Alternative funding models and a lot more innovation necessary to keep journalism alive

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Copyright, Financial Times Deutschland, Frankfurter Rundschau, Hamburg, Journalism, Stephan Weichert, TheMediaBriefing Experts' Blog, Advertising, Newspapers

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Before the German Bundestag passed the new copyright law protecting publishers – dubbed “Lex Google” – Stephan Weichert, professor at Macromedia University of Applied Sciences, Media and Communication in Hamburg, gave a statement to the German Parliament explaining why the debate had missed the core question: Can journalism always be organised and financed as it used to be before digitisation?

Here, based on his statement, Prof Weichert, together with international media consultant Peter Littger, argues that publishers should rather focus on rethinking their editorial models, ensuring brand uniqueness and investing in innovation and distinguishable, high-value journalism instead of calling for support from the government. This is part one of a two-part series - read part two here.

Like never before, journalism has to cope with the fact that technologies are being developed at an unprecedented speed and in an unpredictable direction. The increasingly short life cycles of hardware and the acceleration of how news is published confronts the editorial teams with repeated challenges.

They have forced us into radical rethinking, not least where the financing of quality journalism is concerned. This seems particularly difficult for the legacy press. Over the last ten years it has tried to find answers to the question: How can we secure our future?

The size of the crisis laid bare

A few years ago, most print adherents could find few positive upsides at all to the structural changes from digitisation – a militant clash of cultures between online and print was common in publishing, the consequences of which we still live with today. But we are on the cusp of a change. Fortunately, attitudes towards digitisation have become more open. But current efforts will not be enough to overcome the crisis.

The closure of the Financial Times Deutschland and the bankruptcy filing of Frankfurter Rundschau at the end in 2012 worried us. For the first time, a wide public debate about the future of what used to be the press is unfolding. Suddenly, many Germans – not only the relatively few readers of the two titles – see themselves confronted with the question of what they would really miss after the demise of newspapers.

This is no longer about the future of the printed press but the survival of a special sort of well-sourced and thought-through journalism: the type of journalism that has the power to engage us in the Reithian sense because it entertains, educates and informs. It is exactly this kind of journalism we are worried about.

It is a type of journalism, which fulfils a public service in civil society, side by side with the publicly financed journalism. As it has been pointed out elsewhere ("The public service model dilemma") the self-imposed public service remit increasingly causes a dilemma for private publishers who, indeed have always claimed a special role in the economy and by and large in society. For as long as this remit was co-financed by huge amounts of advertising, publishers lived well on their privilege and had the means to take their responsibilities seriously.

In our view, this balance is fundamentally threatened. What used to be a privilege has turned against publishers like a curse. While in the heyday of newspapers advertisers queued for ad spaces, newspapers now try to usher clients onto their pages, increasingly with dubious forms of courtesy.

Usually, business models of most ordinary products work according to the simple formula: "We charge a price-per-unit that will cover our costs and include a premium".

In the world of the legacy media it used to be a very different formula: there were two sources of income and hence two types of clients and two types of messages, one for the advertisers and one for the readers:

-- The first, for advertisers, was: "We charge a price that is on par (i.e. often agreed) with all other competitors. We don’t know what the fairest price would be for you to address our audience but we imagine you wouldn’t come back if we were really too expensive."

-- Meanwhile the message to readers was: "We charge much less than what you get does actually cost – but never mind, just come back next time and tell your neighbours."

Although company insolvencies always have all sorts of individual reasons, it is fair to ask if there is a general issue with the business at the heart of the newspaper business: the journalism? Does the market still deliver for excellent journalism? Has it ever? Or is good journalism that renders a public service insolvent by default and has it always lived and thrived on subsidies?

In the case of newspapers these subsidies came through the private market support by advertisers. Those advertisers are now leaving and the damaging economic effects in crucial journalistic areas have been mourned for years: investigative reporting, foreign bureaux, almost the entirety of local newsgathering. Added to which there is a dearth of innovation and little willingness to invest – apart from a very few exceptions.

Journalism’s role in 21st century society

A recent representative study conducted by Stephan Weichert et al has shown that many journalists are worried about their jobs. The current situation is perceived no longer just a "crisis" (18 percent ) but as a "normal state of affairs" (48 percent ) or even as a "spirit of optimism" (32 percent ).

The bottom-line of the study: the fear of the crisis not only depresses journalists but also inhibits change and innovation. However, there is no point in announcing the death of excellent journalism. What is really at stake are in our view the diversity as well as the professional standards of journalism.

The more privately-financed journalism comes under pressure, the more state-funded, charity-based or licence-fee backed forms of journalism will dominate, while content driven by commercial interests, so-called “content marketing”, “surreptitious advertising” and “product placement”will flourish.

If vanishing newspapers lead to the domination of public service media in Europe it would be the least unsettling outlook – if only public broadcasters were not so often controlled by who they are supposed to check on: politicians.

There are many niches, not only in B2B media in finance where journalism can pay extremely well and increasingly so. Such do not always render a public service but they can be a great service to customers who, in return pay high prices. However, these are areas into which most legacy daily newspaper publishers do not embark. We wonder: why not?

We wonder this even more in times when the ratio of advertising to circulation revenues is reversing – presumably forever. Therefore, it is more important than ever to develop excellent, new and distinguishable forms of journalism, and at the same time, to add value. Along this line, each type of journalism will probably have to be different. It must stand out against its competitors in a way that is currently very often not the case – because it was not necessary in the past.

Just compare German national dailies. They are very similar. Also we have the peculiar feeling that in times of crises German publishers follow a strong reflex towards forming cartels and create similarities than there is eagerness to create differences and distinguishability.

In terms of how the market works, this behaviour is probably fundamentally wrong. Instead, it must not be innovation-poor, risk-averse and against diversity. The crisis should kick off ideas and concepts to please the audience in unprecedented ways.


Read the second extract of Prof Weichart and Peter Littger's article tomorrow (Wednesday) only on theMediaBriefing, where they ask: to what extent do newspaper really care what readers and advertisers want?


Stephan Weichert is professor at Macromedia University of Applied Sciences, Media and Communication and can be contacted on s.weichert@mhmk.org
Peter Littger is Director, Innovation Media consulting and can be reached at littger@innovation-mediaconsulting.com.


Image by doceggman on Flickr via a Creative Commons Licence.

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