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More Innovation, please!

Newspapers and magazines phase out of the market, editors are losing their jobs – but this stil is not on the end of the journalism. Interim conclusion of a crisis and ideas for the future.

Like never before, journalism has to cope with the fact that technologies are being developed at an unprecedented speed and in an unpredictable direction. The increasingly short life cycles of hardware and the acceleration of how news is published confronts the editorial teams with repeated challenges.

They have forced us into radical rethinking, not least where the financing of quality journalism is concerned. This seems particularly difficult for the legacy press. Over the last ten years it has tried to find answers to the question: How can we secure our future?

The size of the crisis laid bare

A few years ago, most print adherents could find few positive upsides at all to the structural changes from digitisation – a militant clash of cultures between online and print was common in publishing, the consequences of which we still live with today. But we are on the cusp of a change. Fortunately, attitudes towards digitisation have become more open. But current efforts will not be enough to overcome the crisis.

The closure of the „Financial Times Deutschland“ and the bankruptcy filing of „Frankfurter Rundschau“ at the end in 2012 worried us. For the first time, a wide public debate about the future of what used to be the press is unfolding. Suddenly, many Germans – not only the relatively few readers of the two titles – see themselves confronted with the question of what they would really miss after the demise of newspapers.

This is no longer about the future of the printed press but the survival of a special sort of well-sourced and thought-through journalism: the type of journalism that has the power to engage us in the Reithian sense because it entertains, educates and informs. It is exactly this kind of journalism we are worried about.

It is a type of journalism, which fulfils a public service in civil society, side by side with the publicly financed journalism. As it has been pointed out elsewhere („The public service model dilemma“) the self-imposed public service remit increasingly causes a dilemma for private publishers who, indeed have always claimed a special role in the economy and by and large in society. For as long as this remit was co-financed by huge amounts of advertising, publishers lived well on their privilege and had the means to take their responsibilities seriously.

In our view, this balance is fundamentally threatened. What used to be a privilege has turned against publishers like a curse. While in the heyday of newspapers advertisers queued for ad spaces, newspapers now try to usher clients onto their pages, increasingly with dubious forms of courtesy.

Usually, business models of most ordinary products work according to the simple formula: „We charge a price-per-unit that will cover our costs and include a premium“.

In the world of the legacy media it used to be a very different formula: there were two sources of income and hence two types of clients and two types of messages, one for the advertisers and one for the readers:

— The first, for advertisers, was: „We charge a price that is on par (i.e. often agreed) with all other competitors. We don’t know what the fairest price would be for you to address our audience but we imagine you wouldn’t come back if we were really too expensive.“

— Meanwhile the message to readers was: „We charge much less than what you get does actually cost – but never mind, just come back next time and tell your neighbours.“

Although company insolvencies always have all sorts of individual reasons, it is fair to ask if there is a general issue with the business at the heart of the newspaper business: the journalism? Does the market still deliver for excellent journalism? Has it ever? Or is good journalism that renders a public service insolvent by default and has it always lived and thrived on subsidies?

In the case of newspapers these subsidies came through the private market support by advertisers. Those advertisers are now leaving and the damaging economic effects in crucial journalistic areas have been mourned for years: investigative reporting, foreign bureaux, almost the entirety of local newsgathering. Added to which there is a dearth of innovation and little willingness to invest – apart from a very few exceptions.

Journalism’s role in 21st century society

A recent representative study conducted by Stephan Weichert et al has shown that many journalists are worried about their jobs. The current situation is perceived no longer just a „crisis“ (18 percent ) but as a „normal state of affairs“ (48 percent ) or even as a „spirit of optimism“ (32 percent ).

The bottom-line of the study: the fear of the crisis not only depresses journalists but also inhibits change and innovation. However, there is no point in announcing the death of excellent journalism. What is really at stake are in our view the diversity as well as the professional standards of journalism.

The more privately-financed journalism comes under pressure, the more state-funded, charity-based or licence-fee backed forms of journalism will dominate, while content driven by commercial interests, so-called „content marketing“, „surreptitious advertising“ and „product placement“ will flourish.

If vanishing newspapers lead to the domination of public service media in Europe it would be the least unsettling outlook – if only public broadcasters were not so often controlled by who they are supposed to check on: politicians.

There are many niches, not only in B2B media in finance where journalism can pay extremely well and increasingly so. Such do not always render a public service but they can be a great service to customers who, in return pay high prices. However, these are areas into which most legacy daily newspaper publishers do not embark. We wonder: why not?

We wonder this even more in times when the ratio of advertising to circulation revenues is reversing – presumably forever. Therefore, it is more important than ever to develop excellent, new and distinguishable forms of journalism, and at the same time, to add value. Along this line, each type of journalism will probably have to be different. It must stand out against its competitors in a way that is currently very often not the case – because it was not necessary in the past.

Differences and distinguishability

Just compare German national dailies. They are very similar. Also we have the peculiar feeling that in times of crises German publishers follow a strong reflex towards forming cartels and create similarities than there is eagerness to create differences and distinguishability.

In terms of how the market works, this behaviour is probably fundamentally wrong. Instead, it must not be innovation-poor, risk-averse and against diversity. The crisis should kick off ideas and concepts to please the audience in unprecedented ways.

Most experts we know and talk to interpret the radical developmental leap of the internet age as an opportunity rather than a danger. But many have also realised that the digital world changes radically the whole economic marketplace for information – and thus also spending patterns of consumers.

So what are the concrete implications for funding? While the situation in the US is often regarded as being very different to Europe, it is possible to see – perhaps foresee – what the demise of daily newspapers looks like in full gear: more and more titles, even in the biggest regions are being cut from daily to twice-daily or less frequent. At the same time, some interesting new financing models pop up. This is where we would say that the US media market in the current debate about alternative financing is setting the trend.

Side by side with the traditional market model we see four central pillars, which will help to support journalism and to let it grow economically: patronage, foundations, crowd-funding and the whole area of public funding.

1. The market: The majority of journalism will continue to be financed through the market. Only the spending power of consumers can guarantee an independent press, separate from the state. The success of subscriptions, partially-metered and gateway models in the long term will most likely be restricted to those excellently positioned media brands such as „Die Zeit“, „Bild“, „Neue Zürcher Zeitung“, „Süddeutsche Zeitung“, „Wall Street Journal“ or „The New York Times“.

We believe it will be very important for new, high quality journalistic products to emerge, which might be more expensive than we are used to today. A daily newspaper for €2 is presumably not economically feasible. We can imagine that in the future any brand will charge €2 for its online version and once or twice a week perhaps a printed copy for €10. There are already examples of this. And this is just one of many.

2. Philanthropy: In Germany we have begun to look hard at models beyond the market and the state – incidentally also in politics, such as the plans for a state foundation from the government of North Rhine Westphalia. Possibly, there are private donors and non-political foundations who support an independent quality press as instruments of civil societythrough funding outstanding journalistic projects or training, or through publishing themselves. That these models can work is demonstrated by foundation-funded publishers like ProPublica and California Watch as well as in the activities of the Knight Foundation and the MacArthur Foundation.

3. The crowd: America also shows that journalism can be subsidised in a targeted way, but in a long term on a smaller scale. Crowdfunding platforms like spot.us, which work in the USA on the principle of supporting individual journalists or projects as specific journalistic ventures on their own. In Germany platforms like Startnext of donor financed portals like Krautreporter in Berlin are hitting the screens. Finally, it should not be overlooked that licence-fee based broadcasters such as ARD or the BBC receive their funds through a form of crowdfunding rather than from the state, although the latter is very often stipulated. The inclusion and participation of stakeholders offers great potential for improvement of all sorts of services.

4. The state: Because journalism is commonly regarded as beneficial to society and culture, we have to look carefully at financial involvement by the state who might like to see a natural role in supporting the ailing news industry. Any politician overly enthusiastic about permanent financial support from the state to quality media should make us suspicious. This is for example the case in Austria, where publishers are looking at a tripling of the current subsidy of €10.8 million a year.

We are not necessarily preferring indirect support such as loosening the monopoly legislation or the reduction of value added tax – although both could prove worthwhile. One suggestion we would like to make is households’ write-offs on journalistic products. Hereby, ways could be found to generate a surplus, which goes into a national fund for quality journalism. Freelance journalists as well as publishers could be granted access to the fund, based on applications.

All sorts of public subsidies should be complementary to the market model and have a stimulating function. They can, indeed, prove suitable and sustaining in areas where journalism is not sustainable. But they can very easily lead to dependence, curb credibility of the corresponding media and cripple their motivation to reinvent, reposition and redesign themselves.

However, media organisations should not fall into denial about areas where their journalism is no longer self-sustaining. Here, a rigorous and vigorous due diligence is necessary.

The need for journalistic support and where funds should go

There are three areas we consider in need for support because they suffer in the medium term, but bear an important stimulus for quality across the whole business.

1. Research: We regard the expensive research into socially relevant subjects as particularly worthwhile of support. Journalistic investigation is chronically underfunded, above all in the local press. It is here that the involvement of foundations and donors seems most promising – perhaps through scholarship programmes or journalistic prizes – with parallel crowdfunding initiatives, which could, for example, fund time-consuming research travel.

There are a number of distinguished think tanks in the USA with a sense of obligation to the public that work in this direction: Project for Excellence in Journalism, Pulitzer Centre of Crisis Reporting, Center for Investigative Reportingor the Center for Public Integrity.

2. Innovation: Journalistic innovation has to be promoted on a large scale, i.e. the creation of experimental publishing labs as protected realms for experiments and new ideas and particular to develop product visions in the short and medium term, mainly digitally but also in print. There is a huge need to catch up in comparison with the US. Here we see a great need for action that could be financed by foundations, but also from public funds.

3. Digital media proficiency: We consider internet sites for interested citizens modeled on the „Stiftung Medientest“ discussed a few years ago, as a basic part of the encounter of civil society with the digital world. Internet portals for discussion not only help to strengthen the public debate about the social implications of structural changes, but also build an active exchange as a critical dialogue. Such intersections require financial support because experience has taught that the existing media organisations, publishers and broadcasters will not take care of it themselves.

These suggestions for alternative and supportive sourcing are not universal healing cures – they cannot solve the current problems of journalism ad hoc. They will delay the problems like palliative cures, as in cancer therapy. They are a beginning and will ease some of the economic pressure currently affecting the entire industry.

In contrast to legal initiatives like the Leistungsschutzrecht (the ancillary copyright legislation) in Germany, they have the pleasant side effect of allowing journalism to develop: organically, structurally, logically – even if financially damaged. Because it will take a stronger willingness for change than the tearful publishers currently envisage with their demands for state intervention to strengthen and anchor journalism’s place in society in the long term. We hope we as a society will succeed in retaining the spirit of the print press – not for economic reasons, but, at the risk of sounding pathetic, because we believe it is identical with the idea of a free democracy.

„We’ll keep going, I assure you of that.“ says editor Kathleen Solson in the novel The Imperfectionists by Tom Rachman. „News will survive, and quality coverage will always earn a premium. Whatever you want to call it – news, text, content – someone has to report it, someone has to write it, someone has to edit it.“

Journalism will not die

This confidence contains much truth, because journalism as a profession will probably not die. But to come to the point: In the future, journalism will probably simply continue to be not self-sufficient enough – as it used to be: Journalistic products have historically always been cross-subsidised. The only difference will be that in the future the shape of journalism will be much more a result and a reflection of the people’s willingness to buy or support by other means. It will therefore become a question for society as a whole and the preferences will have to answered clearly:

  • Are we up for paying a higher price for good journalism?
  • Are we up for paying higher taxes, licence fees to support good journalism?
  • Are we not at all interested?

If the latter is the case, neither a Lex Google nor the market will deliver. Then the palliative cure will lead to death and all efforts that we currently undertake will make it a very expensive funeral.

However, we believe that the outlook is not nearly as grim if publishers manage to radically reinvent journalism and at same time remember and pay heed to its original remit: to render a service. The better this service, the more people will pay.

Before the German Bundestag passed the new copyright law protecting publishers – dubbed “Lex Google” – Stephan Weichert gave a statement to the German Parliament explaining why the debate had missed the core question: Can journalism always be organised and financed as it used to be before digitisation?  

Dieser Artikel ist ursprünglich bei „The Media Briefing“ erschienen.

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