Re-engineering the wall between church and state

Chris Brogan, the well-known social media strategist and evangelist has a post today about what some of us would call journalistic ethics.

On December 2, Chris wrote a sponsored post on his Dad-o-Matic blog about K-Mart. K-Mart gave him a $500 gift card to go on a shopping spree and write about it. He took his kids. They bought some clothes and toys for a Christmas charity. He wrote it up, with prominent disclosure, talking about how K-Mart isn't the wartime-in-Beirut hellhole you thought it was. End of story.

Are you twitching yet?

Because some people were. They questioned whether this foray into "advertorial" by Chris called his entire body of work into question. A Forrester analyst in a Twitter post called Brogan a "bought" blogger. Another Tweet, from Ben Kunz, said "Nothing wrong w bloggers making $ from ads. But writing Puffery for Pay clearly diminishes @chrisbrogan 's voice."

To those of you sitting in the newsroom, this probably seems like a waste of breath. "Of course any paid writing is advertorial, pure and simple."

But what happens when the advertorial is written by your star reporter and not some kid in the marketing department? Because that's the equivalent here. Brogan is a star of the emerging social media movement. He's written tens of thousands of words, spoken at dozens of conferences, influenced untold numbers of people. Does this one post (or, if he decided, dozens of sponsored posts?) undermine his credibility?

I say no, it doesn't. The wall between editorial and advertising exists for a good reason, but there are many ways to honor it. The traditional newspaper model is just one.

The key is disclosure. As a reader, I know before I read a word, that Brogan has been paid. I can then filter at will. If I think that the money exchange is unseemly, I can move on. If I stay, I have a crucial fact available to help me evaluate what I'm reading.

But this is all a very long introduction to the real reason why I'm typing this post on a Sunday morning rather than doing all the other things I need to finish before the sun smacks the horizon: Chris Brogan's explanation. Anyone who cares about communication, journalism and business models for such should take a few minutes today and read his thoughtful debriefing on the matter:

There’s a whole stripe of people out there who argue that the sponsored post corrodes my editorial integrity, and that I’m not unbiased if I do something with sponsorships, etc. I want to address that, because it really hits to the core of the story, in my mind. Simply, they’re saying that one cannot be editorial-minded and manage a paid sponsorship. (Which, if you think about it, you’re saying that humans can’t separate their perspectives appropriately.) I have a few points with regards to this.

1. Newspapers and magazines are dying. If you’re not reading Newspaper Death Watch and Paid Content and BuzzMachine, then you’re missing some of the most riveting and depressing news of our generation.


2. Those models all work on advertising-to-pay-for-editorial and editorial-to-keep-eyeballs-to-support-advertising. In fact, all previous media works that way. TV, radio, etc. Lost isn’t on TV because it’s cool. It’s because people can advertise against it.


3. Those models are dying because advertising and marketing have lost their impact in those spaces.


4. Since the early 90s, people have hoped to figure out how the web will fix this.


5. I have some opinions on this.

I’m not a journalist. But I am a publisher. I am a reporter. I am a media maker. And here’s the difference: as a publisher, I have all the jobs of the newspaper. I am both the editorial staff and also the business side of the house. In this piece by Barbara Gibson of IABC, Barb Gibson says in her comment to me: “One more note in answer to your points above: while magazines do indeed do advertorials, they’re usually not written and bylined by their star journalists.”

That’s the crux right there of what has people hackles raised, I venture. In larger operations, there’s a bag man to take the advertising money and leave the journalists pure. I’ll get back to that point, because there is a line still, and that line must be respected. That hasn’t changed, and won’t change. But because there are many of us who are the publisher, the writer, the researcher, the customer service department, and the public relations staff, you’re going to have to seek a slightly different way to manifest that distinction.

There's much more at Chris's site.

What happened when the money dried up

I've been passing around an odd little YouTube clip of a 2005 Christmas gift from Sam Zell. It shows an animated statue that features a recording of Sam extolling the virtures of an economy that's throwing off cheap cash left and right, And then, there's a song:



"We're awash with cash to spend!"

It would just be that - an oddity - until you read a piece in the New York Times which notes that the newspaper industry over the past few years followed the same bubble of cheap money that drove the housing bubble.

And, like all bubbles, eventually it pops:

The bankruptcy filing of the Tribune Company on Monday is just the latest, largest evidence that the American newspaper industry is suffering the hangover from an immense buying spree in 2006 and 2007 at what turned out to be the worst possible time for the buyers, just as the business was about to enter a drastic decline.

Newspapers would be in trouble either way. The steady leak of advertising and readers from print to the Web has become a widening torrent in this recession year. Most newspapers remain profitable, but the margins are dropping fast, with the industry losing about 15 percent of its ad revenue this year.

But the companies in the weakest condition are there largely because they borrowed a lot of money to buy papers, often at inflated prices, and the biggest of those deals were struck in 2006 and early 2007.

The full story is here.

Can an InfoValet guide us to a business model?

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Martin Langeveld reports on a conference focused on the notion of an "InfoValet." It sounds like attendees at the conference spent a lot of time thinking of ways to describe what they're onto, but I'd put it this way, from a consumer perspective:

A universal logon system whereby users "pay" for access to information with (secure) information about themselves, rather than with dollars.

Langeveld says, "While a system like this will not necessarily save newspaper publishers (because, for one thing, it will take some time to gain traction), it has the potential to help save journalism by enabling online news publishing at a different scale. While the New York Times could be an InfoValet network member, so can a blogger or micro-local news site, and each can benefit proportionately to their traffic and content value to advertisers and consumers."

Interesting idea, though any attempt to build a new ecosystem from scratch is going to meet with a certain amount of stubborn resistance. Perhaps the recent announcements by Google and Facebook, opening their logon systems to other sites, might provide some readymade structure for the InfoValet idea.

Winner, Most Prescient Post of 2008: Mark Potts

It was just shy of one year ago today when Mark Potts swam against the Zellebratory news of the sale of Tribune, in a post entitled "Here Come The Death Eaters," in which he typed these words:

Put that all together, and 2008 may be the year that the Death Eaters start coming for some of the biggest names in the business: Big chains or papers that are overextended financially and find themselves undermined by the gathering storm of problems. Wall Street and bankers aren't going to put up with that, and executive heads—not to mention those of a lot of unfortunate rank and file employees—will roll. Watch for still more consolidation and, um, innovative financing that will further roil the industry.

Just look at the tumult that accompanied Sam Zell's closing of his deal to buy Tribune Co. this week. The bankers were squeezing the deal right up to the last minute. Even Zell called it "the transaction from hell." And Zell's going to have to pedal—and peddle—as fast as he can to keep the company afloat financially. It's not just the Chicago Cubs that are going to be sold by Tribune. Look for a fire sale of real estate and newspapers (Los Angeles Times, anyone? Anyone?) as Zell strips the company for cash. And at this holiday time, say a prayer for the poor Tribune employees, who could be left holding the bag—through their retirement plan, which now owns the company through Zell's creative accounting—if things turn sour. Memo to Tribune employees: Get. The. Hell. Out.

(Emphasis mine.)

And so it begins

[caption id="attachment_642" align="alignnone" width="500" caption="Photo by William Couch. 1/31/2008"][/caption]

Both the Wall Street Journal and New York Times are reporting tonight that the Tribune company has hired an investment bank and a law firm for a potential bankruptcy filing as early as this week. This is definitely a long way down the road from a year ago when the arrival of Sam Zell was seen as a bold move toward the reinvention of a once-great newspaper brand.

Now?

Here's the New York Times take:

Tribune has hired bankruptcy advisers as the ailing newspaper company seeks to stave off a potential bankruptcy filing, people briefed on the matter said.

The newspaper, which was taken private last year by billionaire investor Samuel Zell, has hired the investment bank Lazard and the law firm Sidley Austin, these people said. Tribune has been hobbled by debt related to that sale last year, which has been compounded by the growing drought of advertising for newspapers.

The Wall Street Journal puts the Tribune distress in perspective:

The appointments underscore the deepening distress for Tribune and other publishers. Newspaper businesses are being battered by dwindling advertising sales and carrying debt loads that are unmanageable in current market conditions. People in the industry expect some papers will need to seek bankruptcy protection or fold in coming months.

Tribune has been on wobbly footing since last December, when real-estate mogul Sam Zell led a debt-backed deal to take the company private. Tribune so far has stayed ahead of its $12 billion in borrowings with the help of asset sales, but now dwindling profits are tightening the noose. The company's cash flow may not be enough to cover nearly $1 billion in interest payments this year, and Tribune owes a $512 million debt payment in June.

Based on the state of declining revenues at the company and its lenders' likely unwillingness to allow Tribune to simply sell off assets to make its payments (as it did with the sale of Newsday in 2008), bankruptcy looks increasingly inevitable. These actions seem to imply that the question may be called sooner than the mid-2009 period I had seen mentioned previously.

Langeveld: What it means to transform to a digital enterprise

I keep coming back to this: if the people, through their behavior, keep telling newspapers that they don't want the paper part of the paper anymore AND the paper part of the paper is enormously expensive to create and distribute, then why doesn't some market take a leap and try going all digital?

Yes, there will be financial downsides at first, but especially in the many markets with only one daily newspaper, this risk may be minimized by the fact that local and national advertisers still need to reach that market, and the audience that newspaper organizations gather remains uniquely strong when measured against other mass media television and radio.

Martin Langeveld, former newspaper publisher and VP and current hive-whacking mediablogger, recently took a look at the numbers behind such a leap. The short version: newspapers won't get rich in the short term, but they just might survive.

This week, Langeveld digs deeper into what it would take for one market to make the leap, and introduces us to a publisher in Cedar Rapids (who will be familiar to readers of this blog) who just may be laying the groundwork for his own leap forward.

The strategy sounds simple: Transform the business from its manufacturing roots into a digital enterprise. I proposed a version of it in my second-ever post, back in September: "To have even a chance of survival, the mindset of the industry needs to become: We are in the business of publishing information content continuously on our web sites; every 24 hours (for now, and this may ultimately change to once or twice weekly) we gather some of that information into a printed product and distribute it, but our business is focused on and driven by our online operations." And I've explained it again more recently when I explored the economics of a daily that morphs into a web-first weekly or twice-weekly, and previously as part of my Six Theses, and elsewhere. I'm not alone on this. "Digital is first" is at the top of Steve Outing's list of suggestions for the industry as well; others have hammered away at it; it should simply be on everyone's list...

Can any of this be even discussed in an organization demoralized by waves of layoffs and cutbacks? It won't be easy, obviously, but it has to be done. A newspaper organization that chooses not to adopt, embrace and fully implement a strategy of becoming a digital enterprise will remain a manufacturing enterprise with a product that fewer people want or need, every day. Perhaps it will be remembered one day by a nice brass plaque on the historic printing plant.

Langeveld doesn't yet get the attention of some of the usual suspects (Jarvis, Yelvington, Mutter, Potts, Rosen - all big thinkers worthy of your feed reader), but he should. He combines an insider's experience with a sharp, analytical mind, and adds a willingness to consider the radical notion that there may yet be a future in the news business.

Jason Calacanis: The 120% Solution

Jason Calacanis suggests a solution to the ills that are plaguing us at the moment. And it's not necessarily what you expect:

Work 20% harder.

It was our collective sloth, consumption and sense of entitlement that
got us into this mess, and the only thing that will get us out of will
be lots of hard work.

If you’ve got a good job, you should bust your butt to make your
company as successful and profitable as possible.  That way, salaries
can increase, jobs can be created and your products and services
become so world class, the phrase “Made in America” will come to mean
something other than “not worth buying.”

If you’re working at a government job, you should be putting in extra
hours to reduce government spending. Come in this weekend and make the
government more efficient. (Yes, I just told a government worker to
come in on Saturday.)

If you’ve got credit card debt, pay it down if you can.

If you’ve got a mortgage, pay it off if you can.

If you work in the service industry, try to work 20% faster and come
up with ideas to make your team more efficient.

Like all great ideas, it's over-simplified and a little flawed in the details if you poke at it, but it's still brilliantly direct, and easy to remember: whatever you're doing, kick it up a notch.

Our grandparents and great-grandparents got this. They all sacrificed so that we could get fat and happy. Now it's time to start thinking of the kids of 2050, and what kind of country they're going to inherit, based on our work ethic now.

Take a few moments and read it. As is the case with all good advice, it's both memorable and attainable.