In 2009, I was interviewed by Tim Burrowes for mumbrella and asked to share some of my ‘contentious’ views about the future of media.

Tim and I had shared a panel discussion at a networking event with two other ‘industry commentators’ a fortnight earlier. The room had been packed with journalists from the major news houses.

My ‘two cents’ had caused a ruckus far beyond anything that I could have predicted during what, I suspect, was intended to be a lighthearted ‘hypothetical’ about the migration of Fairfax papers online.

I’ve been heckled at events before (often and willingly) but I’ve never felt physically threatened, like I felt that night. I had accidentally made some already anxious people very angry.

Of course, no-one likes to think that their industry could be ripe for disruptive change — even those who are happy to predict doom and gloom for everyone else.

Tim invited me onto the Mumbo Report after the fact, I assume because the guy likes to court controversy. Much to our joint surprise, the video interview (albeit highly trimmed) prompted little more than an eerie silence.

Four years later, what initially caused ire, only to be immediately dismissed as science fiction, is now making headlines… for real.

Here’s what I said.

As part of the hypothetical, I made the observation that if your average printed newspaper costs about $20 to produce, a $2 retail price accounts for only 10% of the revenue required to put it together.

It’s important that you take this in: Between 70% and 90% of your average newspaper is paid for by the ads within it.

The misconception: “I prefer reading print newspapers and most people I know also prefer reading print newspapers. Therefore, there will be demand for print newspapers for a long time to come.”

The reality: “Consumer preferences have less influence than you think. The future of print media has very little to do with the demand of newspaper consumers, except to the extent that this demand influences its effectiveness for advertisers.”

So, what happens when 10% of advertisers decide to explore other advertising channels — digital options, perhaps?

Well, someone somewhere must cover the shortfall.

Either, the consumer must pay more (maybe even double what they were paying before) or the paper must shrink in size or fall in quality or a combo of these things must occur. Any of these outcomes are likely to reduce the number of people willing to buy ‘the paper’.

The outcomes needed by the advertisers are likely to then be undermined and, as a result, more advertisers begin to explore alternative options, and the cycle starts again… but faster. (Another 10% of advertisers leave, the rrp goes up, exodus of paying readers, advertising becomes less effective, another 10% of advertisers leave, the rrp goes up, exodus of paying readers, advertising becomes less effective, another 10% of advertisers leave etc etc etc.)

In the case of Fairfax, a third option emerged. Year after year, the company instead has elected to take massive losses and, of course, no one can argue that this is sustainable — unless your agenda is something other than profit. (Enter Rinehart?)

So, let’s look at the purpose and the role of journalism.

Many of our modern newspapers once held nothing other than advertisements.

Of course, clever proprietors began to realise that an interesting story or two might entice more readers… to look at the ads.

As a consequence, modern journalism was born:

A device to get more people to look at the ads.

This is a slightly cynical observation and, of course, the model has never been that simple. Some media products do exist on a pure subscription, user-pays model.

There are also vanity publishers — people who are happy to publish media at a loss, to pursue a social cause or personal agenda. (More on that in a moment.)

But these are usually the exceptions to the rule and most definitely not the case with most contemporary, commercial newspapers — the ones in so much strife. These were largely built on classified advertising sales (one of the first types of advertising to make the shift online).

This begs the following extended question:

If journalism exists to support advertisers and if these advertisers find more cost effective alternatives to reach their markets, what is the purpose of a journalist?

The conventional wisdom (usually the least accurate type of wisdom) is that the purpose of the journalist is to inform and educate and ask hard questions that need to be asked. Sadly, it’s never been that simple.

Without undermining the important role of journalists, what I have described above is a ‘job description’. (And it’s a bloody important job, at that.) However, the commercial purpose of journalism has not changed… much.

Its purpose is still to sell ads in most cases (i.e. attract the attention of consumers in online environments). But, in many new situations, it is now also to attract traffic and get more people to notice a company’s call-to-action. (Can you see where I’m heading?)

To me, the future of journalism can be found within the answer to another question.

Who profits most from owning the news?

In the media and marketing landscape we are now familiar with (and have grown accustomed to over our lifetimes), the media industry obviously has the most to gain from owning the news and, therefore, the eyeballs of consumers.

This is because, for the last hundred years, extraordinarily large amounts of profit could be made from selling advertising space due to the limited number of ways that were available for advertisers to reach their audiences.

The model was simple:

Acquire the attention of consumers. Then rent it.

Over the past decade, however, a seemingly limitless number of ways have evolved to reach a prospective customer or communicate a specific message to a pre-defined audience.

The money to be made by media companies from owning the news and renting the attention of consumers has just about dried up. It’s no longer the cash cow it once was.

So, if media companies no longer have so much to gain from owning the news, who does?

Advertisers as Renters

The answer reverts back to the concept of advertisers as ‘renters’.

In the past, a marketer could prepare an advertising campaign and be quite confident of reaching possibly millions of largely undistracted eyeballs.

The shot-gun marketing approach was an efficient marketing mechanism for the best part of a century because the value generated would exceed the cost of the exercise (we can only assume).

Nowadays, the same sort of blanket approach is, firstly, not going to reach as many undistracted eyeballs but, secondly, the target market may in fact resent the advertiser for employing a style of advertising often now referred to as ‘interruption’ marketing (thanks to the wit and wisdom of Seth Godin and others).

Further, the ‘renter’ mindset can often undermine the quality of marketing, in terms of the message and approach.

If you rent a car, you often don’t worry too much about its re-sale value. If you rent an apartment, the same type of thinking usually also applies.

If you ‘rent’ access to another organisation’s audience, you might not think too deeply about the repercussions of the exercise on the audience’s perception of you or the media outlet – you might not mind playing the same advertisement ad nauseam during every end change of a televised tennis match, even if your commercial drives most viewers to tears.

You’re probably just happy to get your message across (again and again).

But what happens when you buy that car or that house? Suddenly, you’re likely to apply a great deal more thought to your actions, to the future value of your ‘asset’. Renters abuse. Owners respect.

So, how does this relate to the media? Well, we all know it’s better to own. So, why rent?

Business as Eyeball Owners (Not Renters)

The cost of establishing a media outlet is diminishing.

In fact, all you need these days is set up a Twitter account, launch a Facebook fanpage, a LinkedIn Group or start a blog.

But what if you are a medium or large organisation that actually has an established advertising budget? Let’s say that you’re accustomed to spending $500k (or more) a year on advertising?

For example, what if you were responsible for running a hypothetical company created to sell… say…  solar panels and you already have a half million dollar budget to spend?

You could consider these two options:

1. Place advertising in targeted magazines, on television, billboards and radio… as you always have.
2. Employ and place one journalist in Canberra, one at your HQ and one to roam the globe to cover… cleantech.

Arguably, you will soon find yourself the owner of the most heavily resourced media outlet for news on the environment and clean technology in Australia.

No other Australian media outlet invests this much talent to cover either of these topics over the course of a year. The ABC doesn’t have a full time cleantech writer. The Australian doesn’t have a full-time cleantech writer.

You would have three. And with resources comes quality.

If you play your cards right, who is not to say that your news outlet will not dominate its target market – be cited, quoted, aggregated – and attract far more goodwill and customers to your website (or business the outlet was created to support in the first place) than any traditional spend on TV, radio or print media advertising?

Of course, I know what you’re thinking. “Real businesses don’t do that, do they?”

Exhibit A: Bloggers get more leads

I have to thank one of my online marketing workshop buddies, Biagio LaRossa, CEO of communication technology outfit generation-e, for bringing this amazing piece of content to my attention.

It comes from an organisation called Hubspot — an exceptional example of ‘news and content creation’ for the purpose of customer acquisition, rather than for the purpose of courting advertisers.

This slide deck demonstrates — over 24 slides — how companies that blog not only generate more traffic but also generate more leads (and, by extension, sales).

Hubspot content marketing analysis