R Heath (and W Buffet) on the Economics of Dominance and Bundling

October 31, 2009

I was pleased to read Robert Heath’s comment on my recent blurt wrt to the un- and re-bundling of newspaper content.  In it, he directed me to a post of his in July.  Quoth Mr. Heath, citing the Oracle of Omaha, circa 1977:

The economics of a dominant newspaper are excellent, among the very best in the business world. Owners, naturally, would like to believe that their wonderful profitability is achieved only because they unfailingly turn out a wonderful product. That comfortable theory wilts before an uncomfortable fact. While first-class newspapers make excellent profits, the profits of third-rate papers are as good or better – as long as either class of paper is dominant within its community.” [emphasis added]

In other words, while it’s good to be the king, it’s best to be a monopolist.   I’ll repeat what I wrote a couple of weeks ago:  as recently as two decades after Mr. Buffet’s observation, a large Texas newspaper sponsored a softball team with “The Only Game in Town” stencilled on the back of their jerseys.

More recently, of course, Buffet changed his tune, citing the prospect of “unending losses” and saying that he wouldn’t buy most newspapers “at any price.”  Mr. Heath posits why:

The structure of any market in equilibrium is determined by a complex and recursive interplay of technology, economics, inertia (in the form of pre-existing business relationships) and sometimes regulation. In the short term, the last three factors are paramount; in the long-term, technology dominates.

I admire Mr. Heath’s writing and analysis, and am flattered that he stopped by.

From Radio Buttons to Clicks to Apps

October 29, 2009

As well constructed a paragraph on the electronics of content as you’ll ever see:

Why is it so hard for content makers to create value on the web? Because the web has evolved to minimize content makers’ ability to retain users. Thanks to the power of search, users can bounce from one site to another so effortlessly that it’s tremendously difficult for any one site to monetize their visits.

Arnon Mishkin writing for paidcontent.org on the power of the bundle.   What he leaves unsaid but is nonethless true is how painful it is when a content provider gets “unbundled.”     Newspapers = the Unbundled.  Jobs = the Rebundler.  It’s good to be the Rebundler.

The Reconstruction of American Journalism

October 25, 2009

In CJR,  WaPo vet Len Downie and Columbia J-School Professor Michael Schudson provide thorough treatment of the state of journalism.  While I don’t agree with all their recommendations, I couldn’t agree more with what I see has their underlying premise:

The days of a kind of news media paternalism or patronage that produced journalism in the public interest, whether or not it contributed to the bottom line, are largely gone.   American society must take some collective responsibility for supporting independent news reporting in this new environment–as society has, at mjch greater expense, for pub lic needs like education, health care, scientific advancement, and cultural preservation…

Well, Tom, That’s One Way to Look at It

October 16, 2009

Speaking in Hong Kong, AP honcho Tom Curley declares a surplus of news.   Which either means there is too much happening in the world, or that there are too many journalists.  Or, I suppose, both.  Well, gee–that’s a novel take.   It’s actually a little refreshing–so much for that “our first obligation is to the public”  hooey.  Out with all that hoary, maudlin sentimentality, and in with the modern.  When using words like “protect” and “defend,” we’re to understand that the AP–not some retrograde, Dewey-esque notion of a public–will now be on the receiving end of such bracingly active verbs.

Also, Mr. Curley has quite an affinity for the word “deserve,” particularly when the subject is first person plural, and the object is “money.”  

And so I ask again:  what industry ever bailed itself out of trouble by defeaturing the product and raising price?

Texas Observer on the Mystery of Latino Turnout in Texas

October 9, 2009

Dave Mann writes:

A new set of numbers, released in July by the U.S. Census Bureau, shows how far behind Texas has fallen in Latino voting. The Census Bureau estimated, based on the number of Spanish surnames on the voter rolls, that 38 percent of the Latino U.S. citizens over age 18 in Texas went to the polls in November 2008. That was a slight uptick from 2004, when 29 percent of eligible Latinos voted. But other states experienced huge surges in Latino voting last year. California saw about 57 percent of eligible Latinos vote in 2008, more than double the turnout in 2004. In Florida, 62 percent of Latinos turned out in 2008, nearly double the 2004 proportion. And Nevada’s turnout more than doubled, to 52 percent.

Steve Murdock attributes the low turnout to lack of union organizing in Texas and–oh by the way–a dearth of viable Latino candidates.  Notice how nobody even mentions any more the top of the “Dream Team” ticket–one Tony Sanchez.

Henry Cisneros’s name came up in conversation yesterday.  It’s interesting to imagine how different things might have been had he mounted a statewide race.

Burn the Past

October 9, 2009

I don’t know anything about photography.   But my friend Keith Kesler sent me this wonderful post written by one of his friends about the takeover of the field by the digerati.  Sounds familiar.

Matt Thompson’s 10 Questions to Reporters

October 4, 2009

If not for Matt Thompson, I doubt there would be a Texas Tribune (well technically speaking there’s still not one, but I’m assured that there will be soon).  It was Matt who got me thinking about the idea of context, and the lack of innovation in news presentation since the advent of large-scale content managment systems.   He was nice enough to spend some time with our team in Austin recently.  It was terrific.

This post represents a really good summary of a lot of Matt’s thinking.  Highly recommended.

Ken Doctor on Bay Area News Project

October 4, 2009

His “7 Pointers” are as good an analysis as I’ve read.

Shirky: 59-6 Ain’t a Football Score

October 4, 2009

Clay Shirky does content analysis of his hometown newspaper and is dismayed to find that, “most of the substantive part of that day’s Trib wasn’t locally created, and most of it wasn’t news.”  Only six bylines appeared on local hard news stories.  Which Shirky found odd, until he realized that six reporters constituted the entire hard news staff of the paper, even though there were 65 total employees.  Referring to Steve Coll’s early musings on the merits of non-profit journalism, Shirky concludes:

For people who see newspapers as whole institutions that need to be saved, their size (and not the just the dozens and dozens of people on the masthead, but everyone in business and operations as well) makes ideas like Coll’s seems like non-starters — we’re talking about a total workforce in the hundreds, so non-profit conversion seems crazy.

All that changes, though, if you start not from total head count but from a list of the people necessary for the production of Jones’ “iron core of news,” a list that, in the Columbia Daily Tribune’s case, would be something like a dozen. (To put this in perspective, KBIA, Columbia’s NPR affiliate, lists a staff of 20.)

Seen in that light, what’s needed for a non-profit news plan to work isn’t an institutional conversion, it’s a rescue operation. There are dozen or so reporters and editors in Columbia, Missouri, whose daily and public work is critical to the orderly functioning of that town, and those people are trapped inside a burning business model. With that framing of the problem, the question is how to get them out safely, and if that’s the question, Coll’s idea starts to look awfully good.

Jim Barnett to the Rescue

October 3, 2009

So, a couple of days ago, Jack Shafer called us silly–us being the growing number of people who are willing to put our money where our mouths are in suport of quality journalism.  I’m pretty much over it, although of course I couldn’t resist writing my own snarky response , and my analyst was called in for some very expensive overtime.   I’ll bet even Warren Hellman is succeeding in taking it one-day-at-a-time after being so grievously wounded in the pixels of Mr. Shafer’s column.   It must be especially unpleasant to find out that you’re silly in your 70s, after having become the youngest partner in Lehman Brothers history at 28 and then building one of the most successful private equity firms on earth over the last 25 years.    But, time heals all wounds.  Even when the sniper is Slate, that cash-flowing juggernaut, that exemplar of online media’s sheer, profit-seeking might.

Still, I was heartened to read Jim Barnett’s response to Shafer’s post on the Nieman J-Lab blog.  Sure, in his post Jim pays me a nice compliment, something I don’t get nearly as much of as I deserve (wait, was that out loud?).   But what counts is that he cuts right to the heart of Shafer’s argument that non-profit journalism will almost certainly reflect the biases of its participants:

The point here is that journalistic bias is a function of human intention, not the business model under which the story is produced. For-profit, nonprofit, it does not matter. If a reporter or editor has an axe to grind, he or she is going to find a venue to grind it.

Ditto a financier.  If Warren Hellman wants to meddle in the content of the Bay Area News Project, he will, and it will probably fail.  If he understands that’s a bad idea for the integrity of the enterprise, he won’t.  It’s that simple, and I’ve got a pretty good guess about which way it will go.  My understanding is that Mr. Hellman has given a bunch of money to the San Francisco Ballet.  I’d be surprised if he has weighed in on programming decisions, or lobbied for a role as a superannuated  Bon Bon in The Nutcracker.   My bet is that he likes dance; he and his family clearly love San Francisco, and so the match is pretty natural.  

Maybe that’s why in philanthropy circles, a check is often referred to as a gift.


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