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The Steady Decline of News

newspaper-internet

The business of the media is business.  Business is not good.  For more than a decade now, the Internet has been squeezing the profit out of newspapers and news magazines. Not only has the proliferation of online content made it next to impossible to get people to pay for any but the most unique and time-sensitive information but Craig’s List and others have taken over most of the old advertising business newspapers in particular rely on.  Two stories in the New York Times today show that things are only getting worse.

John Herrman (“Media Websites Battle Faltering Ad Revenue and Traffic“):

The business of online news has never been forgiving. But in recent weeks, what had been a simmering worry among publishers has turned into borderline panic.

This month, Mashable, a site that had just raised $15 million, laid off 30 people. Salon, a web publishing pioneer, announced a new round of budget cuts and layoffs. And BuzzFeed, which has been held up as a success story, was forced to bat back questions about its revenue — but not before founders at other start-up media companies received calls from anxious investors.

“It is a very dangerous time,” said Om Malik, an investor at True Ventures whose tech news site, Gigaom, collapsed suddenly in 2015, portending the flurry of contractions.

The trouble, the publishers say, is twofold. The web advertising business, always unpredictable, became more treacherous. And website traffic plateaued at many large sites, in some cases falling — a new and troubling experience after a decade of exuberant growth.

Online publishers have faced numerous financial challenges in recent years, including automated advertising and ad-blocking tools. But now, there is a realization that something more profound has happened: The transition from an Internet of websites to an Internet of mobile apps and social platforms, and Facebook in particular, is no longer coming — it is here.

[…]

Audiences drove the change, preferring to refresh their social feeds and apps instead of visiting website home pages. As social networks grew, visits to websites in some ways became unnecessary detours, leading to the weakened traffic numbers for news sites. Sales staffs at media companies struggled to explain to clients why they should buy ads for a fragmented audience rather than go to robust social networks instead.

This is a disturbing trend. Not only is the revenue being extremely concentrated into a duopoly, but it’s going to the distributors rather than the creators. Neither Google nor Facebook are writing the things we want to read, but they’re making all of the money. Distributing is cheap. Creating is expensive. Not shockingly, it’s having a major—and I would argue negative—impact on content creation.

Jim Rutenberg (“For News Outlets Squeezed From the Middle, It’s Bend or Bust“):

Earlier this month, a couple of inventive young go-getters at BuzzFeed tied enough rubber bands around the center of a watermelon to make it explode. Nearly a million people watched the giant berry burst on Facebook Live. It racked up more than 10 million views in the days that followed.

Traditional journalists everywhere saw themselves as the seeds, flying out of the frame. How do we compete with that? And if that’s the future of news and information, what’s next for our democracy? President Kardashian?

Grandkids: It was not so long ago — oh, say, five, maybe six years — that traditional news organizations like this one could laugh at BuzzFeed’s gag along with everyone else, smugly secure. An exploding watermelon was just an exploding watermelon.

These days, however, news articles — be they about war, voting rights, the arts or immigration policy — increasingly inhabit social media feeds like thefrighteningly dominant one that Facebook runs. They are competing for attention against zany kitchen experiments; your friend’s daughter’s bat mitzvah; and that wild video of a train whipping through a ridiculously narrow alleyway in India.

That entertainment often trumps serious content is hardly a new phenomenon. We had sensationalism and Yellow Journalism more than a century ago. And even during the heyday of professionalized news, there were always sports pages, crosswords, comics, and other amusements. But, increasingly, the latter are simply driving out the former. And some prominent voices are arguing that it should happen more quickly.

We may not yet be the watermelon. But executives who run news organizations almost universally say that we’d all better find our own watermelons — and find them yesterday.

It means big changes are coming fast in the way major news institutions present their journalism, what that journalism includes, and how decisions are made about what to include. The goal: to draw big, addicted audiences.

A lot of it is being done in the rushed panic that comes with the demands of quarterly earnings. And yet, given the highest calling of the news industry — hold politicians to account, unearth corruption — the importance to our political and civic life could not be greater.

A good way to understand the fast-evolving thinking is to check in on people who are trying to build a news and information business from scratch. I did that last week over breakfast with Jim VandeHei, a co-founder of Politico, and Mike Allen, one of the site’s best-known journalists. Both are also veterans of The Washington Post.

Mr. VandeHei, who stepped down last week as Politico’s chief executive, and Roy Schwartz, the company’s departing chief revenue officer, have been seeking potential investors and video and television partners. Mr. Allen is for the time being continuing to write his vital morning tip sheet at Politico, “Playbook,” seven days a week.

When I met with Mr. VandeHei and Mr. Allen, they were tight-lipped about their next venture. They would only describe it in the broadest terms, as “a media company” that will focus on news and information, exist largely on mobile devices and social media, and not directly compete against Politico.

But that was O.K. for my purposes. I was more interested in hearing what this venture wouldn’t be doing. Their answers may require a trigger warning for the proudly ink-stained set.

It starts with Mr. VandeHei’s admittedly provocative proposition that “journalists are killing journalism.” They’re doing this, he says, by “stubbornly clinging to the old ways.” That’s defined as producing 50 competing but nearly identical stories about a presidential candidate’s latest speech, or 700-word updates on the transportation budget negotiations.

Survival, Mr. VandeHei says, depends on giving readers what they really want, how they want it, when they want it, and on not spending too much money producing what they don’t want.

It’s not only about creating big audiences for advertisers, he and Mr. Allen said. It’s about convincing already-inundated audiences that they want what you’re producing, and they want it so badly that they will pay for it through subscriptions. That’s essential as advertising revenue drops to levels that will not support robust news gathering.

VandeHei certainly has a point on the noise inherent in the standard business model. Fifteen years or more into the age when most news stories are available to everyone with an Internet connection, we no longer need ever single outlet to produce the same banal story about the political horse race or the latest goings on in Congress.  But I’m not sure the alternative is to have everyone racing to find the next Grumpy Cat or exploding watermelon video.

In the days of media as gatekeepers, it was taken for granted that it was the job of the press to give people the news they needed, not just the news they wanted. But we’re quickly shedding that conceit:

Through real-time analytics, reporters and editors know how many people are reading their work and through which devices and sites, how long those readers are sticking with it, and what they’re ignoring. Screens featuring these analytics are increasingly showing up, prominently, in American newsrooms, including those of The New York Times and The Washington Post.

This is the biggest and least talked about development in traditional print media as it converts to digital: It now has ratings, just as television does.

The findings from these ratings have been fairly consistent. Videos, podcasts, short items of interest that can be read easily on smartphones, and almost anything with the words “Donald Trump” rate well. Perhaps counterintuitively, deeply reported features and investigative pieces like The Times’s coverage of ISIS’ brutality or its nearly 8,000-word article about one man’s lonely death in Queens can draw readership levels that were never possible in the print-only era.

That’s a big deal, and in Mr. VandeHei’s and Mr. Allen’s view — as well as those of the bosses at The Times, The Post and elsewhere — it shows that big, important work will prove more valuable than fun stunts that may or may not draw big online audiences.

What do not necessarily rate well, however, are the (often important if sometimes unsexy) articles about yesterday’s doings — or, nondoings — at the Federal Election Commission, or the latest federal budget fight.

“We didn’t know if, in a newspaper, people were reading our 600-word piece on the transportation markup on A10 — now we do,” Mr. VandeHei said. “I’m not saying you let the audience dictate everything, but a smart, aggressive, forward-leaning media company is going to write what it thinks is important and its audience thinks is important.”

This is talk you hear in newsrooms across the country, and it’s where there is some cause for concern.

Those drier articles may not score in the ratings, but they can lead to the bigger ones. Watergate started as a story about a burglary. The wide-ranging sex abuse scandal in the Catholic Church that The Boston Globe exposed — captured in the movie “Spotlight” — began as a 700-word column about a single priest.

Once ratings come into the picture, will reporters still want to pursue those smaller stories? And will their editors, who once called these stories “spinach,” want to publish them?

The answer from Mr. VandeHei and like-minded news executives is yes, but it’s incumbent upon news organizations to do a better job with them — make them shorter and more distinctive, with data and striking visual presentation.

Ezra Klein and Matt Yglesias have produced something not only entertaining but valuable with Vox, There’s certainly room for more ventures along those lines.  The problem with that business model is that it only works if someone is doing the pick-and-shovel work of gathering the banal data that has formed traditional news coverage. And there’s no money in that.  And, increasingly, there’s no money even in the Voxification of the content. Or, more accurately, the money that’s there is going to Google and Facebook, not Vox—much less the myriad news outlets doing the shoeleather reporting that makes creating the cute listicles and infographics possible.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He earned a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. JKB says:

    but it’s going to the distributors rather than the creators.

    This has always been true. It is just now, the new distributors don’t have to create content as the old distributors think that content creation was their business. But newspapers and television networks all distributed their own content and the content creators (writers) got the lesser portion of pay. The distributor paid for the creation of “news” content so that people would pay a pittance so the distributor had copies sold data to present to advertisers, for the ad content the “media” distributed.

    Note that until it was possible to cheaply copy and redistribute the content sans ads, no one was concerned about the paper being shared on the lunchroom counter or the magazine in the waiting room even though that cut into subscriptions or newsstand sales.

    First the “journalist” should accept that their open hatred of capitalism is likely to see writing move back its to pre-capitalistic nature.

    In the precapitalistic ages writing was an unremunerative art. Blacksmiths and shoemakers could make a living, but authors could not. Writing was a liberal art, a hobby, but not a profession. It was a noble pursuit of wealthy people, of kings, grandees and statesmen, of patricians and other gentlemen of independent means. It was practiced in spare time by bishops and monks, university teachers and soldiers. The penniless man whom an irresistible impulse prompted to write had first to secure some source of revenue other than authorship.

    Mises, Ludwig von (2010-12-23). The Anti-Capitalistic Mentality (LvMI)

    And if they decide they’d like to continue making a living writing, they’ll have to embrace that they must appeal to the customer in a manner better than their competitors, the other journalists. Writing about the same stuff, from the same anti-[American, capitalism, Republican or whatever] viewpoint probably isn’t a good way to differentiate your product from your journalism school buddies.

    Hot debate. What do you think? Thumb up 9 Thumb down 18

  2. Tyrell says:

    Related trends are the news as entertainment where “breaking news” is flashed constantly and it turns out not to be breaking, or news. And a thunderstorm is given live, on the spot coverage for hours.
    And the preferred reading today is fiction: suspense, fantasy, and apocalyptic future novels. Few people are reading non-fiction: history, biography, science, philosophy.
    Combine that with the total decline (collapse is a suitable description) of professional, unbiased news reporting as in print or broadcast. Few people subscribe to magazines or newspapers. I have not subscribed to a magazine in years
    I used to read Time, Newsweek, USA Today, Smithsonian, National Geographic, and Sports Illustrated regularly.
    A real concern will be a decline of informed voters, and well read leaders and business executives.

    Like or Dislike: Thumb up 10 Thumb down 0

  3. Scott says:

    @Tyrell: My question to you is: why have you stopped reading and subscribing? Is it time? Is it cost? Personally, I still subscribe to National Geographic, Discover, Audubon, Texas Monthly. And I still get a newspaper delivered even though I now read it digitally. I do feel the pressure of time these days. There is so much media and info to absorb and still only 24 hours a day. Heck, at work, we joke that we have to quit work just to have the time to binge watch all the TV shows being produced. If I had a wish, it would be to have more time. Or at least the wisdom to use it better.

    BTW, I have the same problem with beer and wine. There are some many brands of beer and bottles of wine to try and so little time. And liver capacity.

    Like or Dislike: Thumb up 2 Thumb down 0

  4. MarkedMan says:

    First – all the readers of these blog comments are probably fairly atypical of the general public, so I’m not sure how much our opinions matter.

    FWIW, I’ve been an early adapater of new media all my life. I was on whatever preceded Usenet (back when you would still see things with DARPAnet and ARPAnet nomenclature on them). Compuserve user’s groups. Early web sites and blogs. So I’m not a technophobe. But I don’t see the utility of Facebook and Twitter. It’s just a constant, relatively unfiltered stream of crappp. If people get their real news from there, then eventually Facebook and Google will have to create it. It just can’t work any other way. You will never get a Spotlight team that is free and happy to let other companies make money off their efforts. The reporters, editors, fact checkers will go on and do something else.

    I pay for the New York Times and am happy to do it. I support my local NPR stations. I have Patreon subscriptions to a couple of podcasts I listen to (“Futility Closet” – very cool, “Jay and Jack’s Lost Podcast” – which tells you both how long this goes back and what a Lost fan I was/is) and would subscribe to more for other podcasts if they asked. I would pay a subscription to The Atlantic and probably will eventually get around to it now that I’m back in the US and realize what a great news and opinion site they are. I would do a Patreon subscription for this blog and a few others. I would be perfectly happy if none of the above were ever on Facebook or Twitter.

    But even for someone like me the question would come up: if all these sites charged for everything and I didn’t already know about them, how would I find them in the first place?

    Like or Dislike: Thumb up 3 Thumb down 0

  5. stonetools says:

    I’ll copy from my comment on a similar post on the Lawyers, Guns & Money blog:

    The sad coda to this post is while there has been much handwringing over the problem, no one has been able to come up with a solution. Maybe for-profit news gathering no longer has a viable business model? If that ‘s the case, then I see no other option than the NPR model( financing through grants and beggathons) or the BBC model (everyone agrees that we should have a functioning press and we pay a tax to support it). I don’t like either of those solutions, but I don’t like having to exercise either, and yet I do it. Anyone have any better ideas?

    No one there had any better ideas, and someone noted that even NPR is struggling(Note to self: I need to bite the bullet and become a sustaining member).

    So something like the BBC/ PBS is where we may eventually end up, for news media.

    Like or Dislike: Thumb up 1 Thumb down 1

  6. Tony W says:

    @JKB: Like health care, the capitalist market is not the ideal structure for journalism. Profit seeking in some industries should take a back seat to Doing The Right Thing.

    Sure, readers are customers, but advertisers are more important customers. Even the old ad-based model for newsprint made clear that promoting business above all else was paramount, lest you cut off the real money. Read any old paper in the archives, you’ll see an editorial bent that is pro business, especially local business, and nearly no criticism of advertisers.

    Back in the day the major news networks maintained a firewall between the executive offices and the newsroom to avoid the appearance of interference. All pretense has long been dismissed in the pursuit of the almighty dollar.

    Like or Dislike: Thumb up 6 Thumb down 3

  7. Tyrell says:

    @Scott: Probably the cost, magazines stacking up, and the availability of Internet sites. I do not watch much tv.

    Like or Dislike: Thumb up 2 Thumb down 0

  8. James Pearce says:

    @JKB:

    First the “journalist” should accept that their open hatred of capitalism is likely to see writing move back its to pre-capitalistic nature.

    Journalism isn’t struggling in 2016 because reporters are insufficiently capitalist. Why would you even believe that?

    If you ask me, the web was way more disruptive than it needed to be. Why did Paypal have to create itself from the ether when we had Mastercard, Visa, and Western Union? Why did web ads have to be obnoxious pop-ups and browser hijackers, making everyone want to get ad-blockers? Why did publishers deliberately choose to protect their ink-and-paper businesses rather than expand their digital businesses? (Seriously, $9.99 for an ebook that can be so easily pirated? If they had the courage to lower the price, they could make two or three dollars rather than NOTHING.)

    Failure to adapt. That’s all.

    Like or Dislike: Thumb up 11 Thumb down 1

  9. JKB says:

    @Tony W: Profit seeking in some industries should take a back seat to Doing The Right Thing.

    However, the main characteristic of “income” in the economic sense is that it is that surplus over a businessman’s costs that may be consumed without reducing capital, i.e., without living at the expense of the future. You cannot consume “income” without deteriorating your opportunities for future production.

    von Mises, Ludwig (2010-12-08). Marxism Unmasked (LvMI)

    No need to make a profit unless there is a desire to improve the business or do maintenance and depreciation. Of course, they could seek out wealthy individuals who are willing to donate their savings to keep the “journalism” going.

    My point was that the news business was never about the news, it was about getting people to pick up or tune in so that advertisers could reach them with ads. The advertisers have better ways to reach customers today.

    Like or Dislike: Thumb up 4 Thumb down 2

  10. gVOR08 says:

    @James Pearce: Saw an article years ago pointing out that if they’d had the imagination, it would be the NYT list, not Craig’s List.

    Like or Dislike: Thumb up 4 Thumb down 0

  11. James Pearce says:

    @gVOR08:

    Saw an article years ago pointing out that if they’d had the imagination, it would be the NYT list, not Craig’s List.

    Ha. That’s a good one.

    One of the reasons the NYT didn’t have the imagination is because they’d choke the life of any NYTList by trying to monetize or control it, even to the extent of making it less useful.

    Here’s a thought to consider: Is it piracy, or DRM, that’s killing the music business?

    Like or Dislike: Thumb up 2 Thumb down 0

  12. DrDaveT says:

    Not only is the revenue being extremely concentrated into a duopoly, but it’s going to the distributors rather than the creators. Neither Google nor Facebook are writing the things we want to read, but they’re making all of the money.

    So, exactly like the music industry?

    If you haven’t been ranting about that for your entire adult life, it must not be the unfairness of the situation that really bothers you.

    Like or Dislike: Thumb up 1 Thumb down 1

  13. Slugger says:

    The news media was an intermediary, an intermediary between me and the raw events. I trusted them. In today’s world I can get direct reports of events like floods and hurricanes directly from regular folks there in the middle of stuff. The polarization of our world has made me narrowly suspicious of the news media. I don’t know if I am better informed than before, but thisis our world.

    Like or Dislike: Thumb up 2 Thumb down 0

  14. mike shupp says:

    I wonder . . . would it be possible to create an “alternate” internet, with very different standards — something ordinary web browsers couldn’t access, something that was available only to paying customers, something with a very high degree of prestige and oriented towards policy wonks and college graduates?

    Can we create an internet equivalent of the technical journals and “little magazines” that were part of our culture 30 years or so ago?

    Like or Dislike: Thumb up 0 Thumb down 0

  15. Jenos Idanian says:

    People like free stuff.

    They don’t understand that nothing is free. The question is, who is paying for it? There are a ton of answers.

    If it’s something that’s being pirated, then the original creators are paying — and losing their incentive to go on creating. So kiss off future things to pirate.

    If you’re not paying in dollars, you’re paying in something else.

    “If you’re not paying for the product, then you are the product.” (See Facebook for the best example for that one.)

    “Things that can’t go on forever, won’t. Debt that can’t be repaid, won’t be. Promises that can’t be kept, won’t be.”

    This has been coming for some time.

    Like or Dislike: Thumb up 2 Thumb down 0

  16. mike shupp says:

    @Jenos Idanian:

    Yeah, mostly people like free stuff. Still, there are people who happily buy Lamborginis and Maseratis and Shelby Mustangs because Porsches are just too plebian. There are people who pay a hundred grand or more for Japanese toilets because their sensitive butts need coddling. There are people who pay a million bucks to get a rock star to sing at their kid’s christening or Bat Mitzvah because you got to mark the occasion, right? And so on.

    Maybe a high prestige, expensive internet could exist — and pay the bills for the reporters and editors and analysts who would generate the content.

    Like or Dislike: Thumb up 2 Thumb down 1

  17. Pch101 says:

    @mike shupp:

    You won’t have much luck downloading a free Lambo or getting a friend to copy one for you.

    The internet creates a double whammy for content providers: It turns content into a cheap commodity, and it makes it easy to steal view unique content without paying for it. Investigative journalism is generally not going to be something that can be turned into a profit center; it wasn’t ever really profitable even during the supposed good ol’ days when the news divisions would lose money and it was the other content that would keep the lights on.

    Like or Dislike: Thumb up 5 Thumb down 0

  18. Jenos Idanian says:

    @mike shupp: The people who will pay for this prestige internet — what should we call them? I have a few suggestions:

    Genies

    Angels

    Unicorns

    Fairies

    (Insert your preferred mythical force of salvation here)

    What needs to happen is good old-fashioned capitalism. What we have now is the end result of socialism — “From each according to their ability, to each according to their need.” But “need” has been changed to “want,” and too many people have convinced themselves that if they want something bad enough, then they deserve it. And if it belongs to someone else, too damned bad.

    Even worse, the providers are seen as obligated to keep providing their content for free. Because people demand it.

    One success story is the Wall Street Journal. They take a hard line about giving away their content, and they are still doing OK.

    Like or Dislike: Thumb up 1 Thumb down 6

  19. bill says:

    @mike shupp: people with money probably do pay for online newspapers- i mean really, what’s $10/month to them, even if they forget they even have it? granted, there’s not enough to support these dying rags- kinda sad but technology prevails.
    people like me gave up on “print” long ago- mainly for environmental reasons but then i never subscribed to anything online either- free news is abundant if not all that polished.
    i have a bunch of college kids working for me, when they say they’re majoring in “journalism” i just try not to laugh…….and the loans they’ll have to pay for that semi-worthless sheepskin……

    Like or Dislike: Thumb up 0 Thumb down 3

  20. James Pearce says:

    @Jenos Idanian:

    What needs to happen is good old-fashioned capitalism.

    Again with this nonsense? “The steady decline of news” is exactly what a capitalist would expect from a business that is no longer generating much capital. Smaller returns means less investment, and less investment leads to degradation of the whole sector.

    From the post:

    Or, more accurately, the money that’s there is going to Google and Facebook, not Vox

    See, the capital still flows. To capitalist enterprises. (Just not the ones who generate the news.)

    So maybe the problem isn’t a lack of “old-fashioned capitalism” after all.

    Like or Dislike: Thumb up 6 Thumb down 2

  21. Grumpy Realist says:

    One of my business partners was an international radio reporter for UPI for years and years and years. He saw the handwriting on the wall 15 years ago and fled. And now we don’t want news any more anyway–we want to be entertained instead.

    When I get the money together again am going for a subscription to the Financial Times.

    Like or Dislike: Thumb up 3 Thumb down 1

  22. James Joyner says:

    @DrDaveT: Musicians and songwriters still make a lot of money from their work. The rise of Napster and other “sharing” services disrupted the old business model but, eventually, the industry figured out how to make streaming and downloading work for them. Moreover, the records themselves became a marketing scheme to get people to buy concert tickets, which became the real moneymaker, rather than the reverse.

    There hasn’t really been a similar revolution in media. To be sure, a handful of top brands have managed to cut out the middleman and sell their product directly. But most are going under.

    Like or Dislike: Thumb up 2 Thumb down 2

  23. JWh says:

    One of the issues is that it’s tougher for one part of the paper to subsidize the other. Used to be that a person bought the paper for sports, or for the horoscope, or the funny pages. But he bought the whole damn paper. These days, you can grab your sports, horoscope, etc., from other places and not finance the 600-word process write-up on page A10.

    Like or Dislike: Thumb up 2 Thumb down 0

  24. Pch101 says:

    @James Joyner:

    Take a look at this chart:

    https://qzprod.files.wordpress.com/2015/04/global_recorded_music_industry_revenue_-_adjusted_for_inflation_revenue_inflation_adjusted_chartbuilder-1.png?w=640

    The music industry is getting clobbered, and its “adaptation” strategy has consisted largely of suing for infringement whenever possible. They aren’t happy about it, and not many among them have benefited from the internet age.

    Like or Dislike: Thumb up 2 Thumb down 0

  25. James Pearce says:

    @Pch101:

    The music industry is getting clobbered, and its “adaptation” strategy has consisted largely of suing for infringement whenever possible.

    Suing for infringement is so 2008. The big problem in 2016, the reason why the music industry is getting clobbered now, is that in their zeal for control and money, they’re reluctant to sell digital files without DRM and, if forced to do so by consumer demand, they think they can extract a premium for it.

    What they’d really like to do is rent music to you, via streaming or some other method, but they have not yet accepted the fact that renting music versus selling it means they are going to be making less money.

    The costs of producing and distributing recorded music has been reduced to almost nothing, and yet they expect the public to pay the same prices as when they had to ship and warehouse a physical product? No wonder they’re getting clobbered…

    They’d rather make $5 off 10,000 people rather than $1 off a million, and it’s like, do the fricking math.

    Like or Dislike: Thumb up 3 Thumb down 1

  26. Pch101 says:

    @James Pearce:

    The costs of producing and distributing recorded music has been reduced to almost nothing

    If that was true, then Max Martin wouldn’t have a net worth of $200+ million.

    You’re focusing on the wrong areas. The costs of the business come from crafting the product so that it is marketable and then marketing it so that the public knows about it and wants to own it.

    But these days, that effort usually yields a couple of singles instead of album sales. Combine that with people taking content for free by other means, and the product ends up being far less lucrative: fewer units are moved, and the units that are moved cost far less.

    You can get plenty of free music legitimately from unsigned artists via Soundcloud, Reverb Nation, YouTube, etc., but (a) you would have to know about it and (b) want it. The vast majority of those artists are unsigned for a reason.

    Like or Dislike: Thumb up 5 Thumb down 0

  27. Pch101 says:

    It might help you to read this 1995 article about the music business:
    _________

    The really big costs of CD’s derive from marketing, promotion, artists’ fees, royalties and, often, an arbitrary markup representing a calculated guess at what the market will bear…

    …Setting prices “is very arbitrary,” said a top executive at a major label, who described his company’s pricing policies only on condition of anonymity. “We’re trying to raise CD prices,” he said. “The reason for this is that our costs are escalating in such a marginal way, everything from marketing to promoting to signing bands. It costs $400,000 to $600,000 to sign a band. The first video costs a minimum of $50,000. Touring is more expensive, and people’s salaries are a lot higher. Our profit margins are being squeezed.

    “It’s a very speculative business that we’re in. If a label can break one new band a year, they’re having a good year. The first 300,000 to 500,000 copies a record label sells of most CD’s don’t make money. That’s 80 percent of all records that don’t make money; the other 20 percent have to pay for the 80 percent.”

    http://www.nytimes.com/1995/07/05/arts/pennies-that-add-up-to-16.98-why-cd-s-cost-so-much.html

    Like or Dislike: Thumb up 1 Thumb down 0

  28. Steve V says:

    @James Joyner: Reiterating PCH101’s response, the music industry example sadly isn’t a good one. I saw an industry document that said it takes millions of plays in streaming to make even a small amount of money. Touring is what pays now, thus the rise of the 360 deal.

    Like or Dislike: Thumb up 2 Thumb down 0

  29. steve s says:

    @gVOR08: CraigsList’s revenue could probably run the NYT’s staff for a week and a half if you really stretched it.

    Like or Dislike: Thumb up 0 Thumb down 1

  30. James Pearce says:

    @Pch101:

    If that was true, then Max Martin wouldn’t have a net worth of $200+ million.

    It’s true regardless of Max Martin’s net worth.

    You can record a professional quality record with an off-the-shelf laptop using off-the-shelf software. You can distribute your professional quality album without spending a single cent on shipping costs, pressing, printing, etc.

    You will probably not become Max Martin, but your recording will sound the same as something coming out of a pro studio.

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  31. Pch101 says:

    @James Pearce:

    You didn’t bother to read the NYT article, I see.

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  32. James Pearce says:

    @Pch101: I’m sorry. I did not read the 20 year old article that describes today’s music business not at all.

    This doesn’t make me wrong.

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  33. Pch101 says:

    @James Pearce:

    The physical product was not a major expense item in the first place, so your claims regarding the alleged benefits of reducing those costs have no basis in reality since that was never the issue.

    What is more problematic for labels is finding talent that will sell enough units to make money, combined with the growing difficulty of monetizing those artists (they usually move fewer units, and the units that are moved are cheaper.)

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  34. James Pearce says:

    @Pch101:

    The physical product was not a major expense item in the first place, so your claims regarding the alleged benefits of reducing those costs have no basis in reality since that was never the issue.

    Well, first of all, don’t believe a record company’s claims about what is and what is not a major expense item. And yes, the cost of the “physical product” is not a major expense, but go book some studio time and then try to tell me that isn’t a major expense.

    What is more problematic for labels is finding talent that will sell enough units to make money, combined with the growing difficulty of monetizing those artists

    A&R has been “problematic” since the dawn of the music business, so this explanation is insufficient.

    You should try and explain to me why moving 20,000 units in 2016 is a BIG DEAL, when doing the same in 1995 would have been met with a shrug.

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  35. Pch101 says:

    I’ve already explained the issues. The costs of development and promotion remain high, while the expected revenue has fallen.

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  36. James Pearce says:

    @Pch101:

    I’ve already explained the issues.

    Yeah, well…this isn’t the first time I’ve found your explanations wanting.

    The costs of development and promotion remain high

    Not really, no. As I have already explained many of these costs have been eliminated and some of the others have been reduced.

    You should understand why they were high in the past, though, and it has to do with the fact that those costs were all recouped. Do you know what that means?

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  37. Pch101 says:

    Your thesis was wrong, I’ve demonstrated that it was wrong, and you’re hanging onto it for dear life even though it has no merit. Not surprising, and even less worthy of continued discussion.

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  38. MarkedMan says:

    I’m a big fan of Canadian independent music and there used to be a weekly podcast from CBC Radio 3 that featured a “Tales from the Road” type of feature where musicians would describe vignettes from the life of a touring band. One such has always stuck with me. It was from a band that, at least in the Canadian independent music scene, would be considered enduring and successful. And they talked about just how difficult it had become financially. These are bands that play bars, music clubs and the occasional festival that might have dozens, low hundreds, and maybe a thousand paying fans, respectively. These aren’t Bruce Springsteen or even Lourde, but those guys essentially WERE these bands at their start.

    The bars might kick in $50-75, and maybe some beer, big cities paid a bit more but there are a lot of small towns on the way to big cities. The clubs might be twice that. And the festivals were few and far between but everyone but the headliners made hundreds of dollars, not thousands. Up until the Napster years they had made most of their money by setting up a table and selling merch and CD’s, with the CD’s counting for the bulk of their income. But as torrent sites became the norm, the CD revenue would dry up. When the guy came into the studio to tell this story, he had just finished up a tour. They released a new CD on the day the tour started and they had really good sales. The next night, zero. When the woman at the table saw a guy thumbing through the CD’s she asked him if there were any he didn’t have. But he had them all – from torrents. She held up the one that literally hadn’t existed until 24 hours previously. Nope. He already had it. And obviously so had everyone else in the place. Who, by the way, were their fans. They were the ones who already knew them and had come out special to see.

    Expenses? Gas, a beat up van, shared hotel rooms, fast food and coffee. The admittedly small investment in making the CD’s. Insurance. They had an agent (most don’t) so that person got a cut.

    I don’t know the answer, but it is obvious that recording music that brings in no revenue is not viable for small vans. Bands can live like semi homeless vagabonds for only so long before they lose the members who want to have a serious relationship, or a good nights sleep, or a decent meal. There is no longer a viable business model for any but the most insanely successful.

    My guess? Eventually we’ll get back to the concept of a house band where they play twice a week at one club and another day or two at another down the road. They will also emcee and back up the occasional guest. And we already have bought back talent shows (American Idol and such) where the lucky few can skip the grinding exhaustion of paying your dues and go right to a deal that actually pays a few dollars.

    But Spotify is a joke when it comes to the small guys.

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  39. James Pearce says:

    @Pch101:

    Your thesis was wrong,

    It may be, but don’t think you’ve demonstrated it’s wrong by citing a NYT article from 1995 that says “It costs at least $50,000 to make a video.”

    even less worthy of continued discussion.

    Yeah, well….The guy with the most reasonable argument wins. If its frustrating to you that your arguments are not persuasive to a reasonable person, don’t quit.

    Work harder.

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  40. DrDaveT says:

    @James Joyner:

    Musicians and songwriters still make a lot of money from their work.

    So do media. The problem is not the aggregate profitability; it’s the Gini curve.

    A handful of musicians and songwriters make a lot of money. The vast majority of them make essentially nothing. This is not because of supply and demand, but because of the deliberate market failure induced by the distributors. The last thing in the world that the record companies want is for people to be aware of the musicians who are out there.

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  41. Pch101 says:

    @James Pearce:

    The largest expense components of the music industry (sourcing and promoting artists, most of whom produce no profit) haven’t gotten any cheaper.

    Meanwhile, the revenues have been cut in half.

    I’m not sure how much clearer that this needs to be.

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  42. James Pearce says:

    @Pch101:

    The largest expense components of the music industry (sourcing and promoting artists, most of whom produce no profit) haven’t gotten any cheaper.

    Not to be rude, but you know this from reading an article from 1995. You don’t seem to have much understanding of the music biz in 2016.

    That, not your clarity, is the issue here.

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  43. James Pearce says:

    Also wanted to comment on something that MarkedMan said:

    “There is no longer a viable business model for any but the most insanely successful.”

    This, I think is not true.

    In Fight Club, Brad Pitt says, “We’ve all been raised on television to believe that one day we’d all be millionaires, and movie gods, and rock stars. But we won’t.”

    We’re so used to thinking of professional musicians as rich and famous, as rock stars. But maybe we should think of playing music professionally as just another job, and perhaps not even a good one.

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  44. Pch101 says:

    You made a claim about the cost structure of the record business in comparison to how it used to be.

    So fine, I provided an example of how it used to be, and it turns out that you’re wrong. But I can see that you’re impossible to educate, so there’s no point in continuing.

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  45. Bill says:

    @James Pearce:

    Seriously, $9.99 for an ebook that can be so easily pirated?

    Are you sure they are being pirated? I’m the author of 14 ebooks and have contributed a couple of posts at OTB. Some of my ebooks can be supposedly be gotten for free at websites. These websites do one or two things-

    1- You download the file of a story and its gibberish and your computer suddenly has malware or a virus on it.

    2- The website asks for credit card or bank information before you get the story. Now why would they do that if the book is free? It is a phishing scheme.

    Websites with pirated books are really something else entirely and I am not losing sleep over it. BTW my ebooks are selling well enough that I formed a S corporation.

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  46. TheoNott says:

    The endpoint of this trend is publicly-funded journalism. Journalism is a public good just like basic science and the arts. From an economic perspective, it would be more efficient for publicly-funded journalists to just distribute content for free than try to squeeze revenue out of consumers in whatever way they can come up with, which isn’t working anyway. The public has decided that it doesn’t want to pay for content, and it won’t. The old business model is dead, if we as a society won’t take this step, we will have a far sparser content environment in the future.

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  47. James Pearce says:

    @Pch101:

    But I can see that you’re impossible to educate, so there’s no point in continuing.

    For one, the idea that you’re going to educate me is completely ludicrous. At what point did I give you the impression that I needed your tutoring? You can think I’m wrong, obstinate, stubborn or an asshole. I’ve been all of those things at one time or another.

    But don’t think I’m your student.

    2: You would probably be a better debater IF you didn’t think of yourself as an educator. As you can see, I already have formed a viewpoint on this subject (and many of the others we have debated) and I did it without your help. I’m reasonable enough that my viewpoint can be changed…if presented with a good argument.

    That’s what you need to do. Forget about “educating” me.

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  48. Pch101 says:

    Forget about “educating” me.

    Agreed. Can’t teach a pig to sing, etc.

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  49. James Pearce says:

    @Bill:

    Are you sure they are being pirated?

    Depends on the book. Not every ebook will be pirated. But every ebook can be pirated. With ease and for little cost. (And not necessarily on a “website.”)

    BTW my ebooks are selling well enough that I formed a S corporation.

    I am genuinely glad to hear it. Are your books self-published by chance?

    Just curious if you think you’d get a better deal (make more $$, get more exposure, etc) from a traditional publisher than you would on your own.

    I’ve heard a lot of stuff from musicians and writers (mostly on podcasts, I admit) about how they ask themselves what a publisher or a record company can do for them these days, and are hard-pressed to come up with an answer.

    @Pch101:

    Can’t teach a pig to sing

    Insulted, and yet still not persuaded. Wah wah wah.

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  50. Just 'nutha ig'rant cracker says:

    @James Pearce:

    We’re so used to thinking of professional musicians as rich and famous, as rock stars. But maybe we should think of playing music professionally as just another job, and perhaps not even a good one.

    This! And is has always been that way as far as I can see. And I do have a little experience, having graduated university with a degree in music and knowing quite a few people who work, or have worked in the past as performers. (I discovered that I didn’t like living out of a suitcase while I was still in college–and professors at my school had advised me to go on to conservatory to train for a career as a performer.)

    There’s a reason for the saying “don’t give up your day job.”

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  51. MBunge says:

    @James Pearce: But maybe we should think of playing music professionally as just another job, and perhaps not even a good one.

    Who doesn’t understand that most people who play music don’t get rich at it? Same with most writers, actors, artists, etc.

    The difference is that those folks used to not make money because not enough people wanted their music, books, plays, art, etc. Now the issue is people who think they are entitled to experience their work without paying for it.

    Mike

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  52. MarkedMan says:

    @James Pearce:

    But maybe we should think of playing music professionally as just another job, and perhaps not even a good one.

    This is just a supposition, but I imagine that before easily distributed recorded music, being a musician was a regular job. If a hotel lobby or a club or a reception wanted music, they hired a local band. Those band members could have a family, and if they wanted to attend a school play, could get a friend to sub in for a night. And that band was more likely than not to play covers, not original music. I don’t think we will get all the way back to that, but it already seems that we are splitting into two worlds: the young indies who are willing to hit the road for the fame and glory, and put up with bad food and “showering” with moist towelettes in a bar bathroom. And the hyper-crafted professional pop that the real music industry can create and promote. There may be talent shows that bridge a few souls from the first world to the second, and that may keep a few dreams alive. The rest will be wedding bands, house bands and event bands, mostly local.

    I’m not saying this is necessarily bad. Just different.

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  53. James Pearce says:

    @MBunge:

    Now the issue is people who think they are entitled to experience their work without paying for it.

    Not really. The issue is that the experience of paying for music has changed. Instead of buying albums in a record store, we subscribe to various services -Amazon Prime, say- or our T-Mobile account, that allows us to access music “without paying for it.”

    Artists put their music up on Youtube to see and listen to for “free,” because if they didn’t some pirate would, sure, but also to collect the ad revenue people watching it generates.

    You want a “hit” record in 2016? Sell it to a commercial or TV show. You get the licensing revenue and maybe some people will buy your album and maybe some will go see your show.

    The market has changed. It’s not about selling records anymore.

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  54. grumpy realist says:

    @James Pearce: Publishing houses used to act as the gatekeepers. They were the ones who could see the gem of a good story in what had been submitted, and hold an axe over the author until he fixed the story/edited the story/told the story from a different perspective/whatever.

    If you want to see what happens when you take the gatekeeper away, look at Amazon’s self-publishing. There’s a reason why so many e-books are up there with a price of zero–we’re now grubbing through what used to be called the slush pile. And yeah, the level of quality is what you sort of expect.

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  55. Pch101 says:

    It has become extremely cheap to record and distribute music that virtually no one will hear or want to hear.

    It remains costly to get consumers to hear and want the music enough to pay for it, but even then, those consumers are less lucrative than they used to be.

    When your industry loses half of its revenue, there is no amount of cost cutting that can possibly come close to making up for that. The math just doesn’t work.

    For artists who can’t draw large audiences and fill venues, touring is an expense, not a profit center. Touring is a great source of revenue for a major act; for some no-name, not so much. Smaller acts use touring to build their brands, not to make a killing.

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  56. James Pearce says:

    @grumpy realist:

    There’s a reason why so many e-books are up there with a price of zero–we’re now grubbing through what used to be called the slush pile. And yeah, the level of quality is what you sort of expect.

    Yes, I would agree that the slush pile is very public now.

    All that means is that things must first go viral before a publisher/record company will get interested. Look at Justin Bieber. Look at E.L. James.

    I don’t think we’re talking about a scenario where the “gatekeepers” nurture talent at great expense anymore. I mean, I’m sure that still happens.

    But it’s just as likely that the “gatekeepers” have stopped manning the gates and instead are waiting to pick the pockets of the tallest and prettiest of barbarians. So to speak.

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  57. john430 says:

    Not mentioned is the fact that half of the USA bills itself as conservative while “journalists” appear to be mainly liberal, Democrat supporters, if not downright operatives of same. We conservatives closed our pocketbooks to left-wing journalism a long time ago.

    Some here advocate “publicly funded” media content. Why would we support additional left wing claptrap like NPR? I doubt we would turn to the six-o’clock news brought to you by “Your regional Democrat Party.”

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  58. James Pearce says:

    @Pch101:

    For artists who can’t draw large audiences and fill venues, touring is an expense, not a profit center.

    If you can’t draw large audiences or fill venues, why would you expect to make a profit?

    Let’s just say this. The music lover who quit buying CDs because they’re now paying for an AmazonPrime subscription isn’t “entitled.”

    But the artist who think they can make money despite not being able to draw an audience most definitely is.

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  59. steve s says:

    Some here advocate “publicly funded” media content. Why would we support additional left wing claptrap like NPR? I doubt we would turn to the six-o’clock news brought to you by “Your regional Democrat Party.”

    A big part of how the GOP is so FUBAR at this very moment is you guys deciding, a few years ago, to only listen to yourselves, and hide from reality.

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  60. grumpy realist says:

    @James Pearce: what you’re saying is we’ve turned into a “pull society” rather than a “push society”. The gatekeepers used to decide What People Should Read (sometimes LitterachUUUR) and now they simply “pull”–skim off what gets talked about most.

    I think Melissa Scott wrote a SF novel about this–Jazz. Will need to dig it up again.

    The main disadvantage is we end up with trash like “50 Shades of Grey” (which luckily seems to have dropped from sight now that all the bored housewives wanting the frisson of reading something “naughty” have all finished it.)

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  61. Pch101 says:

    @steve s:

    In the wacky world of hard right politics, stories that don’t overtly editorialize with a right-wing slant are “biased.”

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  62. Rafer Janders says:

    @Pch101:

    For artists who can’t draw large audiences and fill venues, touring is an expense, not a profit center. Touring is a great source of revenue for a major act; for some no-name, not so much. Smaller acts use touring to build their brands, not to make a killing.

    Also, touring only works for a very limited subset of musicians, i.e. those that can attract crowds to live shows, which generally tend to be rock, hip-hop, or similar. It doesn’t do much for you if you’re a composer or lyricist, or are something like a string quartet, opera singer, or similar act that doesn’t lend itself to touring late-night clubs or festivals.

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  63. Pch101 says:

    @Rafer Janders:

    You might enjoy “Rock God”, a documentary about singer-songwriter Peter Himmelman who appeared to be on an upward trajectory in his youth and should have had a breakout hit, but who never quite hit the big time.

    It shows him as a 40-something on a shoestring tour, playing small clubs and losing money in the process, looking at his career with self-deprecating humor as he wonders where his next paycheck is going to come from. (While on tour, the network TV show that he was scoring was cancelled.) Guys like him have certainly not benefited from the digital age.

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  64. john430 says:

    @steve s: Yuk, Yuk. Diversity of opinion is only allowed if everyone agrees with you. America’s foreign policy is in disarray, race relations have been set back 20 years under this administration and Obamacare is turning out to be a disaster, but go on believing everything is all right.

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  65. Pch101 says:

    @john430:

    The fact that you aren’t content unless a particular type of OPINION is included with what is supposed to be NEWS only proves Steve’s point and undermines yours.

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  66. john430 says:

    @Pch101 Hardly proves your point you mean. The NYT, et al. regularly mixes fact with opinion so to the uninitiated, (like you) it appears to be reasoned fact.

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