The business of publishing: Lesson for a journalism teacher

Sure, I said, I can teach the Business of Publishing. Granted, all I remember learning about it in college was that libel is expensive, so it’s cheaper to be accurate. But I was a financial journalist for years. And, like every journalist of my generation, I got a crash course in the finances of journalism as I sat in a shrinking newsroom, filling a shrinking print news hole while using an ad blocker to keep my own site’s popups, flip-downs and trackers from crashing my browser.

I checked with other professors teaching similar courses, such as Alan Mutter at Berkeley. What I heard often: No book has kept up with the industry’s change. I looked into possibilities, but even books just two or three years old referred to startups now crashed and innovations already abandoned. There were books about entrepreneurialism, but this course was broader.

Professors said their courses reacted to news as it happened. That made sense, but I wanted a framework that put breaking news about the journalism business in context. This is what I came up with.

Four types of communications media

In the beginning was entertainment. Entertainment is simple. All you need is content and an audience, and the content’s central purpose is only to have an audience.

Up next, public relations. Some say PR is the newest form, born around 1900, birthed by men such as Ivy Lee and Edward Bernays. But that’s just when the practice got a name.

Define public relations as attempts to mold public opinion, on behalf of someone else, through communications. Now look at the inscriptions on stelae announcing a king’s conquests. Pure PR — and not even the earliest. Public relations needs content and an audience, plus distribution. It doesn’t have to be carved in stone; public relations started when the first boss got underlings to tell the rest of the tribe how lucky they were to have a top-quality leader.

Advertising molds public opinion, but with more specific goals: buy this, vote for that. To make sure  messages are clear, advertising generally requires some form of production. Word-of-mouth is cheap but blurry, hence printing, and radio and TV commercials.

Now we’re talking real money. But in a sense, advertising hasn’t had to pay for itself. The connection between dollars spent on ads in newspapers and dollars spent by consumers, for example, was fuzzy.

That’s extremely simplified, of course. But it’s close enough to lead to an understanding of why publishing, particularly journalism publishing — print, broadcast and online — is uniquely challenged by the internet.

Journalism’s business formula

Journalism needs content and an audience. Journalism publishing, in whatever form, needs production and distribution. All that adds up, so journalism needs money. If students understand that structure and what each part comprises, they can fit the story of each startup success or old-media failure (or vice versa) into a logical story.

In a business analysis of journalism, content is not constrained by taste.

CONTENT

Let’s be a broad church. Say journalism content includes news, opinion and instruction. What you cover only matters in terms of potential audience. The key business issue for content is how you get it.

• From the source. Compile news releases, accept stories written by companies or agencies, and you can fill a publication for nothing. News sites with feeds from PR Newswire or “community blogs” for real estate agents and chiropractors take advantage of free content.
• Voluntary labor. Whether community members without a profit motive or unpaid interns, this is a step up from source-driven content.
• Computer-mediated aggregation. Write a program that can grab information from other sites, and you can put together a smartphone app that churns out news content for next to nothing. (See: Flipboard.)
• Human aggregation. There are lots of apparently successful models, from the Drudge Report’s barebones headlines to Huffington Post’s sophisticated intellectual thievery.
• Paying for content from outside. This covers freelancers, syndication and wire services.
• Hiring content creators — also known as journalists.

Each has advantages and disadvantages. Some are cheaper, but have risks: Unpaid bloggers get bored and stop writing; computer-mediated aggregation with an unsophisticated algorithm can lump stories about Cleveland, Ohio, Cleveland, Tennessee, “The Cleveland Show” and Cleveland-brand golf equipment into the same topic. (See: Flipboard.)

Broadcasters have production costs, too. (Deirdre Kline, Middle East Broadcasting Networks)

PRODUCTION

You have to manipulate the content you collect into a form that suits your system. From the first newspapers to today’s websites, someone has to pay to buy, run and maintain production hardware and software. Yesteryear’s Linotypes, presses, proofreaders, printers and press operators are today’s computers, editing software and coders.

Note two things about the impact of the internet on production costs:

• Despite the obvious drastic reduction in costs, online production (at any significant level) is not completely free.
• One new production cost has been added: storing archived content while keeping it reachable by the audience.

Journalism doesn’t happen unless distribution gets content to consumer. (John Kroll / CC 3.0)

DISTRIBUTION

Distribution is whatever comes between production and customer: delivery trucks, carriers, mailing, broadcast towers and internet bandwidth.

Key issues:

• How much control and responsibility will you have? A lot, and you have the ability to ensure reliable delivery — but at great cost. Give away control, as newspaper publishers do by hiring independent contractors for delivery, and your options for satisfying customers are limited. (Not to mention the sticky legal issues that have been around for at least 50 years.)
• Relying on the internet for distribution requires giving up almost all control. This is why laws about net neutrality and related concerns matter to journalists.
• At what point does the distribution cost for a particular audience member outweigh that person’s value as a reader, listener or viewer?

Technology can be a limit to audience size.

AUDIENCE

The cost of delivering content to the audience is covered under distribution. Of separate concern are the major factors that limit potential audience:

• The number of people interested in your content. You’re the greatest source for news in Possum Squeak, Iowa. But even people just across the state line in Rising Falls, Illinois, don’t care. You provide in-depth investigative reporting revealing massive fraud throughout government. But supporters of the party in power don’t want to hear about it. (Competition can also play a role: Is the potential audience’s interest already sated?)
• The number of people interested who can use the product. Journalism as a going business didn’t start, couldn’t start, until a large enough percentage of urban populations could read. If your journalism goes into an app, your audience is limited to those with compatible hardware and software.
• The number of properly equipped people you can reach. Still a significant factor for print and broadcast. The internet does not reach every household, either, but perhaps that limitation fits better under the previous paragraph.
• The number of reachable people who know you exist. The bigger your potential audience, the harder it will be to bring your content to the attention of a significant percentage of them.

At last we get to the tricky part: Paying for all of this. That’s the topic for my next post.