greenwald

What to do with $250m in digital journalism? (II)

 

In a previous Monday Note, we looked at an ideal newsroom, profusely funded by Pierre Omidyar and managed by whistleblowing facilitator Glenn Greenwald, a structure that combines the agility of a tech startup with the highest of journalistic standards. Today, we look at the product and the business model.   

Profit or non-profit? Definitely for-profit! First, because the eBay founder’s track record (see this The New Inquiry article) shows a fierce appetite for profitable ventures. And second, because there no such thing as a free and independent media press without a strong business side: financial vulnerability is journalism’s worst enemy while profit breeds scalability. How to make money, then, with a narrow niche such as investigative journalism? Can Omidyar’s venture move beyond the cross-subsidy system that powered legacy media for decades? This weekend, in a FT.com interview, Henry Blodget justified the deluge of eye-grabbing headlines spread over Business Insider by saying “The dining and motoring sections pay for the Iraq bureau”. . .

For this, Omidyar can look at a wide set of choices: he could devise click-driven contents built on the proven high volume / cheap ads equation. Or he could opt for what I’ll call the Porsche Model, one in which the most visible activity (in this case sports car manufacturing) brings only a marginal contribution to the P&L when compared to its financial activities: in 2009, Porsche made $1bn in profit from car sales and almost $7bn betting on Volkswagen stock. More realistically, an endowment-like model sounds natural for a deep-pocketed investor like Pierre Omidyar. Most US universities are doing fine with that model: a large sum of money, the endowment, is invested and produces enough interest to run operations. One sure thing: If he really wants to go against big corporations and finance, to shield it from pressure, Omidyar should keep its business model disconnected from its editorial operation.

Investigative journalism is a field in which the subscription model can work. In France, the web site Mediapart offers a credible example. Known for, among many others feats, its investigation of the Budget Minister’s hidden Swiss bank account that led to its resignation, Mediapart maintains a newsroom of seasoned reporters working on hot topics. In five years, it collected close to 80,000 subscribers paying €9.90 per month; the web site intends to make €6m ($8m) in revenue and a profit of €0.4m ($0.5m) this year. Small amounts indeed, but not so bad for a market one fifth the size of the US. Scaling up to the huge English-speaking market, and assuming that it will go for a global scope rather than a US-centric coverage, the Omidyar-Greenwald venture could shoot for 500,000 to 800,000 subscribers within a few years, achieving $40m to $60m in yearly revenue.

On the product side, the motto should be Try Everything – on multiple segments and platforms.

Here is possible product-line structure:

298 graph

Mobile should primarily be a news updating vector. In a developing story, say hearings on the NSA scandal, readers want quotes, live blogging, snapshots – all easy to grab while on the go. Addiction must be the goal.

Newsletters deserve particular attention. They remain an excellent vector to distribute news and a powerful traffic driver. But this requires two conditions: First, they must be carefully designed, written by human beings and not by robots. Second, they must be run like an e-commerce operation: a combination of mass emailing and heavy personalization based on collected navigation data. For an editorial product, this means mapping out granular “semantic profiles” in order to serve users with tailored contents. If the Omidyar-Greenwald project lives up to its promise, it will deliver a regular stream of exclusive stuff. A cleverly engineered email system (both editorially and technically) stands good chances  to become a must-read.

User profiling must allow the creation of several verticals. Judging who will join the venture from the first bylines (see article in CNet), the coverage intends te be broad: from national security to White House politics, sports issues (a sure click-bait), civil liberties, military affairs, etc. This justifies working on audience segmentation, as not everyone will be interested in the same subject. The same goes for social web extensions: the more segmented, the better.

Web TV. If you want to go beyond kittens or Nascar crashes, providing TV contents on the web is more difficult that it appears. But “programs” available in Scandinavia show that, for developing stories, Web TV can be a great substitute for conventional TV as it allows simultaneous coverage of multiple events. Nordic viewers love that.

Fact-checking. Since the Omidyar-Greenwald project is built. t on trust and transparency, it should consider launching the equivalent of politifact.com, a fact-checking web site operated by the Tampa Bay Times, which landed a Pulitzer Prize in 2009. A vertical fact-checking site on national security, privacy and data protection issue would definitely be a hit.

Other languages. Going after the Chinese market could be hard to resist. According to Internet World Stats, it is by far the largest single market in the world with 538 million people connected to the web in 2012. For a media venture aimed at lifting the veil on corruption, China offers strong potential in itself. As far as evading censorship, it should be an appealing challenge for the squad of hackers hired by Omidyar-Greenwald.

A print version? Yes. It sounds weird, but I strongly believe that a well-designed weekly, large format (tabloid or Berliner), distributed on selected, affluent markets, would complete the product line. Print remains a vector of choice for specific, long-form readings, ambitious news scenographies with high impact photographs, for an in-depth profile or a public interest story.

Global Thinking. Its potential for worldwide reach is one of this venture’s most interesting factors. It will be of limited interest if it doesn’t embrace a global approach to public interest journalism in large democracies but also in countries that are deprived of a free press (a long list). Creating a high standard, worldwide affiliation system to promote investigative journalism everywhere, regardless of the economic and political constraints, should definitely be on the founders’ roadmap.

frederic.filloux@mondaynote.com

What to do with $250m in digital journalism? (1)

 

Pierre Omidyar, Ebay’s founder and now philanthropist, pledged $250m to a new investigative reporting venture. Starting a project of this magnitude from scratch isn’t an everyday occurrence, leading us to wonder how it could look like? (First of two articles) 

For a digital journalism project, 250 million dollars (€185m) is a serious investment. So far, it’s unclear whether this is a one-time investment, merely initial funding (Omidyar’s share in eBay is approx. $8.5bn), or just yearly running costs. To put things in perspective, The New York Times’ 1300 people newsroom costs around $200m per year, including $70m for international coverage alone, i.e. reporting abroad and maintaining 24 foreign bureaus manned by 50 reporters. But, by most measures, the scope of NYT operations is at the far end of the scale.

A more realistic example is the funding of the non-profit media ProPublica (see a previous Monday Note on the subject). According to its 2012 financial statement (PDF here), ProPublica has raised a little more than $10m from philanthropic organizations and spends less than that for a 30 persons staff. No one disputes that, journalistically speaking, ProPublica is a remarkable publication; it faithfully follows its “Journalism in the Public Interest” mission statement, collecting two Pulitzer Prizes in so doing.

Great journalism can be done at a relatively minimal cost, especially when focused on a narrow segment of the news spectrum. On the other hand, as the New York Times P&L shows, the scope and size of its output directly correlates to the money invested in its production – causing the spending to skyrocket as a result.

Since we know little of Pierre Omidyar’s intentions (interview here in the NYT and a story outlining the project), I’ll spare Monday Note readers my usual back-of-the-envelope calculations, and I’ll stick to a general outline of what a richly funded news ventures could look like.

Staffing structure. Once again, ProPublica shows the way: a relatively small team of young staffers, coached by seasoned reporters and editors. For this, Omidyar draws the hottest name in the field, namely the lawyer-activist-Guardian blogger Glenn Greenwald, who played a prominent role in the Snowden leaks (more about him: his blog on The Guardian; a NYT Magazine profile of Greenwald’s pal Laura Poitras, another key Snowden helper).

Greenwald_guardian

Multi-layer hierarchy is the plague of legacy media. The org chart should be minimalist. A management team of five dedicated, experienced editors is sufficient to lead a 24/365 news structure. Add another layer for production tasks and that’s pretty much it. As for the headcount, it depends on the scope of the news coverage: My guess is a newsroom of 100-150, including a production staff (I’ll come back to that in a moment) can do a terrific  job.

No Guild, no unions, no syndicats à la française, please. Behind their “fighting for our people” façade, they cynically protect their cushy prebends and accelerate the industry’s demise. As a result, the field is left open to pure players – who are keeping people in stables, content-recycling factories.

Beyond that, avoiding any kind of collective bargaining allows management to pay whatever will be necessary to hire and retain talent, without relying to fake titles or bogus hierarchy positions to justify their choices. In addition, above-market salaries should discourage ethically dubious external gigs. Lastly, a strict No-Kolkhoze governance must be enforced from the outset; collaboration and heated intellectual debate is fine as long as it doesn’t emasculate decisions, development, innovation – and speed.

A Journalism 2.0 Academy. I strongly believe in the training of staffers, journalists or not. Hiring motivated young lawyers, accountants, financial analysts, even scientists, and teaching them the trade of journalism is one the best ways to raise the competency level in a newsroom. It means having a couple of in-house “teachers” who will compile and document the best internal and external practices, and dispense those on a permanent basis. This is what excellence requires.

A Technology Directorate. On purpose, I’m borrowing jargon from the CIA or the FSB. A modern news organization should get inspiration from the intelligence community, with a small staff of top level engineers, hackers, cryptographers, data miners, semantic specialists. Together, they will collect data, protect communications for the staff and their sources, provide secured workstations, laptops and servers, build a mirroring infrastructure as a precaution against governmental intrusion. This is complex and expensive: It means establishing encrypted links between countries, preferably on a dedicated network (take advantage of Google’s anger against the NSA to rent capacity), and putting servers in countries like Iceland — a libertarian country and also one of the most connected in the world. While writing this, I ran a couple of “ping” tests, and it turned out that, from Europe, the response-time from an Icelandic server is twice as short as from the New York Times!

Besides assisting the newsroom, tech staff should build a secure and super-fast and easy-to-use Content Management System. Most likely, the best way will turn out to be a WordPress system hack – as Forbes, Quartz, AllThingsD, and plenty of others did. Whatever the setup ends up being, it must be loaded with a powerful semantic engine, connected to scores of databases that will help enrich stories with metadata (see a previous Monday Note on the subject The story as gateway to knowledge). By the same token, a v2.0 newsroom should have its own “aggrefilter”, its own Techmeme that will monitor hundreds websites, blogs and twitter feeds and programmatically collect the most relevant stories. This could be a potent tool for a newsroom (we are building one at Les Echos that will primarily benefit our news team.)

Predictive Analysis Tools and Signal-to-Noise detection. In a more ambitious fashion, an ideal news machine should run analytics aimed at anticipating/predicting spasms in the news cycle. Pierre Omidyar and Glenn Greenwald should acquire or build a unit like the Swedish company Recorded Future (more in this story in Wired UK), which is used by large corporations and by the CIA. Perhaps more realistically, building tools to analyze and decipher in realtime the internet’s “noise”, and being able to detect “low-level signals” could be critical to effectively surfing the wave.

That’s all for today. Next week, I’ll address two main points: Designing modern news products, and ideas on how to make (some) money with this enthralling venture.

frederic.filloux@mondaynote.com