Are the media content providers or service providers?
There is talk among journalists I know — either in person or via Twitter or their blogs — about what the business model of a successful media company should look like. There are many reasons for having that discussion, but one of the most prominent seems to be the loss of jobs in the industry. (I’m being told that 140 journalists are losing their jobs every week in the UK.)
Some blame the job cuts on the greediness of shareholders and the cold hearts of management. Others say journalists are not fit to meet the challenges of their trade undergoing dramatic changes. Most would probably agree that it is a combination of both. Regardless of which side in the debate one leans towards, the upshot is that the discussion focuses on one central question: What should journalists learn/do/stop doing in order for their company to prosper and their jobs to be safe?
Joanna Geary, the development editor of the Birmingham Post, has wondered whether journalists are not too ignorant of their own business. The commenters seem to agree that understanding the basic economic forces that shape journalism as an industry is essential. Much of the talk revolves around the core capabilities media organisations should have, such as understanding SEO and technology. However, it does not look like those competences are drawn from some value-proposition model that requires them.
So what is the value proposition of media businesses? I am not sure how important this is, but lately I am thinking the answer to this question is so hard because there is no real understanding of what media companies are selling. I may be wrong about this, but I think we must focus on selling services rather than content. I’ll try to explain why.
A traditional business that manufactures a product and sells it usually invests chiefly in production. A master watchmaker, say, invests skills, time and money (in the form of parts) into producing a timepiece good enough for people to want to pay a lot to own it. If a business additionally invests in machinery, it can mass-produce watches good enough for a lot of people to want to pay a small sum to own one. Either way, the important thing is that customers are paying to get something that they cannot get otherwise and cannot produce themselves.
How would this work in a news website. Let’s say the website offers most of its content (the mass product, if you like) cheaply or even free, and charges only for the content that has the best quality. The logic of the product manufacturer dictates that most resources need to be spent on producing the valuable content that will be sold to customers. This is probably why investigative journalism is so often mentioned when journalists are asked to describe the value of what they do.
This is already being done. Why doesn’t it work? Because content is intangible. It can be replicated and distributed by means by which tangible goods cannot. If you want a watch, you have to buy one. If you want news, you can wait until somebody with a subscription “buys” it and posts it on a social network, and then get it free. (The same goes for ALL content: music, video, games.)
Of course, this is illegal. But it is so widespread that protecting the content is becoming a costly effort for companies. So much so, in fact, that some are now giving up their tried business models that have brought them billions. The latest developments in music and video indicate that the time when they will be distributed free for the customer may not be far. Music and video producers may in effect become service providers catering to advertisers. Some MMORPGs let gamers download the software free and charge for the use of their servers.
What works for video, music and games may not necessarily work for news. In fact, no one has yet come up with a model that will allow investigative journalism to be supported by ads. But if journalists are to understand their business, they need to know where the value is. And it increasingly looks like the value is in serving your audience, not in telling your story.
