We Media: show us the money

Posted by Martin Stabe on 4 May 2006 at 16:44
Tags: Blogs, Guardian, Journalism, Online, We Media

All this Web 2.0 and blogging discussion at the We Media Global Forum is all well and good, but the question on every editor’s lips is “where’s the money?”. The next discussion here at the Reuters HQ in Canary Wharf will address this ever-tricky issue.

Moderated by Newsnight economics editor Stephanie Flanders, the panel will include a number of people who should have a pretty good idea about how to make money online:

• Rafat Ali runs PaidContent.org, which examines the economics of digital media content — and serves as an excellent case study of how an independent journalist can make money on the web;
• Guardian Newspapers chief executive Carolyn McCall, who recently announced that Guardian Unlimited made £1m this year, largely based on advertising;
• Shoba Purushothaman, chief executive of the New York-based NewsMarket, which supplies broadcast-quality corporate news footage to television networks over the internet, and
• Dave Sifry, founder and chief executive of the blog search engine Technorati.

Mainstream media are charactured as being defensive about this, says Flanders. Other side says “If you build it, they will come” attitude — build tools and worry about the money first.
McCall is first up. The challenges are well rehearsed, but established media business model is in a state of flux because of digital disruption. But it needs to adapt to the new realities, knowing that you can be the best web. McCall thinks there are multiple business models that could work, so it’s not a matter of finding

Guardian’s trust structure allows it to think long-term. The Guardian is completely agnostic about the medium. What matters is the journalism. If the Guardian is not a newspaper in 10 years but

Reuters’ Chris Ahearn says it’s all much ado about nothing. THere are still three major options: Tax users like theBBC, advertising, or have users pay subscriptions.

For bloggers, the problem is to find how to monetize their work while finding a mainstream outlet like Reuters or the Guardian. Models like micropayments are showing promise, he says, noting the success of iTunes. “Peoiple who creat content should be paid,” he says.

Ali says you can get journalists to blog the way the Guardian is. THis isdificult and risky to the brand. The alternative is to help incorporate other existing voices. This is probably also easier than
“THe weakest link in the chain is the professional journalist,” he argues.

Expecting traditional journalists to do completely different things as they were five years ago is asking too much. Working at one-tenth the cost you’re accustomed to is difficult, especially because journalists are some of the laziest you can find.

Reuters journalists would argue that the major difference between bloggers and journalists is the quality of tools at their disposal, says Ahern.

McCall says There will always be a proportion of journalists who don’t want to get their head around this new world. But some journalism is not about the technology: Reporting from Iraq £12,000 per month to keep a journalist in Iraq. How to monetize blog aggregation while carrying the overheads of the original, established. Forty percent of newspaper costs are in publishing costs.

Ali is amazed by the institutional waste of money he saw at the BBC yesterday.

Purushothaman says getting global domination has never been cheaper, but retaining it has never been more expensive.

Flanders is surprised by the optimism she is hearing.

Sebastian Grigg of Goldman Sachs says media businesses are venerable old businesses. What we are seeing at the moment is a very substantial change. Businesses are gripping blindly through this digital change. Talking about the search for business models means nobody knows what’s going on. Only certainty is a huge transfer to consumers. The question is whether the infrasturcutre for this can be supported on the sort of business models that are around at the moment, and right now this is unknown. The public companies are traded closely in line with another because investors don’t know what’s going on, either.

David Sifry draws laughs saying that he loves bankers. THe quesiton is who is going to make money. Only one business knows how to make a disaster into something profitable. Cue film trailer.

It’s a parody trailer for The Day of the Long Tail, a horror film about about mass media users learning to use media tools and media corporations’ futile attempts to respond. No doubt it will be on YouTube soon.

Those who failt to adopt new technologies in the face of disruption risk repeating the mistakes of previous

The industrial schema of producers and passive consumers will be gone in 10 years, says Sifry. The former audience is waking up to the fact that they can be producers too. This is powerful and democratising. There is an opportunity for the rebirth of civic engagement. It will always be impossible to have enough journalists in institutions like Reuters or the Guardian to cover every event that could be of interest to someone.

Purushothaman notes that not everyone wants to make money from blogging.

But Sifry says a few people do want to blog full-time, and there are business models emerging, including blogger guilds that pool their resources to cover overheads. Sifry also stresses indirect revenues from blogging, such as gaining speaking engagements, consulting opportunies portfolios.

One of the greatest failure of media companies is to represent the blog.

McCall notes that the Guardian is a heavily-blogged newspaper because it provides good quality, distinctive, free content. Sifry agrees, saying the Guardian has taken excellent steps to make it easy to link to.

Trust will become increasingly important in the future when there is cocophany of 30 million voices. Some people will want to turn to a trusted source to filter all this informaiton, says McCall.

Sifry says editors are a good thing. We do need filter and brands are therefore important.

Ali is asked how he creates his brand at PaidContent. Ultimately only a repution for consistant accuracy and quality can achieve this.

Grigg responds to a question about advertising by saying advertising needs massive audiences to be viable. Ali disagrees. Not necessarily a scale game and he does not want to have five times the audience he currenlty does, he says.

McCall says MediaGuardian, for example, makes a lot of money, but not because of the size of its audience, but its quality.

Questions: Should media companies reinvent themselves by moving up into higher revnue streams, like owning telecoms companies in India.

McCall is asked if she will be able to hold prices for subscribers and advertisers for five years. No, it’s reviewed every.

Question from the audience: It’s the tech companies going to make money, isn’t it? It’s the mid-size companies that are most at risk, says Purushothaman. Ahearn agrees. Get specialised or get big he says: Those in the middle are dead. (gulp!)

Question: Should big media join citizen-type media, or should the citizen journalism movement accept that big media will drive the game. Who will have to move.

Everyone’s moving, says Ahearn to grunts of consensus from the panel.

Sifry hopes the conference will finally put the ‘bloggers versus journalists’ rhetoric to bed. Applause.

And that’s it. …

Tags: Blogs, Guardian, Journalism, Online, We Media