A Call for More Transparency in Newspaper Production
Of all people, we, the journalistic community, should know that it raises eyebrows and smells weird when someone says “I can’t tell you where the money goes...”
Suppose you are a businessperson looking to go into the newspaper business. You’re going to have a few key questions right off the bat:
How many people actually pay for the news?
How much are they paying? and
How much does it cost to make the news?
The first question helps you understand what kind of market you’re entering. The second one helps you know how much people value your product. And the last question tells you whether you will make a profit.
To answer the first question, according to a 2017 study by the American Press Institute of 2,199 U.S. adults, 53% said they subscribed to some form of the news, and nearly 4 in 10 adults under the age of 35 said they pay for the news.
At first glance those numbers seem high — particularly for the millennials — but that’s good right? A business-minded person would love to have 53% of the potential target market buying their product. Most business owners would be happy to split a large market five ways and just get a cut.
Now even though 53% of those surveyed say they subscribe to either print or digital sources, you’d still want to know why the other 47% don’t. Particularly when it comes to those who are actually reading the news but refusing to pay. But that’s a follow up question for a little later.
Right now, the next question on your mind should be:
On average, how much are the 53% who subscribe actually paying?
We don’t often discuss this but think about it. Are they paying $0.01 (one cent) per month or $1,000.00 per month? The answer very much matters.
Craig Allen, an associate professor from Arizona State University, says he is willing to pay $600 per year to the major news source where he lives in Arizona because he knows the reporters need money to be “‘watchdogs’ for the people.”
That’s $50 per month.
To be fair, Allen probably understands this because of his 13 years in the industry and 33+ years teaching. But does the average reader think about the costs and associate them with the “value” on that level?
Some would and do. But...
Would the average person subscribing to the news be willing to pay $600 a year for it?”
Again, $50 per month?
What do you think?
What do you honestly think?
If you had to walk out on the street right now and ask someone to just give you $50 a month or $600 every year for any reason, what do you think the average person would say?
Their answer will likely be “no” until you start painting some kind of picture of value for them.
So what do you tell them they’ll get in exchange for that $600 a year? And what do you say when they raise objections? What do you say when they talk about getting it free somewhere else or say it’s not that important to them? What do you do when their eyes glaze over as you’re jawing on about democracy dying in darkness and journalists getting canned and how just the cost of a cup of coffee a day will solve this problem?
And suddenly there is a red flag in the business model...
...because good business owners understand that people don’t part with their money “just because” or “almost.” They pay when they are satisfied they are getting a good, fair, or honest deal… and they can’t do that if they can’t explicitly, intuitively, and instinctively, feel or comprehend its value → to them personally.
A potential customer would not like the idea of not having a clear understanding of what they are buying and why the cost is what it is. That is almost a guarantee for losing the sale.
Just to be clear: The problem is not being asked to pay more if something is worth it. The problem is being asked to pay for something that you can’t easily explain and understand. And the general public cannot easily explain the value of the news. And if they can’t easily see and explain the value behind the news how can they possibly accept the price tag we choose to put on it?
That’s a problem.
The average subscriber might actually love and appreciate the news but have very little understanding of the true costs associated with making it. If that’s true the price may be a very arbitrary reason they subscribe; and in fact could be far too low.
Sharing this practical business sense, Patti Newberry, president-elect of the Society of Professional Journalists says newspapers should make sure to create “a very strong connection for readers between the journalism and the price tag.” They need to show that the subscriptions make this content possible because, she says, “If you don’t have dollars for news organizations, you don’t have news.”
How much are they paying for it?
The second question “How much are they paying for it?” is important because it’s not always about what percent of the market you have or even how big the market is. It’s often about how much you’re paying customers do pay, or would pay if marketed correctly.
As Dorie Clark says in the Harvard Business Review, “Price is often a proxy for quality, and when you put yourself at the low end, it signals that you’re unsure of your value — or the value just isn’t there. Either can be alarming for prospective clients.”
According to the API study above, “People are drawn to subscribe to news for three reasons above others — because a publication excels at coverage of key topics, because friends and family subscribe to the publication and to a lesser degree, in response to discount promotions on subscription prices.”
The last point indicates it’s not always the cheaper prices that bring in the most paying customers. Great content and peer pressure seem to be more influential. A business-minded person deciding whether or not to enter this market must ask themselves if people are in fact underpaying for the product because it is a very real and common business mistake.
In these examples there is at least some evidence to suggest that a meaningful percentage of paying customers would gladly pay more if they were shown the brutal costs - and therefore added value of the news they are buying - not paying for, but buying (i.e. getting, owning, having).
Which leads to the next question:
How much does it cost to make the news?
This is where it just gets awkward because so few people really know the answer to this. It’s almost never discussed in any detail and so the public, ahem, our paying customers, are left to guess and assume and clumsily neglect their own responsibilities as citizens while we arrogantly howl and moan about how ignorant and unappreciative they are.
But who can blame them? Have we as an industry ever really tried to help them understand the true costs?
The answer is a glaring ‘no’ and Craig Allen helps us understand why in simple terms. “It’s not natural for newspapers to reveal where their money, and that of subscribers goes,” Allen says.
Why is it not natural to tell the public how expensive everything is?
Kurt Hanson, city editor for the Daily Herald takes it a step further. “I think it's very natural for newspapers to keep their financials close to the chest,” he says. “I argue that it is perfectly normal for newspapers to keep their financials private so long as they're a private entity,”
Hmmm...things just got interesting (because you know Kurt’s not alone in his thinking).
Why would a newspaper not want to be transparent about where their money is going? Of all people, we, the journalistic community, should know that it raises eyebrows and smells weird when someone says “I can’t tell you where the money goes...”
This isn’t about accusing the industry of wrongdoing or mixing advertising with editorial decisions. It’s about changing the story we’re telling the customers so they can change their perception of the value we’re bringing to them.
It might be natural and even sound logical, as Hanson says, to conceal this part of the sausage making. But innovative changes that actually make a difference usually defy current logic.
Is it possible that as an industry we have not considered all the benefits of being more transparent with our funding? Taking it a step further, have we missed the mark entirely by not being wildly transparent and open about everything we’re doing with the money (within all ethical guidelines of course) — or total lack thereof?
What do we have to lose?
By being more transparent, newspapers can help readers to feel a responsibility to contribute or a greater awareness of the value they are paying for.
Allen says he is not sure that the public can or should be trained to fully understand the economics behind newspapers, but “there can be much more public disclosure on the ‘cost of good journalism.’”
Though the public may not need to fully understand all the intricacies of producing a newspaper, in the end, the value or goal of improving their awareness will be to persuade them that what they are paying for is higher quality than what they can find for free, and maybe, just maybe, even get them to pay even more for it because it costs more.
The idea that news should be free needs to change.
But so too does the idea that news can or should be discounted any more in order to compete. Readers need to better understand what they are really paying for in order to charge them the appropriate amounts; and newspapers need to become more transparent as a means of showing them that clear value.
Some of the innovation needed within the industry today might really just mean the same good old-fashioned transparency we’re demanding from everyone else.