In an interview this week with the Rocky Mountain News, the founder of the free classifieds site Craigslist, Craig Newmark, offered some free advice to struggling newspapers:
Q: How do you feel when you hear about the economic impact you’ve had on mainstream newspapers?
A: We have had an impact, but it’s been greatly exaggerated. For example, falling circulation is a much bigger effect.
Q: What would you do if you were running a major newspaper dependent on the support of classified ad revenue?
A: I’d be moving to the Web faster, hiring more investigative journalists, engaging the community and speaking truth to power.
Q: What do you mean by that?
A: When a politician is lying and you know they’re lying, say something about it.
Couldn’t be simpler, right?
Except for one thing: money.
Your circulation’s falling, your classified ad revenue is being eaten away by sites like Craigslist, and so you should “move to the web faster and hire more investigative journalists.” The problem is, those two bits of cheery advice are in direct conflict with each other. Moving to the web means moving to the web’s economic model for publishing, which increasingly is being built on targeted advertisements that generate revenue only when readers click on them. Making money in a pay-by-the-click world means publishing content that (1) attracts ads that pay a lot for clickthroughs and (2) attracts readers who are likely to click on those ads.
Investigative journalism is about as far from that kind of content as you could possibly get. What kind of advertisers are going to bid up the value of keywords related to, say, a story on a mayor who gives a big municipal construction contract to a political contributor? The answer: no kind of advertiser. And what kind of reader of such a story is going to be highly motivated to click on nearby ads. The answer: no kind of reader. Stories on graft just don’t ring the clickthrough cash register. Neither do stories on politics in general. Or on wars or famines or other sorts of nasty business. In fact, most hard journalism just ain’t particularly clickthrough-friendly. Often, it’s downright clickthrough-unfriendly.
Now, add in the fact that investigative journalism is really expensive for newspapers. You’ve got to assign talented reporters to a long-term reporting effort that may or may not even end in a story. And you’ve got to pay their salaries and benefits during that whole time. And their expenses. God forbid the story requires original reporting in some distant place like Africa.
On the other hand, if you could get some cheap freelancer to hack together a story on new developments in high-definition televisions, that could really be a bonanza. Manufacturers, retailers and programmers bid a lot for clickthroughs on HDTV-related ads. And the readers attracted to a story on developments in HDTV are likely to be considering some kind of purchase – and thus in the mood to click. Ka-ching, ka-ching.
So if you’re a beleaguered publisher, or a beleaguered publisher’s boss, and you’re losing money and Wall Street’s howling at your door and the private-equity guys are circling overhead, what do you do? Hire more investigative journalists? Or publish more articles about consumer electronics? (Hey, maybe you can even get your readers to contribute their own TV reviews for free!) That is, I’m afraid, what the business folks call a “no-brainer.”
Traditional newspapers sold bundles of content. Subscribers paid to get the bundle, and advertisers paid to have their ads in the bundle, where those readers would see them. In effect, investigative and other hard journalism was subsidized by the softer stuff – but you couldn’t really see the subsidization, so in a way it didn’t really exist. And, besides, the hard stuff contributed to the value of the overall bundle. That whole model has been slowly unraveling for some time, but the web tears it into tiny little pieces. Literally. The web unbundles the bundle – each story becomes a separate entity that lives or dies, economically, on its own. It’s naked in the marketplace, its commercial existence meticulously measured, click by click. Advertisers, for their part, pay not to be seen by a big group of readers, but to have their ads clicked on by individual readers. They’ll go where the clickthroughs are. Clickthroughs themselves are priced individually, depending on the content they’re associated with. As for readers, they’re not exactly trained or motivated to pay to read anything online. The economic incentives created by the web model are very different from those of the old print model – and it’s economic incentives that ultimately determine business decisions.
Sure, this is how markets should work, but let’s not kid ourselves: the precise nature of the correlation between efficient markets and good journalism remains to be seen, and so far the indicators are less than encouraging. The result may leave a lot of people disappointed – or out of work. To say that newspapers should “move to the web faster and hire more investigative journalists” is to engage in a happy and convenient fantasy. If Craig Newmark is really so gung-ho on talking truth to power, he may want to sit down and have a little chat with himself.