Different direction for media organizations?

With all the predictions of the death of the mainstream media, it’s amazing to think it’s still around. Blogging and Twitter, apparently, will replace mainstream media, or so some would have you believe.

I’ve been a member of the mainstream media and I’m now a blogger. I’m on Twitter. The lines between media and social media are occasionally blurred.

I don’t buy into the hype saying that blogging and Twitter will replace the mainstream media.

We still have radio, books, magazines, newspapers, television, etc. Nothing replaced them. New forms of media have simply changed them. They all still have their place in the media landscape.

Mainstream media is changing

In the summer of 2009 I heard an interview with David Black, CEO of B.C.-based Black Press; apparently it’s Canada’s largest newspaper chain with more than 150 newspapers. He’s still expanding his newspaper empire. Puzzling, considering how many are claiming the media is dying.

What does he know that the pundits don’t? He knows is that the media is not dying, but is changing. Technology has driven the change and the recession has accelerated it.

Small local papers will be around for a long time and some lessons can be taken from them. The biggest advantage they have is that they have a local focus and I believe this will be the primary advantage of successful newspapers in the future. Citizens want to know what is happening in their community and local media still is one of the best ways to do so.

Today the media landscape is littered with wire copy. It’s cheap and easy filler. It has its place and is important in finding out what is happening around the world. On a daily basis, local news tends to be most important to readers. So what’s the best way to get that local news?

The future of newspapers: new form of media organization

The first step would be to form a co-op and everyone in the company is going to earn the same amount. Everyone’s going to be equal, have the same vote and be an equal partner in the organization.

Co-ops aren’t exactly new, but it’s not a common model for media organizations. Journalists typically aren’t a particularly entrepreneurial lot. CHEK TV on Vancouver Island is a fairly recent example of an employee owned station. I believe it’s a corporation, but it’s a similar idea.

Maryland allows social or benefit corporations with California and Vermont possibly following their lead. It essentially allows a corporation to have social goals as one of their primary goals, and not just profits. It could possibly allow a corporation to survive a hostile takeover by a larger, richer media organization seeking to reduce competition. I wouldn’t mind seeing something like this in Canada.

Second, the newspaper would be entirely online. Traditional newspaper and broadcast media are increasingly finding life online, but it’s different, and not as lucrative (yet). By not having a paper version, operational costs are kept much, much lower. One of Black Press’ key advantages is its ownership of presses. It’s expensive and creates many difficulties. While traditional newspapers will still be around, online publications will be the key to the media’s future.

Third, it would be ad free and would be completely subscriber-based. Yes, the dreaded paywall. The idea is to have the newspaper be strictly focused on journalism and not on advertising. The logic is it would be a publication free of any perceived advertiser bias. Those who aren’t subscribers would be allowed some limited views of stories. Partial views of stories would also be allowed in Google News.

I think that people would be willing to subscribe to a quality newspaper free of any perceived bias from advertising. You might not cover the entire market, but could find a sufficient number of subscribers interested in quality journalism that could make the online newspaper a go.

Details: using Edmonton as an example

I’m based in Edmonton, and here’s how I can see it working. According to 2001 census figures, Edmonton has 265,000 households. Now, and including the surrounding area (Spruce Grove, St. Albert, Sherwood Park, Leduc, etc), let’s roughly estimate that at 400,000.

Let’s give journalists a healthy wage of $50,000 each. Using the Edmonton Journal as an example, there’s approximately 90 people in its newsroom and production (estimated).

With an all-online edition, 40 people for an online only, daily publication, to start would be reasonable.

The total payroll would be $2 million. Allowing an extra 50 per cent for overhead such as office space, libel insurance and other costs, you would be looking at an annual budget requirement of $3 million. Seems like a lot, but without ads, how do you do it?

Well, how much would a subscriber be willing to pay? Getting the Journal every day costs $256 per year. Not bad, but would someone be willing to pay $100 per year to get ad-free news delivered to their inbox, online, iPad and to their smart phone? I think they would. With GST that would be $8.75 per month for daily news, or 29 cents a day. (Seattle Post Intelligencer is all-online now and I’m curious how well they’re surviving.)

With a $3 million budget and $100 per subscriber needed you only need 30,000 subscribers. That’s only 7.5 per cent of the households in the Edmonton metro area.

As of March 31, the Edmonton Journal had a paid circulation of 125,589. Readership is estimated at 268,900 to 458,000. The assumption with readership is that there are multiple people reading the same paper.

So, what happens if there are 60,000 subscribers? This would mean revenue of $6 million per year. There are a couple possibilities here. It would be wise to create a reserve of working capital for the operation, but then what? The excess earnings could be distributed to those in the co-op as a dividend. It could be donated to charities.

More importantly the newspaper could expand its coverage and team. It could begin to invest more in investigative journalism. These days the trend is to cut newsrooms, not expand them. Investigative journalism has suffered at a time when North American citizens need it most.

Should there be ads?

It’s certainly possible to produce a quality newspaper, online or otherwise, without ads. I’m sure there’s a large chunk of the newspaper audience that hates the ads. I think it would be a big selling feature for a lot of people. If readers know they’re getting a quality product with honest reporting, that’s also a big selling feature. That’s not to say that just because you have ads you can’t trust the reporting.

People do read the ads in newspapers, no question. Some people pick up newspapers for the ads. Many small community papers seem to be little more than something to hold all the flyers that get delivered.

If an ad-free online newspaper were to be started, it would certainly leave room in the marketplace for competing newspapers to offer space for ads. What would the potential audience think? Good question. Before a venture like this got started, it would certainly be wise to do a great deal of market research to confirm that there would be demand for it. Or maybe an “if you build it, they will come” approach could be in order.

Beyond one city

This model can easily be expanded to more than one city. I can see something like this spreading across Canada and elsewhere. With a common look and content management system for the web, you could brand the network and pull in news from everywhere into that network. It could function as its own wire service.

Ad-free news from across the country, and maybe the world? I would definitely subscribe to that. Surplus funds from larger locations could be used to help new “bureaus” get started in other locations and bring them into the co-op. Once one location was successful, the goal would be to self-fund the entire organization.

If you were an unemployed journalist, would you rather sit at home on EI, or get back to work? If a group of journalists were suddenly laid off at a major paper and got a settlement package, why not pool those resources and start a publication like this? Take a risk! I think it would be more than fair to repay those who funded the organization with surplus funds the organization generated.

Would it work?

I believe that this is a realistic model for future newspapers and helps to solve the problem of shrinking the newsroom as a way of increasing profits. I think that employees would be even more committed to the success of the organization because they share in its successes. It works for companies like Lincoln Electric and Westjet.

I would like to hear your thoughts on whether you’d be interested in investing in something like this, would subscribe to it or why you think it may or may not work.

About 

If I were to picture my ideal life, I’d be sitting in some far off land, sipping a coffee in a café, my backpack at my side, camera around my neck, motorcycle at the curb, pondering my next stop or maybe madly typing away on my laptop about my latest adventure.

3 Responses to Different direction for media organizations?

  1. Hi Alain,

    Ross from J-school here. Hope you’re well. Good article! It held particular interest for me because I’ve been volunteering in my spare time for a media co-op for four years now. I went the corporate route after graduation, but I’ve perpetually yearned for a sustainable business model for media organizations that would facilitate my return to a profession so critical to society. I found that model in The Dominion, a grassroots media co-op out of Montreal that publishes almost daily online and monthly in hardcopy. Four years ago, they were only just starting out, but today they have local divisions in Halifax, Toronto and Vancouver…and can pay editing staff and journalists alike.
    But don’t take my word for it, here’s what Noam Chomsky thinks:
    “As media monopoly extends, and doctrinal rigidity in what remains becomes ever more intense, it would be a major contribution for the functioning of a free society to have independent news sources, free from corporate or state control, internally organized in ways that exemplify what a truly participatory and democratic society would be. I was therefore delighted to learn of the Dominion Paper project, an ambitious and impressive effort to fulfill this urgent need. I know of nothing like it, and wish it the greatest success, for the benefit of all of us.”

    Vive la revolution!

    • Hi Ross,

      Good to hear you’re well. All is good here in Edmonton!

      Thanks for the comment. Glad the Dominion Paper project is working well.

      I think the economic model of the media is probably one of the least sexy but most important topics regarding journalism today. Nobody wants to talk about it either.

      I think it’s great what you guys are doing, but it appears it’s mainly a secondary project for most. I’m sure many would love to do it full-time, and that’s idea behind what I’ve written here. With everything happening in the world today, we need more full-time journalists than ever; this at a time when we’re seeing fewer.

      Every effort helps though. I just hope that people start coming around to our way of thinking sooner as opposed to later.

  2. Pingback: Closing Edmonton news site YegNews.com | alainsaffel.com

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