Five reasons the news business is struggling
Anyone remotely connected to the news media industry is aware of the oncoming meteor aimed at our world. As the clock counts down, some of the institutions responsible for training leaders have begun responding to the need of enabling media people with the skills that will help charter their organisations to safety and prosperity.
One such course is the Executive Education Course at the Craig Newmark School of Journalism at CUNY. And after my first mind-expanding residency, it’s a bit clearer to me why the news media world is in trouble.
We think we’re special
Putting aside the socio-economic consequences of the failing news industry and just focusing on the business side of things for a moment, let’s take a look at the disruption engulfing us. This is a global meltdown happening at a rate we can’t quite fathom. In the space of a decade the industry has lost half its workforce and more than half its main source of revenue. Because of that, we think we’re special. But we’re not, really.
All successful businesses eventually face the reckoning of disruption from new kids on the block. In 1965 the average lifespan of a Fortune 500 company was 33 years. By 2026 it’s estimated to drop to just 14 years. Stuff is getting real for everyone. It’s just rare that an entire industry faces it on a global scale and jammed into a single decade.
The concentration of pain we are feeling now is due in part to the disruption-facilitating nature of the internet and also the ability of the industry to operate successful regional and national oligopolies that could crush competitor upstarts. That period of uninterrupted or limited competition, lasting generations, meant the dam walls burst at about the same time for everyone in the business of news.
There are many contenders for the title of the “root of all evil” for the news media. I will take my cue from innovation scholars and posit that it is the multi-generational success of the industry that has brought it to its knees. It’s known as the “success syndrome” and popularised by the recently deceased Clayton Christensen’s ‘Innovator’s Dilemma’. This is briefly explained as when a business becomes successful, it does everything it can to grow profits in those operations because that’s what works (and too many organisations let accountants make big decisions). But this success has a dark side: it hates innovation because the two are about as compatible as a Pelosi-Trump fundraiser.
Radical, industry innovation is extremely difficult to implement in an organisation that is successful because everything needed to incubate innovation is just about the antithesis of what is required to squeeze out marginal gains in operational efficiency. Only those organisations with proper planning, organisational design and senior leadership buy-in, achieve this time and again. Think Amazon, Apple, IBM and others who start off being successful with one thing, and sur-thrive by innovating into new products, and markets.
When the big disruption came we thought we were different from every other company that got disabled by disruption. But that was just our oligopoly speaking.
Not knowing the difference between strategy and operational efficiency
I’ll admit that in the haze of a decade in hustling to sustain a news media startup, I doubt I would have been able to explain the difference between strategy and operational efficiency; leadership and management. So many lines blur in a founder’s startup role, and with such extreme, constant pressure I wonder if I’d be able to implement the theory even if I studied it. But it is also indicative of the lack of training and investment in our development that we skimped out on.
(Cheat sheet: leaders are responsible for the strategy that differentiates the business and making space for innovation. Or choosing the tracks the train should run on. Managers are responsible for the operational execution of that strategy and making sure the train is on time).
Our excuse was a startup teetering on the edge, but speaking to colleagues from much bigger newsrooms it became clear that lack of management and leadership training is an indictment of the industry. Again, our success over decades made us think we knew everything we needed to know about our world. We assumed complete knowledge, that the big white object on the horizon wasn’t an iceberg. The struggle to be honest and vulnerable enough to admit our knowledge deficiency is holding us back. Some of us don’t yet know what we don’t know, so it is also incumbent on the training institutions to update curricula to better meet the needs of an industry that has a lot of catching-up to do and not much time to do it in.
Good leadership and management doesn’t happen by osmosis or having years of experience in organisations that failed to invest in either. They are skills that can be learnt, but the luxury of time and budgets is fast running out.
After many years of struggling to make payroll, we finally made some big bets in training, development and innovation. What felt like big bets at the time paid off in multiples and had us kicking ourselves that we hadn’t done so sooner. Ours is an industry that has pathologically under-invested in the development of our managers and leaders. Something we desperately need to change.
A lack of innovation is a lack of leadership
Want to see a news media executive squirm? Buy them lunch and ask them what their R&D budget is. Again, the root (canal) of our problems stems from our past successes. Why spend good money on innovation when we only have a handful of competitors and we “own” the channel to our readers/viewers/listeners? Amazon, for years, invested way more than its rivals in R&D and as a result, can lay claim to the title of most innovative company on earth. It has successfully incubated companies or entered into new markets where it now operates as global leader. Less colourful business practices aside, Jeff Bezos has made innovation part of Amazon’s DNA and it’s driving their continued success in areas beyond selling books.
The seminal document on innovation in the news industry in the digital transformation era, is, without doubt, the 2014 Innovation Report by the New York Times. Honesty, vulnerability and willingness to change are the key ingredients to many of life’s challenges. And so it was for the New York Times, which set out a new path in 2014 after their “come to Jesus” moment. Making the consummate investment in, and space for, innovation is the responsibility of leaders of any business, especially so for those who enjoy success.
That our industry has failed to innovate is the Scarlet Letter of our leaders and no one else. We can’t all be the New York Times but it is a beacon of what can be achieved by doing the work to identify the strategies for success, making investments in data and innovation and unleashing the flywheel effect that great content can spark.
We like cookie-cutters. And bright, shiny things
A Reuters research report published in 2019 reflects our continuous pivot to this and that bright shiny thing that would save us. The pivot to scale, then the pivot to user-generated content, platforms, video and ultimately the pivot to readers. Or what Brian Morrisey at Digiday likes to call the “pivot to reality”. But as with most realities, it bites. The “shiny things report”, as it has become known, laments the absence of research-based strategising and rushing off after the next saviour trend. Paywalls run a high-risk of being the next bright, shiny thing that fails to save us.
The allure of paywall subscriptions is that it’s a cookie-cutter solution with readily available technical solutions. The problem, however, is that subscriptions is a “winner takes all” game in which local news outlets, or even national outlets in foreign countries, compete with the New York Times and Washington Post for the same slice of their news subscriptions budget. Our cookie-cutter addiction will only result in half-baked solutions.
The real solutions lie in audience-centric models that rely heavily on listening, and data to understand them. In his book, Geeks bearing Gifts, Professor Jeff Jarvis proclaims “death to mass media!” or more specifically, our treatment of readers as a single mass that will benignly accept our assumed needs of their news requirements. Assumptions of people who may not think like us, look like us or share our life experiences and opportunities.
Membership is a model (one that I am particularly biased towards) that uses these principles of audience-centricity and engagement, but also means each implementation is unique. And much harder to get right, often requiring an evolutionary approach to editorial and community building. The local news problem in the US is way worse than I originally thought and the membership model is a possible solution. But there don’t seem to be many takers because there aren’t any cookie-cutter shortcuts in this space.
“Whom the gods want to destroy, they send 40 years of success.” That Aristotle could pen something 2,000 years ago foretelling the root cause of successful business failures in the modern era, speaks volumes about the nature of humans.
If one common thread binds all these reasons for problems the news industry is facing, it’s people. Organisations are made up of people (for now). What struck me most during our residency was how almost every newsroom represented in our class identified with the challenges laid out in the New York Times Innovation Report. That report shows that humans, and the problems we create, mark us like a bad tattoo we thought was a good idea on a drunken night out in Bangkok.
Culture can be a miracle binding agent or it can become a poison pill. The bigger a company becomes, the harder it is to create and maintain the desired culture, especially with regards to innovation. People are averse to change – even companies that were once innovative can lose their edge, as years and good leaders roll on by. In 1972, the US retail giant Sears accounted for 1% of US GDP with one in two US households owning a Sears credit card. A company that successfully innovated and regenerated multiple times since 1893, is now obliterated. What changed? People.
We are visuals creatures – and if revenue and reader graphs are going up and to the right, something inside us makes us think it’ll carry on in a linear, orderly and perpetual fashion. People are many things but orderly and linear we are not, and without an ongoing plan to keep evolving and innovating, our game will be up.
Short-termism: whether it be profit-chasing over readers’ needs, or print profits over digital transformation, it’s hard, and brave to look past the horizon. Especially when you have quarterly earnings, hedge-fund shareholders and pesky analysts with misaligned interests circling overhead. Short-term thinking is people thinking.
To choose to invest in something that could cannibalise and appears to have an addressable market way smaller than the current successful operation is counterintuitive to how we think. Long-term could mean just a couple of years in the state we find ourselves in. But at least it’s better than the next two quarters. It is only in the realm of the longer-term that reader interests and shareholder interests align. It is there we must direct our strategic thinking and focus. It’s exceptionally difficult to do when the bloodletting is happening all around and long-term capital is hard to source. But that’s what we signed up for. And it ain’t tiddlywinks.
Styli Charalambous is the CEO of Daily Maverick.
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