Media faces the challenge of adding real value: Kohler

In many ways Alan Rusbridger’s Andrew Olle Memorial lecture on Friday provided a more believable roadmap for journalism than the Murdoch plan for pay walls, but neither side of this argument suffers from a deficit of optimism.

In fact both are missing the point: neither model will work unless the product improves.

In his lecture, the editor of The Guardian provided an interesting review of the qualities and importance of Twitter and mapped out a “mutualised” future for the media, in which “instead of trying to write everything ourselves we’re increasingly a platform as well as publisher”. Some will be charged for, he said, but the majority will be free.

Meanwhile, also on Friday, News Corporation’s head of Digital Media in Australia, Richard Freudenstein, put the Murdoch case for paywalls in an interview on ABC radio. He said the Murdoch papers in Australia were leaning towards the Wall Street Journal model of having half the stories free and half charged for, instead of putting all stuff behind a pay wall as the Times and Sunday Times in London have experimented with.

In his speech Rusbridger sniped that the Times’ UK web audience had fallen 98 per cent, which meant it was generating a total global audience of 54,000 and that 28,000 were paying. The Guardian, he said, has an average of 2 million unique browsers a day.

In his interview, Freudenstein in turn sniped that The Guardian and its website lost £34 million last year “so (Rusbridger’s) perhaps in the position of not having to worry so much about actually making money”.

Who’s right? They both are. The whole thing is calamitous for the achingly simple reason that revenue per reader is much lower online than in print – like about one tenth. And the revenue per reader in print is higher because it is an oligopoly, not because the product is better.

Part of the reason for this change involves the main theme of Alan Rusbridger’s speech: “Guess what?” he said. “The readers love to be involved. They, too, like being critics, commentators and photographers. They love helping to defeat injunctions and being asked to share their particular knowledge or pool their expertise.”

That means there is now a colossal volume of “journalism” being produced. People who are actually trained and employed as journalists are struggling to be heard above the din.

But there’s more to it that that: it is now possible for anyone to find out almost anything. Someone sitting at home can now read any press release, watch any press conference, or read its transcript, and examine any public document anywhere in the world.

The lowest paid jobs in society are those that anyone can do, but can’t be bothered or don’t have the time to do, like cleaning or driving. The danger for plain reporting is that it will be increasingly seen in that light – as a service that anyone can do, if they can be bothered or have the time.

No one is going to pay much for that, if anything, and advertisers have already discovered that they are in the driver’s seat with online media because there is a glut of inventory and it’s all measurable and accountable, unlike newspaper advertising.

To survive, therefore, journalism must add value – specifically it must impart meaning. It must do what its customers cannot do themselves, which is to explain what events mean, not just report them.

This does not just apply to material behind pay walls; it applies equally to free journalism as well. That might sound counter intuitive, but the only way to make a decent living through free, ad-funded online journalism these days is through a high level of reader engagement.

A simple click is not worth very much in ad revenue – less than half a cent. Most newspaper articles cost at least $500 to produce, which means they would have to be clicked on 100,000 times to break even – an impossibly high click rate, especially in Australia.

But it is possible to improve that yield through reader engagement, which is all about quality time, not just clicks, and it requires the same thing that will persuade readers to pay for content: added value. That can take many forms, but I think it comes down to meaning: providing “unique browsers” with context, history, explanation and some informed conjecture.

And this does not simply apply to the media. Other industries are being disintermediated in the same way and are also having to reinvent themselves to stay afloat.

The most urgent of these is retailing. For thousands of years we have had to travel to a shop to buy goods because the shopkeepers have controlled their distribution, just as media companies have controlled information.

Now we can go direct to the source of the goods, wherever they are in the world. The volume of shopping online is now ballooning and just about everything is now being bought on the internet and delivered to homes in packages – books, shoes, clothing, food, household items.

Traditional retailers sitting behind the counters in their stores in shopping malls and strips are now facing huge challenges; many won’t survive. Those that do will provide something extra that can’t be bought online, some sort of added value or service.

The same goes for journalism. It doesn’t matter whether it’s free or paid, to survive it must do more than just report what readers could find out for themselves, if they had the time.

This article first appeared on Business Spectator.