Newsonomics: 18 lessons for the news business from 2018

From paywalls to politics, pipes companies to public radio, podcasting to partnerships, and the press to a president.

WrittenBy:Nieman Lab
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We live in transgressive, new-Orwellian times. Fact has been subverted by forces beyond our imagination, both newly minted and old school. Truth, elusive truth, is now in the mind of the subscriber. Yes, it is subscribers, along with their digital payments, who are transforming what’s working best among news-originating companies today and laying the groundwork for the early 2020s. With 2019 nearly upon us, we can look at the year past and see a tired decade dragging to a close, with few winners, numerous strugglers, and caravans of losers.

Facebook has fallen flatter on its face, The Social Network is in danger of becoming a social disease. Google maintains its primacy, even as its CEO is called to Capitol Hill to explain how the current president’s name somehow appears when “idiot” is typed into its engine.

Greed isn’t just good in the minds of many—it’s the long-term strategy for some who’ve somehow gotten a hold of the only business framed in the First Amendment. Phone companies spend billions on “content” properties and them mark them down (and out) like Kmart bluelight specials. Press gets kicked out of the White House—for asking questions. Even the anachronistic White House Correspondents Dinner can’t break a smile. We require, at a minimum, Mencken, Hunter S. Thompson, and Tom Wolfe to best reflect on these idiocies of the moment, but they’re in short supply.

We also sense in all the ferment—political, social, and journalistic—something else brewing for 2020s, but we can’t yet identify it. So let’s see if we can make a little sense of the year that was.

The reader revenue revolution is real.

There’s a simple reason why we see so many double- and triple-bylined stories in The New York Times these days: lots more journalists. In 2014, the Times was still struggling, losing revenue year over year. Its newsroom numbered 1,100, and buyouts and layoffs remained a feature of its business. Today, the Times tells me, it counts 1,500 staffers in the newsroom—up 36 per cent in four years and 15 per cent in the last two years. (In 2016, it reached 1,300.)

The Washington Post has had its own impressive ascent—but its newsroom peoplepower is still only about half of the Times’. Today, the Post’s growing newsroom pays 825 people, up 37 per cent in two years from 600. When Jeff Bezos took over the Post, the staff had been reduced to about 500.

Both have built enviable digital subscription businesses, the Times at more than 3 million, with more than 4 million in combined digital and print. The Post is far less public about its numbers, but it passed 1.5 million digital subscribers not long ago.

And then there’s the Los Angeles Times, beginning to play catch-up after Patrick Soon-Shiong’s green-lighting of Norm Pearlstine’s hiring binge. It’s tough to put a new number on the L.A. Times, and to figure how many are new positions and how many are replacements for the numerous staffers who have left over the past couple of years. All totalled, including all those work for Times-owned pubs in L.A., the number seems to be about 540. For the Times newsroom, it’s about 480.

It’s no secret that local dailies have enjoyed far less success with digital subscription, for lots of reasons. Now, they’re trying—once again—to create sports niche subs, but they’re unlikely to match the out-of-the-box digital sub success of The Athletic. And as the year ends, the direct-to-reader, ad-free The Correspondent has once again shown us its own contrarian ways, raising $2.5 million in an accelerated crowdfunding campaign to launch a U.S. edition mid-2019.

If Mic was the end-of-year whimper, Verizon’s Oath announcement was the bang.

Verizon declared Tim Armstrong’s whole strategy worthless—taking a $4.6 billion writedown on both its AOL and Yahoo purchases. I couldn’t help but think of the 18-year-old image of AOL founder Steve Case grinning alongside a what-have-I-done Time Inc. CEO Jerry Levin. That was 2000. Nine years later, after Armstrong became AOL’s CEO, which had gotten to his own first payoff (Verizon’s buy of AOL in 2016) from poor bewildered legacy media cluelessly trying to buy a piece of the digital future—which, as usual, was already really part of the digital past by the time the deals closed. Urging his parent Verizon to buy Yahoo in 2017 was just icing on the overcooked digital cake. (Note: I mistakenly conflated Steve Case and Tim Armstrong into one person in an earlier version of this column.)

Oath, even at its height, could only claim second place in the branding malpractice department. Tronc will be hard to ever beat, even as that company has reclaimed Tribune Publishing again. Frankly, many of us are having a hard time letting go on the silly name.

Inside Oath, people have told me they’ve fared unevenly. Often left alone, they could chart their own company’s paths. But the absence of an overall strategy—how to link up these islands of both still-in-play and misfit toys—dogged Verizon’s purchase from day one.

At the end of this decade, the pipes companies—the distributors, including the old phone companies Verizon and AT&T—have survived and had money to spend, however recklessly. That money? It was ours, spent on paying for what’s coming out of the pipes. That massive cash flow, from our Internet-connected wallets and phones, fueled these nonsensical buys. And in the end, that strands even more journalists on uncertain ground.

The reversal of national news fortune looks increasingly complete.

Recall a headline from 2011: “The Huffington Post Passes The New York Times in Traffic.” Of course, “traffic” meant “monthly unique visitors” there, and the years since have finally almost killed that trick; the industry now understands more deeply the fact that digital news reading is about engagement, not the near-infinity of units (and bots, Macedonian or otherwise) that saw a single pageview blow by in the past 30 days.

It’s the legacy news sources—led by the Times, the Post, and CNN—that have both transformed their businesses to digital. At the same time, it’s those news companies which have steadfastly stayed on the biggest political and public affairs story of this generation, the Trump presidency. That’s not a coincidence.

BuzzFeed, Vox Media, and Vice—all still contributing significantly to the national discourse, each quite differently—are all looking for new futures. You can’t name a more high-flying dotcom news CEO than BuzzFeed’s Jonah Peretti, and he’s talking about being “open to M&A.” NBC has poured $600 million into BuzzFeed and Vox Media collectively. Given the recession-is-coming, batten-down-the-hatches consensus in many C suites, don’t expect any doubling down on that investment.

BuzzFeed is among those now moving more quickly towards…reader revenue. Yes, it’s all but certified conventional wisdom that the top two winners in the digital ad game are impossible to beat, or even take appreciable market share away from. The Google/Facebook duopoly has ended dreams of “overtaking The New York Times” or “winning a generation of Millennials,” as Mic had once proclaimed.

After pivoting from text to video (but not apparently enough towards its readers/viewers/customers), it could only fetch a $5 million say-goodbye payment once a Facebook video deal fell apart. Put the buyer, Bustle Media’s Bryan Goldberg, on your 2019 watchlist. We’ll see what he does with the Mic brand—and with Gawker, slated for relaunch next year. Having bought at firesale prices, can he find new value in this Internet age?

And then there’s HuffPost itself. Reimagined by editor Lydia Polgreen, it now must find itself again, within or without the Oath structure.

A Gannett/Tribune combo may re-appear in 2019.

No laughing, Tronc watchers. The battle that consumed 2016 may find a second act in 2019. With the McClatchy buy of Tribune looking kaput, a new round of mating dances has already begun, I’m told.

Gannett could buy Tribune—or vice versa. A merger would mean consolidation, which would mean lowered costs, which is the name of the game. Gannett is three times larger than Tribune in revenues; Tribune’s balance sheet is even more pristine (thanks to Soon-Shiong’s cash deal for the L.A. Times) than Gannett’s good one.

What could hold it up? Those two nemeses: Gannett CEO Bob Dickey and former Tronc chairman Michael Ferro, who just nixed the McClatchy buy. Dickey has just announced his retirement, and it’s unusual for a company to pull off a big deal with a lame duck in charge.

Then there’s Ferro himself, the big thorn in the last deal. Tribune CEO Justin Dearborn would probably try to keep Ferro away from the deal, especially as it includes talks with Gannett chair John Jeffry Louis, whom Ferro had harsh words for two years ago. But that won’t be easy.

Gannett’s next CEO won’t be one of the usual suspects.

Dickey never recovered from that maladroit failed effort to buy Tribune/Tronc. Even more, though, Gannett’s board now understands—sound familiar?—that it needs to get more digital more quickly.

The company has begun a national search. As Dickey departs, Gannett’s thin bench stands out. The biggest U.S. news company has few if any internal prospects. Sharon Rowland, Dickey’s corporate business head, is seen as the only possible inside candidate—and since she wasn’t named with Dickey’s announcement, her chances to ascend seem less than 50-50.

Don’t expect Alden Global Capital to sell anytime soon.

Remember the spring peak of the Alden fury? In March, it axed a third of its Denver Post staff and set off protests around the city, reigniting (briefly, once again) national recognition of the news desert enlargement.

Civic cries of “sell!” went unheeded, and largely unacknowledged.

I was able to describe in detail the outrageous profits that Alden was able to continue taking out of the Post and all the Digital First Media “properties.” Which answered the question, however dis-satisfyingly: Why would these guys ever sell?

Spin forward to today and the answer, those in and around the company tell me, isn’t much different. In fact, Alden president Heath Freeman has recently noted some interest in buying other chains. His rationale is quite understandable: He’s optimized his cost-cutting enough to keep profits flowing smoothly, pushing only a tenth of his subscribers a year to cancel. He believes he could “optimize” other chains and, to their dying moments, extract higher returns.

At year’s end, Digital First Media is losing its most outspoken editor: Mercury News executive editor Neil Chase departs to head up CALMatters, the three-year-old public policy statewide org modeled on The Texas Tribune. As he leaves, he salutes his Merc staff: “I’m very proud of what we accomplished in my time here,” he told me Tuesday. “We—not just me, the whole team—transformed The Mercury News and East Bay Times into what they need to be right now. We went from being defined by print sensibilities and deadlines and tools and thinking to being a true digital newsroom, focused on building the online readership that’s essential to our survival. And we did it amid budget challenges and staff cuts, delivering important coverage (punctuated by the 2017 Pulitzer Prize) and amazing features and the kinds of stories that have meaningful impact. The people in this newsroom really care, and it shows in the work they do.”

In forum after forum this year, Chase had noted matter-of-factly that he worked for a venal Wall Street investment company that made no bones about its singular interest—maximizing profit. For instance: “I can’t fault them for not investing in community journalism. But if they don’t want to, someone else should…Democracy can’t succeed without a free press.” He said it often, but with a small smile and without seeming angry. And, as he has pointed out, Alden didn’t even care, as long as he managed to keep the profit-producing presses running.

The hedge fund virus of newspaper ownership isn’t confined to North America.

After contributing to the demise of Canada’s major regional dailies, GoldenTree Asset Management took control of 172-year-old Johnston Press in the U.K. last month. Johnston publishes the “i” national newspaper and 200 other titles. As a bondholder, along with two other U.S. hedge funds—Carval Investors and Benefit Street—GoldenTree took the asset when Johnston couldn’t find a buyer in Britain’s beleaguered newspaper market.

That market has gotten so bad, that the BBC is now sharing its license fee proceeds in any effort to revive local news reporting. (Similarly, a new effort to boost the regional press in Canada is gaining traction.)

What’s GoldenTree’s Canadian legacy? Consider the “tawdry fall” of its Postmedia, or how Canada’s competition watchdog decried its job-cutting, title-closing ways.

Clearly, the native English-speaking world is in a heap of journalism trouble. Of course, that’s in part just a symptom of the wider times. Listen in to The New Yorker Radio Hour’s recent depiction of sad Brexit. On it, Rebecca Mead, one of the magazine’s London-based staff, offered this pithy observation: “The difference between Britain and America now is one of depression and psychosis.”

The ownership of American dailies may make less difference to the actual staffing of their newsrooms than we’d like to believe.

It’s now a familiar morality play. We have the venal Heath Freeman of Alden, bête noire to the interests of community journalism and journalists, on the one hand, and the family owners, best symbolized by the McClatchys of Sacramento, on the other.

Indeed, their motives may be worlds apart. And yet as journalists, we have to see the world for what it is. And that lies in strong part in the number of journalists newspaper companies now pay.

In my column this week on McClatchy’s apparent failed effort to buy Tribune Publishing, I noted that the company now pays fewer than 900 journalists, including its Washington bureau and design center staff. One alert reader did the quick math: “That’s an average of just under 30 per paper, which would be astounding.”

It’s good to still maintain a capacity for astonishment.

The deeper truth is that for those owners tied to the strictures of short-term profit (or break-even, in some cases), the pressures to cut newsroom staffing are near-universal. Alden’s DFM and McClatchy, along with the rest of the chains and many other owners, all continue to cut.

That’s doubly structural: The deepening spiral of (a) universal print decline and (b) short-term-oriented ownership that can’t do anything other than manage that decline.

Consequently, moving into 2019, we see two parallel but wildly uneven trends. There’s the Soon-Shiong buy-and-long-term-strategic-reinvestment camp, which is small enough to meet in a large closet. (Soon-Shiong likes talking in 100-year increments.) Then there’s the single driving motive of increasingly chained-up industry: consolidate, consolidate, consolidate. That’s a cost-savings strategy that doesn’t do much for growth. So the newsroom numbers only move in one direction.

The age of NINO is upon us.

Penny Abernathy’s ground-assessing research has given us “news deserts” and now, in her latest report, “ghost newspapers.” Both are highly descriptive. This year, I added NINO to that vocabulary: Newspapers In Name Only.

NINO has become my best reply to the hundreds (thousands?) of times over the years I have been asked the question: Will there be a day when we don’t have print newspapers? The smarter daily publishers still try to maintain a useful and intelligent print product for their remaining subscribers who are (over)paying. But travel the country and see how much those few remaining printed pages are filled with little and old and wire content. You’ll see quickly that, while they are still being printed, they are shadows of what previous generations got from their dailies. They’re newspapers in name only.

An uncountable number of highly motivated, talented journalists are ready to jump back into the fray—if only they can be paid.

Ethereum and blockchain have proved to be a sideshow, at least for now, as journalism faces the 2020s. Civil Media generated tweetstorm upon tweetstorm. And yet amid it all, dozens of journalists, even if paid uncertainly in dollars and coin, put together impressive sites—from the Colorado Sun and Block Club Chicago to Sludge and Popula. All totaled, roughly 100 journalists got some funding to their work through Civil. As the work of all those involved in INN and LION and in projects from Report for America projects continues to prove: If you pay them, they will report.

We’re ready to cast the next Hollywood blockbuster inspired by American journalism.

“Levinsohn represented by Harder! Secret tapes! Someone option the movie rights to this thing!” tweeted Alley CEO Austin Smith, as NPR’s David Folkenflik reported Michael Ferro’s further descent, “Tribune, Tronc And Beyond: A Slur, A Secret Payout And A Looming Sale.”

Maybe it is time, after the perhaps too-inspirational Spotlight and The Post. Unfortunately, I haven’t yet had any inquiries to option the Newsonomics Tronc/Ferro motherlode, but hope springs eternal. [We’d have to work out a revenue split, Ken. —Ed.]

In the midst of Mr. Ferro’s War to keep his company “independent” (still seems like a wrong use of that word), I once suggested that Christian Bale (the Christian Bale of American Hustle that is) play Ferro. Perhaps we need to go more malevolent (Malkovich?) at this point, given the further allegations of sexual harassment and anti-Semitism. Comments are open.

Business (magazines) have moved (far) east.

When Chatchaval Jiaravanon bought Fortune for $150 million in November, it reminded us much of the business news market has moved to Asian buyers. Just four months earlier, Tokyo-based Uzabase paid $75 million or more for Atlantic Media’s Quartz. That followed Nikkei’s surprise purchase of the Financial Times in 2015. That was preceded by what became a tortured sale of Forbes to “Asian tycoons” in 2014, and ended in a 2017 settlement. (And Forbes’ new ownership has raised the big questions—again surfacing on Capitol Hill in the Google hearings last week—about how the Chinese government mandates in press censorship.)

Why the move east? There’s no one reason, of course, but there are several truisms. Economic growth has shifted to Asia, and the rising class of those involved in it (or who would like to be) are great audiences for the business press. In the U.S., the traditional magazine business has flagged more quickly than even Europe. That digital transformation continues to overwhelm that industry. Time Inc. sold to Meredith and sliced up. Then, just this month, Condé Nast got ready to dispatch its CEO Bob Sauerberg. The reason: insufficient progress toward a digital future.

The relatively few magazines that are finding a future are thought-provoking, reader-supported ones.

The New Yorker, The Atlantic, Vanity Fair, and Wired are among those that are making the digital subscriber transition. Each offers audiences a unique set of voices and reporting. Each, arguably, has risen to our times. It’s the shelter, fashion, travel, and lifestyle magazines—beset by unlimited free digital competition—that suffer, slim, and shutter.

The lesson, again, and again: Unique voices supported by subscribers point a way forward.

Public media seems to be at a familiar crossroads.

Can public media fill the yawning vacuum of local and regional news? That question’s been on the table for almost a decade. Too many of the U.S.’s hundreds of public radio stations still act mostly as pass-throughs for national NPR programming, offering scant original reporting of their own.

Certainly, the largest public radio stations—from WBUR, WNYC, and WAMU to KPCC, KQED, and OPB — have stepped up. But that’s mainly a metro area response. We do see networked improvements, as with the public radio’s Collaborative Journalism Network and Here & Now’s innovative use of regional correspondents. But it’s not nearly enough.

Public radio news directors’ Super Regional events continue to focus on the question, with solutions so far being more piecemeal than nationally strategic.

Into this landscape, as the new head of NPR News, walks Nancy Barnes, previously the respected top editor at the Houston Chronicle and Minneapolis’ Star Tribune. Barnes replaces the #MeToo’d Michael Oreskes (who’s found new work, it seems) after another “interim” year for NPR’s 400 journalists. She brings lots of experience from newspaper companies’ own efforts to harness both the full power of local and national. She will face the familiar and tough-to-change public radio culture, though. With CEO Jarl Mohn now stepping down, more flux is ahead—flux listeners would like to see turned into more local news.

Podcasting—and the newsy podcast—is now mainstream.

Seventy-three million Americans—26 per cent of the population—listen to podcasts at least monthly, according to Edison Research. Also important, podcast listening now matches up demographically with the U.S. population. It’s a great market: Younger women love podcasts.

Just this fall, The Washington Post, having studied the Times’ breakout The Daily success, launched Post Reports.

None of this is brand new, and the Lab’s Nick Quah has covered it in all its fits and starts expertly. What is interesting is that it all seems like prologue.

Smart-speaker penetration approaches 50 percent. The voice age is almost upon us. But there’s at least one rub: News companies aren’t ready for it. Talk to the good folks behind Alexa, Google Home, and Siri, and they’ll point to the lack of news company innovation in the field. Maybe this will change in 2019—a new distribution pipe with new ad potential.

The news isn’t just the news anymore.

Recall the days of LIFO—last in, first out? That’s how news publishers shovelled their news onto to the web, and then smartphones. In fact, too many still do, relying on cheap-to-present automated mobile phone technology. That’s why you often get the latest non-happening out of the local Planning Commission at the top of your local newspaper feed on your phone.

Check out the Times or the Post these days, though, and it is a different world. Stories of greatest import can sometimes stay atop phone screens for much of the day. And the rank order of stories isn’t based at all chronology—with real breaking news of importance elevated to the top, of course—but again on perceived (and data-measured) reader interest and news value.

The phone particularly—now the origin of two-thirds or more of news reading minutes—hasn’t just changed news presentation. It’s changed news judgment itself. Put another way, and not just by the president’s supporters: Have these “papers” inevitably been politicized?

Regional news cooperation initiatives could be a new future, or just an intriguing interim.

As core daily newspaper reporting has so badly eroded, many smaller niche news operations have surfaced, filling gaps here and there.

In 2018, we saw them tested in several regions. The Democracy Fund backed the North Carolina Local News Lab Fund. In Philly, Lenfest money continues to push together regional reporting projects, through the Philadelphia Solutions Journalism Project.

Meanwhile, Bay Area-based Reveal’s own expanding Local Labs initiativefinds novel ways to share both investigative chops and audio storytelling, pushing forward stronger regional media.

“We’ve gotten San Jose and New Orleans off the ground,” Reveal CEO Christa Scharfenberg told me last week. “We’re hiring a collabs manager shortly and will then launch the process to select two more cities. Based on outcomes from these first four cities—and learning from our earlier experiments in NJ, Mississippi, Oklahoma, etc.—the plan is to build a network of labs across the country that does three things: 1) increases the capacity for and volume of local investigative reporting, 2) gives us a pipeline of local investigations to bring up to the national Reveal platform, and 3) provides us with a network to tap into for localization of our national investigations.’

These fledgling efforts show that sum of often-smaller efforts can maximize impact. Are they smart Band-Aids or a wave of the future?

A president without boundaries and an Internet without boundaries have run headlong into each other.

Meanwhile, a press weakened in number but emboldened in spirit increasingly questions those uncertain frontiers—often finding itself ensnared in No-Man’s Land.

If this year has almost seemed too much, let’s recall a little wisdom from Dr. Seuss: “Sometimes the questions are complicated and the answers are simple.”

This story has been republished with permission from Nieman Lab. Read the original story on their website.


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