Monday, June 18, 2012

Death Notices

Many journalists, while naturally inquisitive about the world, have a curious blind-spot about the economics driving the industry supporting their trade. If only the public would buy newspapers again, they say, the advertisers would return and the industry would be saved. Yes, and if only kids would stop downloading music online, record stores might reappear.


For those caught up in the first wave digital wave that rolled through the print industry more than a decade ago, this is familiar. In strategy meetings over years at Fairfax and at other publishers here and abroad, all the arguments you are hearing now for reviving papers have been brainstormed to death.

This blogger still has nightmares of small, airless offices at Fairfax with yellow post-it notes covering the walls. I spent three years as the AFR's 'acting' online editor ('acting' because they dare not give the digital world equivalence with print). And most of that time was spent in brain-eating meetings alongside business people,  earnest McKinsey blow-ins and tech-head contractors cooking up a pie-in-the-sky scheme to try to turn the newspaper into a Bloomberg-style data portal.

The Frankensteinian result of that process was 'AFR Access', a quixotic attempt by Fairfax Business Media to play in the online space while protecting existing and still lucrative print revenues. It was a classic Fairfax punch-pulling exercise, the result of a timidity and lack of imagination among print-only news executives who, like the apocryphal boiling frog, dared not tackle change that was going to be forced on the industry anyway.

While the talk was about a digital future (I was inspired enough to start a blog), the message absorbed from on high across the editorial floor was that journalists should not go out of their way to be cooperative with the "new media" people, who would end up cannabilising the newspaper and taking their jobs. Well that strategy worked out well, didn't it?. 

So for we digital refugees now plying our trade outside the media the news from Fairfax of a painful restructure, accompanied by the axing of 1900 jobs, is like stumbling over the obituary for someone you thought had died years ago.

The truth is the business model for the commercial industry supporting newspaper journalism has been busted for years, with the early signs quite evident at the end of the 1990s. But Fairfax spent most of the ensuing decade preoccupied with protecting its existing print properties and using digital purely as a marketing strategy.

F2, which later became Fairfax Digital, sat symbolically across the water from Fairfax's Dead Trees division at Darling Harbour. The digital business was run by marketing people, with no understanding or interest in the value of journalism. But it was built that way because Fairfax itself could not see that quality journalism was what its business was about. Instead, it entrusted to mobile phone entrepreneurs the business of building a digital platform for its newspapers. The result is the cretinous brand-destroying online versions of the SMH and the Age.

This bungling at Fairfax had its origins in the ascension to the CEO position in 1998 of management guru Fred Hilmer, author of an influential report on productivity. A year before his appointment,  online employment portal Seek was born. It was Seek, along with car sales and real estate web platforms, that planted the seeds for the destruction of Fairfax. Ironically, Hilmer at the time had the option of buying Seek, but flagged it away. This might have least bought him some insurance. 

A professor who once famously described journalists as "content providers for advertising platforms", Hilmer freely admitted that he was not a keen reader of newspapers, which continued a fine tradition at Fairfax of hiring people with no feel for journalism and its worth.

Many of us argued all along that the obvious thing to do was to merge the digital with the print divisions and hire and promote journalists who could think outside the narrow print box in which the company was slowly burying itself. But the risk-averse executives couldn't - or more correctly, wouldn't - do it. Of course, NOW they get it, but with much more painful results. 

There is no easy answer to funding quality journalism. Buying newspapers en masse won't save print. That's because advertisers now have other alternatives as publishing platforms and because the car, job and property ads have a utility in themselves independent of  journalism they used to subsidise.

In any case, cover prices of newspapers provide less than 20 per cent of print revenues. And while the advertising yields from print remain significantly higher than those online, print journalism is a very expensive way of aggregating audiences to sell to advertisers.

Fairfax Media's s share price has plunged by more than 90 per cent in the past five years, destroying hundreds of millions in shareholder value and now the jobs of many hard working people. This wealth destruction has been caused partly by prolonged bungling and political infighting, and has now left the company a sitting duck for a takeover by Gina Rinehart. The world's richest woman - an aggressive climate change denialist and mining plutocrat - is seeking to not only control Fairfax but veto its choice of editors. In other words, she plans to destroy whatever brand value it has left. 

The Rinehart grab for Fairfax is a reminder that newspapers - regardless of their busted business  model - retain significant currency as influence peddlers for those who would use the Fourth Estate to force public opinion and public policy to their own commercial ends.

What we don't know yet is the price, if any, the public is ready to put on the loss of quality independent journalism separated from the advertising model that used to feed it.

We are about to find out.

SEE ALSO:
Don't Just Blame the Web for Fairfax's Failure - Jonathan Green, The Drum
Fairfax or Gina-Fax? | Andrew Jaspan, The  Conversation
Go Ahead, Gina, Build Another Content Company | Alan Kohler, Business Spectator

The Journalism We Need | Jake Lynch, New Matilda

(See here SMH/Age front page under Rinehart)

16 comments:

  1. Speaking as an ordinary old consumer, what I'd prefer in a newspaper is less telling me what my opinion about what's going on in the world should be, and more telling me what's going on in the world. In the past ten years, it seems that option has pretty much vanished from the conventional mass media - if I want to find out what's going on, I need to be willing to either engage with Twitter on a near-obsessive level, or get out there and chase the information myself. Instead, what I get is any number of talking heads telling me how I should feel and think about whatever is going on (and strangely enough, their views all seem to match one another on most particulars; even more strangely, not many of them seem to be views I share).

    I can come up with my own opinions, guys. What I'd prefer to have access to on a regular basis is the facts I need to form these. Newspapers, radio, television - none of these have been providing me with the facts I've been chasing. The internet, by and large, does; even if what I have to do in order to find these facts is sift through a lot of other people's opinions (not all of which agree with one another) in order to find them.

    [Small note: I'm based in WA. I'm therefore well aware my views Don't Count, because I'm not living in either Melbourne or Sydney.]

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  2. Like megpie71, I am increasingly annoyed that Michelle Grattan, Andrew Bolt, Dennis Shannahan, Geg Sheridan and Katharine Murphy tell me how to think. I am not Catholic for generations my family has resisted kow-towing to the Vatican.

    I am sorry that 260+ printers have lost their jobs but that means that 1640+ newsgatherers have also lost their jobs and "freedom of the Press" is sounding tinnily like "Pravda" or the propaganda organ of a totalitarian state

    billie

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  3. Great insights, Mr Denmore. I commented elsewhere that I too thought The Age had died long ago and that it treated its once loyal readers as dimwitted consumers of overblown opinion and ephemera. I am prepared to pay for quality journalism, but like the commenters above, I refuse to be hectored.

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  4. The Age has complete contempt for the outer suburbs, but lo and behold tries to sell house and land packages in its advertising

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  5. Maybe now Fairfax will take online seriously...

    I have the SMH delivered every morning because I can't bear to try and find the news on smh.com.au. And every morning I complain that I've read the whole thing in the time it takes to eat a bowl of cereal. It's curious that neither Fairfax nor News Ltd have offered a special subscription deal that includes an ipad/galaxy to read it on.

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  6. As someone who slaved at the digital coalface for theage.com.au I would like to qualify a little of Mr Denmore's otherwise excellent analysis. Yes, there were plenty of strategic tricks missed in the f2 era by Hilmer and his team. Yes, f2 was run by marketing technocrat types. BUT, it is important to recognise that Mr Denmore's experience at AFR.com (which was then run by Fairfax Business Media not f2) is markedly different from that of theage.com.au and smh.com.au. We had our own battles within the f2 system, and our own issues trying to navigate the divide created by two different cultures and two different businesses within one group. But by and large Nick Leeder, Lee Stephens, Pippa Leary and other f2 execs were very supportive of online editorial efforts. They knew we were trying to build bridges within the Melbourne and Sydney newsrooms, and to a great extent we succeeded.

    I left The Age in 2006, but during my time there I felt we were able to achieve a lot despite the structural divide that prevented holistic integration of online and print. It was never easy, and it always came down to individuals and the relationships we were able to develop. We established both news sites as primary news destinations, we won awards, and we enabled the commercial teams to start delivering a nascent digital display revenue. That revenue was not enough to make up for the missed seek.com.au opportunity and other mistakes. But that's no reason to bemoan the early efforts of some talented online editorial teams. Without that work Fairfax would not have the audience generating digital platforms it now has.

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  7. Thanks for the different perspective, hm. I certainly didn't mean to disparage a lot of the work that was done on digital by so many people. My point more was that the senior editorial executives of the mastheads never had full buy-in. What Fairfax Media lacked was a visionary like The Guardian's Alan Rusbridger. It's such a shame that so many people's work was wasted. Hopefully they put it right now. But the delays and mismanagement have caused far more pain than necessary.

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  8. I find it difficult to believe that they were really worried about declining sales, when they have set about alienating half their potential readers. Talking down labor and their policies and boosting the worst federal opposition in 30 years. Michelle Grattan's and the poseur Hartcher crap output personifies this strategy.

    There is not a single newspaper that I look forward to buying whereas just a few years ago I could not go a day without reading at least two. They pissed me of such that I now want to see the end of them altogether. Propaganda cannot be sold as news.

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  9. And, Anonymous, having a thinkpiece by someone from the IPA / John Howard's former Cabinet in almost every editorial page.

    Stand by for these people to take an even more central position as Gina's influence increases.

    And the John Spooner climate change denial cartoons will become even more frequent. (I wonder what will happen to Tanner, who has retained a genuinely progressive outlook?)

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  10. Uh, Tandberg, not Tanner! Sorry.

    (With the Australian a vanity project for Rupert and the Herald Sun being, you know, the Herald Sun, where will the balance be in Victoria? The Overton Window is going to move still further to the right.)

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  11. Hilmer? Professor Fred Hilmer?
    Ex McKinsey head Fred Hilmer?
    O No, say it ain't so. By definition, McK always gets it right!

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  12. It is clear we need papers to present facts, yet as their market decreased we got more and more opinion, something you can pick up from any blog.

    Why didn't they play to their strengths?

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  13. Over at Crikey, Beeche claims the main villain in the piece is Roger Corbett, Fairfax Board Chairman.

    @ Helen, if Rhinoheart moves the Overton window right, just wait till Tiny Rabbott and Sloppy Joe assume the mantle.

    fractious

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  14. Don't have a problem with the bulk of your analysis, which seems pretty accurate re Hilmer.

    However, I think your opening par -

    "Many journalists, while naturally inquisitive about the world, have a curious blind-spot about the economics driving the industry supporting their trade. If only the public would buy newspapers again, they say, the advertisers would return and the industry would be saved."

    - does show you've been out of the newsroom for a fair while.

    Journalists everywhere are completely up to speed on the forces shaping the business. Painfully aware.

    However, it is questionable what value that knowledge has in an industry that has been systematically mismanaged for a decade.

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  15. Bill, that comment was based in a flood of tweets from Fairfax journos on Monday saying just that - that this wouldn't have happened if more people 'bought' the paper. Maybe they were from the sports section

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  16. To be fair to your correspondents, what they are saying is completely true - just not very useful.

    Which does rather sound like the sports section...

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