Deconstructing news in the attention economy

Slate's Jack Shafer chimed in over the weekend with a vision of how blogs and democratic publishing are eroding the business value of newspapers. He likens the rise of blogs to the introduction of phototypesetting, which undermined the unions and eliminated thousands of linotype operator jobs. He argues, rightly I think, that traditional news organizations need to differentiate their news reporting or fall prey to the onslaught of the army of bloggers. So that's two pundits in one weekend (three if you include me) who are predicting the decline and fall of today's news business.

I'd summarize the situation this way. News is changing because the economics are changing in three important ways:

1. media creation, production, and distribution are getting cheaper,


2. advertising is becoming more networked and more measurable,


3. but audience attention is getting scarcer and more expensive.

So what does that really mean? It means it is getting easier to create news and a news business, but it is harder to make it profitable.

Don't think this trend implies the decline and fall of professional reporting, analysis, editing, illustration, or production of news. On the contrary. If anything, these functions will become more important as consumers look to new media for news. But in my opinion, many of these functions will become disaggregated -- they will become branded activities that businesses will pull together to create the equivalent of today's newspaper. Think of traditional newspaper activities as being a collection of tracks on a music album; future news companies will buy and sell these activities by the track as well as by the album.

You can see a sample of this mashup of branded functions today already at destinations like Newsvine.com (invitation required), where the professional reporting and photographs come from the Associated Press, but the analysis and commentary comes from independents members of the community like me. Editing is minimal -- the only form of editing widely done is by voting articles up and down. Production and branding is done by Newsvine, but they sell advertising to pay the sources and for the Internet distribution. All those functions that used to be under one newspaper masthead are still there, but some have become outsourced to other companies or given to the community to do for free. Newsvine is changing the cost structure of news.

But sadly, that's the easy part.

The real business problem is on the audience side. We face a terrible challenge in today's Attention Economy: media overload is making attention scarcer and more expensive. You pay as much for a full-page ad in the Wall Street Journal today as you did last year, but fewer people will pay attention to it. Why? Because some of the Wall Street Journal readers now read sites like SeekingAlpha.com. More of them buy the paper and then spend their trainride answering their Blackberry messages or joining a conference call. Some of the Journal's print subscribers only read on-line and therefore see a different set of ads. The cost of reaching today's fragmented and divided-attention audiences are going up faster than production costs are going down. That's what's killing the broad news business -- and for that matter, many of today's media businesses from magazines to the TV networks.

This is what we here at Blackfriars call the tyranny of too much. We are overwhelmed with media, messages, ads, news, TV shows, and iPod tracks. We are all becoming too hard to reach. Our problem is not that we can't find the news. It's that the news we want can't find us. And unless it does, no one will pay for it.

There's a name for the process of finding audiences that want products and influencing them to consume them. It's called marketing. Media companies spend about 10% of their revenues on marketing on average, compared with 9% for all business. But do you think those newspapers that we started this column talking about are spending 10% of their revenue on marketing? How about the Internet news companies just hitting the street? In both cases, I'll bet they are vastly underspending the average.

The news business is being reinvented. Creation and production is getting cheaper, but reaching audiences is getting more expensive -- vastly more expensive. Want to figure out who will be the survivors? Look at their marketing budgets. Spending on marketing willl predict the winners and losers in the attention economy.

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