Last Ones Standing

Photo by Nick Ryan, Fairfax

The slow-motion death of newspapers as a vehicle for quality journalism rolls on, with periodic announcements of new waves of redundancies prompting anger, soul-searching and recrimination.

For those of us who escaped the industry years ago, there are feelings of both relief that we got out when we did and sympathy for journalists laid off by companies who still appear clueless about how to make the business work in a digital age.

But while the journalists’ mass walkouts and calls for public solidarity are completely understandable, the market realities facing the industry that has sheltered them for long can’t be ignored.

When people talk about the crisis in the mainstream media, they often mistake the problems facing the media industry with the crisis in journalism itself. Yes, these two developments are related. But it’s not clear that resolving the first will fix the second as we’ll see.

Firstly, journalism itself is not a business. It is a public good that was subsidised for much of the past century by classified and display advertising. Typically, revenue in a newspaper company came mostly from the ads. The media’s customers are not its readers but its advertisers. Its readers’ eyeballs are the asset it sells to the advertisers.

As is now well documented, journalism was formerly bankrolled by the fabled “rivers of gold” from ads for cars, jobs and houses. The internet killed that model by taking away from publishers their monopoly as vehicles for ads.

For nearly 20 years, newspapers all over the world have been experimenting with myriad alternatives to make the business pay, including locking up the paper online for subscribers (the early AFR digital model tried that with disastrous results), erecting partial paywalls (as at the Herald Sun) or applying the so-called “freemium” model (adopted by the SMH in 2012).

While publishers routinely trumpet growth in their digital subscribers, they are typically shy about breaking out exact revenue numbers. The truth is that digital revenues are insufficient to replace the fat margins of the old print empires. And that is unlikely to change.

Fairfax famously responded by diversifying, badly.  As the internet started to impact in the late 1990s, then CEO Fred Hilmer set up a digital arm called F2, plonked it across Darling Harbour in the Maritime Museum and appointed a bunch of groovy young marketers to run it. Of course, it turned out to be another sinkhole and suffered by never sharing the strong journalistic culture that supported the newspapers.

In 2006, another Fairfax CEO, ex-All Black captain David Kirk, saw value in buying internet auction business Trade Me in his native New Zealand for about $600 million. This acquisition actually did quite well and by 2012 was making up 20% of Fairfax’s revenues. But the company then had to flog it off to pay down some of the massive debt it had been saddled with as a result of its poorly timed 2006 merger with Rural Press.

Since then, under Captain Kirk’s replacement – former journalist Greg Hywood – Fairfax has sought to slim down, streamline and synergise (cut costs and go downmarket in layman’s terms). Now Fairfax is stuck in the spiral of decline seen in so many other media businesses around the world.

The spiral, detailed by media economics expert Robert Pickard, goes like this: Profits decline, so the company cuts spending on journalists and content. This leads to less desirable audiences and lower advertising revenue, which cuts into net earnings, which leads to further reductions in staff and so on and so on.

Now we get to the crisis in journalism. Quality deteriorates as editorial checks and balances are removed. Fairfax five years ago decided to outsource much of its sub-editing and layout  to “editorial solutions provider” Pagemasters (owned by wire service AAP, which in turn is jointly owned by Fairfax, News Corp and Seven West Media).

This arrangement lasted just three years. In 2014, Fairfax sought to further cut costs by sacking Pagemasters. Ironically, many of the staff there were original refugees from an earlier round of redundancies at Fairfax, so they got dumped twice.

Fairfax’s next move downmarket was to set up its own barebones sub-editing operation in New Zealand, but this only resulted in increasingly embarrassing production howlers, including this now notorious headline in an early weekend edition of the AFR, announcing to readers that “the world is fukt”. 

 More recently, in one of the worst lapses of editorial control I have ever seen, the SMH stuck on its front page a provocative column by its in-house right-winger and flame-thrower Paul Sheehan, detailing completely unsubstantiated allegations by a clearly deluded woman that she had been gang-raped by a Middle Eastern gang. The woman’s story had so many holes in it that any half-decent journalist would have picked it apart. But Sheehan’s enthusiasm for his (rather nasty) political agenda and the newspaper management’s desire for clickbait (the new barometer of news value) meant it went through unchecked.

It’s true Fairfax’s underlying problems are shared by newspapers around the world. Indeed, much bigger publishers like America’s Knight-Ridder (home of great, Pulitzer Prize-winning newspapers like the Miami Herald and the Philadelphia Inquirier) were either bought out or went bust in the last decade in the failed search for a new business model.

But Fairfax’s fate has been made worse by incompetent management, dithering boards full of people with no understanding of the value of journalism and warring internal fiefdoms led by careerists crawling their way up the corporate ladder.

Marketing gurus, the kind that wrecked Fairfax, used to like to talk about “unique selling propositions” – the one factor that gives your company its selling power and prestige. Domino’s Pizza came up with “you get fresh, hot pizza delivered to your door in 30 minutes, or its free.” These days, it’s all about “brand positioning”.

For Fairfax’s Greg Hywood, the big growth area isn’t journalism. It’s “content marketing”.

“The term content marketing may not be familiar to many of you,” Hywood told the company’s AGM in 2013.  “It covers a broad suite of media and publishing content that actively engages and builds a customer relationship to drive trial, acquisition or loyalty without actively selling. “

I’d suggest to Fairfax journalists that when a media CEO starts talking like that, run. The unique selling proposition of Fairfax traditionally was quality journalism, which is built on public trust. Without trust, it has nothing. It is a marketing company, an advertising platform, just another vehicle for fast-talking MBAs to leverage brand opportunities in pursuit of revenue streams.

With the old media companies disintermediated and now empty shells (like the major record labels before them), quality journalism is going to have to find its own way in the marketplace (like musicians have had to do). 

That could mean journalists breaking away from the marketers and crowdfunding new leanly-staffed digital publications that dump the usual keep-the-ads-apart news fodder for real public interest journalism. 

So what price do we want to put on this quality journalism? 

Maybe the better question for everyone to ask is what cost we are prepared to accept for living without it.