve on its own terms.

I don’t believe in the blessings of integrated newsrooms. My experience is that the online business will do best if it is run as a separate organisation.

The media industry is facing the perfect storm. Particularly newspapers. Revenues from classified ads are falling off a cliff, brand advertising is running at lower levels than for a long time and, in general, circulation is continuing to decrease – year after year.

Some things are on the up, though: the number of reports written in incomprehensible management speak, advice about the “opportunities in a downturn” and last but not least, the belief in integrated newsrooms.

According to a survey by Zogby International, an overwhelming majority of the world’s editors – 86 percent – are convinced of the blessings of integrated newsrooms. Staffed by journalists so effortlessly versatile that they will manage to produce high-quality material for both the online and print editions day in, day out.

Miraculous powers are attributed to integrated newsrooms. They are expected to secure the future of newspapers. They are the holy grail of editors – and managing directors.

Personally, I dissent.

My conviction is based on more than 20 years’ experience of running newsrooms – both at print and online newspapers. And on the recognition that we are now facing permanent climate change – and not just outside the newsroom.

I live in Scandinavia. Let me therefore proudly present some of our leading sportsmen. Sweden was the birthplace of two incredible skiers: Gunde Svan, who won 11 World Championship and Olympic gold medals; and Ingemar Stenmark, who won five, in addition to 86 individual World Cup races.

If anything, Norway has done even better: Bjørn Dæhlie won 17 World Championship and Olympic golds, whilst Kjetil André Aamodt won nine. Svan and Dæhlie were cross-country skiers, whereas Stenmark and Aamodt were alpine skiers, but the tools they all used were skis and they all raced on snow. Nevertheless, no-one would imagine that the slalom specialist Stenmark could have beaten Svan in a cross-country race.

Because the formats are so different. Like the Internet and paper!

All content produced for the print media is periodic. Either daily, weekly or monthly. The Internet is an environment that is suitable for continuous journalistic production. At its best, this is often done in dialogue with readers. Their presence and experiences become an integrated part of the final journalistic product.

These are two ways of working that obviously require different specialist skills. And to stick to the sporting metaphors: different team structures and training methods.

The day before I started work on this article, a dramatic mudslide swept several houses into the sea in Norway – many hours away from our newsroom. The event provided an avalanche of illustrations of the differences between a real-time medium and a periodic publication.

The initial coverage on www.vg.no – using the blogging tool Coveritlive – included the following:

13.13. Joint Rescue Coordination Centre confirms that several people are thought to have been swept away by the mudslide.

13.14. The police, paramedics and the fire service are at the scene, but are unable to move into the affected area for fear of further mudslides.

13.14. Our reader Lars asks: Do we know how many people?

13.15: The number of people is not known.

13.18. Our reader Sindre asks: Is there a rescue helicopter there?

13.19. The Joint Rescue Coordination Centre says that a helicopter has arrived, and has started searching for people who may be in the mudslide.

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13.29: Our reader Jostein asks: Are you there, or are you just providing information feeds from other people?

13.29: Both our online and print editions have sent reporters to the scene. We are in continuous contact with the police, local authorities, joint rescue coordination centre and other sources in the area.

13.33: Here is Wikipedia’s list of past mudslides in Norway.

13.35: VGTV. See a video from the scene of the mudslide.

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13:52 Update from our reader Hein Ove Trondsen: Working onboard the KV Titran. We have been redirected to the location of the mudslide in Namsos to help with the rescue operation. We have 2 divers onboard.

During the first hour after the accident, the online edition had given readers up-to-date information, live pictures, reports by people on the ground and answers to important questions.

The next day the print edition has six carefully edited pages with big pictures showing the full horror of the disaster. It also told the dramatic story of a man who entered the mudslide to warm and look after a nine day old boy and his young mother. Told and presented in a way that would never have been possible with the emphasis on speed and format of the online edition. The online reporting during the initial phase was brief, multi-media, partially user-generated and transparent. It was presented as a dialogue. The newspaper report was carefully edited, distilled and refined.

To take another example: when a block of flats on the west coast of Norway recently collapsed, killing several occupants, the online edition published 28 extensive articles with 113 updates before the print edition was even on sale. Whilst online coverage is a constant stream – like a bubbling brook, newspaper coverage is constrained by various limitations – like the contents of a bottle. Both the brook and the bottle contain water, just as both the online and print editions can contain fantastic journalism. But they are two different formats.

There are amateurs who are good at both cross-country and alpine skiing, but it isn’t possible to be compete professionally at both disciplines in parallel. News organisations face the same choice: is it ok for us to be an amateur? Or is our ambition to occupy a leading position both online and in print? My aim is the latter – to be number one in the country!

Having separate newsrooms for the online and print editions requires a certain critical mass, in terms of both the organisation and the market being served. So I am not claiming that this model will suit everyone. At smaller newspapers the dual newsroom model would not be viable.

But it seems stranger that big news organisations in major markets are opting for integrated newsrooms. Clearly they are doing so in the belief that it is the best way of adapting to the challenges facing the print editions and the opportunities available online. In my opinion, a completely integrated model is so hard to get right that it reduces the chances of success – of both editions.

Choosing an integrated newsroom reveals a deficient understanding of the consequences of the online business model, and of the changes that need to take place at newspapers.

Let me expand my thoughts on this issue, and on how it should affect the organisation of the newsroom. The online business model – which relies almost entirely on advertising for revenues – means that the market leader receives a disproportionate share of the revenues. Look at Google in comparison to other search engines.

Or look at the revenues of the biggest classified ad portal in your market, and compare them with those of the second biggest portal. News services are no different.

My prediction is as follows: newspapers with a joint organisation for their online and print editions are unlikely to make much money online. It is impossible to capture the valuable number one position with that kind of organisational structure. The bigger the market, the harder it becomes. And the further you are from the top of the podium, the lower the revenues. The number ones earn vastly more than everyone else.

David Beckham earns a hundred times more than an average midfielder at Bolton.

Online positions are all about critical mass. If you manage to occupy a leading position, it becomes very difficult for your competitors to take you on. In reality, critical mass offers greater protection than actual quality differences in relation to your competitors. In academic terms, the Harvard professor John T. Gourville puts it like this: “The average person will underestimate the potential advantage of replacement by a factor of around three, and overestimate by the same factor everything he is asked to give up”. A powerful argument for the importance of being number one.

I don’t think that integrated newsrooms will improve the prospects of print editions either. At the moment the climate facing the media industry in general – and the newspapers in particular – is very severe. All too many newspaper managers think that we are simply facing a storm, when in reality it is a case of permanent climate change.

Storms can cause considerable damage, but they do not permanently change the biotope. When the climate changes, conditions improve for certain species, and deteriorate for others. For a decade we have witnessed an improvement in the growth prospects of digital media products, in tandem with an increasingly challenging environment for the analogue media – including newspapers.

In order to meet this challenge, it is necessary to build on the strengths of the various media. Let the Internet be the daring alpine skier who responds at lightning speed to unforeseen obstacles, and let the print edition be the cross-country skier with excellent stamina for the news-gathering process. There are more entertainment programmes on TV than ever before – because entertainment is the area where TV has the most obvious relative advantage over other media.

How will it help the print edition that its reporters have to produce increasing amounts of material for the online edition? How can the online edition continue focusing on development if its content is increasingly provided by the print newsroom?

Every day I read supposedly good advice about how to confront the challenges facing newspapers. The other day, a leading American newspaper manager quoted the following as good examples of how to adapt to the current market: a newspaper had placed its logo down the left-hand side of its front page, and another one had changed the name of one of its sections from Tempo to Live.

Wake up! This is like talking about changing the curtains when you are locked inside a burning house. What about looking for the emergency exit or trying to put the fire out?

Newspapers will clearly need to be produced more cheaply in the future. Circulation will not increase. Within that context, the idea of the integrated newsroom makes some sense – in that it has the potential to reduce production costs. Nevertheless, I think it is the wrong response – for three reasons:

1. The product development needs of the print and online editions are different. All product development requires a great deal of focus. If newspapers are to be viable in the future, they must offer a product that clearly differentiates them from online news sources. The Internet is already the first link in the news value chain, and it will only reinforce that position. To my mind, it is virtually impossible for the same people to reposition a newspaper whilst simultaneously developing original and innovative story-telling methods online. Integrated newsrooms are likely to hold back both the development of the print edition and the potential of the Internet.

1. The newsrooms of print editions are run more expensively than those of online editions. If they are merged, it is more likely that the higher cost structures of the print editions will infect the online editions than vice-versa.

1. Newspapers must cut costs, but the focus should be on other areas than the core journalistic functions. They must be printed more cheaply, distributed more cheaply, have fewer support staff and the process of turning journalistic content into the finished product must be much more efficient. Our response to the challenges facing newspapers should not be poorer journalism.

What has informed my view? My own experiences running Norway’s biggest newspaper – and then running Norway’s biggest online service. Two products based on the same brand name – VG.

Let me give a brief summary of the story. Our online edition was founded on 10 October 1995. At the time I was the managing editor of the news section of the print edition. The online edition was allowed to take its first unsteady steps completely without my supervision – although officially it was a small department within the newspaper. That remained the organisational structure until the summer of 2000. At that point the online business was made a separate company, which I was given the task of running – both editorially and commercially.

When we started out in 2000, the number of daily visitors to our website was less than 20 percent of the readership of the newspaper. Today the readership of the newspaper is 80 percent of the number of people who visit the website. This historic paradigm shift has been driven by broadband technology, and the fact that digital natives make up an increasing share of the market. But also because we allowed ourselves to develop the online edition on its own terms. Driven by an overriding ambition: to be number one online.

The Internet will not disappear. There is no empirical evidence that a defensive strategy will safeguard the future prospects of the print edition. On the contrary, our best guarantee of future success is that 40 percent of our media house’s ad revenues, and almost 38 percent of total profit, now come from our digital business.

A newspaper reader is generally considered to be worth twenty times as much as an online user. In the case of VG that factor is less than eight. At least 55 percent of the costs of publishing a newspaper can immediately be eliminated by going “online only”. Paper, distribution, printing and commisions are not needed on the Internet. We would be close to break-even already, even if we were to move all of our print journalists to the online edition.

Not that we are going to do that, because just as we must “Let the Internet live”, we must also “Let the print edition live”. The biggest challenge for all traditional media houses will be to handle the transition from analogue to digital media consumption as smoothly as possible.

I am convinced that the organisations which succeed in doing so will gain a relatively stronger position than in the analogue world. Admittedly digitalisation involves the fragmentation of the media landscape, but it also makes the biggest channels more dominant. Have you heard of Google, Facebook You Tube and Twitter? Or in the Scandinavian market for news websites – aftonbladet.se and vg.no?

In addition to having a separate newsroom, our online business is also a separate company. This arrangement is becoming increasingly rare. Again my personal view diverges from the majority one. If both the print and online editions are part of the same company, with the same board of directors, I believe that more time will be spent on the challenges facing the established medium, than on the opportunities presented by the new medium. Both deserve proper attention, but not at the expense of each other. The problems of old age have never been alleviated by hampering the development of youth.

I believe that both the online business and the print edition are best off with separate organisations. It provides both products with the best foundations for the necessary focus, pace and product development.

However, the media industry has been hit by a once-in-a-century crisis, which was partly brought on by former central banker Alan Greenspan’s doctrine: “Rather than pricking a bubble when it is being inflated, it is better to concentrate on clearing up the mess after it has burst”.

This is not the time to be dogmatic. Online and print editions can definitely learn more from one another. But I cannot help thinking that the excessive trust placed in integrated newsrooms has been born out of a need to cover up the fact that far too many newspapers originally missed the online boat.

Torry Pedersen is the CEO of VG. He has been a managing editor at VG’s print edition, and from 2000 to 2008 he was Editor-in-chief and CEO of VG nett (VG online).