How the Media Industry miscalculated the Internet
It's intriguing how the newspaper publishing industry fought disintermediation... the rise of the internet as news source was first viewed as a threat that they could control because the "content" cards (the journalists) were in their hands. But the ill fated merger of AOL and Time Warner in 2000 put traditional media on red alert as they realized they lost game.
Then in 2001, the news publishers secretly revelled at the dot.com bust and began an "internet is dangerous" media push as the spectres of identity fraud, online stalking and hard drive crashing viruses mirrored the times coinciding with the gravity of terrorism. Individual privacy seemed paramount... "social networking" was not in the lexicon yet. They thought they got their game back.
Hunkering down, the publishers envisioned their only justifiable internet play was to repurpose their print content online... and even tried charging online subscriptions like their old biz model. In 2001, you may remember CNN was the media leader covering terrorism and the impending war... their take on "technology" was real time reporting by their star correspondents, not by anyone else.
Suddenly, blogging and its 2003 breakout cousin MySpace, which replicates the blog's journalistic functionality within the context of a social network, ushered in "user-generated content". The internet was no longer "dangerous" but embraceable and publishable.
The news publishers just did not see how quickly and inevitably the internet would create new journalistic voices that would challenge their credibility as news sources, and create unexpected new business models like Craigslist that would erode their revenue models. As they lost revenue, their subsequent cost-cutting measures devalued their content - shrunken news staffs and budgets foster risk-averse journalism written by worried reporters - that does not make good copy.
Today, journalists and bloggers follow a similar formula for writing - they research the internet (the great data equalizer) for sources and commentary, possibly make phone calls to authorities in the researched topic to corroborate information, aggregate the data and go to press. And journalists often have credibility problems - bloggers with greater specialized knowledge are often more accurate new sources than the traditional media, who aren't working inside the industry.
Greg Swann at Bloodhound speculates more harshly on the disintermediation of journalists with his post How much future is there in a job that millions of very smart people are willing to do for free?
Implications:
How does the story of the journalistic disintermediation apply to real estate? Real estate and the fourth estate share a similar myopic vision on how their business models work. For example, the real estate brokers' initial response to the internet's transparency threat was to hunker down, after all, they controlled the agents and the MLS.
The newspaper publishers are now realizing there is a completely separate business model - open source journalism is hiring away their best and brightest - and they need to adapt to it. Likewise, real estate will have new business models that will blindside segments of the industry... I've just mentioned how title insurance companies plan to enter the consumer loan business.
Here's the book to read: Blue Ocean Strategy - How to Create Uncontested Market Space and Make the Competition Irrelevant - by W. Chan Kim and Renee Mauborgne. The byline says it all... the real estate industry has so many inefficiencies, new market spaces will open up quite quickly.
---------------
I have a companion piece over at Inman blog discussing how traditional media is beginning to embrace real estate bloggers.
---------------
Technorati Tags: new media, disintermediation, citizen journalism, open source journalism, aol time warner, real estate, real estate 2.0, web 2.0, blue ocean
The best journalists get their information from primary sources. The worst bloggers rely entirely on secondary sources (often news reports written by journalists). Good bloggers work like the best journalists. Bad journalists work like the worst bloggers.
The best journalists acquire insight by specializing in an area (their "beat") for years. That insight is used to put the information they get from sources into context -- not to win you over to their point of view. The worst bloggers will offer an opinion on any topic under the sun.
Bloggers rarely have the time or resources to do the kind of in-depth investigative reporting that challenges the party line or uncovers corporate or governmental wrongdoing in a substantive way. It's one thing to make accusations, and another to demonstrate them.
Take as an example the claim that the newspaper industry "fought disintermediation" with an "internet is dangerous" media push warning of the perils of "identity fraud, online stalking and hard drive crashing viruses."
Well, the media loves hyping the dangers of just about anything -- street crime, forest fires, trans fats -- because it grabs readers ("if it bleeds, it leads").
But what do stories about identity fraud, online stalking etc. have to do with newspapers wanting to charge for their content or having reservations about the journalistic standards of some user-generated content?
You sound like an outsider, projecting your own views of the possible motive for these stories: "Oh, newspapers are scared of technology, so they demonize it." Have you ever actually talked to anybody who works in the newspaper industry?
Newspapers maintain a very real separation between the editorial and business sides. Apart from wanting to produce stories that are relevant and interesting for readers, editors and reporters do not base their coverage decisions on a paper's bottom line.
Is it possible that newspaper publishers, like radio broadcasters when television came along -- need to experiment before they figure out where they fit in the new media landscape? Some, like the New York Times, have caught on quickly. Most newspapers now have blogs, some authored by reporters, others by readers. But just about every newspaper is losing print ad revenue faster than it moves over to their Web sites.
I completely agree with you that "As (newspapers) lost revenue, their subsequent cost-cutting measures devalued their content." That is a death spiral, because when your content suffers you lose readers and revenue and so you cut costs more. The NYT has survived because it's a family owned-paper and has kept its quality up, but publicly traded companies like Knight Ridder (RIP) are at the mercy of shareholders' never-ending demands for greater profit margins.
The journalists at cost-cutting newspaper chains aren't risk averse, as you claim -- they are just too busy to give many stories the attention they deserve.
Reply to this
Thank you Matt,
I realize this article is harsh on the management of newspaper publishers. But I agree with you on how dilettantish bloggers can be, including me, on expressing viewpoints that are often shaded more personal than journalistic. After all, for most of us it's a part time endeavor.
I see a lot of bloggers (XBroker, Bloodhound) approach their craft as a sort of testing ground for gauging public opinion. If you read my articles, you'll note I'm constantly stretching - trying to define the business strategy, or searching for the details behind a press release. I fail a lot - First Mover Advantage, Problem with Blog Journalism are two examples.
I'm pleased to hear your comments... I agree the NYT and magazines like Forbes have executed exceptionally in its adaptation to the new media.
Yes, I admit my conspiracy idea of the media purposefully playing down the internet in 2001 is too sensationalistic... poor writing.
You do miss my point on the "publishers' fear of technology"... I'm positing that media really did have a lock on content in 2001. I don't think a lot of people could have predicted user-generated content on January 1, 2002 when the country and the internet was in lock-down mode. The media embraced technology to their own ends as long as it supported their rights to their content. The advent of open source journalism and user-generated content simply produced content that the media companies don't own and now the media playing field casts a much wider net.
Always been a fan of yours... thanks for putting up with us bloggers!
Reply to this
I think blogs are great -- they often provide keener insights into a story than mainstream media accounts because their authors aren't constrained by the need to be objective.
But I think of bloggers as being more like the personalities who write columns on the op-ed page than as people who dig up sotries.
I take issue with the idea that the traditional news media is threatened by the content created by bloggers. The big problem newspapers face is that all their classified revenue is going to Web sites like Craigslist and ebay. Newspapers make most of their money from ads, not subscribers (although it's hard to charge for ads if you have no circulation!).
Others have said it better but the bottom line is this: what are we all going to blog about if there are no professional news gatherers? Will we discuss company press releases and e-mails we get from tipsters? When the White House announces a new policy initiative, will all 50,000 political bloggers put in calls to their sources for comment?
Of course there will always be journalists covering the White House, but what about local government affairs. In most parts of the country, the coverage provided by the local papers (or too often, THE newspaper) has deteriorated to the point where it's hard to find much you want to read. For the most part, bloggers and other user-gen content producers are not filling that void. And who can blame them? Who wants to attend local government meetings that run until midnight unless they are getting paid for it or their interests are at stake?
Reply to this
Again, I appreciate your views as a journalist.
Traditional news media isn't threatened by content created by the "op-ed" bloggers, it is threatened by the burgeoning number of alternative news media sources. There needs to be a distinction made between the "op-ed" blogger and the "professional" bloggers who author Techcrunch and the Big Picture. You mention that journalists need to develop a "beat" in order to become credible, the new bloggers are just as credible. The best and brightest journalists are jumping ship from traditional media to build their own Techcrunch-style franchises.
Journalists play a societal role as news professionals. In this sense, they won't be disintermediated, but there will be far fewer of them on the traditional media payroll. One of my journalist friends (yes, I have them) mentioned her complaint about blogging: the media company pays for all the costs of investigative reporting - the travel, the salary and the time - and when it's published, the content is absconded by the bloggerati. The public consumes the content, but is receiving it from various non-print sources (Digg, feed reader, news aggregator) and the organization that paid for that content may not get its due recognition, particularly important when they need the eyeballs to demonstrate advertising credibility. And the public doesn't recognize the brand of the news source in contrast to a time when we received our news from either David Brinkley or Walter Cronkite. My point is - many news publishing companies have lost control of the content they once held as the "fourth estate"... content has become commoditized. I'm on your side, I want the NYT, WSJ, Forbes and Inman to keep their content differentiated and focused to a specific audience (umm, me...)
You lament the deterioration of local news coverage and wonder who will step in. Will print eventually be too costly for local rags and move all local news to the internet? Will sites like Placeblogger aggregate local content for consumption? It's another subject I'll tackle in a future post because local news distribution is directly related to the local nature of real estate marketing.
Reply to this
Well said, Pat. I think that bloggers give journalists a run for their money just as alternative media sources are giving traditional channels a good fight to the finish. The blogosphere is more fickle than brick and morter publishing houses that retain writers for extended periods of time. If a blogger goes soft, they don't survive whereas many a journalist is kept on well past their prime.
Reply to this
“We’re sorry. As of Jan. 1, 2007, newspaper ads from The Seattle Times and the Seattle Post-Intelligencer no longer appear online. To continue to see the newspaper ads, we suggest convenient home delivery of The Seattle Times or Seattle Post Intelligencer.”
And the King County Journal goes belly-up (A Daily’s Last Day).
How the Media Industry miscalculated the Internet by Pat Kitano on Transparent Real Estate
Circulation Plunges at Major Newspapers , New York TImes
Newspaper Circulation Continues Decline, Forcing Tough Decisions, Wall Street Journal
Reply to this
I agree that traditional journalism is being turned upside down by a number of forces, including individual bloggers and a severe lack of funding. I think bloggers have a really important place today and in the future. But we really have to question what we're missing by having fewer and fewer journalists capable of doing the type of reporting that uncovered the scum at Enron and WorldCom. And not that I'm comparing those two to this situation -- but what blogger was writing about the antitrust investigations at NAR before an actual lawsuit was filed? I'd love to see a blogger call up a large organization like that and get a serious interview with a top exec, and that's something you'd need to have the full story.
You may be right that many a journalist throughout the past have not pulled their weight in deep reporting and perhaps the "weeding out" is a good thing in the end. Less sensational news. Maybe.
I think it's great that we're having this discussion, but I don't see it as black and white. I do think that old-school reporters need to wake up and seize a new day of media, utlizing blogs and bloggers as reporting tools and ways to offer more compelling content. But I think it's silly to think that bloggers alone can carry the weight of journalism themselves or that blogs will someday replace the entire news franchise.
Reply to this
I'm in complete agreement Jessica. Journalists are a societal requirement in democracy, that's obvious for anyone who lived in a police state. Again, I think the distinction is in the word "blogger". Those Forbes top 25 web celebs are all bloggers, but really they are the new journalists. Depending upon their networks (which I bet are highly evolved), they could probably access top execs.
It is ridiculous to think that blogs can replace news franchises; journalism is a full time profession. However, news journalism will micro-channel like Inman News, providing specific value (at $149) to subscribers who need specialized content.
Reply to this