/ 11 May 2011

Why integration can be a barrier in the digital world

“Here’s the problem,” says Randall Rothenberg, head of the US Interactive Advertising Bureau. “Journalists just don’t understand their business.”

This is a line which leaps out from a new report the Guardian is publishing on Wednesday from the Tow Centre for Digital Journalism at Columbia Journalism School, entitled, The Story So Far: What We Know About the Business of Digital Journalism.

It is an uncomfortable insight but an important one. In the report the authors Bill Grueskin, Ava Seave and Lucas Graves have conducted dozens of interviews in newsrooms and in the online journalism business across the United States, and while there are some bright patches of optimism, the overall picture should be troubling to many news executives.

It seems from reading the report that journalists are not just having difficulty understanding their business, but that the business itself is so fundamentally changed that commercial departments are equally disoriented. Chris Hendricks, the vice-president of interactive media at McClatchy, one of the US’s largest newspaper chains, says something in the report which is startling, not because it isn’t true, but because one rarely hears it clearly articulated from within a news company: “The longstanding premise of content and advertising being inextricably linked has clearly fallen apart,” he says, adding: “It’s almost like we are a sales and distribution company that has decided we are going to fund journalism.”

There are plenty of examples of businesses which are now innovating in ways they would never have dreamed of a few years ago. The Houston Chronicle for example, has switched its attention in one sector from big retailers to small businesses and instead of advertising alone, offers a flat rate consultancy service which addresses everything from ad sales to social media presence for its clients. The slightly odd church-owned KSL.com in Salt Lake City, rethought its classified business to make it a key driver to its editorial pages, and became very profitable in the process. But there are also many where digital sales remain a marginal couple of percent of overall revenues.

Unhooking the thinking which has your commercial activities pinned to your content is really what being digital means. This is how many digital enterprises have been able to disrupt the bundled news industry as it struggles to think about new ways to raise revenue while at the same time keep alive a legacy business.

Progress quicker where digital is kept apart
Why is it important that journalists know more about their business now, in a digital age, than before, when a blissful ignorance of your revenue streams was often worn as a badge of honour and independence from the grubby business of making money? I don’t subscribe to the idea that journalists should make commercial innovation their key activity, but in the digital realm, a clear understanding of both what stories and journalism cost to produce and how they can be most engaging and effective are crucial. These are skills which will be as important in the non-profit and public service realm as they are in the commercial world. Being in step with the possibilities and developments of digital audiences is as much about making journalism effective as it is about making it profitable. As the report says: “We are likely to see a world of more and smaller news organisations, the most successful of which will leverage their staffs and audience by using aggregation, curation and partnerships with audiences to provide content of genuine value.”

One of the other key findings in the report which underwrites this thinking is the suggestion that while there is evidence that some integrated news rooms and sales forces are effective, there is more evidence that progress is quicker where digital is kept apart. Noting that this is not an option for many smaller businesses the report suggests: “Bigger companies should analyse the potential in creating separate staff, particularly on the business side. We did find successful companies with integrated digital and legacy departments, but others have demonstrated that they can compete more effectively by deploying committed digital-only teams to adapt to the changing circumstances.”

In the past 10 years so many news organisations have assumed that integration is the right path — and for some it might be so — but the evidence shows that often the requirements of a completely different business are best served by a single point of focus. The highly expensive business of mashing together workforces or creating departments which do everything from one production line was once the holy grail of the news business. Now, like so many aspects of the business, this too needs rethinking. – guardian.co.uk