Thursday, January 29, 2009

Of Babies and Bathwater: Congressional Quarterly is the Healthy Bait for Rescuing the Ailing St. Pete Times

I enjoyed this year's SIIA Information Industry Summit and Previews events very much; there were great presentations and great discussions throughout the two-plus days in New York. However, I was a bit disturbed by some of the gossip I heard percolating in the background about the successes of Congressional Quarterly that were highlighted by CQ's president and editor-in-chief Robert Merry in his panel presentation. Under Merry CQ went from being one of many challenged niche Washington print publications into a highly successful for-profit online subscription service with a healthy array of complementary of online and print publications. The undercurrent at the conference was along the lines of "Well, that's easy for him to say, he works for a non-profit." Sorry, folks, while the non-profit Poynter Institute owns CQ as well as The St. Petersburg Times via parent umbrella Times Publishing Co., Merry has had to work towards a profit component as much as any other publication.

Such critiques are especially ironic given the announcement that TPC is now looking to sell CQ in order to raise cash that will allow its beleaguered St. Pete Times to stay afloat. Politico has a particularly meaty take on the proposed sale, with lots of insider quotes. The bottom line of this deal is fairly simple: CQ is a valuable asset, will sell as soon as there's money available to buy it and is the baby being thrown out to rescue the soiled bathwater that is today's consumer newspapers. It is akin to The New York Times' recent decision to lease out real estate from its new building to raise operating cash for its newspaper, but unlike the NYT, TPC has decided that it's better to hang on to a dying publication and to let go a publication that's done its homework on how to survive in a very tough market niche.

At least TPC is making an honest attempt to try to figure out a working business model for newspapers in a post-print era. By contrast, The New York Times went to print with an op-ed piece by David Swensen and Michael Schmidt which claims that today's news organizations should be subsidized as non-profit organizations. The op-ed piece lays out the facts of the news industry's woes objectively enough, but then it adds this nugget:
By endowing our most valued sources of news we would free them from the strictures of an obsolete business model and offer them a permanent place in society, like that of America’s colleges and universities. Endowments would transform newspapers into unshakable fixtures of American life, with greater stability and enhanced independence that would allow them to serve the public good more effectively.
Perhaps with bailout fever in the air news organizations are feeling that they should join the Washington gravy train and try to get a permanent government subsidy. If so, this would be both extremely ironic and highly unlikely, given Washington's relentless cutbacks on public radio and television outlets, which have lost the lion's share of their government subsidization and which do not have the extensive international correspondent networks that Swensen and Schmidt claim are in need of subsidization. From crowing about "cash cow" profits to going hat in hand to governmental organizations seems to be an unlikely transition for most major media companies, especially given their recent tendency to play high stakes M&A games on highly leveraged dealmaking at the expense of staff and product development.

In one sense the concept of endowing consumer news journalism is a sound one; we should be making it easier for good news to be collected in a way that puts less profit pressure on news organizations. The truth of the matter, though, is that this is happening anyway. In addition to some news organizations teaching people in local markets how to help them in collecting news, the marketplace is encouaging startups that are filling the gaps left behind from the media industry's dilution of news coverage. Emma Heald notes at Editorsweblog.org the progress of VoiceofSanDiego.org, an investigative journalism startup funded by contributions from the greater San Diego, California community and from the Knight Foundation. VoSD.org has the flexibility to produce investigative journalism without the pressure of advertising, but that's not the only solution to filling in the revenue gap required to produce important news. More partisan outlets such as The Raw Story have periodic fund drives to help close the gap between modest online ad revenues and what it takes to field journalists who are willing to pursue commercially unpalatable news.

So although it is romantic to think that news organizations that have tried to be blue-chip stock plays can become well-disciplined investigative news organizations at the wave of an endowment wand, the reality is that there is a new generation of investigative news being produced both by professionals and citizen-journalists independent of those media companies. News will survive and thrive in the online world, to borrow from the title of Content Nation, but not necessarily in the hands of organizations that are the product of the era of mass production. Much of it will be produced for free or for the purposes of people who choose to support it either through endowments for through their good will in producing it. But news will continue to be produced for a profit - if its producers can understand that the content industry is entering the post-industrial era. Mass production still has value, but the most value in the publishing marketplace is in the mass-production of highly contextual information and experiences. The key to the survival of publishing is to focus on monetizing the contexts, not the "things."

In some ways the consumer news industry understands this in their improved focus on search engine optimization, contextual ads, better content engagement and better integration of content generated by its communities. But at the heart of the gap between yesterday's more robust revenues and today's more meager online revenues is a failure to monetize contexts efficiently. Some of that gap can be closed by a standardized approach to micropayments, but in large part the proliferation of news on many topics from online sources and independent aggregators of news links means that there will always be fewer contexts that traditional news organizations can monetize. So yes, get those endowments if you can find them, but don't expect that you'll support the same kind of news organization with them.

All of this brings us back to Bob Merry's great historical insights on the news industry. He noted at the SIIA Information Industry Summit that prior to the rise of today's "objective" news gathering organizations in the industrial 19th century there was a robust array of smaller and more partisan news organizations from which people could pick and choose insights on the topics of the day. In this fray, few news rooms would claim to have the "objective" view of the truth: people would have to assemble that on their own through studying the sources and discussing them with others. In Merry's view the industrialization of news to produce a standardized consumer commodity was a relatively brief phenomenon in its long-term history. In other words, perhaps what we are seeing in the news industry is not its undoing but rather its re-doing into its more native form.

CQ can expect to find an eager buyer soon enough, and the consumer news industry as a whole will turn into whatever free markets want it to be soon enough as well. I do believe that it would be a mistake to subsidize today's news organizations as they have existed in recent decades. This would be as large a mistake as countries that have subsidized other inefficient industries in the past. Instead, we need to continue to ask the question of major consumer news publishers, "Which part of the word 'change' is it that do you not understand?" Let's endow new business models for consumer news such as new approaches to micropayments and community-supported news generation methods that serve people as they want to be served. The rest will take care of itself soon enough. In the meantime, the successes of CQ underscores the point that a good publication in a good niche will always have a fighting chance. And in any business it really is all about the fight, after all - isn't it?
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