Diving Down into “The Story So Far”

And coming up with the parts you need to read

The Columbia University Graduate School of Journalism, in its worthy manner, has come out with a 146-page report entitled “The Story So Far: What We Know About the Business of Digital Journalism”. It includes the story of Gabriel Sherman’s 463-word story on nymag.com about Roger Ailes and Sarah Palin, and Jack Mirkinson’s 237-word distillation of the story for HuffPo. While the former got good traffic from the latter, the HuffPo version was still much more popular than the original.

The Columbia report doesn’t examine why the HuffPo version was so relatively successful—the fact that HuffPo’s story is in its headline, for instance, while New York went cryptic with “Going Rogue on Ailes Could Leave Palin on Thin Ice”, and didn’t get to the actual news until the third paragraph. But the anecdote packs a punch all the same: if you blather on too long, people are liable to ignore you.

So let me try to find some of the good bits for you, since I know you’re not going to read the whole thing, and especially because the most interesting stuff—at least as far as I’m concerned—doesn’t even begin until page 110. That’s where we find this:

For decades, there has been a connection between the journalism that news organizations provide and the advertisements that generate most of their revenue. Whether it’s a glossy spread that runs before the table of contents in a fashion magazine, or the anchorman’s “more after this message” assurance on the local Eyewitness News, ads and content have always been closely linked in the stream that appears before the consumer.

That linkage is breaking down, and news organizations are scrambling to replace it with something else.That may mean selling ads on sites they don’t own or control. “Creating content doesn’t ensure a well-sized audience,” says Chris Hendricks, vice president of interactive media at newspaper chain McClatchy Co.“We’re accepting of the fact that the two may be disengaged.”

If you’re going to reinvent the business of journalism for the digital era, this is a really fruitful place to start—the idea that although the business and the journalism are always going to be linked, they don’t necessarily need to be linked through the slightly kludgy old-media mechanism of simple adjacency.

I’ve spent roughly fifteen years now listening to people come up with a fantastic idea for a website which basically boils down to a single dubious business model: we’ll create great editorial content, loads of people will love that content and visit our site, and then we can sell those people to advertisers by running banner ads.

Given the astonishing number of websites out there trying to make that business model work, it’s a statistical inevitability that some of them will make money—even if it’s usually by means of paying their employees very little and their founders nothing at all. And some subset of those sites can properly be considered journalism, although maybe not journalism of the sort that CJR types generally think of when they hear the word. (I doubt Gawker or Techcrunch are going to win any Pulitzers any time soon.)

When you move away from the ad-adjacency model, however, things get a lot more interesting and exciting. Journalistic organizations have reach and credibility in their communities, whether those communities are geographical, topical, or something else. And that reach and credibility can be monetized in a number of different ways.

One way to do that is to sell ad space not just on your own site but on other sites, too. The ad-sales teams at local newspapers, for instance, tend to have good relationships with a lot of local businesses, who might well want reach beyond the paper and its website. Meanwhile, bigger websites don’t really know who those businesses are, or how to reach them. And when you have a lot of inventory to sell, you can get much more inventive and sophisticated. Consider McClatchy’s relationship with Yahoo:

Because Yahoo has such broad reach, the relationship opens a big market for local news organizations.“The typical paper has 15 percent penetration in the local market,” Hendricks says, speaking of online operations. “When we partner with Yahoo,it takes us up to 80 percent.” And because manyYahoo ads are “behaviorally targeted”—meaning they are more closely geared to readers’ interests, based on web usage habits, geography or demographics—the rates are much higher. But those ads need a lot of viewers to ensure that the subsections of the audience are big enough to interest advertisers. “It’s almost impossible to sell behaviorally targeted ads with 15 percent penetration,” Hendricks says. “With Yahoo’s scale you can.” McClatchy averages an $18 cost per thousand views for targeted ads, Hendricks says. That’s about twice the average for its usual display ads, though it has to share the proceeds with Yahoo.

There are other ways to leverage local relationships, too, like Groupon and its clones: the Minneapolis Star Tribune launched a coupon service, called STeals, while McClatchy both has a Groupon clone of its own and has a deal with Groupon itself.

More generally, publishers can monetize credibility in many ways: Wired has pop-up stores, New York magazine has a bridal show, The Atlantic has a big events business which already brings in $6 million a year and which is growing fast. And on top of that there are various freemium strategies, where free journalism drives demand for exclusive content or expert access.

Meanwhile, the journalism itself has value to various people and can be monetized. Publishers still have a fetish for exclusive content, often because they know a dangerously small amount about SEO. But I do think that we’re only just beginning to see sites which pay relatively modest sums to republish (as opposed to simply link to) carefully-curated content from elsewhere on the web. If publishers are willing to sell the non-exclusive right to republish their content, I think they could make some money doing that.

On top of that, of course, a handful of name-brand journalists can do very well online, monetizing their own personal brand. And much of that value goes to publishers, too. I think the Columbia report is wrong about this:

Andrew Sullivan’s Daily Dish was responsible for 1 million monthly unique visitors, or about 20 percent of the traffic, at the Atlantic’s site. But it was Sullivan’s audience, not The Atlantic’s; the blogger owned the brand equity. So when he moved to The Daily Beast in April 2011, he took his unique users with him.

In fact, there’s no evidence that the number of unique visitors at The Atlantic has fallen as a result of Sullivan’s departure. In fact, The Atlantic did a very good job of leveraging Sullivan’s blog in a successful attempt to get a reputation as a respected home for smart, name-brand commentary online. People who like Andrew Sullivan also like James Fallows, or Ta-Nehisi Coates, or other Atlantic bloggers Andrew linked to on a pretty regular basis; they also followed his links to magazine articles and turned out to be pretty appreciative of the rest of the material on theatlantic.com. So while Sullivan did have a very large number of unique visitors, it’s wrong to say that he took them with him when he left. Yes, most of them now read him at the Daily Beast. But that doesn’t mean that all or even most of them have left The Atlantic.

The Columbia report ends with a list of recommendations. Some of them are platitudinous slogans (“leverage staffs and audience by using aggregation, curation and partnerships with audiences to provide content of genuine value”; “mobile digital devices represent a special challenge”).

Others, however, are smart and sensible. If you’re a legacy media organization, for instance, don’t just shovel your legacy-media content onto the web and expect it to take off: successful websites need to have a webby sensibility, and tend to be separated from the legacy outfit. They also need to push back against the tyranny of the CPM. And don’t expect to make lots of money from a paywall. You won’t. And if you think you will, that’s a good sign you don’t understand how your business works.

Felix Salmon is an Audit contributor. He's also the finance blogger for Reuters; this post can also be found at Reuters.com.