Change the newsmedia model or someone else will


As I write today, Australian media commentators, pundits, and politicians are furiously debating the future of news media. Why? Because Australia’s major news organisations announced significant changes in their business plans. The plant closings, consolidations, downsizing, and job losses are causing great concern.

This move follows on a similarly momentous month in the U.S., which Earl Wilkinson dissected in his most recent INMA blog post.

Many here are still clinging to a futile hope that somehow the current model can be preserved. And, frankly, I can understand their passion for the past. The old model operated efficiently and very, very profitably for more than 100 years. Newsmedia organisations and their shareholders have enjoyed robust profit margins while providing a valuable service to advertisers and audiences.

A reluctance to let go of a previously successful model is not unprecedented. I saw it firsthand at a meeting in San Francisco in 2003. At the time, the music industry was in crisis, being challenged by new digital technology. Millions of songs were being downloaded for free. The music business model was in jeopardy.

I was in San Francisco for the launch of iTunes’ second generation. After the launch, I met with Steve Jobs from Apple and a brilliant music executive to discuss a promotion to help launch iTunes for Windows. I was representing McDonald’s and their millions of Windows users around the world. The promotion idea was simple: Provide a free song to McDonald’s customers to help sample the new iTunes product. Apple had the store and software. The music company had the music. McDonald’s had the customers.

We agreed in principal to the promotion. But what happened next was quite remarkable. The music executive enthused about the deal and about distributing millions of songs legally to fans. But then he turned to me and said, “This is really great. But once we’ve completed the iTunes program, let’s get together and talk about how we can provide CDs to your customers.” He was clinging to the old model. Sound familiar?

The lesson for me was this: If you don’t change your business model, someone else will. Today, over 16 billion music downloads later, the music business model has well and truly changed.

You can see the same pattern in digital photography. And, regrettably, the same pattern in news media.

But who could change the newsmedia business model? I don’t believe the biggest newsmedia organisation in the world (based on audience) is a member of INMA. But with nearly 1 billion active users, Facebook’s audience is staggering. But “news”? Surely Facebook isn’t in the news business, is it? It is, according to their users. They say that reading about the birth of a new niece or nephew is news. So are pictures of a friend’s party, or a link to a funny cat. In fact, those news items are more personally relevant than reports on a G20 meeting in Mexico. And their “sources,” friends and family, are significantly more credible than any other source.

News is in the mind of the beholder.

Facebook or a similar service or another outside company could change the business model. And that is why I am enthused by the radical changes we are seeing in the newsmedia business. Those clinging to the old model will have to let go, or be left holding on to an irrelevant business. Those making bold and difficult decisions are demonstrating a willingness to play a leading role in shaping the future.

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