My colleague Jason Wilson has attacked the Finkelstein Independent Media Inquiry report in the context of the Fairfax restructure announced today. Jason writes:
The Independent Media Inquiry bent over backwards to demonstrate the peristence of media power in order to build a case for regulating it further. But the real story is that traditional media are in a death spiral. These have been major social institutions. Despite what many see as their poor performance in recent years, it’s not clear what exists to replace them in that role.
The Independent Media Inquiry investigated whether or not governmental regulation and/or support would be appropriate in the context of the shifting composition of an industry sector. All major media companies in Australia made submissions that suggested that government support would be unwarranted. The report references a number of submissions and introduces and then quotes from the Fairfax submission thus:
Notably none of the established newspapers felt there was a need for government support. The submission by Fairfax Media states:
No one can deny that the traditional media business models have been severely challenged by the growth of the Internet. That said Fairfax does not support the proposition that independent journalism needs assistance by way of Government subsidy or tax breaks as have been suggested by some submissions … Media organisations need to transform themselves to account for the changing needs of audiences as the digital and online platforms continue to evolve. Existing revenue streams need to grow and new revenue sources need to be found and sustained.
It seems that is precisely what Fairfax are doing at present.
Two other points are worth making in the context of the analysis by the Independent Media Inquiry Report. Firstly, the report analyses the democratic function of the news media (what Jason refers to in terms of them having been ‘major social institutions’) from the government’s perspective, not the perspective of individual journalists or companies. I do not agree with Jason that the Independent Media Inquiry was tasked or even should have been tasked with providing an industry with strategic solutions to their commercial problems. Chapter 12 of the report engages with the problem of ensuring industry-wide ‘journalistic capacity’ to produce ‘quality journalism’, which is slightly unconventional for a media analysis. Most media analyses fall into the political economy perspective or correlating ownership or the identity of news producers in general with a normative sense of ‘diversity’. ‘Diversity’ was mentioned in the terms of reference, but this was developed into ‘journalistic capacity’ in the report. Nor does the report explore even a single example of a specific news outlet or business model. Clearly, this would have been inappropriate. Imagine the furore unleashed by the culture warriors at The Australian if the report made forthright suggestions regarding how businesses should operate!?!
Is this a ‘desperate’ move by Fairfax?
Here is a brief extract from a discussion I had with Jason and Jonathon on Twitter.
Clearly, they both believe, as does Jonathon Green, that Fairfax’s move to be ‘desperate’. Is it?
The Long View
The second point to be made about the Independent Media Inquiry is regarding the absence of the kind of suggestions (as noted by Jason) and if they are not in the report, then where such information can be found. A fantastic starting point for anyone interested in how this may (or may not) play out is the Newspaper Next experiment from the the American Press Institute. Proper historical research is required to analyse the last two decades of of shifting business models, as a way to ward off the boosterism of an always future leaning opinion makers. Less ‘this is what you should do’ (or in the case of Fairfax the schadenfreude of the inverse boosterist ‘this is what you should have done 10 years ago’) and more ‘this is what has and has not worked in this context’. The chronic boosterism of ‘internet evangelists’ manifest in the rush to be ‘in front’ of every other voice in the marketplace of opinion means that existing experiments such as Newspaper Next are often forgotten.
Two major reports were released as part of the experiment, and a third smaller report. One from 2006 announcing the project, another two years later reporting on those media companies following through with the Newspaper Next experiment and a third on using ‘Interactive Databases’ (I’ve uploaded the first two reports to Scribd, because it seems that the API has removed Newspaper Next from its site). I’ve got an academic article in the works that analyses both major reports in terms of the way they discuss ‘opportunity’; it is a curious example of thinking ‘opportunity’ as the necessary restructure of markets (by way of attempting to forge new stabilising social neworks that reproduce markets and therefore stability of revenue streams, etc).
The first report presents some of the conceptual background in thinking about the changes to the US newspaper industry based on notions of ‘disruptive innovation’ and the main points are capture in above diagram (page 19). Some rightly criticised the experiment and the report specifically for being ‘all talk’. Indeed, it does have a certain boosterist tone about it. There is some good ideas amongst all the enthusiasm however.
The second report presents 24 case studies of new products and seven examples of how newspaper companies organized and financed innovation. The most relevant example in the report is The Chicago Tribune. Unfortunately, even at this stage of the experiment it was clear that no newspapers would be willing to ‘make the leap’. As Rick Edmonds at Poynter reported at the time:
However, many of the experiments have stuck too closely to traditional core competencies, making money, for instance, by reverse publishing online material into print, still the comfort zone for the ad sales force. The result: the pace of change is unprecedented but not quick enough; most projects are too small and too slow to develop revenue on the scale needed. So the report urges newspapers companies to “make the leap” beyond news or even news and information.
Then check out this post by Steve Buttry, one of those involved in the Newspaper Next experiment. He was also apparently behind the third report on using interactive databases as a new kind of journalistic product. Steve’s point is that none of the news companies that engaged him or others to make presentations wanted to impliment the Newspaper Next blueprint.
The results were pretty much the same as the response to N2: Executives praised the ideas generally, but lacked the vision, courage and/or freedom to make such dramatic changes in their declining companies. Either N2 or C3 could have led the newspaper industry to a more prosperous future if companies had truly followed them. Instead the business has followed a defensive course of slashing costs, throwing up paywalls and waiting for a miracle.
My point is a very simple one: there has been a huge amount of work carried out in other local, national and international markets on what has worked and what has not worked in attempts to restructure individual companies. It is clear that Fairfax has to undergo a transition to a new business model. It is far from clear what transition model works best.
Maybe I am the only person (at least in my Twitter stream) who thinks that amongst all the commentary about the ‘desperation’ of Fairfax that they actually did something right in holding off from undergoing this transition? Does anyone have any figures on how much money has been wasted at other media organisations on ‘restructures’? obviously some changes should have been made sooner (such as the ‘digital first’ strategy and the integrated newsroom). However, if they had attempted to lock themselves into a new business model even a few years ago would they have the information they have now about what works, what doesn’t and the various different contexts and range of outcomes in between? Business leaders are inherently conservative, they are not going to invest in a company restructure that requires a market restructure at the same time. Not unless they have the ‘killer app’ anyway, but there is no ‘iPod’ solution to the challenges faced by the news industry.