Robert G. Picard
VALUE CREATION AND THE FUTURE OF NEWS ORGANIZATIONS Why and how journalism must change to remain relevant in the twenty-first century
Copyright © 2010 by Formalpress | MediaXXI – Publishing, Research and Consulting Author: Robert Picard Layout Design and Cover Art: Media XXI/André Viana Machado All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying or microfilming, recording, or otherwise, without permission of the publisher. Printed in Publidisa – Barcelona/Sevilla ISBN: 978-989-8143-27-3 Formalpress – Publicações e Marketing, lda. Rua Dr. Egas Moniz, n.º 11, Loja A, 2675-341 Lisbon | Odivelas Tel.: 217 573 459 Fax: 217 576 316 geralmediaxxi@formalpress.com Praça Marquês de Pombal, n.º 70; 4000-390 Porto Tel.: 225 029 137 Cataloging Data Picard, Robert G. Value Creation and the Future of News Organizations / Robert G. Picard p. 156; 23 cm. Includes bibliographic references ISBN: 978-989-8143-27-3 1. journalism — economic aspects 2. mass media — economic aspects
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TABLE OF CONTENTS Introduction..................................................................................................... 9 1 - An Industry in Turmoil .............................................................................11 The Challenge of Audience Needs and Wants..............................................16 Media Proliferation and Audience Changes..................................................22 Social Changes, Institutional Relationships, and Organizational Trust..........23 Changing Business Models......................................................................... 27 The Growing Malaise in News Organizations............................................. 32 A Paucity of Leadership.............................................................................. 34 2 - Value, Values, and Value Creation............................................................. 43 Types of Value .......................................................................................... 49 Value and Values.........................................................................................51 The Need for Better Value Creation............................................................. 54 Value for Different Stakeholders................................................................. 56 3 - Strategy and Value Creation...................................................................... 65 The Value Creation Approach..................................................................... 67 Value Creation Varies Over Time................................................................ 70 4 - The Value of News, Information and Journalism....................................... 77 Influences Created by Journalistic Activity................................................. 83 Value, Volume, and Commoditization of Information............................... 85 Value and Speed of Information Distribution........................................... 89 Value and Distance to News Events..........................................................91 Value of Exclusivity of Information.......................................................... 94
Value of Specialized Journalism and Information..................................... 96 Value of Cross Media and Repurposing Activities...................................... 98 Limitations of Current Value Creation Approaches and Strategies ������������ 101 Information, Knowledge, Experience, and Understanding.......................... 101 The Need to Add Value to News and Information.......................................104 5 - Value and the Future of News Organizations...........................................109 Increase Value or Face Demise................................................................... 110 Increasing Value for Consumers............................................................. 110 Increasing Value for Journalists.............................................................. 112 Increasing Value for Investors................................................................. 112 Increasing Value for Advertisers............................................................. 113 Increasing Value for Society................................................................... 113 Raising the Value of Content..................................................................... 113 Emphasize Journalism and News Processing........................................... 116 Specialize or Localize............................................................................ 116 Change the Emphasis of Coverage.......................................................... 118 Provide Salvation from the Flood............................................................ 118 Become the Trusted Advisor...................................................................120 Use News Organizations’ Certification Abilities....................................... 121 Emphasize Ease of Use and Convenience................................................ 121 Become the Preferred Provider across Platforms.......................................123 Provide Participation in Journalism Processes.........................................125 Create Compelling Experiences............................................................... 127 6 - Raising the Value of Content and Content Services..................................131 Bibliography..................................................................................................137 About the Author..........................................................................................151
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Introduction T his book addresses fundamental questions about the sustainability of news organizations, considering value created by journalism, why and how audiences’ perceptions of the value of news and information are changing, and what the changes portend for the future of established news organizations and their traditional role in democratic processes. The impetus for the study involves questions of why large numbers of consumers are willing to pay for entertainment but not news and why many do not use news even when it is provided free or at a low price. The books explores the concept of value, how it is related to and determined by values, and how value is created in the gathering and preparation of news and informational content and in the packaging of content in the forms of newspapers, newscasts, and news agency reports. It examines news, information, and journalism from the value creation perspective, exploring the social, functional, and economic value of news, addressing the effects of volume of information on value, and investigating the commoditization of news and information and its effects on value. The project addresses the differences in value of information, knowledge, experience and understanding and why much contemporary news and information is perceived to have limited value. It considers the need to increase value in news organizations, implications for how news and information are gathered, processed, and presented, and how news organizations relate to and interact with their audiences and consumers. Value creation is influenced by the traditions and processes behind the creation and dissemination of news and information and the underlying cultural norms and philosophies of those journalistic activities. Historically, much of the focus of value in journalism has been on the value of content as defined by the norms of journalists and news organizations, which have been influenced by a progressive philosophy of enlightening, educating,
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and mobilizing the audience to take part in social life and democratic processes. The book focuses on how the contemporary environment has shifted the determination of value from journalists to audiences and the implications of this change to news organizations. The value creation perspective asserts that value is in the mind of the consumer and is a measure of worth or importance placed on a product or service. Today, there are clear indications that consumers’ views of the value of contemporary news and information are relatively poor given their unwillingness to make significant temporal and monetary expenditures for that content. This would tend to indicate that much of the news and information as currently provided by many news organizations is unable to create functional, emotional and self-expressive value for its users. The book explores the tensions between issues of journalistic and consumer value and between the concepts of citizens and consumers. It shows how some efforts that produce market-driven journalism have been marked by limited understanding and poor application of strategic theories and practices and how they have diminished rather than improved the value of news and information. Ultimately, the project addresses strategies for increasing value and improving the sustainability of news organizations. There is no magic formula for journalistic value creation because news organizations vary widely in their functions, settings, and processes and each faces unique challenges. But all need to undertake processes to understand how they create value, what value they create today, the limitations to the creation, and their potential for creating new and additional value that will improve their abilities to serve stakeholders in the coming years.