Journalists Are News Companies’ Most Valuable Asset

Journalists are news companies’ most valuable assets.

That’s what Mike Arrington asserts, and I think he’s right (disregard the “failing old media” rhetoric):

And earlier today I got a glimpse at what AOL is up to – they are hiring all the journalists being fired and laid off by the newspapers and magazines. And they now have a news room 1,500 journalists and editors strong. Amazingly, failing old media is throwing away their most valuable assets. And AOL is eagerly picking those assets up for a song. Before anyone knows it, AOL may be the most powerful news outlet in the world.

Given that NYT has gone to great lengths to avoid newsroom layoffs, I suspect they know full well how valuable their journalists are.

Mike Arrington is TechCrunch’s most valuable asset, for his personal brand and for the quality of the posts he writes.

As Arrington points out, AOL CEO Tim Armstrong has also realized how valuable journalists are, and is aligning AOL’s new strategy with cornering the market for journalist talent.

But is Arrington right that media companies are blithely throwing away their most valuable asset? Why did newspapers make so many newsroom cuts on their path back to profitability? Is it because they don’t recognize the value of their journalists?

I think it’s because they are still wrestling with the declining value of their other major asset: industrial printing and distribution capacity, i.e. printing presses and delivery trucks and all their industrial staff. While some newspapers have made significant cuts to their industrial operation by not delivering or publishing everyday (and a few have taken the extreme step of ending their industrial operation entirely), most have protected this asset because it is not really variable — it’s mostly all or nothing.

But to say that the value of industrial printing and distribution capacity is declining is not to say it has no value — it of course still generates most of newspaper company revenues. But the decline, while exacerbated to a large degree by the recession, is still secular long-term. (And newspaper companies are surely using the breathing room they achieved through cost reduction-driven profitability to figure out their long-term strategies — and they are focused on digital.)

AOL, in contrast, has no industrial assets, so has the latitude to invest in journalists. They also have another huge asset that newspapers enjoyed in their geographic distribution areas that they entirely lack on the web: SCALE

A notable illustration of the shifting value of news company assets that sits between AOL and most newspaper companies is Politico.

Politico rose to prominence by showcasing its high profile journalists on its website.

Unlike most news sites, Politico has real profile pages for its journalists and showcases their bylines on every story (even the lead homepage story):

This doesn’t mean, however, that Politico derives no value from industrial printing and distribution. In fact, half of their $15 million in annual revenue comes from a print edition published three days a week when Congress is in session, and once a week otherwise (via Vanity Fair).

But Politico doesn’t own any printing presses or delivery trucks, i.e. no industrial assets. And the print publication is largely the product of content produced first for the web — and it is very much a “nichepaper,” i.e. it targets the highly valuable audience of Capitol Hill staffers and members of Congress.

The result is that Politico is able to invest in a talented newsroom staff of 100, paying nearly as much as The Washington Post. And Politico is profitable.

But does focusing on journalists as news companies’ most valuable asset mean that news companies should be exclusively in the content production business? That’s a significant shift from the industrial printing and distribution business.

In the digital media world, companies like Google (GOOG) and Apple (AAPL) have taken over, as Columbia J School Dean and former WSJ.com managing editor Bill Grueskin put it, the “profitable front end of the distribution chain,” leaving news companies with the much less profitable back end of the value chain (i.e. content creation).

But what if journalists could also be the key to news companies getting back into the distribution business, in digital media?

The greatest asset of Google, the most successful content distribution business on the web, is its ability to harness the judgment of every person who creates a hyperlink on the web, and to know which links from which sites represent more trusted judgment.

News companies still employ in their newsrooms arguably the greatest collective source of news judgment.

So how can news companies leverage the asset of their journalists’ news judgment?

Hint #1: Collaboration

Hint #2: Scale

News companies are notably trying to figure out how to get into the business of charging for content on the web. As Apple’s iTunes demonstrated, the key to charging for content is in effective and highly convenient packaging.

Could journalists be the key to not only creating the content but also packaging it?

Think about that for a while. More in another post.

Comments

[pftittl:]

Good column. Yesterday the Orange County Register announced it was outsourcing printing and distribution of its product to the Los Angeles Times! Lots of employees will be cut loose there.

Jul 31 08:09 AM

[shootpar2001:]

Sorry!!!!
I do not see it; valuable assets?
A journalist regurgitates information; when I crash my car into something and they come some time later and report about it and that it tied up traffic for two hours......where is the value?
I could state example after example; in today's instant world a journalist adding their two-cents or 'spin' is not adding value.
That accident generated five 911 calls, three cell phone pictues and numerous tweets; my own navigation system was alerted before the journalist had an idea.
It is not news that I had a bad day or my child was screaming or whatever; any and all third person, fourth person, etc. is old and many times distorted and thus irrelevant.
As information becomes more accessible and mobile; a journalist with their opinion or prospective are just less and less relevant!!!!

Jul 31 09:31 AM

[djj420:]

Web content wants to be free. But after google has bled all the ad money from the newspapers, they'll have to hire many of the writers and editors who the newspapers can't pay anymore. As for the people running the presses and delivering papers- they are dinosaurs. They're the buggy-whip manufacturers of the 21st century.

Jul 31 09:35 AM

[speeddaimon:]

"Journalists are news companies’ most valuable assets"

Uh, no shit. Thats like saying Doctors are the most important asset of healthcare. The problem with the news industry is that the value of their reporting has declined at a steady rate, which I think has to do with the proliferation of news networks and 24 hours news cycles. Suddenly everything is breaking news. Lindsay Lohan, Britney Spears, Amy Winehouse, Michael Jackson. You think the older, staid, actual journalists would have been caught dead giving this any airtime at all? Hell no.

But now we have this crap as headline news on CNN, we have people who claim to be journalists throwing softball questions at the perpetrators (govt) of this economic crisis so they can be part of the in-crowd. The problem isn't that people only want to get their news online, its the the general quality of the news as reported by newspapers and television is lacking in depth, integrity, and value.

Look at ZeroHedge, they provide real news, real investigations, and work on behalf of the people, unlike "journalists" on TV or newspapers that do the least amount of legwork possible in order to make a paycheck. How many news stories have been retracted or corrected because of incomplete or incorrect information. Anybody remember George Bush's supposed Reserve documents Dan Rather?

Jul 31 11:21 AM

[Boxed Merlot:]

<… “News companies still employ in their newsrooms arguably the greatest collective source of news judgment.”...

Though I may possess an ethical or moral desire / propensity to be truthful in my life / speech / writing, this unfortunately, will not protect me from being deceived myself. In addition, it appears to me that deceit is probably more effective in the editorial process of omission nowadays than ever before. This disregard or even trivialization of pertinent facts that may not support a presupposed course of action or favored interest continue to foster distrust in many otherwise eloquent journalistic endeavors. One thing I appreciate about SA articles is the voluntary disclosure most contributors include when writing about their particular field of expertise. Though this by no means will prevent deceit, it tends to allow one to properly assign value to the points of view being presented.
______________________...

<… “So how can news companies leverage the asset of their journalists’ news judgment?”

How about by disclosing any benefit being received or hoped for by the presentation of the work.

Jul 31 12:41 PM

[bcncv:]

Yes and no. I would rephrase that QUALITY journalists are the best asset. One quality journalist is worth twenty less capable ones.

Too many papers (SF Chronicle comes to mind) have been busy replacing quality journalism with college hires and interns.

Jul 31 01:43 PM