How does an organization that trains professional journalists handle on one hand the radical disintegration of the professionalized class and on the other hand embrace the larger swing of online, openness, etc.

I think the semi-recent makover of their site late last year was a start. I’m also intrigued by Bill’s new blog that covers the business side of things.

Listen in…

Tom – as someone who is an outsider to journalism, what were your thoughts on the day and the situation journalism faces.

Let me start with the day. As a technology person who has been around industries that have changed because of technology and the Internet it was heartening to see newspaper people recognize the magnitude of the change and not justify the head in the sand approach. There was general consensus that this is not an-incremental change and incremental solutions won’t work.

In Telecom and other industries – there is generally denial until the very end. But for most people who attended there was a real awareness that change isn’t necessarily bad. It is disruptive but it can lead to journalist being more effective at their mission, provided they can figure out little details along the way like … how to get paid for it.

The bigger subject is a fascinating one because it probably is true that journalists have never had tools that are as good as the tools that are avaliable now. The ability to selectively crowdsource a story if you need to, or build a story as Jeff described it, even if the story itself isn’t the focal point, where you start something and pieces of it get filled in around it through the link economy, video can be mixed in and the man on the street is everywhere, etc. So the tools for journalists to do their job are fantastic. And the physical impediments are smaller than they have ever been. But the business model hasn’t been figured out – and journalists have to eat like everyone else.

I think we got far enough in the day to figure out that’s where we are – but we didn’t get much further. There are a few possible models for journalist and a few hyper-local models but there is a distance to go in terms of figuring out how they can make a living in journalism. It’s not a question of what value journalism can add – there is general agreement that credibility, editing, facts, and quality reporting are things that journalists bring that is of value- but it is hard to see how revenue can come from it right now.

Are there any direct comparisons or analogies from when you worked in Telecom?

Any industry under threat tries to cut its way to greatness. Particularly industries that have had a controlling situation for a period of time. When indsturies were essentially monopolies or they have a franchise it’s very hard for the owners or stockholders to realize the value is evaporating. Their first reaction is that these are temporary times and cutting back is a solution.

Often this is a good first reaction – because they were monopolies these companies typically have a lot of fat. But there comes a point where you can’t cut anymore. There is nothing left to cut and if you keep cutting the product gets damaged and its a downward spiral. That is Telecom, newspapers, and perhaps the car industry.

What’s different though? Related to this I think is a comment you brought up about the economics of Craigslist. That growth of a network is more valuable than high revenues per network node? So that if you charge as little as possible – but the network grows in size, it becomes impossible for others to compete. Is there a way newspapers could leverage that?

It’s maximizing your network by drawing out as little cash as you can until you are in a sailable position.

I’m just guessing here – this is just speculation because the answer is probably different if you mean local, regional, national or global.

It’s probably easiest to see where local news organizations, hyper-local in web terms, analogous to a small-town newspaper could achieve this status. I think we will fairly quickly find the model and tools wher ethe local site becomes an indispensable part of people’s lives and advertisers are eager to support it – because it has a consistent readership with identifiable demographics.

By making readers contributors (which newspapers have always done to some extent with wedding annoucements, etc), using the ability to crowdosurce when trains are late, where crime is, etc – the local sites like Baristanet can become an even more apart of people’s lives than the small-town newspapers used to be.

At that point in time – they won’t need to charge a lot for advertising because they will have a lot of it – and they will be in the Cragislist spot where they can charge so little it will be tough for competition to sneak in. A rival local newspaper will have real competition. But competition would be good because it would mean together they would figure out the proper economics.

I think there would only be one winner – at least until the winner gets sloppy. Because if one builds a good network in terms of people then there is not much sense in being part of the inferior network. If it’s as simple as traffic reports where you have 1,000 readers sending in updates and you have lots of people texting in so that site has the best traffic reports and somebody else starts up another network their site is going to be useless because nobody is on it – and why would anybody join it? It’s useless.

I’m not sure what this looks like at the regional national or global level. It’s hard to have a community if everybody reads the NY Times – the Times is doing an experiment with TimesPeople – where if you join the community you know what your friends are reading, etc – they are trying to be the host of a lot of little communities -because that is more interesting than worldwide – everyone read this article. So being a larger group that hosts smaller groups with an excellence at national or international coverage. That could work for NY Times WaPo organizations – but not many of those. They could be advertising supported if people integrated it into their daily lives.

I don’t know what happens inbetween at the regional level. I think it’ll be important because from a governance point of view – we need the information.
Last thoughts?

I’m optimistic – I think something will evolve because we have such a need for the information. People are interested – maybe cause there is more information or maybe because they are scared – but a positive thing for journalists is that there is this hunger if there is a business model for supplying it.

(For those keeping track, that’s one video using Viddler, the other two using Vimeo and Blip. Have a video platform you want me to try? Let me know).

I was able to get a brief chat in with Bill who has also provided a brief write-up below.

From Bill Densmore

Thanks for all your work on last week’s “New Business Models for News” summit at CUNY; I was unable to attend. But your on-demand video archives are a valuable fill-in.

I’d like your community to know about the Information Valet Project, which takes a cue from Jeff Jarvis’ advice to start building new business models. Our first summit to define and plan launch of the Information Valet Service is Dec. 3-5 at the new Donald W. Reynolds Journalism Institute at the Univ. of Missouri. We invite participants. (To register: http://www.ivpblueprint.org)

We’re pushing a fairly specific notion of how to build a shared-user network with a revenue model baked in — the revenue model is similar to the sort of reverse syndication which Jeff talks about, and embraces the networking concepts outlined by Tom Evslin at CUNY.

“Blueprinting the Information Valet Economy” is a strategy summit designed to blueprint the law, ownership, management, marketing and technology of a shared-user network for user-centric demographics, privacy-protected purchasing and advertising exchange and compensation.

Evslin noted that the former newsPAPER industry — because of its unique content and relationship with 50 million customers who pay for information daily — is in a unique position to provide the content seed corn needed to jump start a network business — if it comes together on a platform and protocols.

We’ll put forward fairly specific ideas for doing this forward as a point of departure — and expect to hear modifications. We’ll end up after 2-1/2 days with a commitment to form a collaborative that will move forward with whatever is the consensus approach.

I hope there will be other events like IVP Blueprint — at CUNY, and elsewhere — which advance specific projects for sustaining the parts of journalism which contribute to participatory democracy.

Opportunities:

1.  Local – While we didn’t get to the local discussion until the end, this was clearly seen as the biggest opportunity.  And not just because we want to help Google’s Eric Stein hit his numbers.  The reselling of AdSense by news brands who have local salesforces is a substantial opportunity.  Businesses like Reach Local are ready to cut out local newspaper salesforces.  And, there’s an opportunity even if you don’t have a salesforce to work through businesses like Clickable to help Joe the Plumber reach the local audience through the newspaper’s site.

2.  Data Sales.  It’s already a vibrant business for many publishers.  Whether it is through selling data to providers like Tacoda or Ascerno, using other data services to create B2B or local services, news publishers are sitting on top of a meaningful amount of data that can drive revenue.

3.  Ad Networks, when managed right, are also an opportunity.  When tied in with data, ad networks can unlock value that publisher otherwise can’t sell.  Whether this is good or bad over the long term is still a question.  Should sites follow the Washington Post and ESPN and cut out Ad Networks entirely?  Many in the room felt that Ad Networks allow the best news brands to focus on selling their high-value inventory themselves while delivering extra monetization for unsold inventory.   The other side of the argument – that Ad Networks create channel conflict and undermine brands – carries merit.  Success comes from managing what inventory is given to Ad Networks and what isn’t.

4.  The technology to create a totally effecient market exists today.  While online ads are now part of a big distributed network where frequently the seller of the ad isn’t the publisher of the conent, the market is still inefficient.  Only reselling AdSense has delivered on this promise.  The other parts of the chain, including Ad Exchanges, are starting to gain acceptance, but are not yet easy for publishers to scale.  In the future this will change and create more opportunities.

5.  Smaller scale opportunities include:  Subscriptions for specific high-value content, but not for general news; Branded content, but more of a niche solution; In Germany, Focus is directly selling products as well as doing lead generation; Virtual currencies may present an opportunity down the road; Video is an opportunity, but it’s comparatively small.

So, why isn’t this working?

Measurement.  The lack of reliable metrics are holding growth back (note, this is a challenge for everyone in online advertising, not just news).  This is an issue that lacks short-term solutions.  But, incremental progress keeps being made and eventually a solution should emerge.

The challenge of creating a growth business inside of a mature business.  For instance, objectively, reselling ad sense makes sense.  But implementation has been tied up with internally slow decisionmaking and technical implementation.

The mindset of replacing print losses with digital presents a fundamental challenge.  It doesn’t align with where consumer behavior is going to be.  And, the timeline for building digital value doesn’t line up with the realities of the declining print business.  Competitors by contrast, are able to focus on just scaling their digital businesses at their natural pace.  News brands that solve this problem will be the big winners.

And now the list of ideas we came up with for further discussion:  AdSense, Display, Online Video, Lead Generation, Direct Transactions/Retail, Conferences, Co-branded content, Subscriptions, Syndication, Data Mining, Product placement, Auction Model, Market Research, Licensing, Republishing web to print, Sponsored Feeds, Virtual Goods, Email.

If “the value of a network is proportional to the square of the number of endpoints,” then one task as digital journalists is to scale our networks — be they organically-grown, hyperlocal blogs or corporate-driven, international communities — as quickly and effectively as possible.

In a broadly-ranging, nearly consensus-free conversation, the “Networks” break-our group explored one case study, factors necessary to support network growth, and inherent challenges.
Tom Evslin provided two key points for our discussion of Debby Galant’s Baristanet, a blog covering news specific to Montclaire, NJ.

• The best Editorial networks grow organically from the bottom up.  Individual entities tend towards expertise and passion, but lack platform or ad sale expertise.
• The best Tool networks tend to form top down with standardized platform tools and metrics, plus centralized ad ops.

It stands to reason, then, that a top down initiative like Microsoft’s Sidewalk — possessing platform, metrics, and ad ops standardization lacking editorial expertise, flexibility and voice (see “The Cracks In Microsoft’s Sidewalk“) – might fail.

Likewise, though Debby’s Baristanet is a local success, her network value is less than it could be.  Moreover, she is forced to spend resources on platform and ad ops, instead of pure content creation.
Baristanet, then, would benefit from a broader, hyper-local site-supporting platform.

Outside.in’s Mark Josephson and NowPublic’s Merrill Brown contributed valuable insight from a platform perspective on incentivizing network engagement:

• Egos: We’ll make you a star!
• Revenue: My ads on your page.
• Reward/Reputation

In the waning minutes of our conversation, Harvard’s Thomas Eisenmann connected the conversation to a key question as news organizations continue to decline: If a city’s primary paper disappeared, would hyper-local coverage replace the centralized, enterprise-journalism oriented newsroom?
In the end, Thomas’s question lingered alongside a number of others:

• What are the best examples of journalism networks?
• Are journalism networks fundamentally niche?
• Can niche networks serve investigative journalism?
• How does a historically corporate, top-down infrastructure grow a network?

We were the fun group — the cost-cutters.

Charged with finding new efficiencies for newsrooms, we struggled a bit to come up with a model that would produce useful lessons. Ultimately, we decided to focus on a market like Philadelphia or Dallas and, rather than tweaking the existing daily newspaper model, to start fresh with an online-only news organization.

Andrew Heyward of Marketspace LLC led the discussion, and we began with traffic and revenue assumptions, then worked backward to create a newsroom that fit within those limits. With Neil Budde of DailyMe doing the math on his iPhone, we projected a website with 800 million page views/year at $5 rpm, for total revenue of $4 million. We set aside $2.1 million of that revenue to pay an editorial staff of 35 FTEs $60,000/year.

Here’s how the staffing broke down:

-Content creators who do blogging/photography/video/curation of beats: 20
-Community managers who do outreach, mediation, social media evangelism: 3
-Programmers/developers: 2
-Designers/graphics artists: 2
-Producers who do site management, etc.: 5
-Editors: 3

There was a spirited debate about whether there should be a newsroom at all; in the end there was general consensus that staff members should be out in the community reporting as much as possible, but that a scaled-back newsroom provided a valuable space for collaboration.

Easier to agree on was a list of things our staff would not do:

-National entertainment
-National sports
-National/international news
-Editorial page

In the areas of primary focus — local government, education, high school sports, etc. — we envisioned beat reporters working with networks of local bloggers to expand the reach of the staff.

We left questions about how to monetize all of this to the revenue group, but as Michael Rosenblum of Rosenblum Associates put it, “We’ve created a digital aquisition machine, and we find creative revenue opportunities based on that content.”

“The idea is simple — you go to Google blog search or Technorati or Memeorandum and look for info on local or even statewide elections, you’re going to end up with posts from blogs halfway across the country or about entirely different races. BNN/Elections brings you the posts from left and right from bloggers who are actually on the scene — the bloggers who have been writing about local and state politics, who go to the speeches and know the players down to the precinct captain level.”