Paul Gillin has written a lengthy article on How the Coming Newspaper Industry Collapse Will Reinvent Journalism (available also as a PDF file), where he outlines a new business model for publishers of “paper” media. The text is quite long, and is definitely worth reading with attention. I will try to summarize it.

Internet has completely disrupted the traditional communication industry, and has broken the business model of daily newspapers, which was developed over 150 years ago to support a delivery method that is now irrelevant. At that time, paper was the only way to deliver information on a daily basis. Large editorial staffs were needed to create proprietary content, which was necessary to ensure a large circulation, which was necessary to justify high ad rates. For a long time, newspapers were the most effective mean to reach consumers in many geographies.

This business model is about to collapse, in a way that will be stunning in speed and scope. Web 2.0 and its vastly superior economics are quickly killing publishers, which will be replaced by new media more cost-efficient: information sites based on blogs.

They outsource everything: editorial content is outsourced to individuals, and editorial expenses are close to zero; circulation is outsourced to Google and links from other sites; production is outsourced to hosted services at minimal cost; sales are outsourced to Google Adwords or other sales agents; and marketing and promotion aren’t even done. This model is so compelling that it will almost completely upend the existing mainstream media model in a short time.

During the first decade of the Internet organizations put their brochures online and users got comfortable with the idea of a global network. Search tools were rudimentary, Web content was difficult to create and interactivity was limited. That’s all changed. Today is easy to create Web content. Computing power, storage and bandwidth costs are declining rapidly. The open-source software movement has dropped the price of software to near zero. Search engines have become a better marketing channel than email. Google AdSense and affiliate marketing networks can generate income for Web site operators, even at low traffic levels.

So here’s where the spiral begins. Newspapers’ advertising business will be gone in 10 years, a victim of the superior results and economics of search-driven online advertising. The department stores and cell phone companies that sustain newspapers’ advertising business will apply intense pressure on papers to bring down prices. Newspapers will be forced to lay off staff in order to maintain margins. Cuts in services will lead to cuts in editorial coverage, making papers less relevant to subscribers. Once this spiral begins, it will accelerate with breathtaking speed. And it has already begun.

Experience has shown that business models based on proprietary products collapse when confronted with competition that is open, standardized and less expensive. It’s happened in consumer electronics, telecommunications, computers and household appliances, and there’s no reason it won’t happen in media.

History has also demonstrated that business models based on scarcity collapse in the face of abundance. The whole newspaper model is predicated on the idea that timely information is hard to come by. But information is now cheap and abundant.

The sole advantage that newspapers still have is their reach in local markets. But that, too, is changing. Search engine makers are figuring out how to provide value in local search. These forces are converging to attack newspapers’ last refuge. In 10 years, probably a third of metropolitan daily print newspapers will be gone. What will replace them? And what will the new journalism look like?

What emerges from the rubble of the newspaper industry will be a fresh, vibrant and very different kind of journalism. It will make a lot of traditionalists uncomfortable. It will force us to re-examine our assumptions about everything from readership to libel law. But it will ultimately be an evolution of the profession into something that is richer, more inclusive and much more dynamic than anything we have ever known.

The craft of journalism will evolve to include far more aggregation and organization than it has in the past. Editors will assemble their reports from a vast library of resources located across the Internet. Some information will come from paid staff writers, others from freelancers and still more from reports and opinions published by independent third parties and even competitors. Editors will still have a critical role, but their value will increasingly be in assembling and organizing information for readers who don’t have the time to sort through the vast Web.

The craft of reporting will become faster and more iterative. Rumor, speculation and incomplete information will be published far more readily, on the assumption that errors can be corrected. Stories will, in essence, be built in real time and in full public view. Readers will be a central part of the process, correcting and commenting upon articles as they are taking shape. Reporting will become, in effect, a community process.

This new model will be very disruptive and very controversial. The idea of publishing information which have not been double checked and of actively involving readers - who have no formal relationship with the news organization - in the reporting process will be too much for some editors to accept. But this is where journalism will go, and it is happening now, every day, on blogs and community media sites across the world. There, authors publish information that is unverified and unreliable. They do so with the expectation that their readers will set them straight and that the truth will be arrived at through a process of publishing and correction.

Journalism will become much more local. As the cost of publishing falls to near zero and citizens become more comfortable with the tools of publishing, thousands of mini “newspapers” will form around different geographies and topics. Aggregation sites will emerge to sift through and organize the reports and conversations going on in these small communities. Many of these sites will involve human editors who understand the needs of their audience and monitor online activity on their behalf.

This will be a complete rebirth of journalism around the concept that information is plentiful and cheap. Instead of 1.500 print newspapers, there will be five to 10 national “super-papers” and thousands of regional and special interest community news sites. The new model will create a more dynamic and diverse information landscape than we have ever known. It will be incredibly exciting.

What is happening to the newspaper industry will have a significant impact on the PR industry. The printed press has been for decades one of the most important targets of public relators. Newspapers are disappearing and journalists are decreasing in number: specialists are becoming generalists, and staff is shrinking to the point that there are already several “one man bands”. This increases the difference between good and bad PR, in term of results.

Today, a good PR agency is a professional boutique capable of ensuring coverage on paper and online thanks to the quality of the contents that is capable of generating and providing to traditional and social media. Today, the press release is just one of the tools, and its quality - given the extremely short time available for reading and judging its content - is more important than ever. Therefore, the PR agency capable of writing “good” press releases in a consistent way has more chances to see them published, and can also multiply the opportunities thanks to the capability of transforming any suitable information in viable content.

Unfortunately, companies have not understood this evolution, and insist in choosing large PR agencies - although they already know that the account, after the first meeting, will be handled by juniors which are supposed to be there to learn the job and are totally unable to provide any decent output - which regularly fail in reaching any target (even the least ambitious). Hopefully, time and experience will change this situation.

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