Have you heard the news? Janet's pregnant!
There's a reason that the first thing you see when you log into Facebook (NASDAQ:FB) - the product around which everything else on Facebook revolves - is called the News Feed. And yet, only a relatively small proportion of what you see in your News Feed can really be considered journalism.
It is almost impossible to exaggerate the degree to which Facebook has changed the news business. For centuries, news has been based on a broadcasting paradigm: a small group of journalists creates a product - a self-contained news bundle - which is then consumed by a very large group of viewers or readers or listeners. Various different bundles competed for your attention: you might get your news from the New York Times, or the Economist, or NPR, or the NBC Nightly News, or Newsweek, or any of a thousand other outlets. In any case, the atomic unit of news, from the consumer's perspective, was the bundle, not the story. Any given individual would get her news from only a handful of outlets in any given week - quite frequently, only one or two.
The result was a mentality perfectly summed up in the New York Times (NYSE:NYT) slogan of "all the news that's fit to print." News outlets could not assume that their readers were getting any news elsewhere, so they had to aspire to being comprehensive. They also had to appeal to a very broad audience: every story in a prime-time newscast, for instance, had to be understood by nearly everybody watching it.
Finally, the news had to be new. If you published a story yesterday, you couldn't republish the same story today. The news was therefore incremental: the bundle informed you of how the world had changed in the past day or week. The daily bundles were therefore at their best covering events which happened over the course of a single day, and the weekly bundles were best at covering bigger events which happened over the course of a single week. Longer-duration stories were harder to cover - wars, for instance, or the civil rights movement. On the one hand, you didn't want to bore your readers with old news; on the other hand, you didn't want to assume that they knew everything that had previously been reported on the subject. It was a hard line to walk. In general, the more heavily-covered the story, the more that the public would be forced to piece together the big picture from a long series of incremental developments. If you hadn't been following the story from the beginning, you would feel a bit like someone starting a TV series on season 3, episode 5.
In the early days of the web, these constraints were not serious handicaps. The web wasn't (yet) replacing the old bundles as the main place where people got their news. And, in any case, the portals were recreating the bundle strategy of trying to be all things to all people. But then the dot-com bust arrived, and in its wake the web became atomized. Where once there were portals, now there was search - along with a new phenomenon called blogs.
Search and blogs, between them, helped to usher in a huge change in how we consume news, and turned the atomic unit of news from the bundle to the story. New outlets, like the Huffington Post, still aspired to bundle the news, but the bundling was no longer the top priority. Instead, such sites put enormous amounts of effort into ensuring that their stories - on an individual level - would get lots of traffic from Google (NASDAQ:GOOG). Later, outfits like Demand Media (NYSE:DMD) gave up on the bundle idea entirely, and just tried to manufacture the kind of stories that people were searching for. And all the while, blogs were acting as rebundlers, linking to the best content from all over the web. The special value of the bundle - the whole point of a news product, and something only a major media company could ever put together - was starting to die. Simultaneously, the value of the individual story, which might attract hundreds or even thousands of inbound links, started to rise substantially.
The rise of the blogs also meant the erosion of what Ezra Klein calls "the constraint of newness." Some blogs, especially in the tech space, competed hard on speed. But almost all of them found a huge audience of people who wanted them to take content which had already been published elsewhere, and then republish it in their own voice, on their own site. A punchier headline here, a snarkier take there; often the copy proved more popular than the original.
With this change, the economics of the news business started shifting dramatically. Before, the locus of value creation was fundamentally corporate: only big media companies could hire hundreds of journalists and put their work together into a comprehensive and valuable bundle. But online, bundling is cheap. Any blogger can start finding and linking to the best content out there, and many did. The real value, now, started being pushed down a couple of levels, to the individuals who were writing the content which would garner those all-important inbound links. What's more, as we saw in part 2 of this series, those individuals tend to command more reader loyalty than their corporate owners do.
It was never going to be easy for legacy media companies to adjust to these new realities. But then came social, which accelerated everything, and sent the whole news ecosystem spiraling out of the old publishers' control.
The main reason why the blogosphere never managed to overtake legacy media was the fact that it required quite a lot of work on the part of readers, who had to put significant effort into seeking out the blogs, or the set of blogs, which best reflected their own interests. The most avid news consumers would do that work, and be well rewarded for doing so. But most people aren't particularly avid news consumers, and so they never bothered.
Similarly, the "daily me" products which were occasionally launched by big media companies tended to need a lot of laborious personalization effort up front in return for dubious benefits down the road. Even if you went to the trouble of customizing one of these sites so that it would deliver personalized content, you'd still end up being served only material produced by a single media company. After many years of trying, only one personalization product got any mass traction at all, and eventually that one too - iGoogle - got killed.
But then social media arrived. Twitter (NYSE:TWTR) and Facebook take a very basic bloggy format - the reverse-chronological news feed - and serve it up in as many different flavors as they have users. Personalization isn't a way of taking an existing product and refining it; it is the product. This is personal personalization, too. Rather than trying to refine what you see by specifying subject headings like "dance" or "Miami Dolphins" or the tickers in your stock portfolio, social websites are based in the first instance on the real-life human beings you care about the most.
In the era of blogs, if a certain blogger shared a news story you were interested in, that would help increase the attention you paid to the blogger. In the era of social media, if one of your friends shares a news story, that helps increase the attention you pay to the news story. People started caring more about the news, not because the news had suddenly become more interesting, but just because they saw that their friends cared about it, and it's only human to care about what your friends care about.
Social media didn't just create newly-engaged readers; it also created millions of newly-engaged aggregators. The most enjoyable part of blogging, in the early days, was putting things up on the internet and seeing people respond to them - by clicking on your links, or linking to you, or engaging you in the comments section. But it wasn't easy. Twitter and Facebook - and Pinterest, for that matter, and the rest of the social media universe - did two important things. Firstly they made publishing incredibly easy; and secondly they rewarded publishing by giving contributors immediate likes and replies and favs and other evidence that people really cared about what you were publishing. It was the endorphin rush familiar to old-school bloggers, democratized and accelerated.
Now, everybody is a journalist, or at least a contributor to other people's news feeds. There are still a few individuals whose links matter a lot - Matt Drudge, most obviously, or John Gruber. They have an ability to provide the kind of links that millions of people want to follow. But the traffic they drive is dwarfed by the aggregated power of Facebook, where millions of links, and other snippets of information, are shared every minute.
The result is that Twitter and Facebook have become the new indispensable bundles - and in doing so have changed the nature of what news is. Imagine opening up the New York Times and seeing pictures of your friend's birthday party: that would be personalization. And that's exactly what Facebook provides, with the help of millions of unpaid editors. Those editors might care a little bit about stuff being new - but they don't care nearly as much as journalists do. They do care a lot about interests which have historically been too narrow for mass-media outlets to cover. And they also care about stuff which is silly, or cute, or funny, or all of the above.
This might come as depressing news to high-minded editors who extol the wonders of investigative journalism and who disdain cat videos as being beneath them. But most news bundles have always included their fair share of fluff, and in a disaggregated world, there's no need for the investigative journalists to work for the same employer as the people curating cat videos. (Although, they can.)
The new dominance of social media in the news business is not depressing at all: it's excellent news. Just as most news consumers were never avid enough to seek out blogs, most Americans were never avid enough to seek out news at all. They didn't buy newspapers; they didn't watch the nightly news on TV; it just wasn't something which interested them. But now the news comes at them directly, from their friends, which means that the total news audience has grown massively, even just within the relatively stagnant US population. Globally, of course, it's growing faster still - the ubiquitous smartphone is a worldwide phenomenon.
We're at an excitingly early stage in working out how to best produce and provide news in a social world. There are lots of business models that might work; there are also editorial models that look like they work until they don't. But if you look at the news business as a whole, rather than at individual companies, it's almost impossible not to be incredibly optimistic. Media used to be carved up along geographic grounds, because of the physical limitations of distributing newspapers or broadcasting TV signals. Now, there are thousands of communities and interest groups that gather together on Twitter and Facebook and share news with each other, which means there are thousands of new ways to build an audience.
Meanwhile, on the back end, technology is evolving fast, and giving individual journalists astonishing power to tell stories in compelling and highly visual ways. Posts like this one - wordy strings of paragraphs, without much structure or narrative - are inherently off-putting; there are much more efficient and effective ways for people like me to communicate what we want to say, and there are dozens of new-media companies devoted to giving us the tools to do just that.
Now is a particularly exciting time in the news business. One journalist recently told me that it has changed more in the past eight months than it changed in the previous five years, and I think he's right about that. One big reason is that the technologists are getting involved: people like Vox Media and Medium and BuzzFeed and First Look Media are making multi-million-dollar bets that they can build the CMS of the future, and that they can use their software advantage to win the battle for consumer attention. David Carr says that it costs about $25 million these days to compete in the digital media space - that's a lot lower than the $50 million cost of launching a magazine, or the $200 million cost of launching a cable network. And it's lower still than the billions of dollars that newspaper companies - including the New York Times Company - spent on color printing presses. In other words, the barriers to entry have never been lower, while the potential rewards have never been higher.
Right now might also be a very brief window of opportunity for roll-up strategies. The idea behind such things is simple: if you have a powerful CMS, then it makes sense to take existing sites (like, say, the Curbed Network) and move them onto a more powerful system (like, say, Vox Media's Chorus). Everybody wins. But as web technology becomes increasingly sophisticated, and sites start looking very different depending on the device used to view them, it becomes increasingly difficult to port an entire website over to a brand new platform. You can't just import the HTML and tweak the CSS any more. Up until very recently, there hasn't been the money available to prosecute such a strategy; it won't be all that long before such a strategy becomes technically much more difficult. (I can't imagine, for instance, merging the Vox Media and BuzzFeed back ends without enormous headaches and difficulty.) So if you're going to do it, then you should waste no time.
On the other hand, journalists themselves are becoming much more portable than they ever used to be. It used to be that if you left the NYT or WSJ or ABC News or some other storied news brand, you lost a lot of power and reach. But as the media universe fragments, that's not nearly as true any more. Just in the past few months, Nate Silver and David Pogue have left the NYT; Walt Mossberg and Kara Swisher have left the WSJ; Katie Couric has left ABC; Ezra Klein has left the Washington Post; Glenn Greenwald has left the Guardian; and so on and so forth. All of those were high-profile, big-dollar deals, but there are lots of other journalists moving around right now too, and it has never been less obvious that if you get a job offer from a big legacy-media company then you should take it.
The reflected glory of the established brand is still there, to be sure - "I'm calling from the New York Times" still gets your calls returned a lot faster than "I'm calling from Medium." But legacy companies tend to move more slowly, and have more cumbersome technology, and are less likely to win the technology arms race, if only because their editorial technology has to support not only digital publishing but also the old-media formats. The result is what you might call the journalist arb: a digital company can pay its journalists significantly more than (say) the NYT, while still having a significantly lower total editorial budget per journalist. The journalists get more money, more freedom, more tools to tell their story, and get to work for a more nimble employer which isn't burdened with a massive legacy cost basis. They might lose a certain amount of reputational capital, but the loss involved there has never been smaller, and is decreasing by the week.
So even if it's soon going to be difficult for digital media companies to aggregate websites onto a single platform, it is only going to get easier to aggregate journalists. The most efficient platforms, with the greatest reach and the best tools, will have a natural advantage in terms of talent acquisition and retention. Which in turn is going to make life more difficult still for legacy media companies.
We're only just beginning to get an idea of the kind of journalism - and the kind of news - these new platforms are going to produce. Certainly, the conception of what counts as news is going to get broader. It will include living articles of the kind that Klein is talking about; it will include personal stories of the kind that do so well on Medium; it will include discursive conversations and opinionated video; it will be fast, and slow, and funny, and serious, and personal, and universal, and hyper-local, and global, and everything in between. And, for the companies which get it right, it will be extremely profitable.
Disclosure: No positions.