Saving The News

Wednesday, 10 October 2018, 10:51 am
Opinion: Alastair Thompson

In 2015 with support from our wonderfully supportive crowd, one of NZ’s oldest pure-play digital media companies Scoop.co.nz emerged from Operation Chrysalis and became NZ’s first charitably owned news company, under the wing of the Scoop Foundation for Public Interest Journalism.

Three years later the evolution of the now 19-year-old news company is entering a new phase - an institutional renewal project which we are calling Scoop 3.0. This week we launched a crowd-funding and crowd-selling campaign on PledgeMe with two objectives, bringing Scoop’s proven new business model for news back into the discussion over the News Crisis, and to raise some funds to kick-start the next phase in the evolution of the Scoop project.

Scoop co-founder and former editor Alastair Thompson backgrounds the Scoop 3.0 project – and invites consideration of the question – what if there were no news?

Contents:
Part 1: Why The News Needs Saving
Introduction
Watching, Waiting, Seeking Sustainability
News Crisis Update
. . .StuffMe & Mediaworks
. . .The News SOEs
. . .NZ’s Second Tier News Publishers

Part 2: Scoop 3.0 - Taking The Scoop Model To The World
Scoop’s Much Needed, But Little Heralded Solution
Scoop’s history as an innovator and incubator of NZ online news
Raw Content + The Ethical Paywall = A Solution To The Crisis
Introducing Scoop 3.0

[The images in this post recall several successful crowd-funding campaigns that got us this far. To the more than 1000 Kiwis who assisted us.... thank you. All images by Scott Broadley]

Introduction

As I write I can already hear the rebuttal.

But does the news need saving? Why would we want to? Isn’t the news just crap anyway? Fake? It looks to me like the news industry is doing just fine – just look at the flashy suits and glam frocks on the box? News, who needs news when you have Facebook?

One of the saddest aspects of the decline of the news industry, not just here in NZ - but everywhere, is that it often seems invisible, in large part because news is a confidence business. News is powerful. News publishers are important. This is a key part of the news industry’s core shtick.

When Scoop Co-editor Joseph Cederwall was reviewing this piece earlier today he asked what I meant when I said this:

“Newsmakers in business, politics and civil society tend to be much more concerned about the quality of, or absence of, news about themselves, than about the continuing decline of the overall news industry.”

Leaders of NZ, in politics, business, civil society, culture, public relations in fact pretty much everywhere are unaware of the titantic struggle for survival that the news media has been engaged in for the past decade.

Their concern about the news media is therefore not about the existential threat it faces, but rather simply about their relationship with it.

But am I over stating the case here? Am I just talking up the tragedy in order to try to drum up some more cash for the struggling business I founded, Scoop.co.nz, a business I have spent two decades of my life?

Well yes, to a point. My sincere hope is that this campaign succeeds and that I will then be able to move on to other things. I certainly want Scoop to survive. And as you will find out if you read on, I also think Scoop now has something important to offer to the rest of the news industry, an approach to thinking about their core business which is at least worthy of consideration.

But that is not the core purpose of this latest Scoop PledgeMe campaign. If NZ doesn’t think it needs Scoop that’s fine, it will go the way of a legion of other publications and disappear into the darkness.

But if news dies, then everything that we hold dear, our freedoms, our organisation, the rule of law, all of it, will fail. Because the Washington Post is right, Democracy will die in darkness.

And so the core purpose of the campaign that Scoop is running over the next two months is to break the glass. To alert news consumers, news makers and voters to the simple truth – the news industry is dying. From where it is right now, what remains of NZ’s core news reporting capacity would be wiped out by a recession. There is literally no gas left in the tank. And that is why Scoop is now hatching a cunning plan to “Save The News” and to enlist your help in getting that work done.

Watching, Waiting, Seeking Sustainability

It’s a hard road creating a sustainable media business which is not based on advertising (just ask our larger brethren), but after doing the hard yards for the past 36 months we are nearly there. Over the past 12 months 90% of Scoop’s revenue came from our integrated ScoopPro approach to professional subscription services and copyright licensing.

The dedication of a small team of Scoop staff and volunteers has proved the viability of this completely new approach to funding journalism, news collection and curation. We’ve experienced a lot of two steps forward one step backwards (cancellation of large contracts) – which is why it is taking longer than expected to get fully back in the black. But we are making steady progress, and we have done so entirely through boot-strapping – and with the assistance of our crowd.

During this three year period Scoop has also largely kept its head down - watching from the sidelines as larger - far better funded - news organisations have navigated their own paths through this period of existential threat to the very existence of quality news media in NZ. And we have also watched as two new independent publications with similar aspirations and hopes to ours – NewsRoom.co.nz and TheSpinoff.co.nz have rapidly moved to the front of the class. We are greatly encouraged by their success, and wish them more of the same, but we do not want our readers and clients and supporters to believe that they have solved the gnarly problem of news monetization because they most definitely have not.

As you will read below, the results achieved by NZ’s major news companies are mostly pretty negative, and what is markedly absent across the board is any sign of successful innovation. Advertising, an industry that has abandoned news as its vector, remains the only real source of revenue for any of them.

And this is why we think what Scoop has done is special and deserves your support.

We may be a bit like the tortoise in this race, but those who remember that story will recall that in the end the tortoise won.

And while doubtless the news media giants who have ignored Scoop’s approach for the past three years will continue to do so - the purpose of Scoop’s latest return to the Crowd-funding – Crowd-Selling stage, is to try to draw their attention, as well as that of policy makers, and the wider news publishing world, that here at Scoop.co.nz we have the foundations of an entirely new, viable, long-term, legal framework for funding an next generation innovative, competitive and public-interest focused news industry that is not dependent on advertising.

The News Crisis

But before we get to that, let’s review what has been going on in the business of news in NZ lately.

While a lot of news about the business of news is reported on Scoop (BusinessDesk does the hard yards for us on that), it rarely gets much prominence in the wider news universe. News companies see little value in exposing their weaknesses. And few people pay much attention to business news at the best of times. And for their part newsmakers in business, politics and civil society tend to be much more concerned about the quality of, or absence of, news about themselves, than about the continuing decline of the overall news industry.

From a markets based news perspective, the news industry is now so marginal in profitability terms it barely rates a mention. But recent events in the UK (Brexit) and USA (Trump) amply illustrate the commercial failure of news has wider consequences – and these issues are beginning to get a bit of play, albeit more usually at a trend level than in specifics.

NZ is not escaping the trend towards a less informed body politic.

Do you ever get the impression that NZ politics news is becoming increasingly narrowly focused on, perhaps even fixated on trivia? And do you ever wonder whether this is perhaps a contributing factor in the failure of our political system to address significant challenges that NZ faces?

I do, and as a consequence I keep a very close eye on what is happening in the NZ news media. And it is far from a pretty picture.

StuffMe & Mediaworks

This year Stuff (formerly Fairfax) has started shedding newspaper titles like a pekingese with alopecia in an effort to keep itself on the right side of the profit/loss ledger. It appears to have pinned much of its digital business model hopes on Neighbourly.co.nz, the latest directory service startup from the house of Shane Bradley, this time dressed up as a social network. Bradley is best known for a series of startups he convinced NZME to fund through the early noughties, including Groupon lookalike GrabOne.co.nz, the free-classified site sella.co.nz, and an early yellow-pages competitor Finda.co.nz (eventually sold to Yellow Pages). Of these three only GrabOne remains as an NZME business unit.

Stuff’s main competitor - and would be merger partner - NZME is similarly struggling to call itself a business these days, announcing in its latest results that it has little scope left to cut costs, and reporting that it is borrowing to fund its pitifully small dividend outlay to the financial institutions who now own 86% of it.

For its part the former employer of the marvelous John Campbell, whose show was closed down Mediaworks is also continuing to report losses even as it continues to receive very significant funding from NZ On Air for its drama, comedy and reality TV offerings.

In summary NZ’s corporate news giants are in disarray.

To put the decline into some perspective, since 2003 Stuff’s news assets have experienced a 96.4% valuation writedown, and not simply because doing so is a means of generating tax losses, in the case of Stuff’s assets they are worth 96.4% less because they are stuffed.

The News SOEs

Meanwhile in the Govt. news company portfolio the story is a little more positive. TVNZ has just experienced its first year of stable revenues since 2012.

RNZ has also been benefiting from the first signs of Govt. largesse directed at it in a decade & is now partnering with NZOnAir as a funder of news innovation. It has also been winning both the most commonly cited bright spot in the world of news stakes, while growing its ratings and showing an increasing capacity to innovate internally. It is undoubtedly now the brightest star in the fading constellation of NZ news publishing. But it is not at all commercial.

NZ’s Second Tier News Publishers

In the second tier indy-commerical world the results have been less encouraging.

The best in show position on a commercial basis probably belongs to Allied Press, the newspaper group based in Dunedin which owns the ODT and which has proven the value of sticking to its knitting, serving subscribers with relevant local content and keeping its focus on print advertising revenues rather than chasing the chimera of digital cash.

At the other end of the spectrum, former indy-business-news-heavy-weight NBR appears to now be nearing implosion. It has been shedding staff and melting down in public recently. NBR owner Todd Scott has been talking up the idea of mounting a Stuff takeover, but it doesn’t seem a likely prospect. The messy state of this decades old stalwart business news brand is something of a tragedy when it comes to talking about commercial news innovation in NZ. Scott and NBR had been the leading proponent of the paywall business model in NZ news.

But the underlying story here is one of flawed foundations. The astronomical vendor financed price that Scott reportedly purchased the NBR off former owner Barry Coleman for - $12 million - has become a millstone that the business looks unlikely to ever be able to generate enough profit to pay.

What happens next at the NBR is probably now up to Coleman.

Across town the feisty newcomer to the indy-news game TheSpinoff.co.nz has – while approaching its fifth spin around the sun - become the news institution for the erudite. That said, it too is still trying to work out how it can make itself viable in the long term. Its mix of sponsorship, advertising, and content based business models - while solid enough thanks to some strong business alliances - has recently taken a hit as it tries to navigate a digital advertising world completely dominated by Facebook and Google.

Speaking personally the colourful Spinoff crew remain my personal favourite flag-bearers for the new age of news.

While TheSpinoff is one of the very rare news publishers in the world that pays for freelance submissions, the rates being paid are for the most part more akin to tokens of appreciation rather than a complete reflection of the work that goes into producing serious journalistic work.

New kid on the block NewsRoom.co.nz arrived on the scene in 2017 like a shooting star – winning awards galore in the 2018 Voyager awards and deservedly so. But behind the scenes its path towards sustainability is difficult to plot. Newsroom appears to be heavily dependent on support from its founders, a limited cluster of corporate sponsors who are paying significantly over the odds for association with quality journalism with limited reach, and some brave start-up investors. NewsRoom too was hit by Facebook algorithms.

In the end the underlying realities for NBR, TheSpinoff and NewsRoom are this: the success of their premium advertising business models rest on the assumption a group of corporate advertisers will continue to pay a order of magnitude premium for the benefit of working with innovative small media outlets with high quality informed, decision maker audiences vs what they could be paying at Facebook, Google, Stuff and NZME for similar marketing impact.

Scoop is very familiar with this business model as it used to be ours - before we concluded that if we were to survive, advertising revenue would need to be the cherry on the top, not the cake that forms the foundation of the business.

Scoop’s Much Needed, But Little Heralded Solution

Which is not to say that Scoop is performing like a commercial hero in comparison to our indy-digital news brethren. We most definitely are not. But our cost structure is an order of magnitude smaller – and our traffic levels far less dependent on social media promotion.

Rather, what Scoop is seeking to say today – to everybody - is that we need to start seriously looking for a new means to fund news – otherwise what remains of the news industry NZ is surely headed for a sticky end. Right now it is hard not to come to a conclusion that the news industry in NZ is on a path towards the business equivalent of congested heart failure.

And in the context of this - Scoop’s our unique selling position in the increasingly dysfunctional NZ news market is getting stronger. We alone have a non-advertising, non-paywall based revenue model; a strong and stable readership that relies on us for what we do; and far lower costs than any of our competitors.

Yet in the three years and four months since Scoop introduced its ethical-paywall only Radio New Zealand’s Mediawatch and NBR have covered our approach to the business of news. “Not Invented Here” syndrome appears to as pervasive now as it has ever been in the news media.

Looking back I remember very clearly in August 2015, shortly after our ethical paywall launched, pitching to an All of Government advertising panel procurement meeting about native advertising alongside NZME and Stuff. The pitch meeting provided an opportunity for me to talk briefly to Sinead Boucher, then Stuff’s editor in chief about our approach. Sinead who is now the CEO of the giant in NZ digital news publishing, appeared interested, but nothing has happened. Stuff hasn’t ever written about our news model, or indeed about Scoop at all – albeit occasionally referencing Scoop as a source for a picture without even saying it is a news organisation or a website.

Rather than considering following in Scoop’s footsteps, Stuff has all its eggs in the neighbourly basket – hoping on hope that lost cats, jumblesales and the tradie market will somehow rescue them.

Over at NZME according to recent reports the NZ Herald is now reported to be considering reinstating a porous paywall - similar to the one they had back in the early noughties - which restricts access to a portion of their content and encourages print subscription by bundling it print subscriptions with paywall access.

While this is not such a bad idea - why they have not even considered following in Scoop’s footsteps in terms on the ethical-paywall approach is a mystery to us. Scoop’s right’s based licensing approach to seeking institutional funding for news could potentially generate significant amounts of corporate and Govt. revenue for them, far greater than it does for us.

And this is part of the reason we believe we continue to have much to offer the NZ news industry - besides providing a great way for the country’s journalists to quickly check the spelling of names and official titles of newsmakers, and to research the past two decades of news history using source material.

In addition to providing a back-up source for reliable, timely situational intelligence to our readers (professional and private), it is our hope Scoop’s example might soon begin to demonstrate a path forward for other commercial news media in NZ to right their ships. We would also like to be seen by policy-makers as fertile ground for those seeking a solution to this crisis – but while policy makers, politicians and senior bureaucrats ought to be concerned about the state of the media – in all likelihood they are not.

These days the Washington Post says in its masthead that “Democracy Dies In Darkness”. If NZ’s proud history as a healthy democracy in which the rule of law is respected and a plurality of viewpoints are able to freely coexist is to continue – then we as a nation need to find a solution to the problem of keeping that darkness at bay. A solution to funding quality news services is a necessary precondition for a healthy democracy to exist.

Scoop’s history as an innovator and incubator of NZ online news

Scoop’s commitment towards fostering healthy news business models is not a new found objective. A decade ago we became NZ’s only remaining professional news agency BusinessDesk.co.nz’s first client – and we remain their longest serving one. Over the next five years we provided BusinessDesk with a technology platform to distribute their indy news agency content to the majors.

Beginning around 2006 Scoop.co.nz established the Scoop Media Cartel – an alliance of blog publishers who pooled their traffic and shared advertising contracts. It was an approach that helped keep us relevant for longer than we would have otherwise – but one that died when the direct booking of advertising on websites disappeared in recent years.

More recently in our hometown Scoop has had the pleasure of working with the team at The Wellington APP, the latest addition to a fast growing independent network of local app publishers. These new app publishers - like Scoop – are trying to build a low cost, broad-based annual subscription funded approach generating sustainable revenue streams which can support quality local news services – in many cases (albeit not in the case of The Wellington App) in combination with local print publications.

Raw Content + The Ethical Paywall = A Solution To The Crisis

The three years since the launch of our “Ethical Paywall” in 2015 have been hard here at Scoop.

We have cut costs to the bone and have benefited from the forbearance of suppliers and collaborators to get as far as we have. That said we think our 200+ paying licensed accredited organisations speak volumes – these are businesses and institutional news users who have agreed to pay us to professionally use our content simply by reading it. We think this proves the value of our new approach.

But what is most important about Scoop’s approach is not the product so much as the principle. Scoop has over three years successfully asserted the right to be paid by organisations that decide they want their staff to have access to Scoop, not because they choose to pay us, but because they agree that we have a right to insist on being paid.

While this may not yet have resulted in us rolling in the “Rivers of Gold of yore” which lined the pockets of the news publishing moguls, we think we now genuinely have the core elements of a scalable solution to the News Crisis that could be deployed all over the world – wherever a community that requires a quality feed of actionable news intelligence exists.

And with that in mind Scoop 3.0 is about commencing that scaling process.

The primary objective of the Scoop 3.0 crowd-selling campaign which began this week is to increase the number of licensed organizations from 200 to 300. At which point we will be able to reinvest and strengthen our team, our product and the underlying technology it sits on.

Introducing Scoop 3.0

Scoop 3.0 is a multi-legged project which will roll out over the coming 36 months:

Phase One: Preparing Scoop For Investment - including co-design, business planning and recruitment;

Phase Two: Raising capital via an Equity Crowd Funding raise here on PledgeMe (scheduled to take place during 2019);

Phase Three: Rebuilding infrastructure and consolidating the business;

Phase Four: Taking the Scoop Model to the world

To find out more about the details around our thinking and reasoning please read Co-editor Joe Cederwall’s three part series:

1. Scoop 3.0 - A Global Vision and Future Focus
2. Ten reasons to have hope for a better Media in the future
3. Why The News Crisis Gives Us Hope

And then please join us, either as an individual member of the Scoop Foundation by making a donation of $25 or more, or, if you or your organisation use Scoop content professionally, then please talk to the decision makers in your organisation about signing up and bringing your professional use of Scoop within the terms of use of our site.

We can see in our logs that many 100s of organisations routinely use Scoop in their daily business – and we only need 100 more to enable us to begin to reinvest in the quality of the services that we provide.

Please think about it. Since it became charitably owned Scoop has become effectively a piece of publicly owned infrastructure which benefits the entire community. All that we require to keep this infrastructure going and improving is for those who benefit from its existence to make a modest contribution towards its upkeep.

Thank you for reading this far. If you have done so then you are a champion.

ENDS

© Scoop Media

Alastair Thompson

Scoop Publisher

Alastair Thompson is the co-founder of Scoop. He is of Scottish and Irish extraction and from Wellington, New Zealand. Alastair has 24 years experience in the media, at the Dominion, National Business Review, North & South magazine, Straight Furrow newspaper and online since 1997. He is the winner of several journalism awards for business and investigative work.

Contact Alastair Thompson

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