Elephant Diaries: The Great Paradox

Surowiecki in the New Yorker:

The peculiar fact about the current crisis is that even as big papers have become less profitable they’ve arguably become more popular. The blogosphere, much of which piggybacks on traditional journalism’s content, has magnified the reach of newspapers, and although papers now face far more scrutiny, this is a kind of backhanded compliment to their continued relevance. Usually, when an industry runs into the kind of trouble that Levitt was talking about, it’s because people are abandoning its products. But people don’t use the Times less than they did a decade ago. They use it more. The difference is that today they don’t have to pay for it. The real problem for newspapers, in other words, isn’t the Internet; it’s us. We want access to everything, we want it now, and we want it for free. That’s a consumer’s dream, but eventually it’s going to collide with reality: if newspapers’ profits vanish, so will their product.

Worth noting: I didn’t pay for Surowiecki’s piece, and don’t regularly read the New Yorker. A blogger pal emailed it to me. Thanks, Ken!


  1. I have started to read the New Yorker on line because my daughter recommended the New Yorker. Day by day, I read more of the New Yorker, in part because the articles are interesting and very well written.

    Shouldn’t the New Yorker, which by my repeated visits to their site can tell that I come back, be able to raise their rates to advertisers in lieu of the New Yorker’s extended internet reach?

    And, with a few easy questions, the New Yorker could determine which of their advertisers is most interesting to me. As simple approach would be:

    “New Yorker here. LL Bean has decided to advertise in the New Yorker. Is LL Bean a company whose products you might buy?



    Don’t know, send me a couple of blurbs about them and ask again.”

    With this approach, the New Yorker would gain new customers for LL Bean and new revenues for itself.

    As a second step, after a few more visits on my part, the New Yorker could ask me (and Google) about buying a subscription for specific content (New Scientist does this in a hokey way, HuLu has a much better approach.)

    There would be subscription choices. I could pick the one that fits me. The New Yorker could avoid the mistakes that other entities, such as the NYT, have made in trying to get paid for content.

    Eventually, there would be a match between content, advertising, and payment that would suit the content provider and the reader.

    For me, certain kinds of ads would be great, city hall news would be good, middle school soccer games would have no value, and details of murders would have little value. I would be buying the ‘paper’ that I wanted to read and throwing away the parts that I did not want to read before I ever got them. If this new rebundled subscription were done well, I am likely to be paying the standard subscription rate. If the new rebundling were a little more clever, so that I did not have to read the Los Alamos Monitor for local news, the Albuquerque Journal for state news, and the New York Times, the Economist, etc. for national and international news and could get all of it with one subscription, I would be very happy and would subscribe forever.

    Is this rebundling possible? Is it stupid to think about it?

    I do not claim that I have the skill to write any of the articles in such a rebundled product. On the technical side, I have already done what is proposed (parts of it have also been done by others). I have done it for various customers, not in the media, on various jobs.

    Please give me some feedback.

  2. My proposed ‘paper’ above, which I will dub the ‘Fleck Times’ can be implemented easily with software that I created, a Digital Servant.

    In actuality, every reader could see an individualized version of the Fleck Times. The connections would be to the Fleck site and to paying Fleck and his cronies for the privilege.

    I realized the above after my last post.

    Essentially, the Fleck Times would be a next generation and higher value version of some of the things that Google has done. (By the way, Google’s technology would not allow them to compete with the Fleck Times for the Fleck Times’ readers.)

    Again, please comment, on the blog or privately.


  3. Eric – A number of very sophisticated permutations of this customizable news product have been tried and largely failed – even when free. I’ve never quite understood why, but the customers won’t bite on this hook.

  4. OK, John.

    Every attempt that I have made to rebundle has apparently been tired without success.

    This gets us back to the basic question.

    People used to buy local newspapers. A large fraction of the people within a region bought a local daily.

    Why did the customers buy these newspapers and why aren’t they buying them anymore?

    The response ‘The Internet’ does not seem to be the correct answer.

  5. A couple of things. First, they do still buy local papers in extremely large numbers. Just less than they used to, but still more than read any news web sites.

    Second, see the discussion in my previous post about bundling. Customers used to buy the entire bundle in order to get the specific piece they were interested in. Many did not care about the local news, and only bought it for the sports. Many didn’t care about the sports and bought it only for the local news. Comics. Stock tables. Classifieds. All those things have been unbundled now, and you don’t need to buy a newspaper any more to get most of them.

  6. Can you get unbundled local sports or local news on line? I will agree that you can get stock quotes and comics on line and that Craig’s list seems to be a serious competitor to the classifieds.

    As before, I am for good journalism and will not accept, easily, that people will not pay for it.

    Has a newspaper run a survey on what people are willing to pay for local news and local sports online? Here in Los Alamos, the TV stations and Santa Fe or Albuquerque newspapers do not cover local Los Alamos news or sports very well.

    While I understand the bundling argument, my intuition says that bundling and unbundling is not the right way to look at the problem if you want to solve it.

    The bundling/unbundling argument seems to lead only to “Go be a welder.” Since, I don’t think that “Go be a welder” is the correct answer, then the bundling approach must not be the correct way to frame the problem.

    Thanks for the discussion.

  7. Doesn’t Surowiecki get it at least partially wrong when he points at ‘what customers will pay’ as the source of the problem? I seem to recall from discussions with you that subscription only barely covered (or perhaps even didn’t cover) the cost of printing, and that it was advertising that did the bulk of the work in paying for content and profit.

    In other words, if all subscription money went away (say because customers didn’t want to pay) but all printing costs also went away, but (hypothetically) ad revenue stayed at the current level, would that be enough to maintain journalistic standards at current levels? Or do paper subscriptions actually carry their weight? (Obviously maintaining the same level of advertising revenue online is difficult, but I’m curious what the outcome is if you set that problem aside for the moment.)

    (Perhaps a modified version of the same question: does the Th->Sunday only experiment one of the Detroit papers is doing make sense? I’m probably in the minority, but I would actually subscribe to a high-quality weekly local paper, just like I currently subscribe to the Economist to get in-depth, but weekly, global news coverage. My current local news options seem to be either weekly or quality, which is sort of sad.)

  8. Great questions, Luis.

    If onLineAdRevenue=printAdRevenue on a per-customer basis, we’d be in far better shape. But on line advertising does not work as well, so advertisers will pay less – about 1/20th per reader.

    I’m not privy to our internal business numbers, but you can do a hypothetical calculation that suggests that you could dump all printing and delivery costs and we’d have to quadruple or more our on line readership relative to our current print readership. Nobody in local news comes within an order of magnitude of those numbers, even the best ones.

  9. While I usually love Surowiecki (and I pay to read the New Yorker in print each week), he’s missing the point here. We weren’t really paying for newspapers before. And we’re still not.

    Oh, sure, readers were paying a little bit to demonstrate that they want this thing with their breakfast (note how community papers that are tossed on everyone’s lawns have cheaper ad rates because the audience can’t be audited in the same way.)

    But we in the newspaper industry made almost all of our money from advertisers. And John’s right — the core of the problem is that we have not been able to generate anywhere near the same amount of advertising revenue per reader online. Now, is that because online advertising was priced too cheaply to begin with? Because advertisers now have the handy metric of clickthroughs to measure the perceived effectiveness of their campaign in ways they never could before? Or maybe newspapers — as the local information monopoly — were overcharging for print ads for all those years? (Yes, all of the above.)

    Some new models will emerge, I imagine (e.g., nonprofits like ProPublica) but in the end the entire enterprise will shrink, finding some new equilibrium. The question is whether that now shrunken, but economically viable operation can provide journalism that we’re proud of.

  10. The question is whether that now shrunken, but economically viable operation can provide journalism that we’re proud of.

    The amount of journalism that the business should be proud of is already fairly small, unfortunately. If you threw out the junk from my home town paper you’d be left with a small weekly paper instead of a huge daily. I’d probably actually subscribe to that small weekly paper (as I subscribe to the Economist but not the lousy American ‘news’ weeklies) but unfortunately I realize I’m probably in the minority.

    Relatedly, Surowiecki is right that my generation would rather get this stuff for free, but we’re also unwilling to pay for junk, and most of us believe that most newspapers are junk. The people who should be your biggest fans in this generation all stood and cheered at the Jon Stewart ‘you’re hurting America’ attack on CNN, and we don’t think newspapers are any better. The industry will have to fix that perception among elites if they are ever going to find a serious audience again.

  11. Would someone please discuss this topic from the advertiser’s point of view?

    If you are an advertiser with $10,000 to spend in order to reach buyers in a local market, say Albuquerque, where do you spend each advertising dollar and why?

    Some choices might be:
    Local newspapers
    Network TV
    Cable TV
    Local editions of national newspapers
    Internet advertising on national sites
    Internet advertising on local sites
    In store promotions
    What your boss tells you to do

    How do you know whether your advertising dollars are well spent?
    How does your current spending distribution differ from your previous spending distribution?

    Now, from the newspaper’s, online and in print, point of view how many dollars of the $10,000 have moved to other media and is there a way to get these dollars back? What role would good newspaper journalism have in getting these advertising dollars back?

    I think, as an ignorant outsider, that the above is the heart of the discussion. Am I right?

  12. Luis –

    The response to your argument goes back to bundling. The audience for quality, as you define it, is too small to support the production of quality *at the local level*. The audience for any one thing, in fact, is too small to support its production *at the local level* – whether it’s comics or Lobo sports or whatever. The bundling model is the only way this works at the local level.

    I think what you’re seeing, with the rise of the Economist and the strength (in terms of audience size) of the New York Times or the enduring success of the WSJ at the national level is precisely a shift toward the kind of quality you describe. But some of the highest quality local and regional publications (the Rocky Mountain News and the Seattle Times are great examples) are going down the tubes. And some really solid efforts at quality on line news at the local regional level (Crosscut in Seattle is my favorite for-profit model, and our own New Mexico Independent is a great non-profit example) are drawing only small audiences.

    There’s a second problem that’s embedded here. When you probe deeply into “the news media sucks” argument, one thread always ends up devolving to “news outlet X does not comport to my view of reality.” To generalize, conservatives think the mainstream media sucks because it is liberal, liberals think it sucks because it is conservative. But the issue breaks down on all sorts of axes. Unbundling allows people to gravitate toward specialized media that matches their world view. One form of that is blogs (think Daily Kos) that reference and reframe mainstream coverage into a more acceptable package for an ideological audience. (No doubt there is a conservative alternative I could cite here, but life is short.. 🙂

    Maybe there’s an economically viable model here in a two-newspaper town – one liberal and one conservative paper?

  13. Totally with you on the bundling problem; no good solution there, unfortunately. I do wish we could get better experimentation in this area- it seems to me that it will take ‘freeing up’ a lot of current subscription and advertising dollars before we see more experimentation in how this happens.

    I do agree that a lot of the ‘media outlet X sucks’ is driven by ‘media outlet X doesn’t agree with me’, but I don’t think that is all of it. Some other problems off the top of my head:

    * a notion of balance that boils down to ‘I found one person who said that it is raining, so I’ll find someone else to say it is sunny out, and I won’t actually look out the window to see if it is raining or not.’ You’ve complained about this yourself in the context of the global warming issue, and it happens to every political issue. Of course, papers do this in part because they don’t want to offend anyone, but maybe a better solution would be to actually educate people (including the reporters, who admittedly often don’t have the time/resources to dig deeper, but maybe they should admit that more often.)

    * inability to focus on ‘boring’ long term issues because of the demands of the news cycle- look at the utterly horrible, horse-race reporting of the presidential campaign, regularly turning random fluctuations in a single poll into ‘significant’ news and completely unwilling to discuss actual issues. Similarly, the reluctance to report on ‘things we already know’- ‘of course’ everyone knows we already torture, so why spend cycles reporting on the torture report released friday? (More generally, everyone on earth knows that the way to bury news is to release it on Friday- why do news organizations let politicians and corporations get away with that tactic just because by Monday it is ‘old news’?)

    * preference for stories (pretty white girl was murdered! days of coverage!) over facts and statistics (thousands of black girls murdered, no coverage at all.) This is a broader human failing, of course, but I’d like to think that our media should aspire to being better than the rest of us.

    These are all complex issues, of course, and I can only barely pretend to know what I’m talking about here. But it is hard for me (and lots of others) not to see these issues as indications of structural and cultural problems that go deeper than market demand and partisan politics.

  14. BTW, John, I’m curious to hear what you have to say about TV-newspaper consolidation. I know that, historically, there are good reasons why we like to keep those separate editorially and ownership-wise. At this rate, though, we’re headed for fewer papers and editorial perspectives anyway, so I have to wonder if maybe allowing cross-media mergers might perhaps salvage something. (Alternately it might cut off the air supply of new competitors; not sure.)

  15. Luis –

    The flaw in your argument about horse race journalism is to not consider the role and responsibility of the audience. There was lots of non-horse race coverage as well, in all sorts of places. But compare the traffic it got to Nate Silver’s numbers, or Politico’s. Unbundling allows people to choose what they want, and they overwhelmingly choose horse race. People get the news media that responds to their stated preferences.

  16. I have to wonder how much of that is actual preference and how much of that is momentum- discovering new sources is time and resource consuming, which can make the existing (poor) reporting ‘good enough’ even if it would actually be preferred once people discovered it.

    (I hope that the idea that the best products inevitably win out in an open market is one of the ideas we can put to bed, or at least take with a gigantic grain of salt, after we recover from this recession.)

  17. even if /the better reporting/ would actually be preferred.

    tangent: what is a good history of american journalism? As I understand it, the idea of what ‘good’ journalism is has shifted before (it was partisan, then non-partisan but not investigative, then investigative (yellow)… etc., or at least something like that); I’m curious as to what it was that drove those changes in the past.

  18. Eric:

    Your question about advertiser motivation and methodology is miles more complex than you seem to realize. Advertisers make decisions on where to spend their money based on many factors, including budget, target demographic, buyer behavior information, and sales or return goals. Each demo is different and reacts to a different mix of media and message. So your $10K question? Pretty much meaningless.

    Newspapers used to be the biggest game in town, and still are for a consumer above the age of 55. They used to be pretty close to that for younger folk too, but much of that demo has moved online for its news and to make purchasing decisions. Back in the day, I might have bought the Sunday paper specifically for the ads. I don’t bother to do that anymore, since everything has moved online, and the papers will never get that reader back. As an advertiser, if the Sunday paper ad-reader is my demo, I will also never return to print.

    “How does your current spending distribution differ from your previous spending distribution?” I follow my target demo. If the demo forsakes newspapers, I do too.

    Bundling is actually a pretty persuasive argument for why things aren’t working so well for print readership, by the way. I wouldn’t discount it.

    You said “People used to buy local newspapers. A large fraction of the people within a region bought a local daily. Why did the customers buy these newspapers and why aren’t they buying them anymore?” I would argue that people weren’t buying the paper. They were buying information, full stop. Information about the community, information about products (advertising), whatever. The bundling theory elegantly explains why a growing number of people are looking online for this information.

    One of the biggest challenges all businesses will face in the coming years is that we have, as consumers, trained ourselves to expect things to be free. Software is free, information is free, movies and music are free (if you know where to look), and we’re going to expect, as a population, to spend less and less for more and more goods and services. This isn’t just a problem for newspapers, but they’re on the vanguard of this shift in consumer expectation and behavior.

    All that aside, as an advertiser I do not want or expect journalists to participate in driving ad sales. That’s not their job, and publications that mix editorial with sales quickly get a reputation that undermines their authority, and ultimately their readership.

    In a perfect world (online or print), editors would have the funding, staff, and managerial mojo to provide the best and most compelling information to readers, and management would find profit centers to pay for that excellence. I think there are promising models (look at the Google ads or Amazon Associates programs — both services come with good info on how they work). But nobody (literally, nobody) has figured out how to make that work.

    Oh — and as a PS to the Journal — I am younger and more web-savvy than your target demo and find your site impossible to navigate. As an advertiser this creates doubt in your ability to deliver eyes to my message. If you won’t change it for your readers (and I find this notion shocking in the extreme), consider changing it for your advertisers.

  19. Sort of as a PPS. It’s very dangerous to assume that all consumers act as you do. Your slice of the demographic group may act that way, but you may also be an aberration within your demo, or be part of a demo that is undesirable from a marketing perspective.

    For instance, if I sell luxury cars (and I’m so glad that I don’t), a person motivated primarily by sales announcements or online discounts is of almost no interest to me. So advice from an individual consumer to drop my prices may not be an indication that my cars are too expensive. Rather, it may be a sign that that consumer is not a member of my target demo.

    Bottom line: I do not assume that my target acts, feels, behaves as I do. This is the first lesson in advertising, and often the hardest to learn.

  20. Sophie,
    Thanks for the information.
    I knew that I was out of my depth; I just did not know how much.

    I was curious about the dynamics though.

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