Can Open Source Thinking Create a Sustainable Business Model for Local Journalism?

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It’s been very interesting reading the commentary in response to Mark Zuckerburg’s recent manifesto about building communities. Among journalists, there’s a general consensus that Facebook (and Google) are responsible for decimating journalism’s business model. What is being debated now are suggestions on how to address this. The two main schools of thought are:

  1. Facebook should take responsibility for destroying the fourth estate and fund quality journalism as a result.
  2. The publishing industry needs to get up, dust itself off, and figure out a new and repeatable business model to replace the one that Facebook and Google has destroyed.

To take away any sense of suspense, I am firmly in camp #2. That should not be a surprise — I started my career at Bell Labs as a software developer before becoming a serial entrepreneur. I have spent the majority of my career developing new capabilities that did not exist previously. I believe that the evolution of products and ideas is inevitable, and that innovation is the engine that drives commerce. Now that my latest endeavor, Bizyhood, has spent a few years working with local publishers, we can offer a perspective that marries the entrepreneurial perspective with the journalistic view.

First, let’s take a look at what the leaders in the publishing industry are saying.

Viewpoint #1: Facebook should fund journalism as a philanthropic effort
This point was made by two prominent members of the journalism family — Emily Bell and Steve Waldman. I found Steve’s perspective particularly interesting, since as the founder of LifePosts he’s essentially doing what I’m doing in reverse — he is a journalist who is taking a shot at a tech startup. One of Steve’s built-in advantages is that he can pen (and get published) an opinion piece in the NY Times, something very few others are given the opportunity to do. There have been plenty of responses to both Emily and Steve’s posts, and the points are solid.

My opinion is that many business models get disrupted — that’s innovation, after all. If an incumbent doesn’t move quickly enough to embrace the disruption, they will die.  We’ve seen this pattern play out in many industries over the last several decades. Facebook and Google owe the publishing industry nothing.

What bothered me the most about Emily and Steve’s posts is the assumption that they deserve to be given a living to write. I’m not arguing about the value of the fourth estate — it’s absolutely critical to our democracy and I’m personally quite concerned about it given the state of affairs today. But journalism has evolved. People don’t want to be lectured to constantly. Rather, we want the ability to have a conversation, share our views, and think that the author even cares about what we have to say. Journalism has failed miserably in this regard. In lieu of being able to have a conversation, we will migrate to reading the articles that agree with our worldview, which leads to bifurcated masses. Sound familiar?

The status quo no longer works for journalism. As an alternative, I suggest the journalism industry itself take just 1% of the $4B that Steve wants Facebook to fund and make forty $1M bets on new initiatives that can offer the public something Google or Facebook cannot.

Viewpoint #2 – Create a new revenue model for publishing
“Stop whining and let’s build something sustainable.”

This was the immediate response to Emily and Steve’s posts from many who responded. A very early shot off the bow claimed that Facebook “sucks” for news. This is correct. Facebook’s customer is the consumer. Their goal is to entertain them to keep them coming back, and to stay as long as possible. So they can feed more ads. When I was a kid, the evil in the world was television, keeping us occupied for up to seven hours a day. We didn’t watch the news for four hours on TV, we watched a little news and a lot of entertainment. Now it’s Facebook sucking hours a day out of our lives, and the same truth holds. It isn’t news that’s keeping people on their site all day.

It was also noted that perceived monopolies have been overcome throughout the ages, and today’s environment is no exception. Google and Facebook do have plenty of white space to exploit, and somebody will. If publishing has lost a revenue model, then create a new revenue model. Stop trying to reinvent the current models. Do what the large tech companies consistently do – obsolete your current product to make way for a bigger and better product.

Shortly after the Zuckerburg manifesto was published, there was a call, specifically to local publishers, to address some of the shortcomings noted. This call to action specifically states that local publishers need to “build better informed and civically engaged communities.” As a follow up to that post, suggestions were made for new business models for local publishing.

These posts reflect the right direction and attitude that local publishing needs to take. However, there are a few challenges and concerns to note. First, in order to truly build engaged communities, all members of the community need to be brought on. When publishers are only dealing with businesses that advertise with them, that leaves out over 95% of the businesses in a community. Any plan to engage communities needs to include all businesses.

Second, many of the suggestions rely heavily on a relationship with Facebook to generate new revenue. Publishers should leverage Facebook as a part of their marketing/outreach strategy, but only as a very small part. Facebook will always call the shots and can and will change the rules of the game at any time. This is not a sustainable way to generate new revenue. And don’t forget that they suck at news anyway!

The suggestion to “create a whole new relationship between users, publishers and advertisers that promises to benefit all three” is directly on the mark of what needs to happen. This is something that must be solved directly by the publisher without relying on an existing social network or search giant. The solution requires a new model altogether, not an incremental change on existing models.

What Are The Options?
The great news is that there are dozens of options, and many of them are being explored. It dawned on me that journalism holds itself back, perhaps rightly. While Facebook and Google can chug along and let pundits argue about the legitimacy and morality of their decisions, it seems journalism is in a constant state of self-realization.

Being a for-profit business means being exceptionally clear about what your product is and who the customer is that you sell to. It’s not clear that journalism has a clear idea of either. So, that is Step 1. As Pope says in his post: “Eventually, a commercial revenue stream must also help out.”

One thing is clear; that commercial revenue stream is not advertising. Print advertising is the Kodak Film of the publishing industry. Facebook and Google dominate the digital advertising market. Bizyhood is looking at “white spaces” specifically for local publishers, as we think their need to survive is tantamount for democracy, and we also believe there are revenue opportunities in local that don’t exist for national and global publishers. New options must contain these four attributes at a minimum:

  • Transparent
  • Open
  • Collaborative
  • Inclusive

The concept of an article needs to be redefined. Community involvement is imperative, but commenting systems aren’t the answer. Sharing of content is critical, as is user generated content that can be curated by Editors so that quality news and information comes from all of us.

When I started my career at Bell Labs, all software was closed. There was very little collaboration; almost none between companies, and very little between engineers and our customers. Open source software changed the landscape for the entire industry. Rather than commoditizing software completely (an early concern at the time), it actually made software development easier and more productive.

I see tremendous parallels in the publishing industry today. As a kid, it was quite a thrill to get in the paper, and the one time I got a letter to the editor published, I was on cloud nine for weeks. But that “closed” model is dead. Anybody can be a journalist, photographer, star. We no longer need to go to the fourth estate to have our voices heard. But what hasn’t changed is the need for a trusted and knowledgeable voice to help us sift through what is fact or fiction…. Fake or real…. Current or passé. So, consider content “open source.” Your job is to add value on top of that.

Scott BarnettScott Barnett is a serial entrepreneur with 25+ years experience in software development, product management, sales, and marketing. He is currently founder of Bizyhood, a startup focused on content distribution and engagement tools for local publishers and businesses.