Speaking truth to power: my speech to the CBI

On Thursday this week (June 10), I’ve been invited to speak at the Senior Executive Lunch of the West Midlands CBI. I’ve been asked to talk about “Tomorrow’s news today -  changes to regional media and what the future holds for news journalism.”

It’s a well-worn theme and I’ve spoken on this at many events before, but mostly to media-dominated audiences. In front of an audience of very senior business figures, I thought I would try to give them an insight into where the media is going, and even steer them towards the realisation that smaller media enterprises will become more and more significant in the near future.

This is my first draft, and I’d welcome suggestions for other points to make to this audience.

(June 9 update: thanks for all the challenging and thought-provoking reaction to this post. I never expected to get such a response, as I said nothing here that I've not said before - mostly on this blog as it happens. In the light of yesterday's announcement by Jeremy Hunt that IFNCs are dead, I'll try in the speech to better represent broadcasting issues. For the moment, though, I've concentrated on tidying up some of my editing howlers on this draft and will try to update more fully later. June 10 update: I added a couple of pars about IFNCs and the Jeremy Hunt announcement. They're pasted at the bottom of this post)


Journalism has no God-given right to exist and journalists are owed a living by nobody.

By the same token, none of you have any ‘right’ whatsoever to receive a daily print newspaper that provides you with hundreds of stories focused purely on your needs as a senior business decision maker in this tiny outpost of the global economy.

Sadly, listening both to both journalists and to readers over the past few years, you would think that news journalism was like the air that
we breathe – ubiquitous and free. Unfortunately it’s not. Even if you’re the BBC – state-run and paid-for by us anyway – journalism has to be bank rolled by somebody, somewhere down the line.

For as long as newsprint held a near-monopoly as the major delivery channel for advertisers, none of us really had to worry much about this. The arrival of TV advertising coincided with a 50-year consumer boom, so a few lost readers didn’t worry the newspapers much, living high on the hog of ever-growing ad revenues.

“We survived TV so we can survive anything” is still a far too commonly heard mantra of newspaper people.

But when the internet finally got into gear between five and ten years ago, it did three things:

One, it started occupying a bigger and bigger slice of the average person’s time per week – time that may in the past have been spent browsing a newspaper. But they weren’t just looking at digital versions of what might have been in that paper – they were travelling the globe from their laptop buying and selling on ebay, and talking to thousands of people on social media services. Suddenly the clunky utility and quaint warmth of your local paper seemed a lot less attractive.

Second, it gave advertisers a much more cost-effective way to reach audiences. When the classified advertising site Craigslist launched, it took hundreds of millions of dollars of advertising business from major city papers in the US, several of which have now closed. Why spend £600 on a tiny job ad in your local paper which may be read by a few dozen people when £100 will put it on a myriad of jobs boards browsed by thousands of active job hunters daily?

Third, the web rode a perfect storm as the recession stated to bite three or four years ago, forcing businesses to spend reduced marketing budgets much more wisely and in a much more targeted way.

Suddenly, everything was conspiring against the newspaper business.

But don’t feel too sorry for it.

I spent the last 15 years of my newspaper career regularly attending industry conferences in which the threats and opportunities of the internet were endlessly discussed and analysed. Pretty much everything that has come to pass was predicted, but what did the big newspaper groups do? Very little that was right, it turns out. Saddled by a shareholder base that had grown used to the cash cow returns of a monopoly, the regional newspaper industry in particular was structurally incapable of adopting the entrepreneurial approach that is the only option available when almost every aspect of your business model is rendered obsolete.
So, where are we now?

Hundreds   Dozens of newspapers in the UK alone have shut. Thousands of newspaper staff have been made redundant. Readership numbers and revenues for those titles that survive are a fraction of where they were just a few years ago.

Every newspaper has a website – some considerably better than others.  So if the internet is the answer, all these online newspapers are doing fine, right?

Wrong. Still the woe continues – the internet hasn’t fixed the newspaper business model – precisely because it remains the newspaper business model.

Newspapers are still trying aspiring to the revenue levels of the old days, so the mantra is: ‘”You can’t make money from the internet ... Lose a pound in print advertising, make a penny online.”

Well, that’s true – but it’s only a problem if you’re trying to make an online revenue stream pay for a newsprint cost base.

Despite all the slash-and-burn cost-cutting of the past few years, the newspaper business is balanced precariously atop extraordinary pensions obligations, massive ongoing capital bills for print plants, and debt that was affordable when cashflow was fuelled by lorry-loads of classified revenues but is now raping the bottom line.

So even ‘forward thinking’ online-minded, digitally enabled newspaper groups are trying to fight with several limbs tied behind their backs. No wonder they say ‘there’s no money in online advertising'.

What’s left for them? Cue the desperate hope that so many of them are attaching to Rupert Murdoch’s decision to make readers of the Times and other newspapers pay to read the titles online.

That’s the answer they cry – make the buggers pay to read us online. They pay for a newspaper, so why not charge them for digital access? Hurrah!

This is such a wrong-headed argument I hardly know where to start to demonstrate to you its folly.

Let’s start by looking at the very premise that you pay for a newspaper anyway in the first place. Well, you do, but that’s all you do – you pay for the very paper you hold in your hand. Your 70p goes absolutely nowhere to meeting the full costs of what you’re reading – the journalists’ salaries, the IT and all the other component parts of  complex business producing a highly perishable manufactured product. The difference is subsidised by advertising or the depth of a proprietor’s pocket – or both. If consumers were truly ‘buying’ and therefore valuing the journalism itself rather than the means of delivery, they’d happily pay £5 per copy of the Daily Rag. But of course they don’t – and won’t ever - but that’s exactly what paywall fans think will happen online.

With a newspaper, all you’ve bought is the delivery channel – the paper and perhaps the space on the newsagent’s counter. Just as now you’ve paid £700 for your home PC, £30 a month for your broadband connection and perhaps another £30 a month for your smartphone.

Is it any wonder that people are so reluctant to ‘pay for content’ online? They’ve already stumped up more than they ever did to buy a newspaper two or three times a week, so why should they add to the burden by paying for content that is available elsewhere for free?

Often when I give talks like this, it’s at this point that many in the audience think – and often say – “Ah, but I really like a newspaper in my hands; I can’t read  a little screen; the internet is full of nutters etc etc.”

Well, all of that may be true, but the market doesn’t care what you think, anymore than it would if you said you’d rather travel by steam train. Another technology came along to replace steam, and most people liked the convenience and speed, leaving nostalgists to form special clubs to re-enact the wonders of the old days.

And that’s what frustrates me most. When hard market facts tell us the media business is only going in one direction, you have nostalgists like Chris Bullivant recapturing the days of yore and launching old-style newspapers – and what’s worse, big players like Trinity Mirror humouring him by spending money on funding counter-launches when they should be moving their brands online ever more aggressively.

But I suppose I more than anyone shouldn’t be complaining. After all, I’ve put a 20-year newspaper career behind me and have firmly tied my colours to the online mast.

TheBusinessDesk.com is a purely online entity that provides highly focused, targeted news stories at a very tightly defined niche – business leaders and professionals in the English regions. We deliver that content in very particular ways – mostly through a daily morning email with links through to the website. While we have an Iphone app and  other major developments on the way, what we do is essentially very old-fashioned. Good, solid journalism published in a timely way and paid for by advertising. We just happen to be using new delivery tools to the best of our ability, and our exceptionally low-cost business model means we stand a chance of being around serving our readership for a long time to come.

Our growing readership and revenue numbers suggest it’s a model that works for us and our customers and we’re certainly optimistic that there’s great potential for the growth of the business.

But I’m also optimistic about journalism.

Does journalism have an important role to play in a democratic society? – you bet it does.

And do you need daily information that helps you live your life and do business profitably? Of course you do.

Journalism that’s good for society and good for business can and will survive – but only if it is part of a profit-making industry sector whose growth and sustainability makes it an attractive prospect for shareholders. 

I believe the biggest challenge to journalism is not the internet – it is the inherent inability of the largest media groups to squeeze from it the revenues and profits they’ve been built on. It is also the tendency of too many journalists to leave ‘business issues’ to the money men and ‘the management’.

The sooner more of them get down and dirty in the guts of what can turn a small idea into a successful business, then I think we’ll have a lot more answers to the question: “where is news journalism headed?”

(These lines were also included in the speech:
And that brings me neatly to this week’s announcement that the government favours the idea of 80 city TV stations based on the US model. It has scrapped three pilot schemes for Independently Funded News Consortia which would have delivered region-wide public service news, some of which would have replaced the currently inaffordable local ITV news programming.

I helped advise the government on the selection of the bidding consortia, and I firmly believe the pilots would have helped answer some of the burning questions of what regional news looks like in the 21st century. Sadly, because of Jeremy Hunt’s apparent nostalgia for old-fashioned telly stations, we face another two or three year delay before his alternative can be truly tested. I fear by then it may be too late. )