Picard is a professor of media economics at Sweden’s Jonkoping University, a visiting fellow at the Reuters Institute at Oxford University, and the author and editor of 23 books.
Many see what’s happening in newspapers and magazines (layoffs, closures and print reductions) and blame a broken business model turned upside down by the Internet – with its free content and classifieds. Others, though, would argue that the traditional print product and model – including the production and distribution models – is fatally flawed. So, is it a content issue or a monetization issue?
I don’t think it’s an either/or proposition. If you look at the newspaper model, it’s not completely broken. The industry last year made almost $50 billion and the advertising situation is not as bad as a lot of people think. In fact, newspapers have gotten back most of the money lost on classifieds through their online operations. Almost $4 billion a year is coming into the industry from newspaper websites. That’s one of the things that get lost in this discussion. Yes, classifieds are moving out, but there is a new revenue stream moving in. In fact, if it weren’t for the recession, it probably would have equalized this year. Now, it will take another year or two. That being said, the big-city, mass-audience format of the newspaper is no longer working.
In an op-ed piece in the Christian Science Monitor last month, you argued that journalists deserve to be underpaid. You wrote: “If journalists want to promote good journalism and value creation that makes them earn more pay, they will have to take more responsibility for coverage decisions and content choices so that journalism becomes more valuable.” What sort of coverage decisions do you suggest they make?
What I’d do first is get a good understanding of who’s reading the newspaper and what their interests are. Generally, readership studies have been done very badly in the newspaper industry and the magazine industry as well, because they tend to put a great focus on those people who aren’t reading. One of the biggest problems is that people who actually buy the newspaper, the core customers, don’t read 75 percent of the content. That’s costing companies an awful lot of paper, a lot of production, a lot of salary. And they need to figure out how to get rid of that stuff and replace it with content that readers are not able to get elsewhere.
Conventional wisdom says that if you let readers guide content decisions, all we’d be left with is Britney Spears-type coverage, at the expense of investigative or public service reporting. Is that true?
That’s not true. In fact, if you look at core newspaper readers, that’s what they hate most about the paper. That stuff has been put in there to get the people who don’t want to read about public affairs or the economy. And so what they’re trying to do is retain this mass audience, even though the mass audience has been leaving at about 2 percent a year for the last 30 years. Those people don’t want to read about Britney, they’d rather see her on video, on the Internet or on TV. Yet, publishers are still saying, “We need to get everybody, including people who aren’t invested in news.” That model’s not working. It has never worked. It’s been an absolutely steady decline for almost four decades.
Will online advertising rates ever catch up to those in print, making an Internet ad as profitable for news organizations as print ads used to be? In a sense, shouldn’t online ads be more valuable since they’re so targeted, measurable and could actually send you straight to checkout?
I don’t think it will ever happen. Online works pretty well for branding and for loyalty campaigns, but it’s not particularly effective for retail ads. If you look across nations, you find that in terms of cross-elasticity, magazines and the Internet are closer than newspapers and the Internet, while magazines and TV are closer than newspapers and TV, in terms of what advertisers they attract and the willingness of those advertisers to substitute media. Each medium has its virtues. People use the Internet to find products they know they want to buy. So it’s not a simple thing to say you’re going to take all this local advertising and throw it online.
We at Sparksheet have been looking at the ways in which companies are using social networking sites to connect with customers and build their brands. You noted recently on your blog that companies should think twice before jumping on the Twitter or Facebook bandwagon, that they should be realistic about costs and effort. When is it worth it for a brand to join the social media fray, and when is it better off sitting it out?
I think it becomes worthwhile when you have regular content and regular transactions with your customers. So, for instance, if you’re a distributor and you have an overstock that you want to move rapidly, at that point it becomes reasonable. But the problem is, when you have every company sending messages to everybody all the time, it becomes just a blur of spam. It’s the same way with news. People want some breaking news about some things but after a while, if they get too much stuff, folks will start tuning out.
Do you see branded content as a solution to the news industry’s woes? Is there a way to have a “Mercedes Wall Street Journal” or “60 Minutes by Whole Foods” without dismantling the traditional “Chinese wall” between journalism and advertising?
The Chinese wall is actually a rather recent thing in journalism. If you look historically, it’s something that was built after the professionalism of journalism in the 1920s and ‘30s, and it was always breached at various times. I think the wall will be more porous than it has been, but if it breaks down too much, you lose your credibility, in which case you lose your audience anyhow.