Selling horses when consumers prefer sports cars:
The fundamental product problem of legacy news providers in the digital world
Presentation of Robert G. Picard to the “On digital distribution’s failure to solve newspapers’ existential crisis: Symptoms, causes, consequences and remedies” panel at the International Communication Association annual conference, San Diego, California, May 25-29, 2017
Horses are magnificent animals that have been domesticated for about 6,000 years. They are intelligent, curious, can obtain great speed, and have inordinate stamina that makes different breeds suitable for tasks ranging from transportation to sport to heavy work. We hold them in high regard and describe their lineage, bearing, size, coats, muscularity, and brightness of their eyes. They are social creatures with individual personalities that are culturally honoured in art and literature and often described as noble creatures that are companionable and loyal.
Given their versatility and attractiveness, why are there so few horse dealers in our cities and why do so few of us own horses?
The answer is simply that today most of us prefer automobiles for transportation and trucks and heavy equipment using internal combustion engines for work purposes. Many of us yearn for sport and muscle cars–fast, sleek, stylish vehicles capable greater speed and covering more ground than horses. Horse trading barns and corrals that used to be found in every city have now been replaced with automobile, truck, and heavy equipment dealers. As the transformation to motor vehicles occurred over the past century, horse dealers have never argued that their problem selling horses was finding new revenue; they understood that their product had been replaced by things that served the same fundamental purposes differently.
Why is that we in journalism and information have such a difficult time accepting that legacy news products and formats are similarly experiencing competitive product displacement? Why do we see it the change as undesirable and evil? The change has been underway for a half century, with the public has increasingly exhibiting a preference for news and information presentations on television, cable, the Internet and social media. Digitalization is neither the cause nor the definitive solution to news organizations’ challenges,
We should not be lamenting the change or seeking protectionism for legacy news enterprises, but determining how to best provide credible and needed news and information in products and formats that meet the needs of the contemporary public.
How do we solve the challenges?
The challenges of changing technology, audience behaviour, and revenue require clear thinking and level headedness. In seeking solutions, it is critical to distinguish whether the focus is on journalism or the institutions of journalism. Journalism represents practices designed to ensure veracity and accuracy of news and to treat subjects of news coverage fairly. These practices developed first in print, then news agencies, and television and they now are employed by professional journalists and others embracing the practices in a variety of digital forms. The institutions of journalism are the organized workplaces and labour settings in which journalism is practiced. These institutions have produced and distributed news and information for three centuries, with commercial interests being central to them for the latter half of that history. Institutional determination of what is news and how it should be covered, presented, and distributed has been significantly influenced by institutional interests and these sometimes deviate from the best practices of journalism and information desired by news consumers.
Although there is some concern about journalism, most sustainability concerns are focused on the institutions of journalism. Journalism is evolving, finding effective ways to use digital opportunities, changing to embrace the interactivity and new functionality provided by digital platforms, and the best practices of journalism are increasingly being seen as important to the credibility to digital content. Journalism institutions and many journalists working in them, however, have embraced the idea that the challenge in the digital world is primarily how to monetize digital media and increase revenues. Only limited attention is being paid to the nature of the journalism practiced and kinds of content provided. The latter is being pursued primarily for the purpose of driving readership upward on various platforms in the wishful pursuit of advertising revenue. This institutionally focused strategy is designed to serve institutional interests not improve its offerings. Pursuing solutions to the revenue challenge masks a far greater challenge—the news product itself. The product challenge involves understanding and focusing on the public’s needs for and desires for news, public perceptions of news definitions and news presentation, and the level of consumption of news from traditional news providers relative to the overall news availability. The product perspective is crucial for understanding and responding to the contemporary challenges of news provision. It must become the motivation of efforts in every news organization today.
All products serve purposes and their popularity and survival are affected by their usefulness, available resources, changing technologies, lifestyle shifts, and social fashion. These factors have over time affected fundamental products as salt (Kurlansky, 2003), simple products such as the pencil (Petroski, 1990), complex products such as steam engines that endured for 3 centuries before being replaced by other forms of power production (Hills, 1989), and indulgences such as cigarettes that were glamorous and then reviled (Brandt, 2006). Products are reflections of the cultures in which they are produced and products are not equally successful across cultures (Rapaille, 2006; de Mooij, 2011) because they are not equally useful or do not fit lifestyles, cultural values, and individual needs.
Applying the product perspective to news involves understanding its necessity, the functions it serves for consumers, and the requirements that news products must meet. These elements are essential for all product design (Osterwalder et al., 2015; Ulrich and Eppinger, 2015). It is easier to apply product design principles to new products, but it is particularly difficult for existing firms with well-established products to adapt them over time because institutional history, culture, and practices often conflict with needed innovation.
Determining the nature of news products requires significant consideration today. News is not organic, it is based on cultural and political values and the interests of those providing it. This was less a challenge when there were few options for consumers and monopolies or near monopolies existed in news and information in print and television. Even in those conditions, journalism research showed public disagreement with journalists and editors over what constituted news and how it was presented, a sentiment that continues (Tsfati, Meyers, and Peri, 2006; van der Wurff and Klaus Schoenbach, 2014). The public is not well served by procedural coverage of politics and public agencies and constant commentary; but needs broader understanding of issues and explanations of developments (Heider, McCombs, and Poindexter, 2005). Horserace coverage of elections is criticized because it drowns out content that provides understanding about candidates’ views of issues and their visions (Craig, 2014). News of about crime focuses on salacious details of individual crimes, but rarely on its broader social implications (Graber, 1980; Romer, Jamieson, and Aday, 2003). In nearly every category of news that has been studied—foreign relations, domestic social policy, education, health, etc.—research has revealed problems associated with an overemphasis on event-centered and breaking news reporting and need and desires for more explanation in news reports (Heider, McCombs, and Poindexter, 2005; Dagnes, 2010; Stephens, 2010; Harcup, 2016). This style of reporting has continued, however, because it fits institutional needs by supported planning, reducing costs, and reinforcing clear newsbeats.
In today’s high choice environments for news and information, however, most readers and viewers have already flooded away from legacy news providers and continue to do so.
Journalism faces new economic conditions for production and distribution, new funding methods, more participatory audiences and more opportunities than in the past (Picard, 2014). This environment is challenging because journalism has never been a viable commercial product on its own. It has always been depended on subsidies and financial streams for performing non-news functions such as commercial printing and advertising, as well as monopolies and exclusivity arrangements to make it financially feasible (John and Silberstein Loeb, 2015; Picard, 2016).
Nevertheless, more types of journalism operations are present than in the past—including blogs of independent journalists and sites of digital news cooperatives, journalism produced in a range of not-for-profit, commercial, and public service institutional arrangements, as well as traditional news enterprises in print and broadcasting who now engage in diverse cross-platform activities. Never have we had such an array of journalism practice, primarily because the economics of digital environments are friendlier to news and information start-ups and digital platforms support a variety of business models (Picard, 2011).
A fundamental challenge in the digital environment is that news consumers are shifting from single destination sources to distributed media sources, increasingly obtaining their news from a variety of platforms and services. This is creating a shift away from traditional mass media markets to serving smaller audiences and individuals. This change requires news providers to pay greater attention to individual motives, needs, and expectations, personal interests and tastes, individual lives and social contexts, and the locations and settings of their individual media use. This requires news providers to have a much better understanding of their consumers than in the past, whether news enterprises might wish to or not.
News providers today must understand what the platforms and services they utilize provide consumers and what customers like and dislike about them. They must consider how they can now deliver better value, the functions they are performing for customers, the emotional and expressive needs they are satisfying, the problems they are solving for customers, how they make customer lives easier or more enjoyable, and what their expectations are and how they can be exceeded. Accomplishing that requires deep consideration of value and value creation (Picard 2010).
Fundamentally this requires news organizations to shift from a goods logic to a service logic. The focus cannot be on creating a newspaper, newscast, or online site that is available to customers, but must become a customer-centric approach in which the organization serves their needs, and helps them solve their informational and news needs. To be successful, news organizations must establish and maintain relationships with their news customers so they can anticipate and solve their needs through a variety of interactions on various platforms.
These platforms and products should not be perceived as substitutes, however. Each must be valuable independently of each other and collectively provide greater value than the sum of the individual value. The purpose of multiple platforms and products should not merely to find new customers, but to increase and improve contact with existing customers. The goal should be advance service to and extract more revenue from core customers.
Accomplishing this will requires news enterprises to seek answers to questions such as: Are we imitating others or creating a unique approach that is correct for us? Are we thinking about our technology or the consumer? Do we have a clear overall strategy and how do our individual activities support it? What partners should we have to increase the quality and benefits of our services? The answers to the questions will differ depending on the size, resources, customer base and locations, and strategies of firms. Organizations cannot achieve sustainability through imitation.
There are no easy solutions to the challenges currently facing news providers, so news enterprises must have heightened awareness of what is happening about them, commit to better servicing the long-term interests of news consumers rather than focusing on their own short-term needs, and invest in improvements that meet those customers’ needs. This is not an easy requirement to fulfil and will require deep change in the ways news organizations think about their activities and the news content they produce and distribute.
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Copyright 2017: Professor Robert G Picard, one of the world’s leading media business and media management experts. Come to join Prof Picard at the World Media Economics and Management Conference (WMEMC 2018) in Cape Town, South Africa, from 6-9 May 2018