Tuesday, September 18, 2012

There are still some newspapers valuable

NextMedia, which is a main media group in Taiwan, was reported to sell its printed media sector in Taiwan very soon. And the price of the sector could be more than USD 300 million. Actually,  NextMedia is a relatively new media group in Taiwan. Its first weekly magazine was published in 2001. All of the information provided by NextMedia have many pictures. One of the famous slogans is “If there is a picture, it is a fact”. All of the pages are full-color and readers can always find the update on their website. While most of the newspapers around the world face serious financial problems, including advertising revenue dropping and circulation declining, NextMedia’s printed media never worries about this problem.

I don’t like the narrative style of NextMedia because it provides too much sensational information and always focuses on the bad side of an incident or person. However, there are some other important characters that make NextMedia a relatively reliable media in Taiwan (and maybe the most reliable). The philosophy of NextMedia seems to not be a newspaper, magazine or even a TV station but a “trusted information website”. I don’t know if the phrase is suitable, but when you check the information from NextMedia and other media in Taiwan, you can tell the difference. I think this difference is also why newspapers around the world are in the jeopardy while facing the challenge of new media.

Again.. content first, then others

Is newspaper in crisis? It may be absolutely true. If so, how many industries and jobs are not in crisis these days? I think there are less and less professions that are in stable position without influence of the rapid changes in technology and social system. The crisis is not simply a newspaper industry issue. Thus, it is not time to panic, which, I think, should be a point of departure.

Anyhow, next question will be how to save “Private Ryan?” The answer may be very simple: how to reach, inform, and satisfy the expectations of audiences. Of those, it seems that while how to reach and inform seems to be deeply associated with technology, how to satisfy the expectation is about news content. The former, I think, is relatively easier to handle than the latter. However, when dealing with the issue of crisis in traditional media, especially newspaper, it seems that technology is mainly emphasized. It’s clearly true that journalists no longer stand “at the mouth of a vast assembly line of information” due to development of technology in many areas. They, thus, are gradually losing their control over content and format. However, journalists still stand at the place where they can have exclusive access to more valuable information and news sources. It means that journalists can provide something novel that create value and that ordinary people cannot offer. Few readers and viewers would be contented to pay for information without something special and uniqueness, no matter how easily they can get it.    

There is another interesting solution to save newspaper in crisis; that is about payment system.

Bad journalism isn't confined to one coverage area

I wasn't really surprised at what Iris, Seth, and Nan found in their analysis of newspapers' coverage of their own struggles, and I'm not convinced that this indicated anything significant regarding the industry's coverage of itself in particular. As the authors acknowledged near the end of the paper, this is just how journalists cover business crises, period - not just in their own business.

They rely heavily on episodic framing, putting things in a narrow perspective, devoid of context. They quote industry leaders rather than looking for a broader range of perspectives. They use anecdotes and lazy, overwrought language rather than economic principles and precise, telling statistics. These are things that business journalists do, no matter what the industry.

And I think the general tone of pessimism can be explained by the overall characteristics of American professional journalism, too, rather than anything particular to covering the newspaper industry. In framing stories, American journalists are driven more than anything else by a desire to tie each individual story into an overarching narrative (even if that narrative doesn't actually add any context). The story can't just be that Mitt Romney said something stupid about half the country and the reality of who does and doesn't pay income tax; the story becomes Mitt Romney's Ongoing Problems With Gaffes.

So the struggles of the newspaper industry quite naturally lend themselves toward an easy, reductionistic narrative: "OMG NEWSPAPERS ARE DYING!!!!1" (to paraphrase Picard). Nuance, caution, tentative optimism - none of that fits the narrative. Only pessimism does, and if specifics run against that narrative, they get tossed. So the negativity is really a function of an attachment to simple narrative, not necessarily any deep-seated belief about the future of their industry.

Definition of problems

Response to: How newspaper covered the newspaper “crisis”

Most times innovative ideas do not come from extraordinary creativity. In many cases, individuals or organizations fail to properly define a problem and their solutions based on the wrong evaluation of the situation usually lead to the wrong direction. In light of that, it was interesting to read how news media described their own failure in the market.
As evidences confirmed through the paper, it was not surprising to see that the struggling news media had difficulty achieving the facts-based reporting, due to the conflict of interest or emotion-laden nature of the industry as the paper pointed out. Self-reflecting reporting cannot avoid criticism.
However, the criticism not only relies on the conflict of interest or emotion-laden nature, but also lies on their inaccurate evaluation on their failure. Increasing debts and costs, falling profits, and readership are not the causes of the newspaper crisis. Those are more likely to be characterized as symptoms of ‘ill organizations’. Instead, they should have reported the causes bringing the organizations not to adapt to new era of ‘digital world’. Moreover, they should have considered why their news value is not same as the one in the past.
In sum, their description on newspaper crisis reminds me of why they have had hard time to adapt to the new world. The innovative solutions come from the correct assessment of the problems.

Who is to blame?

There is really not much journalists can do if newspapers believe, and are right in their claim that the primarily cause of their financial crisis is "loss of advertising revenue" (table 4 in Chyi, Lewis & Zhang, 2012), because then the money problem is not [directly] due to most news consumers' unwillingness to pay for digital content, which goes back to an entirely different argument on value creation, etc. Rather, the money problem lies in most, if not all advertising departments' inability to effectively please their clients, the advertisers, in today's media environment. 

I've asked this question when Jim Moroney came to give a talk at Rosental's entrepreneurial journalism class last year, and I continue to wonder about this question today -- notwithstanding the importance of quality journalism in reaching and keeping news audiences, which is clearly something that newspapers are doing wrong with their incessant layoffs that, while cut cost, significantly weaken their "iron core"  (Alex S. Jones, Losing the News: The Future of the News that Feeds Democracy) -- if newspapers' predominate economic problem lies in their loss of advertising revenue (news consumers were never commercial newspapers' primary target in the past for revenue anyway), why do we seldom hear industry discussions on the need for new advertising models in the midst of their frequent discussions about paywalls, etc.? Even in their discussions of "new business models," most focus on finding ways to charge news consumers rather than improving their advertising strategies-- have they already declared it a losing battle against Google?

"It wasn't that the newspaper didn't have an audience. It had a huge audience. But it was increasingly an audience that read the Web edition, where advertising sells for a fraction of what it brings in the print edition" (Jones, 2009, p. 176).

Journalism not dead, in cardiac arrest

I hate to repeat myself, but I feel like the case study brought up a point from a week ago. Journalism is facing challenges because of the lack of innovation. Clinging to the past can not be a permanent solution. As a profession that is becoming obsolete because anyone can do it, journalist need to try to think creatively to save their profession.

What I didn't understand in Stepp's article was the NYT's cut out TV listings, and how he saw this as a bad thing. Now, I consider myself a pretty intelligent person, but I had no idea people still looked at that page. With things like DirectTV, your cable provider and the internet, one would think people wouldn't need TV listings in their newspaper. But when I think about it, everything in a newspaper could be found on the internet--and updated more often at that!

What's not dead is the story-telling gift of journalist. I agree with Stepp about putting more things in papers that actually make them unique and is exclusive to the paper. Bringing in more opinion pieces could increase reaction leading to interaction, especially if newspapers focused more on local happenings. Throw in some investigative reporting and we could really turn this industry around.

Is journalism dead? Well, that depends on how you define journalism. Is it a profession or merely an act? I think it is obvious that the old ways of journalism have died, and if journalist want to save their profession, then they need to take some initiative. If they have no faith in their industry, then so will no one else, including advertisers. Advertising makes up most of a newspaper's revenue, but who wants to advertise in a dying medium while they could advertise for cheaper and in color on a different medium like the internet.

Journalism isn't dead, just needs a shock to the chest.

Sunday, September 16, 2012

Economic of scale / scope could be dangerous

After digitalization, the concepts of “economic of scale” and “economic of scope” become more and more important to media and telecommunication. Media and telecommunication operators enjoy the benefits from these two economic concepts and try to maximize their advantage by merging other competitors or crossing over with related businesses. However, it is very dangerous to let any one company to become colossal, especially in the media and telecommunication business.

There were more than 10,000 newspapermen that protested the loss of freedom of press on September 1, 2012 which is Taiwan’s Journalist’s Day. One of the key appeals of this demonstration was to ask government not to permit the petition of Want-Want China Holdings Ltd., which owns a publishing company, newspaper, cable TV station, and wireless TV station. Want-Want also hope to merge with China Network Systems Co., Ltd., the main cable channel operator in Taiwan.

Want-Want’s dispute is still an ongoing problem in Taiwan. Passing Want-Want China Holdings Ltd’s application seems legal. However, there are so many predictable problems with a monster corporation in a society. Based on the hi-technology and the capital-intensive development, regulators should use the “economic of scale” and “economic of scope” very carefully.

Human nature as a factor in economics

At a glance, theories of consumer behavior seem to be very deeply related to the basic human instinct. For example, consumers tend to allocate their limited budgets and income to purchases of goods and services in a way that their total utility (satisfaction) is maximized. In most cases, as a person increases consumption of a product - while keeping consumption of other products constant - there is a decline in the marginal utility that person derives from consuming each additional unit of that product. How about in media goods? For ‘habit forming’ that may be one of human nature, Hoskins et al. argue that “consumption of cultural goods can be habit forming in the sense that present consumption not only provides utility during this period but changes tastes through the accumulation of knowledge and appreciation for the product,” which “provides one explanation for U.S. dominance of the movie industry.
Human nature can be regarded as ways of feeling, thinking and acting that human beings have intrinsically. It is true that there have been fundamental questions, especially in philosophy, about such as what the characteristics of human nature are and what causes them, which are like bases of several different approaches to ethical theories such as deontology and consequentialism. For example, what is human nature between rationality and irrationality and which one has more influence on economy? (Human Nature: The X Factor in Economic Theory) Nevertheless, as mentioned above, economics seems to be clearly based on human nature. If so, what should be considered as the most fundamental and important human nature in “media” economics?  

The selfish, conflicted rationality of human nature

Like Angela, I'll do my best to parse through some of my initial thoughts on Dr. Jensen's questions on human nature, rationality, and economic design. I suspect these thoughts are in a totally different direction than Dr. Jensen is planning on going tomorrow, but I'll throw them out there anyway.

I do believe there is a human nature, but what I think about its characteristics has been informed not so much by scientific inquiry as theological belief and study. That's getting pretty far afield from economics, so I'll keep the explanation brief: I think human nature is fundamentally selfish, though that doesn't mean all of our actions are wholly selfish - there's still room for decisions based on altruism and a desire for others to benefit, though most of our decisions and behavior are rooted in a desire to please and benefit ourselves.

As for the rationality and predictability of human nature, I'm kind of in between the economists (rational) and psychologists (irrational) on that. I think that humans are essentially rational in their decision-making, but that our rationality is fundamentally flawed. In a way, we're torn between two competing senses of rationality - what we want to do, and what we feel we should do. When those two senses interact, combine, and trade off, they produce behavior that appears at times very irrational and unpredictable.

As for the design of an economy, I think the proper response to this selfishness and conflicted rationality is not to resign ourselves to fundamental, constant selfishness and build our economic system around it (not entirely, anyway). That's a recipe for corruption and dysfunction on an ever-broadening scale. Instead, I think we have a responsibility to "protect ourselves from ourselves," as it were, and design an economic system that encourages altruism and the broader social good while also being realistic and acknowledging our bent toward selfishness. What exactly does that look like in practice? I'm not running for public office, so I don't even pretend to know. :)

News media as a marginal man in economics.

The chapters four and five explained the mechanism of how consumers and producers make an economically optimal choice in the market. Overall, the mechanism introduced in the chapters is based on the classical economic principle that many economists agree on.

However, some scholars in Economics and Sociology argue against the concept of 'homo-economicus' who is a rational and self-oriented profit taker through the new lens of economic-sociology. According to them, the assumption of 'rational individual' is not sufficient to explain the behavior of consumers and producers in real life. 
For instance, Herbert Simon, the Nobel prize winner in Economics, introduced the concept of 'bounded rationality' in explaining the decision making process of organizations. With limited knowledge and experiences, organizations as well as individuals cannot reach the economically optimal decisions. Some scholars in Behaivor Science also pointed out that organizations come to the managemental decision in order to avoid any internal conflict, instead of maximizing profits. Those claims show how fragile the assumption of rationality is in real life decision making. 

Moreover, news media industry is one of the hardest economic industry in which the principle of economics is applied because journalists put value to social responsibility over profit. Normative responsibility surpasses profit among many news media employees, especially journalists. Therefore, new approach is needed to better understand the news industry. Maybe, the cases of social enterprise might be an example.

Attributes of an eventer

One of the theories I found interesting was the Attribute Theory. It is true that it is the attributes of the products more than the products themselves. In the book they mentioned how Apple was the leader in computer sales, until Windows '95 came out, rivaling Apple's easy system. They were able to improve and offer newer attributes with their colorful '98 iMac. And let me tell you, that candy colored iMac is what changed me forever. My dad had always bought me HP laptops, but when I first saw the '98 iMac, I knew I had to have it. I had never seen a computer like it. For my birthday I received a green iMac and have never left the Apple brand. As a designer, the Apple operating system keeps on improving on their attributes, which is why I stick with their brand.

Two weekends ago I went to visit North Carolina, Virginia and Maryland. I participate in a sport called Eventing and have my goals set on competing in the Olympics one day, and flew north to find my next horse. While some people would say 'a horse is a horse' that is not true when you are looking for an athlete. There are so many attributes you have to look for when you are looking for an eventer. They need to be a good mover, brave, a nice and tidy jumper, they need to have speed and good confirmation. It is all these attributes that I have had to consider before purchasing. But to blend in with the ways of human nature, there is a natural feeling when you get on the horse meant for you. It doesn't matter to me if the horse has perfect confirmation, if I get on and I don't feel that connection, then I'll pass. It is in our nature as a rider to want that strong connection with a horse. Maybe our indian ancestors wanted that same connection with their horses. Maybe it's why our ancestors of war always wanted the strongest horses to be their partner in battle.

Here is an interesting read about some politically incorrect truths of human nature.

News as credence goods?

Thinking back to Jim Moroney's speech at ISOJ this past April (http://vimeo.com/43911345) and after reading the textbook's discussion of search goods, experience goods and credence goods, I wondered whether news companies suffer from news' being seen as credence goods by consumers where product in-differentiation, among other things, contribute to its inability to create demand?

In a way this goes back to Picard's point last week about the need for journalists to create "value," which Moroney defines as the interaction between relevance and differentiation in his talk. Nonetheless, the problem here lies in that credence goods by definition implies a direct relationship between price and demand -- while this kind of makes sense if we were to compare those free newspapers we often see in restaurants or on the streets and local newspapers in print, it becomes inapplicable when we move online because online news is still largely assumed and expected to be free regardless of the brand, etc... 

Looking forward, I wonder if news apps would become the new credence goods in the future if news companies continue to struggle with product commodification and the quest among the public for good quality journalism persists? (e.g., "I will rely on App A for news rather than App B because the former is more expensive, which surely implies better quality if nothing else...")

Dr. Jensen's questions and snowball effect

In considering "human nature," that is -- if we were to assume there are predictable, regulatory and quantifiable patterns to how human beings think or behave, I think we a priori have to accept the premise that "human beings are rational."  

As a quantitative researcher myself, I think such a positivist ontology is what allows for theoretical deduction based on empirical testing (after all, what would be the point of studying human behaviors if we believe human beings are fundamentally irrational and unpredictable?); however, such assumption is also what may become troublesome for studies of economics, for example, because as rational as we would like to be, we are by and large not rational beings -- our emotions often get in the way of our rationality; our utility-based evaluation of short term benefits versus long term consequences (and vice versa) is not always clear-cut, and our seemingly "rational" decisions are often based on things that we cannot parse out or articulate.

This is not to say that human beings are essentially unpredictable and there is no future for quantitative research in social sciences. In fact, I think most of us do share some fundamental traits that are predictable and may constitute "human nature." For example, most of us prefer being rewarded than punished in most cases, and most of us are creatures of habit under normal circumstances.  Nonetheless, the question is -- at which level of specificity does our assumption of "human nature" begin to falter due to too much variance in all kinds of known and unknown factors that influence our decision making? 

Going back to Dr. Jensen's questions about human nature and the design of an economy, which I clearly don't have the answers to... I think a question that may be also worthy of discussion or examination is --  At which point do the "noises"  (e.g., emotional responses, short vs. long term considerations, etc.) outweigh the underlying predictability we model after in studies and designs of economics? Recent history in domestic and world economy suggests that we haven't found the answer yet, but one thing is certain: "insanity is doing the same thing over and over again and expecting different results" (Einstien).

Perhaps asking different questions is not the solution nor proper response to the questions that have already been raised, but for someone like me who often have more questions than answers, I can only pray that some of my endless questions will somehow lead to the right way of seeking the answers...