New examples of Media Getting It: Content Creation and Curation Grow

We are seeing several fresh examples of main stream media beginning to focus on what it has to do to survive and thrive in the future. Every day we find another example of media companies daring to change their model to adapt to the new world the face, and give the consumer a more relevant and useful product.

Today’s examples are in the area closest to my heart, news. Everyone has seen the business models of news organizations fall apart over the past several years. During that process these major players have done little besides cut costs to manages profits or losses. Few have aggressively tried to change their product to adapt to what consumers now want.

First, we have what may be the biggest news brand in the world, CNN, making a major decision to drop use of the Associated Press, and use the money it spends on that to focus on original content. It is critical for news organizations to give their customers compelling content that is difficult to find elsewhere. Original content becomes even more important when there is virtually no barrier to entry for people to create a news site using the Associated Press to provide the basic story it provides everywhere.

“We are taking an important next step in the content- ownership process we began in 2007 to more fully leverage CNN’s global newsgathering investments,” CNN Worldwide President Jim Walton told his staff in an internal memo obtained by Bloomberg News, and confirmed by CNN. CNN’s primary source for its news will now be itself. Hopefully this move will also hasten the convergence of CNN’s television and web operations in to one cohesive news force.

The second move I want to highlight today might on the surface seem like a contradiction. But it’s not. It’s a great example of solid news organizations doing something else they will have to do from now on, “curating” information and news from other sources for their readers.

Marketwatch and CNN Money websites have gone to Twitter-based financial service StockTwits to provide them each with widgets that will reside on their sites and give the large audiences both sites enjoy a glimpse into the trading rooms. StockTwit’s tweets generally reflect the topics being bandied about on trading desks in realtime. So no matter how well Marketwatch and CNN Money know their audiences, they know that StockTweets offers a different perspective, and one that is impossible for a news organization to do on its own.

While MarketWatch and CNN Money are embracing the art of curation, by getting help cutting through the noise that is the crowd on wall street, the CNN move seems to be going in the opposite direction and eliminating outside content from it’s sites. But actually, the CNN move is really solving a more critical problem it has. In CNN’s case this is an opportunity to have resources to develop its own voice and more original content, which it desperately needs. It needs to bringmore original news and content closer to CNN’s consumers on whatever platform they are using at the time. They are creating positions at headquarters and in bureaus to get information on TV more quickly and they are starting something called “CNN Share,” which will package breaking news immediately for distribution over mobile, the web and on television. CNN can no longer afford to be giving consumers news they feel they can get anywhere, from anyone.

How Can Newspapers Survive?

Charles Foster Kane

Newspapers are still the best-staffed news organizations and remain journalism’s brightest hope—if they can only break their addiction to print.

It’s one of my favorite lines in Citizen Kane, the 1941 classic about a newspaper publisher. Kane is responding to his top financial advisor who just pointed out that Kane’s newspaper empire is losing a million dollars a year.

Charles Foster Kane: “You’re right, I did lose a million dollars last year. I expect to lose a million dollars this year. I expect to lose a million dollars next year. You know, Mr. Thatcher, at the rate of a million dollars a year, I’ll have to close this place in…60 years.”

Turns out he was right, give or take a few years. Sixty-eight years after Kane uttered those words, the newspaper industry is staring death in the face.

Last week brought more news of impending doom. The Minneapolis Star-Tribune filed for bankruptcy protection, the Hearst Corporation announced it would close the 146-year-old Seattle Post-Intelligencer unless a very unlikely buyer is found, and a few weeks earlier, E.W. Scripps made the same announcement about the Rocky Mountain News. A month before that, the venerable Tribune company, owners of the Chicago Tribune, Los Angeles Times, Newsday and other major papers, also filed for bankruptcy.

We know the problems have surfaced everywhere. While some papers continue to make an operating profit, those profits are shrinking, and many papers are still being crushed because the profit isn’t enough to fund the debt that was taken on by the paper’s buyers. This is the case in places like Philadelphia and Minneapolis, as well as with the entire Tribune Company. Once immensely profitable regional newspapers like the San Francisco Chronicle and Boston Globe are losing a lot of money. The Chronicle is rumored to be losing more than a million dollars a week!

Newspaper companies need to turn the tide and turn it fast if they want to stay in business at all. It’s time to go on the offensive and renovate their businesses around the changing needs and demands of their customers. The difficulty lies in that much of their future may not involve paper, and the industry is having a hard time changing its name.

If they don’t, they will become what the railroad industry became. The railroads could have survived as major players in the business of transporting people, had they believed they were in the transportation business, not the train business. They would have invested in cars, buses and airplanes. But they didn’t, and while there remains a railroad industry today, it’s much smaller and less significant than it was.

That’s what will happen to the newspaper business unless the remaining players decide they are not in the newspaper business at all, but rather the news business. And if they want to stay in the news business, they need to get much more aggressive about giving people news the ways they want to get it. I say “ways” because the future of news will not be about one form of delivery. Studies now show us that consumers no longer get their news from one or two sources, but from many sources in many ways: from computers to BlackBerries and iPhones, to television and radio, to screens in elevators and at coffee shops throughout the day.

Luckily, since they are still the most adequately staffed local providers of news and information, newspapers have some time to take advantage of their strengths and move quickly into new and still developing platforms. But to do this, they’ll need to be nimble and fast.

By definition, news has a short shelf life. So in many cases, consumers want to know about news as soon as it happens. That could be the kind of news that everyone wants, like the plane landing in the Hudson, or it can be very personal, like one of your stocks just went way up or down, or the road you normally use to drive home from work is closed because of an accident. The fact is, the consumer now wants to participate in deciding how and when they get each type of news and who they get it from. This is their world.

The most difficult thing for the industry is creating all new business models to pay for that news, so they need to be aggressive in learning how to monetize news delivered over each of these new forms. The advertising model may not always work. Certain types of advertising that supported news, like classified ads, are gone from the newspaper and won’t be coming back. So now it is imperative that the industry find a way for the public to pay for the news it gets.

But they can’t start by making the public pay for the cost of producing a printed newspaper, when all they want is digitally delivered news. The public won’t pay for the industry’s problem. Face it, printed papers are old news.

Frankly the industry hasn’t done a very good job of convincing people that it can create a new business model. Doing so takes time and money, and newspaper companies are already low on both. Public newspaper companies have been crucified by their investors. The McClatchy Company, which made the biggest bets on the future of the industry by buying The Knight-Ridder chain, has seen the value of it’s stock drop 98 percent over the past five years—that’s what you would call a real no-confidence vote from the shareholders.

So here’s the rub: the newspaper companies need to develop business models that support newsrooms, not newspapers. And it’s likely going to be the private companies who don’t have to satisfy the public need for improved quarterly earnings that can lead the charge. They have to envision what the news business will look like in the future and build business models that support that, without the added burden of supporting a delivery system most users don’t care about. And they have to invest heavily in news gathering and news dissemination. The goals are both speed and context. The newsroom has to be part CNN Headline News and part The Economist..

The business transition from newspaper to news company is painful, but it’s the path they have to take. The new news companies will be built around what they cover, not how they distribute the news. There will be a news company, or more than one, covering subjects like national or financial news. There will also be newsrooms covering San Francisco or New York news. And each will have a news-gathering operation and a news-editing operation that will disseminate the news they gather over all platforms, from print (if there is a market for print) to TV, radio, mobile, and the internet. In each case, they will be paid for that content, either directly or through advertising sales. They might not even own the products that consumers use to get the news—certainly not the iPhones or BlackBerries, and not even necessarily the radio or TV stations or printed newspapers . They just have to be good at gathering and disseminating. If newspaper companies want to stay in business and stay relevant, they will need to leave the distribution game to someone else.

So, Mr. Kane, prepare to lose some more money, if you have it. If you can be a bit patient while you do that, you might still be business when it’s over.

Who Shot Network Television?

You don’t need a CSI team to see that the wounds have been largely self-inflicted, but the networks can pull through if they recommit to innovative programming, says a media veteran.

A couple of key developments have been overlooked among the job cuts and bankruptcy filings in Media Land of late, but they’ll have huge significance to the future of network television.

First were the executive changes at NBC and a restructuring that will put its studio and network under one management team. NBC co-chairmen Marc Graboff and Ben Silverman will have the newly combined operations under them.

Once again the big winners will be those who create and own great content.

Next came a speculative piece in TVWeek that Disney is considering having the ABC Network and ABC Studios report to a single executive, possibly merging its development teams.

A few years ago, when CBS separated from Viacom, CBS Network President Nancy Tellem was also given authority over the Paramount TV studios.

In each case, there are probably personality issues behind some of the changes and certainly cost issues behind the consolidation. But the real message here, the one that will resonate for years to come, is that network television is losing its grip over distribution and needs to concentrate its creativity on programming.

As it becomes ever easier to deliver video to a growing broadband audience, many more will continue to do so very successfully.

Many of the reasons television networks exist are over. Networks built a “network” of local stations around the country so they could deliver the same programming in each city and sell advertising at the national level around that programming.

How long has it been since you watched a TV show on a set getting its signal over the air through an antenna? The country watches TV on cable and satellite today, and both are capable of delivering nationwide programming without the need for a local broadcast partner.

The creation of cable entertainment networks like HBO, Showtime, TNT, A&E, and Discovery; sports networks like ESPN; and news networks like CNN, CNBC, MSNBC, etc., have all chipped away at the nationwide content monopoly once held by the big television networks. As distribution finally reached virtually every home in the nation through either cable or satellite, many of these networks were able to create original programming that could pay for itself. And for the first time, studios and producers could create television programming that didn’t have to be bought by a network to succeed. In the end, CBS, NBC, ABC, Fox, and even the CW are practically on an even par with the most successful cable and satellite networks. They can reach almost exactly the same audience.

When the Internet is hooked up to most home TV sets, which will happen over the coming decade, anyone with a website will be able to reach all the homes in the country. At that point, even cable and satellite networks will have diminished power. It will be possible, for example, for YouTube to create a scripted drama that appears every week and is viewable on every living room TV set. And YouTube and Google may have the marketing clout to bring the audience in for some innovative programming. It’s fair to assume, though, that none of this will provide for any change unless these new players produce content people ultimately want to see.

The TV networks will still exist, because it will still be more efficient to deliver a lot of programming down a point-to-multipoint network, rather than a fully interactive one. When scores of millions of viewers all want to watch one show at the same time—the Super Bowl is a good example—it would be incredibly expensive to have them watch over an interactive platform. So there will be pipes into our homes with one-way broadcast capabilities, using either cable or satellite technology. They will still have the advantage that they can cheaply deliver programming on a schedule to every household.

So don’t count out our TV networks entirely. It’s no accident that whether you can get 15, 60, 100, or 1,000 TV stations in your home, the four or five you watch the most are the traditional broadcast networks. They each spend a small fortune to develop dozens of shows each year, and only ultimately offer the best of the lot to the public. That system has created shows of increasing quality and, one hopes, will continue to do so. And it has created marketing machines that know how to promote the programs to broad audiences. And they can grow more revenue for those shows by making them available on all the other digital platforms, much the same way they profit from reruns and DVD sales today.

If they can keep creating first-rate programming (through their studio operations), the networks can still dominate the programming scene. Ultimately it’s Leslie Moonves’ enormous talent as a developer of great programs that can save CBS as a television powerhouse.

But the networks won’t have the advantage of being able to hold their dominant positions even if they screw up the programming, which they have enjoyed in the past. They won’t dominate the programming the public gets to choose from. And the competition will continue to grow as more and more content creators get access to TV views through the new distribution platforms.

So once again the big winners will be those who create and own great content. They will, as they always have, find the best way to get that content to people who want it. As for the networks, look for them to slim down to become more like studios.

Larry Kramer is senior adviser at Polaris Venture Partners, a national venture capital firm. He served as the first president of CBS Digital Media. Prior to joining CBS, Kramer was chairman, CEO, and founder of MarketWatch, Inc. Kramer spent more than 20 years in journalism as a reporter and editor at The San Francisco Examiner, The Washington Post, and The Times of Trenton.