The tyranny of online advertising

Posted by Martin Stabe on 14 March 2006 at 14:05
Tags: Craigslist, Investigations, Journalism, Online

Speaking at South by Southwest Interactive film festival in Texas, Craigslist founder Craig Newmark has said newspapers should invest more in investigative journalism.

This echoed similar sentiments Newmark aired in an interview a fortnight ago, during which he was asked what he would do if he were the editor of a newspaper dependent on classified sales. Newmark said: “I’d be moving to the Web faster, hiring more investigative journalists, engaging the community and speaking truth to power.”

But is it really that easy? Nicholas Carr, a former executive editor of the Harvard Business Review, has a thoughtful response. Newmark’s sentiment is all very nice, Carr says, except that the disaggregation of newspaper content on the web makes investing in expensive forms of public-interest journalism very difficult:

Traditional newspapers sold bundles of content. Subscribers paid to get the bundle, and advertisers paid to have their ads in the bundle, where those readers would see them. In effect, investigative and other hard journalism was subsidized by the softer stuff — but you couldn’t really see the subsidization, so in a way it didn’t really exist.

And, besides, the hard stuff contributed to the value of the overall bundle. That whole model has been slowly unraveling for some time, but the web tears it into tiny little pieces. Literally. The web unbundles the bundle - each story becomes a separate entity that lives or dies, economically, on its own. It’s naked in the marketplace, its commercial existence meticulously measured, click by click. … The economic incentives created by the web model are very different from those of the old print model - and it’s economic incentives that ultimately determine business decisions.

In another post, Carr offers an example of what the different economics of online journalism could mean for the types of stories that publications are incentivised to run:

Let’s say you’re an online newspaper. You do a long, complex story about the relationship between political strife and disease in Africa. It’s a good story, and it’s an important story, and it’s expensive to produce (you have to send a reporter and a photographer overseas). But it’s not a story that gets readers to click on ads, and it’s not a story that lends itself to the kind of keywords that advertisers bid a lot of money for. You also do a brief review of some new high-definition TVs coming on the market. It’s a cheap story to produce. And it produces loads of high-priced clickthroughs by readers.

The loss of some classified advertising revenue to sites like Craigslist is only part of the problem for online newspapers: The disaggregating effect of the Internet and the much greater detail with which advertisers can monitor which stories generate page views is another. As Carr says public-interest investigative and foreign reporting has always been subsidized by fluffier, more advertising-friendly content. But online, this system of invisible invisible subsidies is far more transparent and will become more difficult to sustain. In the long term, this is a much more serious problem than classified advertising revenue.

Tags: Craigslist, Investigations, Journalism, Online