Category Archives: Newspapers

Chain Reaction

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Chicago reactor team. Enrico Fermi, first row, first on left.

For more than a year, physicist Enrico Fermi and his team had been building a pile of blocks under the racquet courts at the University of Chicago.

The pile was made of alternating bricks of uranium and graphite.

Inserted into the pile were cadmium coated rods that could be withdrawn.

This was the world’s first nuclear reactor and no one knew if it would work.

On December 2, 1942, Fermi and his team began to withdraw the cadmium rods.

Cadmium has the power to absorb neutrons.  The uranium, being radioactive, gave off neutrons. And each time a neutron from the deteriorating uranium hit another uranim atom, it caused a small reaction which gave off both heat and an addition three neutrons.  As neutron hit atom and each atom in turn went from U238 and U235, the newly formed atom of U235 in turn gave off an additional 3 neutrons.  One became 3 became 9. 3 to the third over and over and over, each giving off more and more energy and the reaction took off.  The pile went critical and the reaction was self sustaining for 28 minutes.

The world’s first chain reaction.

The successful experiment under the University of Chicago’s football stadium was the foundation of the Manhattan Project and the basis of the Atomic Bombs that the US would ultimately drop on both Hiroshima and Nagasaki three years later.

New technologies do not occur in a vacuum.

Once unleashed, they, like the pinging loose neutrons in Fermi’s pile, begin to set off a series of chain reactions impacting on other technologies and industries until those industries and technologies are also changed… or simply explode.

Take the Internet.

The Internet itself was the product of the US military’s desire to protect command and control from the power of nuclear weapons. As warheads grew ever larger in megatonnage, the military had initially responded by burying their command deeper and deeper in the earth.

It soon grew apparent that it was far easier to ratchet up the megatonage of the bombs than keep digging deeper into the earth.

So the military went to the Rand Corporation and asked them for a solution.  They came up with a rather novel one: networks.

If you build a network of nodes, they said, connecting the nodes together, then even if one or two or four nodes are destroyed, the others will continue to function.

The US Dept of Defense did just that. Under their  Advanced Research Projects Agency, ARPA, they built something called ARPAnet. A network of mainframe computers joined together by phone lines.  Think The Forbin Project.

This ARPAnet was to become the Internet.  Opened to the public, it’s network growing far beyond its initial 8 nodes to what we know today.

As each new node was added, as each new computer and user and server came online, as each new functionality was added, the national network of the web, formerly Arpanet, now grew, a bit like Fermi’s pile in Chicago. Each begetting more and more and each new line of code or added function or added computer adding more and more, larger and larger, until it hit critical masss itself.

Had you told the people building Arpanet for the Defense Department that their 8 mainframes and dial up telephone links would one day destroy the newspaper business, they would have thought you insane.

But it did.

Had you told them that it would destroy all the television networks in the country, they would have had you institutionalized as a raving lunatic.

But it will.

Had you told them that it would one day render Bell Telephone worthless because you could use VOIP protocols for free, they would not have had the vaguest idea what you were talking about.

But all of that was to come true.

It was the inevitable result of the chain reaction set off the day Bolt Beranek and Newman, the engineering firm hired to build Arpanet, turned it on.

As Andy Grove, the Chairman of Intel said, “listen to the technology. It will tell you where to go”.

Look at the confluence of technologies impacting now on the television and journalism business.  Cellphone with video cameras inside. A web that carries video content globally for free.  Listen to the technology.  Where is it taking us? It may not be where you want to go, but most assuredly, this is where we are headed.

And unlike Fermi’s reactor in Chicago, there is no way to turn it off or to slow down the reaction.  We are rapidly approaching critical mass.

Right Facts, Wrong Conclusion

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Gets it… but doesn’t…

Columnist and writer Michael Kinsley in the New York Times today opines, You Can’t Sell News by the Slice.

Kinsley, like everyone else, is grappling with the search for the Holy Grail of how to keep newspapers alive.

In the course of his grappling he posts some interesting statistics:

Newspaper readers have never paid for the content (words and photos). What they have paid for is the paper that content is printed on. A week of The Washington Post weighs about eight pounds and costs $1.81 for new subscribers, home-delivered. With newsprint (that’s the paper, not the ink) costing around $750 a metric ton, or 34 cents a pound, Post subscribers are getting almost a dollar’s worth of paper free every week — not to mention the ink, the delivery, etc. The Times is more svelte and more expensive. It might even have a viable business model if it could sell the paper with nothing written on it.

The problem, Kinsley writes, is that even if you charged every online user $2 a month, that would only bring in $24 million, a drop in the bucket to The Washington Post or The New York Times.

What is killing The Times, The Post, The Trib and every other paper in the country is not so much the declining revenues from advertising (though that is a problem) but rather the cost of running the paper under the old, conventional model.

85% of the cost of a newspaper is the physical reality of the paper. The paper, the ink, the presses, the buildings, the delivery of a physical item to each and every reader’s kitchen table each morning.

This costs a fortune.

And it is no longer necessary.

It is, in fact, a burden.

Sell the building, sell the trucks, close down the presses, lose the pressmen, the ink, the paper and all the rest.

Cut your costs to the bone.

And then take out the bones.

What do you have?

A very profitable operation.

Smaller, for sure, but profitable.

And suddenly you have global distribution to more than 2 billion readers.

That’s a lot.

Apparently more people read The Guardian online in the US than buy the physical paper in the UK daily.

That’s what used to be The Manchester Guardian.

Editor Alan Rusbridger is rapidly turning what was once a local English paper into the best global newspaper in the world.  Very far indeed from it’s Manchester origins. You can’t hardly find a Manchester local story in the paper, but you do find some of the very best reporting and writing in the English-speaking world.

When it comes time to cut costs because revenue is down, it is an act of suicide to cut the editorial side. Why do you think people read the paper in the first place?

What should be cut are the vestiges of an old and unworkable business model for distributing the news.

Paper.

The solution to the crisis facing newspapers today?

More of the news…. less of the paper.



Only Yesterday

reporting on their own demise…

In 1981, KRON4 (of all people) ran the story embedded above.

It was about a radical new experiment.  A newspaper in San Francisco was putting its newspaper online.

As the story says, it was not going to read by a lot of people. Only 3-4,000 people in the San Francisco area even had a home computer.  500 had registered an interest in reading the paper online.

That story aired 28 years ago, which is about right for the impact of a new technology to be felt.

Had you wandered over to the SF Examiner in 1981 and told them that these new computers and their green screens would one day destroy the entire newspaper industry, they would have told you that you were out of your mind. Yet sitting there, in the newsroom, like some kind of weird virus, was indeed the engine of the destruction of an entire 350 year old industry.

Go to any television newsroom and tell them the same thing, and they will probably react the same way the folks in the Examiner newsroom would have in 1981.

It’s just not possible.

It is.

And it is going to happen.

As surely as online publishing destroyed the entire business model for newspapers, online video which is just getting started now (a bit, but not much more advanced than online text was in 1981), is going to make the entire television news business model a museum piece.

Can television news operations prepare better for what is surely coming than newspapers did?

Don’t know.

Not sure anyone can.

It just requires too much letting go what is well-known and established.

When the Titanic had only just struck the iceberg, the ship’s architect, upon examining the damage, already knew that the ship was fated to sink to the bottom of the ocean.

For those on board the still stable ship, having dinner, dancing in the ballroom, the notion that they should take to the lifeboats (or maybe start building them) would have seemed ridiculous.

A Case for a “King of News”?

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Capable of seeing all sides of an argument…

For many years now, I have been a resident of two countries, the USA and the UK.  That ‘duality’ has taught me to look at the world from several perspectives at the same time. This is a story about newspapers and TV news  in America, but it has its roots in English history. Stick with it, it’s interesting….

As an American, there is much to admire in England and in the English way of life, but for a long time I could never understand the British respect for the Monarchy.  The ‘House of Windsor’ was to me an anachronism.  Here were inept and painfully average people elevated to the height of power.  What was more irking was that they were supported by tax money.  “Off with their heads!”

Yet Republicanism has had little traction in Britain, and everyone supports the Monarchy.  It’s an institution with very very deep emotional roots.

I did not really understand why until I read Winston Churchill’s History of the English Speaking Peoples.

My new understanding of English History has also given me a new view of journalism in the United States.

Charles I ruled England during the time of the Civil War (the British one, not the American one), and was overthrown and beheaded in 1649.

The Monarchy was then replaced by Republican rule under Cromwell who ruled under the title of Lord Protector. It was a popular revolution and it was England’s first and only experiment as a Republic.  A short 12 years later, the Monarchy of Charles II was restored to vast popular acclaim across the length and breadth of the land.

What happened? And what does this have to do with Journalism in America?

The rule of Cromwell was a nightmare for pretty much everyone in England.  Unbound by the restraints of Nobless Oblige, Cromwell and his followers became the Taliban of England. There were religious trials, there were religious police. It was a holy terror, in every sense of the word.

The English soon came to realize the value of a countervailing force in the institution of a Monarchy.  While Parliament and democracy might well reflect the momentay passions of the population and the ups and downs of the economy or foreign fortune or failure, the Monarchy was able to stand a bit aloof and have a far longer and more stable perspective.  Britain needed a Monarch, in a way, to allow the Parliament to function far more effectively.  It was a pillar of stability. Alone it was unreasonable and could be dangerous. But in concert with an empassioned Parliament, it cast just the right balance. Hence, the experience of the Cromwellian Republic forever cast in the British temperment a healthy respect for the Institution of the Monarchy.

Clever.

Now we come to journalism in the United States.

Our nation, perhaps unlike any nation that has ever existed before, is as much run, defacto, by the Media as it is by our elected legislators.  It might not be too unfair to say that the position of the media in fact has vast sway over the kind of government we get, our perception of foreign policy, domestic policy, the economy and so on.  The very foundation of our goverment is in fact predicated on the notion of a well informed electorate; otherwise what is the point of a voting democracy? (note: First Amendment).

But when the voice of the media and thus of public discourse and public information is also married to the vicissituedes solely of the marketplace, does this place our democracy in danger?

We may, in the next few years, see the very disappearance of newspapers from many American cities and towns.  The economics of the marketplace will simply no longer be able to support them. Television news may follow suit.  There may be a new incarnation on the web… or there may not be.  This remains to be seen.

By the same token, that which does make air, or make print, will increasingly be driven by baseline market demand.  The cushion that once existed for newspapers, in the form of classifieds, car ads, house ads, want ads and so on has now been stripped away by the web. It is a naked news and nothing less.

At a conference I attended in Bristol, England last  month, Paul Dacre, Editor of The Daily Mail, a very popular tabloid made a strong case for ‘shock news’. It is, he said, the only way to sell papers.  Fox News in the US is no different. This is a business.

But it is also a business that is more than a business. It carries with it the concept of ‘the public good’ and ‘an informed electorate’.

There was a time when that responsibility rested firmly, (if tenderly) in the hands of a few families, the Sulzbergers, the Grahams, Bill Paley and David Sarnoff.  They understood their responsibility to balance businesss with public service.

Those days are either over or rapidly drawing to a close.

And what will we be left with?  A naked market driven information place…. The 21st Century equivalent of Cromwell’s Republic, but with ROI replace le roi, so to speak.

This is not healthy. This is not good for America.

Thus, perhaps we should start to think of creating a kind of separate and non-market driven countervailing force in the world of journalism.  One that exists not to replace the Fox News or Today Show of the world, but to provide a stable pillar of quality journalism. A benchmark. An alternative that is not driven by ratings or the passions of the moment.

It is true we have both NPR and PBS, but both are woefully underfunded, and in the case of PBS, so badly constructed from its birth as to be almost stillborn.

Perhaps what we really need in this country is a kind of BBC; free of ratings and a haven for the best journalists in the nation (as Harvard tenure, for example… ), where they can work unthreatened by layoffs or cutbacks.  A place where television, newspaper and online journalism might flourish at its best; and provide a ‘safe haven’ for the information we so desperately  need to function effectively.

It would cost us, but far far less than we spend on so many other goverment ‘programs’ that deliver so far less.

It might be the best investment we could make with a small percentage of our tax dollars. Something that would return a thousand fold.

You might, for the moment, think that you can depend upon The New York Times. But in this world, there is no guarantee that the vagaries of the marketplace might not place that newspaper ‘on the block’, the same place Charles I found himself 360 years ago, this month.

The First Internet

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nonlinear… portable…

It’s no secret

The newspaper business is in trouble.

But it’s not becasue newspapers don’t have value.

But I am not so sure that the ‘value’ is in the news. Maybe it’s something else.

I grew up on Long Island, NY.

And the only newspaper we had on Long Island was Newsday. It was a pretty popular paper, and like everyone else, I read it every day.  Looking back on what the paper meant, I realize that the paper was about much more than news. In fact, the news part of it was almost secondary.  Newsday was critical to life on the Island because it provided day to day information essential to living.

And that information generally wasn’t that Ray Margiotta had been indicted again.

Interesting, but who cares.

No.

The information that the paper provided us with was what sales the stores were having. Or what was playing at the movies. These were the ads, not the articles.  Years later, when I lived in Manhattan, and my wife and I wanted to go to the movies, we would open The Times and scan the ads to see what was playing.

On Long Island when I wanted to sell my car, I took an ad in Newsday. When I wanted to sell my boat, I took an ad in Newsday. When I wanted to go to a concert, I checked the paper.  When I needed my first job, I got it through The New York Times.

The paper was much much more than news. Through its ads and its classifieds, it was a community bulletin board.  A place where you went to buy a house, rent an apartment, get a job, see what was for sale at Macy’s, check out the movies, the concerts, the clubs. Do you remember the pages and pages of personal ads in the Village Voice?

In retrospect, I can now see that the local newspaper did what the web would ultimately come to do: publish all the necessary and relevant information that one needed to have a full life – or at least do all the stuff you had to do.  It was the ads as much as the ‘news’ that made the paper not only so attractive, but so essential to day to day life.

Now, as we watch the newspaper industry collapse around us, we are fixated on the journalism. But in retrospect, I think, those news stories were nothing but filler for the ads, and it was the ads that were the really essential part of the paper.

Maybe, if we want to rescue the newspapaper business, and ironically, it is the ads that we should be paying attention to. They not only paid the bills, they broadcast vast reams of local information that, it turns out, was critical.

Where Are Your Priorities?

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1959 Caddy. But does democracy hinge on this?

Washington, it seems, is not prepared to let the auto industry and Detroit go down the tubes.

The bail out is going to happen, even if the White House has to fund it itself from the $700 billion rescue fund.

While cars are nice, and everyone understands the impact of Ford, GM and Chrysler going Chapter 11, one must wonder about the impact of losing The New York Times, The Chicago Tribune, The Baltimore Sun and The LA Times… not to mention a few others.

While Senators and Congressmen fall all over themselves to bail out the failed American car industry, not one person raises a single voice to bail out the failing American newspaper business.

Strange culture we have.

The newspaper business is the only industry enshrined in the US Consitution. The First Amendment guaranteed the right to a free press.  Perhaps, had the US Contitution been written in the 1950s, it might have guaranteed every citizen the right to cheap and dependable transportation – but it does not.

A free press, as the Founding Fathers made clear, was the cornerstone of a democratic society.

As Thomas Jefferson said, “Our liberty depends on the freedom of the press, and that cannot be limited without being lost”

Jefferson did not, as far as we know, say anything about our liberty being dependent upon a reasonably priced automobile that is manufactured in the United States.

Automobiles are still going to be made.

They are going to come from Japan and Germany.

No one will go wthout a car who wants one. In fact, you will be able to get a good car for less money from Japan, just as you do now. Who can tell? Lexus? Why not?

But let the newspapers die and you will be hard pressed to replace The New York Times with the Asahi Shinbum.

It says a great deal about our society, and none of it good by the way, that we are willing to countenance and watch as detached observers, the death of the American newspaper industry, yet we are seemingly unable to do the same with cars.

I say, the time has come for a bailout for the American newspaper industry.

A few billion dollars to cushion the blow as they make the difficult transition from print to online only.

Help keep the journalists, with their many years of experience, in place.  Believe me, a great reporter is a whole lot harder to replace than a line worker in Detroit.  Once you lose them, they are gone forever.

Let the publishers of The New York Times, The Chicago Tribune, The LA Times go down to DC for Senate Hearings. They won’t take private jets – they don’t have any.  Let them explain to the Senate and to the American people just how important quality journalism is to a functioning democracy.

Let’s set up a loan fund for the papers, just like we’re going to do for Detroit.

You are on a sinking ship and you can only rescue one: A Chevy Aveo or The New York Times, which do you pick?



Hello?

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Mr. Watson, come here… I need you…

Sometimes when new technologies come along, they overturn the world of conventional thinking – particularly when it comes to valuation.

Take a look at the telephone.

Before Alexander Graham Bell invented the telephone, value was directly married to rarity.  The more rare an object, the more it was worth.  Gold had great value because there was not a lot of it. Make gold as common as lead, and its value would plummet.  So people horded gold and nations went to war over gold. Only kings and very rich people had gold. That was how they liked it.  Open the treasury in the middle of the night and luxuriate in your wealth.

Comes the telephone.

What is the value of a telephone if only one person has it?

Nothing.

Who are you going to call?

If only a few kings and a few rich people have phones, the value increases, but only marginally. Now you can call a few friends,but that’s about it.

However, if everyone has a phone, right down to the local plumber, suddenly a phone is so valuable that you can not afford not to have one.

Now that’s value, but an inverse value from that which had been true through almost all of human experience. It is no longer rarity that gives value, but rather commonality.

What does this have to do with the current crisis in newspapers?

A lot, I think.

Because the crisis we are facing in newspapers and journalism in general is also a moment in which conventional thinking about valuation is being turned on its head, although we are slow to see that , as usual.

Up until now, we have thought that the primary asset of a paper or a TV station was, in fact, the station or the newspaper itself.  It was The New York Times that had the value, or CBS News. The rest, the people who worked there, were in a sense fungible.

In other words, the institution lived on and on, and readers or viewers were attracted to the institution, while the people who created the content for the institution were fundamentally replaceable or interchangeable.

This we sometimes referred to as ‘branding’.

This remained true so long as the technology of the day meant that there were a limited number of pipelines or platforms for delivery of information or content (and the advertising that went along with them).  In the words of AJ Liebling “freedom of the press is limited to those who own one”.

Because it was ridiculously expensive to even entertain the idea of having your own press.  The very cost of a press and the attendant mechanisms of distribution were a barrier to entry for competitors.  Thus, the perceived value of an institution like The New York Times was vested in that barrier to entry.  The reporters might go from paper to paper, from The Times to The Herald to The Daily News, but the paper, the institution would survive.

The reporters were marginal.

The same was true for television.

When it surfaced in the 1950s, the signal was pushed through the air.  There was limited space on the electromagnetic spectrum, so the FCC licensed the limited space to three networks, ABC, NBC and CBS and they held a virtual monopoly over access to people’s homes.

Shows might come and go, but the platform, the pipeline was in the frequency (and in all the expensive investment in infrastructure to push pictures and sound into the air).  The value was in the network, not in the content, per se.  The content was simply the filler, which was changeable depending upon taste.

When cable arrived, it as the same model, simply fractionalized over more players.

The web, however, like the invention of the telephone, changed everything.

At first, newspapers and later television stations saw the web as yet another platform for distribution – a kind of super cable, that would carry The New York Times or CBS shows into everyone’s home.

But that was not the case.

What the web did was to rewrite the fundamentals of valuation.

And like medieval kings, it was and is hard for those who once had the most precious things in the world to grasp that the very definition of value has now changed forever.

What the web did was to take away the barriers to entry. To make the ‘gold’  of the NY Times or NBC’s FCC license as common as lead.

Now, anyone, any time, and for no cost, could get into 2 billion homes. For free.

So where does value suddenly reside?

In the content.

People online are seeking content.

Quality content.

And they do not care where it resides.

iTunes is a classic indicator of what is coming.

In webworld, music is often a harbinger of where the future lies.

When I go to iTunes to download a song, I don’t care if the recording artist is signed with Arista or RCA or Decca or whomever. It does not matter a bit to me.  It is the music I am after.  The ‘studio’ goes away. It is the content that is king.

Each day I go to NYTimes.com to read the paper, but in truth, if Frank Rich, Maureen Dowd, Tom Friedman and a handfull of others were to suddenly break away from the paper and set up their own website (and like Drudge, they might aggregate headlines), I would go there instead.

Now, the NY Times might be in financial trouble, and perhaps their website does not generate enough revenue to support their building, the presses, their trucks, their vast management and HR teams and so on. But my guess is that online revenues from The New New York Times  (aka Rich, Dowd, Friedman and Co.) would more than satisfy the writers.

That’s all that counts.

The content.

So it strikes me as more than a bit odd that when budget cuts come, which is inevitable, the first places to be cut are those who actually create the content.

It does not make sense.

It is like eating the seed corn.

Sell the building.

Fire the management.

Close down HR.

Do anything, but save and nurture the talent.

Or maybe the talent will simply leave and set up their own online ‘paper’. I mean, why do they really need management anyway?