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Inside Forbes: 7 Facts Journalists Need to Know About the News Business

Feb 6 2014, 8:22am CST | by

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Inside Forbes: 7 Facts Journalists Need to Know About the News Business
 
 

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Inside Forbes: 7 Facts Journalists Need to Know About the News Business

I vividly recall my hunt for a newspaper job in 1974 after getting an undergrad degree in journalism. I went to school in Iowa City, so the natural choices were The Cedar Rapids Gazette or The Des Moines Register, but after four years in Iowa I wanted out. Instead, I mailed a dozen or more resumes to once great papers like The Baltimore Sun, The Times Picayune and The Miami Herald. Actually, my sights were set on The Milwaukee Journal. I got an interview, nothing more. The others sent rejection letters that I hung on my bedroom wall. A last-minute visit to The Wall Street Journal on LaSalle Street in Chicago (a bastion for Midwest grads) led to an editing test at Dow Jones in New York City — and my first job as a newswire copy editor for $12,500.

Journalism, putting aside the no-thank-you letters, was full of excitement back then. Woodward and Bernstein (a.k.a. “Woodstein”) were taking down a president. Roe v. Wade, Vietnam War protests (I was tear gassed from my dorm) and campus rallies for George McGovern made the newsroom, not Wall Street or a young Silicon Valley, the place to be. Today, the media story is far different — fewer hard-working beat reporters, widespread distrust of journalists, professionals competing with device-laden citizen journalists. The digital divide — or the economic inequality between groups based on access to technology — has engulfed the news media. “More and more, it’s becoming apparent that digital publishing is its own thing, not an additional platform for established new companies,” wrote David Carr, The New York Times columnist.

If only it was that simplistic. For years, I’ve challenged journalists to understand the news businessnot sulk and go home. “New media” and “Old media” is a distinction with little difference when everyone is confronting the same vexing economic, advertising and marketplace challenges. Technology is also an equal opportunity disruptor. Youthful digital news startups, born on the desktop not to print, face a mobile onslaught that could bring young and old alike to their knees.

So, what’s a veteran journalist looking for relevance, or a college grad seeking a way in, to do? Possessing a reporter’s tenacity and an editor’s savvy are givens. Today, it takes far more. It’s no longer simply identifying a cherished news brand like I did 40 years ago; or falling blindly in love with startup brands in waiting run by bold-faced media names; or even getting caught up in the romance of it all at the expense of clear-eyed thinking. Planning or extending a journalism career means coming to grips with the unthinkable: news is a business, certainly no longer a public trust, if it ever was. Here are seven critical business areas media hopefuls and stalwarts need to grasp.

1) Scalability: Like it or not, it’s the Holy Grail of monetizing a news product. One reporter writing one, two or even three stories and one sales guy selling one, two or three ad pages is not even enough. To make it all work, that is, to make money, both the news and sales processes must achieve a higher level of efficiency. Operational demands for profits are too relentless. Increasingly, journalists are content creators (text, video and audio) and nodes in a social information network, much like fax machines are nodes in a communication network. Machine or human, the value of each grows exponentially with every additional network connection. Scalable efficiency like that is also required to achieve success in today’s $20 billion display ad business (banners, video, rich media and sponsorships), a vital revenue stream in the digital world despite the grousing about consumer banner blindness.
What to look for: Growth-centric business models.

2) Labor Model: Hiring more salaried reporters and sales guys is a linear solution from another era. It’s not exponential thinking. Most old media companies still deploy traditional personnel models. Star-studded startups do the same. Others bring on lots of people at lower salaries. The onslaught of programmatic buying (see below) with its lower rates for text and video ads will eventually take a toll on such models. Lower variable labor costs make for increased efficiency. Machinima.com does it with incentive-based video producers, who are similar to FORBES contributors. SBNation has hundreds of fan-centric bloggers. Fledging audio startups like Umano tap the large pool of freelance narrators. Medium, a content startup from Ev Williams, a cofounder of Twitter, enables storytelling “by everyone from professional journalists to amateur cooks.” Even Time Inc., which this week said it would cut 500 jobs, has made noise about scalable models. To quote Peter Drucker, the management guru: “If you want something new, you have to stop doing something old.”
What to look for: Radical newsroom processes and procedures.

3) Programmatic Buying: Put simply, it’s the buying and selling of ads through computers — no human required. It can accomplish in microseconds what sales guys with big expense budgets travel around the country to achieve. Despite the naysaying, there are ways to win in machine buying. What’s required is brand transparency on the exchanges and a willingness to include ad inventory many deem to sacred for competitive bidding. Absent that kind of free thinking, news organizations risk prices for a big chunk of their display space falling as much as 70%.
What to look for: Ad inventory optimization and 100% sell-through.

4) Advertising Strategy: In the good old days, journalists believed all problems could be solved if the sales department sold another four-color ad page. Then it became rich media display ads placed in a ghetto of ads. Sponsorships played a role, too The goal moving forward is develop new types of ad products. Native advertising is a beginning. Social ad concepts are another. Sometime ago The New York Times launched Ricochet, a program that enables marketers to attach their ads to NYT stories they tweet out to their Twitter followers. Such ideas for mobile devices will also begin to pop up.
What to look for: Creative new ad products.

5) Audience Strategy: The world of general interest is pretty much over, though journalists and backers like Pierre Omidyar will never stop trying to revive it, for the mass-market or elite audiences. The social Web is about verticals, niches and ecosystems — Tech, Sports, Investing, etc., with competitors finding different twists (Sports Illustrated is staffed with reporters, BleacherReport more with fans). Verticals more easily attract advertising dollars, sold by sales people or through computers on ad exchanges. In a multi-vertical audience strategy, demographic groups come into play. Sports and tech under one media roof attract young males, making for a focused sales approach. With more diffuse audiences, data analysis can help turn microtargets into large targetable audiences that work for marketers.
What to look for: Data management platforms, of DMPs.

6) Revenue Streams: In addition to scalable advertising models, new revenue streams become critical. Conferences, a long-time favorite, are gaining ground as a way to bring people face-to-face in a virtual world. Research reports on behalf of marketers can also be lucrative. Brand matters, too. FORBES recently signed a licensing deal for a FORBES financial center in the Philippines and other uses for the FORBES name are in the works. Other media brands are focused on re-purposing content for TV, movies and across the entertainment industry.
What to look for: Efforts to extend the brand.

7) Technology:  There is no journalism and no revenue without sophisticated publishing tools, data platforms, algorithms, real-time data and so much more. At an event at Harvard awhile back, Arthur Sulzberger was asked what advice he’d give to a fresh-faced new New York Times reporter. Go sit down and talk to an engineer, he said. Similarly, those engineers should seek out technologists in the startup community, where much of the next great code comes from. They sharing of everyone’s knowledge across an organization becomes critical to how technology plays out. At FORBES, it’s a daily routine for our product, sales, technology and edit teams to meet, share and implement.
What to look for: Cross-department collaboration.

Journalists themselves must also work differently to remain competitive in the era of social media. I asked Zach O’Malley Greenberg, a FORBES reporter who also spearheaded our new intern program, to describe reporting  today vs. five years ago. “In the old days (pre-2010), entry-level reporters were looked on almost as though they were stem cells — undifferentiated and malleable, with the potential to grow into any sort of specialty. Outfits looked for well-rounded applicants and I think that’s how I got my first job here at FORBES (Zach was caught in a round of layoffs years back, later to be rehired as a music reporter). The new world places a tremendous premium on expertise, even for newcomers.” Zach is particularly attuned to what he calls “the dangers” of of social. “When writing about individuals who have their own large audiences, journalists may be tempted to take a more positive approach to a story in hopes of getting a retweet from a subject. It’s imperative that writers not fall into this trap.”

Randall Lane, the editor of FORBES magazine and an entrepreneur at heart, says journalists must keep their natural skepticism in check regarding the future of their own business. “Too many industry cynics bash media companies that lay people off — or turn to contractors — but then also bash media companies trying to break from bad old models. You can’t have it both ways.” Getting down to the practical, Randall’s advice to young and veteran reporters: “Be platform agnostic when developing a story — then be platform-specific when executing it. Maybe it’s an epic tale that can be majestically told in words and photos. Maybe it’s a quick, timely take that demands to be posted online — even as a six-second Vine or 15-second Instagram video. Find great stories, then figure out the platform that’s best for it.”

An original one-sheet movie poster, folds visibly intact, of All the President’s Men hangs in my office (I still love watching the trailer). It’s a daily reminder of another era, the determination of two dogged reporters and the sheer power of the media business. I knew little about the inner workings of the business back then, affording it more romance than deserved. Today, with a solid understanding — and most important, an appreciation — of my industry’s evolving, arcane business elements, I can confront the challenges ahead with the same enthusiasm of a young college editor putting his paper to bed before heading out for few late-night 25-cent beers.

My new ebook, The Path Forward for the News Business, is a full account of the steps FORBES is taking to implement new models for both content creation and advertising. You can get it here. My first ebook, The FORBES Model for Journalism in the Digital Era, can be found here.

Source: Forbes

 

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