A House of Cards

houseofcards

The answer, my friend, is blowing in the wind…

Drudgereport.com, one of the top websites in the country is an aggregator of other people’s work.

My friend Jeff Jarvis calls on websites to be ‘curators’.

All of this is great…. but…

But at the end of the day, someone has to make the original content and be paid for it.

Until now, that someone has been newspapers.

But I think we are looking at the end of newspapers, and that is a sobering moment for all of is.

Again, I am going to pimp for Jay Yarrow’s outstanding analysis in the BER, which is, I learn to my amazement, the Business and Economic Reporting program for NYU! So congrats Jay Rosen for doing such an incredible job over there.

The entire newspaper business, now no longer a surprise to anyone, is on life support.

Henry Blodget at Silicon Alley Insider recently did an analysis of The New York Times and found that the company has a negative net worth!

They have $46 million in cash and are owed $366 million from advertisers, giving them $412 million. They owe $398 million in short-term debt, which comes due May 2009, in addition to a projected $470 million in operational costs like salaries and newsprint, giving them a total of $865 million in near-term obligations — $453 more than they have.

This is not a problem they are going to fix by mortgaging their new building.

And this collapse is not limited to The NY Times.  The bankruptcy of the entire Tribune group, which include The LA Times, The Baltimore Sun, the Chicago Tribune is almost incomprehensible, yet true.

The newspaper business is not what it was.  It is a mess.

The Washington Post is actually supported by that company’s educational division (including the Stanley Kaplan SAT review course).  The company’s annual report last year stated that the company took in $2.93 billion in revenue (of a total 4.18 billion) from the educational branch. The paper delivered only $889 million. The paper’s revenue declined 7% while the educational division grew 13%.  Without the educational division, I think it is fair to say that the paper would be in the same straits as The NY Times is now.

So the conventional newspaper business model is in deep deep trouble. And if the papers go belly up, who is going to provide the content for Mr. Drudge and countless others to curate?

That’s a good question.

Is news of any value?

I think so.

But perhaps not on paper and ink.

Michael Bloomberg made a fortune with news, but by not putting it on paper and ink. He could have. But he opted instead to lease dedicated terminals that delivered the same information that a paper (or a website!!) might have.  Bloomberg understood the value of the news information and a way to package it very very profitably.

In yesterday’s blog, Paul commented:

Business models are thin on the ground. Sure, loads of newpapers are crossing to the internet – it’s a cheap transition to make – but how many are making money from it? Name them.

Well, here’s one.  The Wall Street Journal. Since taking over the paper, Rupert Murdoch has started charging for the online service, and now you have to pay $104 a year for the full online service.  In the past year, Murdoch has earned $100 million in online ad revenue and another $100 million in subscription fees.  That’s almost as much as The New York Times is going to get for mortgaging its building.

15 responses to “A House of Cards

  1. The WSJ has a niche audience. Likewise Guardian and Daily Mail. Newspapers (in the US) serve “local communities”. Local communities are not niches.

    Newspapers want to define readers in a way that readers don’t want to be defined.

  2. I take Michael’s point about WSJ. Some big numbers. Not sure it’s a business model that other newspapers could rely upon to survive; afterall most of those WSJ subscribers will be businesspeople – they are not going to be spending their own money. Just like they don’t pay for planes, trains and automobiles.

    Most people buying newspapers are dipping into their own pockets. That’s why when The Irish Times attempted to emulate the WSJ model with a ‘premium subscription’ service, they withdrew it after a year – people didn’t want to pay for it – especially when they were paying for foreign agency copy which they could consume for free everywhere else…

  3. As someone who has a passion for video and film I hope that VJ work will someday be profitable, but I fear it will never happen.

    People used to read newspapers because they were the only way to get information. Newspapers had the concept of journalistic integrity; it was ingrained in the whole organization. You could trust that which was written in the paper. Now both values are diminished, if not gone.

    The editors of the Denver Post, five years ago, said that the newspaper was no longer focused on news dissemination but had a primary goal of entertainment. While they may be honest enough to admit it, I don’t believe they are alone in this goal. Newspapers should have stuck with the news and not tried to compete for entertainment dollars.

    As the Internet has grown, it is much easier to access the content. My phone has a web browser, for example. In the post dot-com bubble era companies have returned to the Internet as a panacea. But the Internet has always been a mob, with little attempt at integrity. Any content put online will be lost as a drop in the ocean. Only large organizations will be able to afford to screen content and ensure its quality before being seen by the masses. Even then it will be assumed to be a lie or fabrication for corporate edification.

    Does this mean VJ news is the answer? Unfortunately even the companies that have embraced the concept of empowered “predator” freelance VJs think the content should be as free as everything else on the Internet. For example, a VJ may receive up to $100 for five good minutes of content, perhaps a days work. I have spoken with a purchasing executive of a major cable channel and was told that she wanted cheap content and not to put myself in the work in any way. I am not interested in being on the other side of the camera, but the statement was an eye-opener. Her goal was to get as many people sending in content and pay as little as possible.

    These communication companies see the Internet as a goldmine of near-free content they can purchase and leverage for lots of ad revenue and stock footage. Seeing your name in lights is great until you realize it won’t help pay the mortgage.

    As long as VJs are seen as cheap, independent labor and not a real asset only those very new to the industry or independently wealthy will spend the time it takes to improve their skills from ok to good to great. Those that are new will realize they are being taken advantage of and go elsewhere to pay the rent, leaving VJ work to those who otherwise don’t have to work for a living. Like many forms of art, its exercise must enrich the person in ways other then money.

  4. Doom and gloom from those who don’t make money shooting and editing news.

    Oh ye of little faith.

    Those of us that actually make product at a quality level will have work and a paycheck.

    The rest of you sound like writers who have never sold a story or book in your lives.

    Only the delivery system is changing. The product remains the same.

    Just because the old printing press is breaking down doesn’t mean only low budget writers will get to be paid to create a product that really sells.

    The internet only folks will suck wind.

    The newspaper companies and television broadcast units they own will suck wind.

    Others, NOT tied to print (or the printing press) or on the one legged, no profit, internet only visual mediums have a future.

    I don’t blame those with fear in their voices.

    They have every reason to be afraid.

    But don’t kid yourself.

    There are lots of others just like me who are already making a living producing video news coverage for BOTH the web and broadcast.

    The rest of you have a lot of catching up to do.

    Empty talk of “adapt or die” is for those that remain unemployed and hanging onto a dream they’ve never achieved.

    Meanwhile, I’m doing it now AND getting a paycheck.

    Adapting, surviving, event thriving during these tough times while others in markets not big enough to support their efforts, or creating product that no one is interested in, try to figure out where they do and don’t fit in.

    Those are the folks who need to open their eyes and “adapt or die”. Internet only business models are a dead end when it comes to daily news coverage delivered to an audience that keeps coming back for more.

  5. Well…
    My brother-in-law is a producer NBC News, and as I am sure you know, the pink slips are flying as fast as at the newspapers. With two boys in college, I wish that TV news was immune.. but it does not seem to be. However we keep our fingers crossed.

  6. Producers have a future as long as they can pick up a camera themselves, shoot, edit, interview and write.

    Those that can’t do that aren’t really producers in the future.

    That is not meant to be taken as me wishing ill will towards your brother-in-law.

    Just a hard reality many have to face about who does and doesn’t “produce” content.

  7. Its tough out there….
    Finance, manufacturing, resource and media companies are all being hammered. There has been “a perfect storm” for a lot of organizations in the last few months/year. Incomes way down, and they all are scrambling to find the new business model to make profit, satisfy shareholders, creditors and the government. I think it wont clear and a lot will go to the wall, and harsh as it is, the strong will survive. Prudent management is believing things might not stay the same, against a barrage of voices demanding jump on the wagon that everyone else is following.
    One hopes that VJing has a place in this new model. I think that all media will seriously have to look at the roles/models they have currently and reevaluate them going forward. It is funny to reflect that organizations that start lean with many people adopting multiple roles move to old models as incomes increase especially in television. That doesn’t appear to happen in the on-line world, hence their survival and easy adoption perhaps their model is the future, think lean and expert comment.
    See http://www.nzherald.co.nz/startup/news/article.cfm?c_id=1502269&objectid=10527665

  8. you won’t get any argument on that here

  9. $ – I keep reading from people like you about these broadcast shooters who say they make a quality product…

    Virtually nothing I have seen from broadcast news could be deemed a quality product – it’s the same canned shots recycled for each story. Interview with on camera hard light, b-roll footage of something that is uninteresting and a voice over – the democratization of content is going to make this a moot point. I’ve seen better quality content come from such venues as CurrentTV and other indie resources than from the so called mainstream broadcast professionals.

    Since I have no reference to what you deem quality – it’s a one sided POV at the present time on my end.

  10. Congratulation Tim, you have won first prize for the most intelligent and realistic view of this entire VJ, CJ comedy spectacular. CJ and VJ is nothing more than a cheap or free labor option for greedy or bad management that have no clue of what managements should be doing. You have losers like Cliff who has been waiting for years under the dream of “it will happen because we are better”, sound like a bunch of ugly virgins hoping that one day something will happen so they can get a first date. They all fail to understand that nobody in this world is willing to pay for bad and low quality. Clients will pay for what’s worth and if they are paying nothing than that’s what’s the actual market value of CJ and VJ is, nothing.

    Look at what television executives are trying to do and think what would happen if GM (another industry in trouble) would try to do the same. Let’s try to save money by building the cheapest and ugliest car we can, just like programmers are trying to get the cheapest and worst video they can, but here’s the catch, let see what would happen if this ugly car would be priced as much as a good car so GM could pocket the saving to fix previous management screw ups, do you think that the public would buy it? How many cars do you think they would sale? NONE. This is exactly what’s happening to stupid management who think that moving to bad quality work will save their rears, and make no mistakes, management move to VJ and CJ is nothing more that an attempt to buy time until they can find another job because their demise is inevitable. The public has the ultimate power to put stations out of business with a simple click on their remote. Why would viewers watch something crappy when with a click of their remote they can watch something good, and their cost is exactly the same?

    The actual production crew that today consists of a cameraman and a soundman is the lowest expense in a production, yet they have the power to make that show a success or a failure, smart management knows all too well of the importance and will never cut costs there. The problem in television is the multi-layers of production management that drives up the costs. These are the areas that smart managements are reducing, consolidating or eliminating. Mess with everything you can but don’t mess with quality, that’s their motto.

    I don’t want to give away secrets, especially not here. I’m a freelancer and have been one for 39 years, plus 3 years as an Army photographer and cinematographer and I have been doing something called EPM that stands for effective production management. Eliminate anything that can be eliminated and let it be transparent when it comes to the finished product. We are not talking about local news here but about some of the biggest and most successful names in the business, and the same can be applied anywhere and to any business. On most if not all project we were able to cut cost in half and some by as much as 2/3 without effecting quality. I learned most of these techniques over the years by actually working on management training videos for some of the world most successful corporations and then applying those ideas to our business. This is smart and successful management at work but you will not see many television management embracing these techniques because they are the ones that might be the first ones to go, it’s much easier to blame the cost on the crews and buy time.

  11. Cliff, my quality product has sufficient “quality” to encourage people to pay me for it.

    You?

    Didn’t think so.😉

    While I and others actually walk the talk, shoot and edit video for BOTH broadcast and internet, you continue your years-long unemployment.

    Isn’t it about time you adapted to the real world?

    If for not other reason than to prove what you claim you can do has actual value to others, instead of just yourself and no one else.

  12. $ – That’s funny – did you just make that up?

  13. Nino,
    Trust me. I am a purveyor and supporter of the “quality has value” theory.

    But you just wrote something that has a catch:

    ” Clients will pay for what’s worth and if they are paying nothing than that’s what’s the actual market value of CJ and VJ is, nothing.”

    First, what if clients have little or no money? And that applies to your clients? Where will they cut expenses? Would you need to lower your rate? How far down could that go? Theoretically, it could go down and down… until the level of “quality” matches how much money they have to spend. Two things can happen.

    First, the quality can be improved from the low level suppliers. Their cameras are cheaper. Their editing is cheaper. Their lights are cheaper. Their talent might be just as good.

    The market will connect the supply with the demand. And in the current economic meltdown, theoretically, the clients could dry up, or look for cheaper suppliers, offer less work based on budget cutbacks.

    The “market value” affects you. You are the recipient of the money.

    So if the VJ model drives down the market value… then who suffers? Those who don’t get work. Those whose work is substandard. And those who are charging more than the going market rate is.

    “Paying for what it’s worth” goes both ways.
    Quality is worth something. But only to a certain price level. And setting the price level isn’t entirely up to the freelance photographer. It is negotiated.

    But you are an expert at the freelance business… I’m not. I am just making some observations, as usual.

  14. Actually Cliff has a point. There is a lot on TV that is very poor in quality. I don’t want anyone to think I am entirely happy with the status quo of TV quality (especially local news) but I can’t see that a bunch of handycam hopefuls’ waving their toy cameras at anything that moves in the hope of capturing ‘younews’ is going to improve things.
    The thing is from my experience a lot of the very worst cameramen in this industry are the same ones that would love to work VJ. As a model it gives the lazy b’stds an excuse for poor work. They can forget all that annoying stuff like tripods, lights and focus. Just concentrate on their lunch break and whack of some stuff on deadline day while they work their phone sex-line clients the rest of the week.
    Look at the worst person in the newsroom… now think of them being cloned and running the whole place. You are now seeing the future of VJ newsroom.

    TV will never get better until management start valuing the people who make it.

    A network over here commissioned 14 first time VJ doco makers to make a one hour doco each. It cost less than they usually paid for 4 conventional doco’s, 14 for the price of 4 good money saving decision right?
    Nope. Two years later none of the doco’s have run. None of them are good enough (technically or content wise) to go on TV. I’ve been contacted about trying to fix 3 of the lest bad one’s. I’m not sure if it’s possible, even if we can fix the sound, without a complete re-shoot of most of them, they are really, really ugly… not even good enough for the net.
    That’s money lost, 4 doco’s that will never be funded in the name of trying to save money and appeal to the youth market… stupid.

  15. EB, this is not the Salvation Army this is a business. If a client doesn’t have the money to pay then he doesn’t have a business and he is not a client. There’s only one reason to be in business and that’s to make money, if he can’t generate enough interest and revenue in the product that he is offering then he has to go and make room for those who can.

    The news market is in disarray is not settles by a long shot. Any payroll cuts are a temporary fix and guarantee to get much worse; those who can not afford a real crew today will not afford even a VJ tomorrow and will be looking for CJ who can supply free work, in few words CJs are putting VJs out of business even before they get a change to get into the business. Why? Because there’s no noticeable difference in quality between VJ and CJ so why pay even a little when you can get it for nothing. It doesn’t make any difference anyway because the public in not watching either one of them so whoever is gearing their business toward VJ or CJ work will be out of business anyway. Just look at all the noises that Michael’s made for the super innovative show “what’s you trip” on the travel channel, one show and have you heard anything else about it? The public in not buying that crap and neither are the advertisers.

    If you are a good news cameraman and feel that your future is uncertain then do what I’ve been saying for years, improve, diversify your skills and seek other markets. News is only ten percent of television business and is the ten percent that is have most of the problems.

    While Michael is talking about flip cameras network are grabbing every piece of high end HD cameras available. Sony new XDHD 700 camera sold out even before it was officially available for sale. Networks are reducing their staffs but high end programmings are still being done, by whom? By freelancers, networks are realizing that it’s much cheaper to pay freelancer’s high rates than having people on payrolls. Ask any established freelancers about VJ or CJ and he doesn’t have a clue of what you are talking about it. Their business goes on and goes up year after year. This year alone I gave away over one hundred days of work because of multiple booking, that’s over 200K of work, that’s almost seven years of pay for those working at Verizon Hyperlocal inWashington, and this was only my excess booking.

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