No doubt the entertainment industry has a lot of trepidation about the recently announced Google TV (though it sounds to me like Google is just building Android and Chrome into TV’s and set-top boxes, much in the same way that everybody expects Apple to put iOS into its unannounced iTV… I mean, if you’ve played with the NetFlix or ABC apps on an iPad, it doesn’t sound like there’s anything really new here)… but what really struck me from the LA Times article reprinted in today’s Seattle Times was this particular toss-away:
The prospect of Google getting into television frightens many in Hollywood, who worry that Silicon Valley will upend the entertainment industry just as the Internet ravaged the music and newspaper industries.
Yeah, um, except… what happened to the music industry and what happened to the newspaper industry are two entirely different things.
Music sales, in both units and dollars, rose steadily and healthily for decades before plateauing in the late 1990’s at about $17 billion annually. That’s when digital piracy, particularly the widespread popularity of peer-to-peer file sharing networks, started to take the legs out from under the industry. The dollar value of music sales has pretty much shrunk nearly every year since, to about $10 billion annually today, though thanks in large part to Apple’s iTunes, unit sales in 2009 reached an all time high.
Total paid U.S. newspaper circulation on the other hand had been relatively flat since about 1960, despite huge increases in population, and has been on the decline since the mid-1980’s, well before the market penetration of broadband Internet could have much of an impact on its business. Indeed, if any medium is to blame for stealing away paid subscribers, it is television not the Internet. And while readership has shifted dramatically from print to digital over the past decade, unlike the music industry, it wasn’t digital pirates who put the newspapers’ content free online, but the newspapers themselves.
Furthermore, there’s another huge difference between the music and newspaper industries, and the respective woes they face sustaining themselves in this new medium. While it is true that music industry revenues have continued to slide even as unit sales reach record highs, so too have their unit costs. Thanks to new digital technologies, the cost of recording an album is now a fraction of what it was just 20 years ago, while the cost of distributing a digital track has shrunk to virtually nil. If the old labels can’t figure out a way to exploit these new efficiencies to remain relevant in the new online marketplace, well, that’s their problem, and no real loss to artists who now have multiple means of promoting themselves to new audiences.
But newspapers haven’t benefited nearly as much from new technologies, for while the cost of delivering an online paper is, likewise, virtually nil, they’re still locked into the expensive, capital-intensive medium of print, regardless of how many fewer customers now purchase the print edition. As I’ve previously argued, the whole notion of an “online newspaper” per se is oxymoronic, for the industry’s entire business model is one based on the physical need to print and distribute paper. Absent this medium, much of what a newspaper does as an institution becomes unnecessary, and its legacy print edition becomes a financial drag on the organization as a whole, making it less competitive to newer, totally online competitors.
Indeed, it is reasonable to question whether most dailies can survive the shift from print to digital in much more than name only… which suggests the biggest difference between the music and newspaper industries, at least from the consumer’s perspective. Music labels publish and distribute the collective work of independent artists, whereas newspapers mostly create their own content via staff reporters. Thus if the large music labels were to suddenly collapse and disappear, few consumers would notice, as the new distribution medium is already mature enough to allow independent artists access to the marketplace. But if newspapers were to suddenly disappear there would be an equally sudden collapse in the amount of local journalism being produced… with potentially dire consequences for our democracy.
All the more reason why newspaper executives should not be allowed to absolve themselves of their own mistakes, simply by blaming the bulk of their industry’s woes on external forces.
Goldy said:
“… whereas newspapers mostly create their own content via staff reporters….”
If that were only true.
Today’s newspapers seem to be mostly content derived from AP newswiers, their columns and cartoonists from syndicated sources, etc. As USA Today proved, you really can print a national newspaper without having any local staffs providing local content.
And even a large measure of the local content consists of press releases re-printed in the paper, with hardly a word changed. I know this, because I receive press releases on an almost daily basis, and can read the articles when they appear in the paper later.
As newspapers reduce their staffs in a continuing series of cost-savings campaigns, they rely more and more on AP stories and press releases for their content – to the long-term detriment of their survival strategy.
On the internet, it has become a truisim that CONTENT IS KING. If newspapers concentrated on good local reporting, investigative journalism, imaginative sports writing, etc., then they can survive, either on the interent or dead-tree delivery platforms. But newspapers which insist on holding onto the old delivery platform by sacrificing content will be gone before this decade is out.
Irony is always king. The newspapers like the PI and Times always start their cutting by getting rid of those expensive pesky reporters and writers. Yeah, but that’s, er…the point of the paper. I can go online on ANY number of web sites and apps and get the AP/NPR/UPI news. I don’t need to buy a dead tree from the Times to get that content.
The ONLY thing what so ever the Times is useful for (to me) is local news. I always take the paper when I get it and toss out the ‘front’ section, toss out the sports (don’t care and again can get elsewhere) and just read the local section. But even that is being undercut. I get more local news from micro news sites like the westseatleblog. I find out much more about what’s going on in my community from that than the Times. Then when you add on political coverage from weeklys like the Stranger or Weekly, there’s just VERY little market left for the Times in my world. Maybe a weekly “investigative report” sort of paper…that’s about it. It has nothing to do with the digital age or piracy, just a medium that sucks at delivering “content” I care about.
The last time I BOUGHT a Times was last year when the husband and I bought the paper while out to eat, for the local movie listings. But the paper didn’t bother printing them, all they had were ads for movies and a printed link saying go look it up the times at their website.
Idiots, if I had an internet connection at the restaurant, I wouldn’t have needed to buy the paper.
The one thing I needed the paper for, they didn’t bother to print.
The paper Times is becoming as relevant as buggy whips.
Blue John @ # 3: That’s what Fandango is for. If your telephone can’t handle web pages, you can just call them on a toll-free number, put in your zip code, and they will tell you what theatres are in your vicinity, which movies are playing there, and the movie times. But you have to listen to a couple of annoying ads along the way.
But Blue John brings up a good point.
The newspapers don’t even bother to print movie times, and sports box scores come directly from the sports leagues, etc. Craigslist offers classified ads. You can get wire service news from any number of websites.
What is left, other than local reporting of local news, politics, and sports?
I’m curious about how much it actually costs to keep reporters around?
Seems like I read somewhere that some news outlets are so disgusted with the way AP conducts business (exorbitant rates, really biased editing) that they’re forming their own press associations and dropping AP all together.
I agree with rph6033: Content is King. If you write it, someone will pay to read it or to have it read to share the eyeballs the content brings as advertisers and sponsors. Simple supply and demand. I don’t think the appetite for good investigative reporting is going to dissipate simply because the delivery/payment model hasn’t sorted itself out yet.
The West Seattle Blog has a pretty good handle on one efficient way to do business. Plus they have all that remarkable citizen reporting that is much more timely than even the television news, especially where traffic, road closures, etc. are concerned.
Even small towns are doing a better job of covering their news than newspapers: http://www.minonktalk.com/ I wish every small town in America had a site like that.
This is an exciting time; we’re watching history here as the news industry is evolving before our eyes. And just as Newscorp has found a way to exploit the LCD for its ratings, I believe that investigative reporting will thrive in this country, and a way will be found for those who do the legwork to make a decent living.
Oh, yeah, Goldy…great analysis. I understood it this time. Nicely done.
“…the industry’s entire business model is one based on the physical need to print and distribute paper.”
Certainly, in part.
But another failing part of the business model that you are missing here is the “value” proposition that a trad newspaper delivers to its advertisers.
In the trad media model active from about the 1920s to the 1970s, an agreement was formed between the audience (reader) and the media gatekeeper (editor). The media gatekeeper agrees to dutifully summarize all the “relevant” news from a neutral perspective absent the burden of any overt “voice”. The audience agrees to suspend skepticism and critical reading (for the sake of efficiency) and accept the avowed “wisdom” of the neutral gatekeeper. Thus the newspaper delivers to the advertiser an audience of suitably prepared readers.
But both audiences and advertisers have moved on. It appears very clear today that most of us prefer “news” with “voice”. We are no longer content to be merely “informed” with summaries of important events and circumstances. Simply “knowing” that Tiger Woods’ divorce is final isn’t enough to impress coworkers and friends anymore. We must also be equipped with the “implication” of these events and circumstances. Today we want our news to actively motivate us into a point of view. Again, for the sake of efficiency.
And advertisers see more value in this as well. Events and circumstances that can be portrayed in a voice that implies fear, resentment, anger, lust, etc, will activate the audience to more willingly receive advertiser’s messages. Thus, complex news stories containing nuanced underlying truths are simplified and trivialized for the sake of fulfilling the gatekeepers obligation to its advertisers.
Gonna take you to task to that statement Goldy.
While filesharing became widespread, the fact is that the major reason music sales started to go down is the publishers flat out stopped contracting with actual, independant musicians. The music industry decided, that actually finding that next supergroup was too much trouble, and too risky for their business models, and instead moved everything in-house.
They replaced actual musicians with committees, lyrics in one department, melody and rhythm in another, all carefully analyzed and broken down into formulas that could be used to generate a synthetic form of music for careful publication.
You will never see another Led Zeppelin, another Dire Straits, or another Cream, simply because independently trained and practiced musicians, developing their own forms and patterns are too expensive for the music publishers to deal with. They can crank out assembly-line pablum and publicize it, and put it out much cheaper by hiring actors to play the parts of rock and roll stars, while delegating the actual songwriting to their in-house committees using carefully analyzed models and formulas.
In short, the music industry is dying, not because of filesharing, but because they are now totally commercialized and are putting out mass-produced cookie cutter bullshit for the masses while raking in the bucks for themselves instead of having to pay real musicians for their actual talent.
They did it to themselves, and they won’t change their business models simply because they have consolidated all the profit internally. Popular music today is crap. Actual musicians are comparatively rare in this modern age of mass production.
So they blame filesharing, when most of the music being traded around such systems is the stuff that was written back in the 60’s and 70’s when actual musicians were the stars, and the publishing houses were just that, there to publish other peoples work.
Here’s an oddball thought since I have nothing better to do at the moment. Goldy mentions the decline started years ago. Well years ago the papers quit with an evening edition. How many of us want to get a morning paper that we don’t have time to read, then go to work and come home to stale news? By the time we get home what happened in the morning ain’t news. Maybe they should have stuck with the evening edition and competed with the likes of NBC, CBS, ABC, etc. Besides they make a hell of a profit margin. Last I looked and that was some time ago, it was well over 20%.
Bluecollar @10,
It’s not such an oddball thought. I myself have been pondering whether an afternoon paper might prove more relevant than a morning one. (Or maybe, the fact that I am pondering it, makes it an oddball thought after all.)
10 and 11
That, actually, would seem to make a lot of sense. The PI was the morning paper, then the Times, the afternoon paper, decided to quash the PI by going to the morning. The PI did, indeed, get quashed. So, however, seems to be the fate of the Seattle Times. The Times got what it wanted, but it didn’t get what it needed. Capitalism happens that way.
The main difference between the newspapers and the music/movie business is that the major newspapers didn’t band together and lavish love all over Congress to criminalize anyone who doesn’t buy and read their product, or who tries to compete with them.
10, 11, & 12: I agree that for most of us, an afternoon paper makes the most sense. But I don’t see it happening again in our time (at least not in the print format) due to logistical constraints.
First, is the problem that we are no longer on an eight-hour news cycle. News is an international affair which is on a 24-hour cycle. While this impacts morning papers as well, it hits afternoon papers harder, because their isn’t enough time to offer analysis of national news. Where do you make your deadline? Noon? 3:00 p.m.?
Secondly, the printing and distribution takes hours. Most people would want their newspaper waiting on them when they got home. But getting a paper printed, collated, loaded onto trucks, dropped off at distribution centers, picked up by carriers, and then delivered to your doorstep takes a few hours under the best conditions. Add the afternoon commute to the mix, and some people would be lucky to get their paper by 7:00 p.m. That was the Blethen’s reasoning for switching to a morning paper, and I think it’s a valid one.
re 14. You are correct. There was an opportunity lost in going to morning editions.