[This is December 2018 article was originally published in the Digital Deliverance newsletter but never before posted here.]
Many of my friends and acquaintances who teach journalism or media or who are well-known ‘pundits’ about online journalism are thrilled at the launch of The Correspondent, a U.S. version of the De Correspondent, a news operation in the Netherlands that operates only online and is funded mostly by its readers. I’m not thrilled at The Correspondent’s launch.
I think it will be just a boutique operation. It is in vogue, will have its time on the catwalk, but isn’t a journalism business model that can be widely used. My prediction is that The Correspondent itself will succeed, but no more. In other words, this is not the business model that the news industry direly needs – a new business model that deals with how the media environment has changed and which can support journalism through the world.
After briefly describing The Correspondent’s business plan, let me explain the four flaws for any other U.S. news operations thinking of copying it.
Ken Doctor can give you a basic rundown of its business and editorial models. It’s based upon the arguably successful De Correspondent n the Netherlands. There some 60,000 ‘paying member’ readers pay the equivalent of $22 per month to read De Correspondent online, revenue that subsidizes 78-percent of the salaries of its operations and its 51 full-time journalists. De Correspondent doesn’t accept or publisher advertising. Book publishing and its journalists’ speaking fees account for the other 22 percent of its revenues. As Doctor reports, its business model has been borrowed by Denmark’s Zetland and by Switzerland’s Republik, cases which seems to infer that De Correspondent has a business model that will work in any country Can indeed this Dutch model be transplanted across the Atlantic into the New World city formerly known as Nieuw Amsterdam? More importantly, can that model be used by other online websites to sustain journalism, reversing journalism’s evaporation and financial decline in the United States and other countries?
I see no reason why The Correspondent itself should not succeed in attracting enough paying readers to achieve its goal of hiring 12 to 15 full-time journalists. After, all the United States is a much larger country than the Netherlands; so if Der Correspondent in a country of 17 million people was able to attract enough paying online readers to sustain 51 full-time journalists, The Correspondent should be able to attract enough in a country of 320 million people so to sustain 12 to 15 full-time journalists. So goes the superficial logic. Indeed, by the publication date of this newsletter, The Correspondent has already solicited pledges to pay from more than 13,000 people. one-third of its goal. I expect that it will exceed its target number of ‘paying members’ plus likely hire more than 15 full-time journalists. And it will probably survive for ten years or more.
So, that outcome would be good, right? Yes, for The Correspondent itself. As a boutique outlet for news. What’s not to like?
Four things, the first being that the U.S. is indeed larger than the Netherlands. It’s larger in population, geographic size, regional diversity, and wealth of competition. Although it’s easier to find 13,000 to 60,000 paying readers out of a population of 320 million than out of 17 million, the number and potential or actual wealth of existing or new competitors is much greater than a 1:18.8 ratio (320/17=18.8). To start, The Correspondent’s website will be competing against all the websites of all the existing national news organizations (TV and radio news networks, news magazines, and daily national newspaper, plus existing online-only national or topical news websites) in the United States. Likewise, The Correspondent’s journalists who report on special topics and features and not general-interest news will be competing against all the topical feature websites in the U.S., of which there are hundreds or thousands. Population ratios aren’t equivalent to ratios of competitors, partic
larly when comparing a compact 41 thousand square kilometer nation to a 9.8 million sq. km nation. The Netherlands has some excellent newspapers [disclosure: I consulted during the 1990s to De Telegraaf and to Algemeen Dagbladet] and more homeogeneous and highly literate population than does the U.S.; no Dutchman in the Netherlands is more than 240 km. (150 mi.) away from any other resident in the country, less than the distance between New York City and Boston; and within that distance, although there might be regional differences between Frieslanders and Zeelanders, those difference aren’t nearly as great as between New Englanders and Americans from the former Confederacy or Between Floridians and Minnesotans.
Will Americans prefer to pay to read The Correspondent rather than its U.S. competitors? Will it be demographically as successful attracting ‘paying members’ outside as inside the Boston-to-Washington, D.C., corridor? The case of The New York Times (NYT) is illustrative. Perhaps the most prestigious English-language newspaper, with more than a century’s pedigree, NYT during the past five years has spent tens of millions of dollars trying to convert its website’s nearly 80 million registered users into the equivalent of ‘paying members’. It has ‘succeeded’ in converting less than 4% of them worldwide, at rates similar to what The Correspondent plans to charge. I think The Correspondent will succeed at being no more a ’boutique’ online operations, similar to Salon, Politico, The New Yorker, etc.
Second, The Correspondent model suffers from what I refer to as Bell’s Journalistic Syndrome, the mid-Atlantic belief that what the country (name a country) needs is a prestigious national news organization and that whatever business model might work for that will work for that will work for less prestigious and more parochial ones. It’s a syndrome that gives the News Media Association (former known as the Newspaper Society) in the U.K. and the Inland Press Association in the U.S. dyspepsia. It’s wonderful that the U.S. has prestigious investigative newspapers such as The New York Times and The Washington Post. But those are only two of some 1,250 daily newspapers in the country, only about 75 of which have daily circulations of more than 100,000 copies per day; the median U.S. daily newspaper has a circulation of approximately 18,000. The U.S. news industry has lost 32,000 jobs during the past ten years. Almost all of the job losses have been at median-sized daily newspapers and news radio stations. How well could they, or the journalists now unemployed by them, use The Correspondent’s business model? How many people in Sheboygan or Willimantic or Rapid City will pay $22 per month to support a team of even five full-time journalists covering their local news? It’s been tried, and failed.
Third, if I’m going to coin the name of a syndrome, I might as well classify it, too. The Correspondent’s business model fits under the category of Newsroom of Dreams disorder, a variant of the ‘Field of Dreams’. Journalists believe their work has value; most don’t understand why more consumers don’t see that value; most believe consumers need to become aware or more aware of that value; and thus most believe that consumers will pay – if given quality journalism. A similar disorder affects the restaurant industry: each cook believes everyone will like his cooking; doesn’t understand why some people don’t; believes that more people need to become of how good his cooking is; and thus believe that people will pay for it. So endemic is this disorder among chefs and cooks that 60 percent of restaurants fail within their first year and only 12 percent stay in business more than five years. Chefs and cooks might believe that their knowledge of cooking means they can successfully run a restaurant, but that’s like an auto factory worker believing he can naturally run a car dealership. He doesn’t realize it takes different skills. The television personality Gordon Ramsay, himself an excellent chef and highly successful owner of restaurants, earns millions of dollars annually demonstrating by others’ examples how cooking, however excellently, isn’t sufficient to keep a restaurant operating.
I’m constantly amazed by the number of journalists I encounter who believe that they, and they alone, know best how news operations should be commercially operated. After all, they say, ‘we know news best’. They think that without the any need to sell advertising, without any corporate ownership, and with a minimal front-office operation, the resulting unencumbered newsroom operations will find its best way to sustain itself financially and thrive into the future. I say no. There is much more involved, even without the need for an advertising department, presses, or a big front-office or corporate ownership. I say that as someone who spent the first 20 years of my 40-year media career as a daily newspaper journalist (including owning and publishing one), who’s been a business executive for news services (the original United Press International and Reuters), spent a decade working full-time as a consultant to news operations that were moving into online, and spent the past decade as a professor of postgraduate New Media Business. I’ve learned (sometimes the hard way) and teach the panoply of skills, beyond journalism, that are needed to successfully run news companies. Being a good or excellent journalist simply isn’t enough (ask Gordon Ramsay if good or excellent cooking is merely enough to successfully run a restaurant).
Fourth and finally, The Correspondent’s boutique business model for news is myopic to the greatest change in the media environment. As during the past 30 years people’s access and choices of news, entertainment, and other information has changed from relative scarcity to surplus, their media consumption habits have markedly changes. I don’t mean just from print and broadcast to online. Here are the before and the after:
BEFORE: During the second half of the 20th Century when the Industrial Era began ending, most people’s only sources of news, entertainment, and other information, were one or two (perhaps three or four if you lived in a very large city or Europe) newspapers, one or two dozen magazines sold on newsstands, a dozen locally-receivable AM and FM (plus perhaps MW if you lived outside North America) radio stations, and one to three (perhaps five or six if you lived in a metropolitan area) TV stations or networks. For example, their only source of daily changing news in text format was their daily newspaper, which they consumed for international, national, region, and local news, sports, features, weather reports, comics, schedules of events, and to know what was available for sale. There was limited space within the pages of that daily newspapers, so the newspaper’s editor and his newsroom team used two basic criteria to decide which stories to include:
- Stories that might have the greatest demographic interest in that community.
- Stories about which the editor and his team thought everyone should become informed.
The resulting selection (i.e., edition) might not satisfy each and every its readers’ needs, interests, and tastes; but they had few or no other daily alternatives. It was similar to a school meal, in which the entree, side dish, and desert is chosen by a qualified nutritionist who thinks the selection best for everyone there, but which in reality might not satisfy many or most people there. Nevertheless, the edition or the school meal was consumed (the former paid for) because folks had no other choice.
AFTER: Nowadays, people’s access and choices of news, entertainment, and other information, has increased by literally magnitudes. They now have online access not only to their own locally available community’s newspapers, weekly or monthly magazines and broadcast stations but to every newspaper, magazine, and broadcaster in the world, plus hundreds and thousands of topical or special-interest websites.
They no longer consume their local newspaper, online or in print, for international and national news; they instead access the websites of national newspapers and national broadcasters for those contents. They likewise don’t use their local newspaper for international or national financial information, instead accessing financial publications’ websites for that. A tennis fan in the community no longer has to hope that day there will be a tennis story that day in sport pages of his local newspaper; he can instead access Tennis magazine’s website to get that and much more. Etcetera. The only contents people in that community will continue to use from their local newspaper is purely local stories for which still might not be available anywhere else. Thus the traditional package (i.e., edition) of Industrial Era journalism unbundles.
People decreasingly use (and purchase) those editions. They instead pick and choose stories not from within any one edition but from across the entire Internet. Rather than continuing to consume the same meal (i.e., edition) as everyone else in their community, they hunt and gather their own selection of stories, based upon each of those individual’s own unique mix of needs, interests, and tastes, like users of a gargantuan buffet. Given the choice of continuing to consume the same mass meal as everyone else versus picking and choosing items according to their own individual mixes of needs, interests, and tastes, virtually everyone will abandon the mass meal.
Publisher and broadcasters of Industrial Era media products (printed publications and over-the-air or cable broadcasting) see this as the ‘fragmention’ of their previously mass audiences. I see it instead as there were always as many ‘fragments’ as their were individuals and that the previous ‘mass’ was an illusion caused by Industrial Era media technologies’ inabilities to create products that delivered the right match of stories to each individual’s unique needs, interests, and tastes. The Correspondent is a continuation of Industrial Era practices transplanted online. It’s not the solution for the Informational Era (what some blindly call ’post-industrial journalism’). It will add another node to the future infrastructure that needs to be developed for journalism in this new Informational Era. But it’s far from a solution.
[The fourth point above was the overall subject (i.e., no focus on The Correspondent) of an academic paper I delivered September 14th at the Rethinking Theories and Concepts of Mediated Communications conference organized by the University of Missouri, Ludwig Maximilian University of Munich, and Nanyang Technological University of Singapore, and held at the Col*legi de Periodistas de Catalunya in Barcelona, Spain. Click the hyperlink below to read that paper. It’s the first of what will be a two-paper; its second part containing the subjects about which the first suggests further study. The first part is an introduction to the concept of Individuated Media during the dawning Informational Era]