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Feb. 24, 2009, 3:30 p.m.

Lab Book Club: A look back at the early days of online news

[For Chapters 7 and 8 of this month’s Nieman Journalism Lab Book Club selection, we turn to Tim Windsor. For more info on the Book Club, check here. —Ed.]

Chapter 7 of All the News That’s Fit to Sell, like much of the book that surrounds it, is a moment frozen in time, like Pompeii or Colonial Williamsburg. Published in 2004, using data gathered in 2000, it’s a slice of history.

But what can we learn from this detailed look into the past? Let’s jump into The Wayback Machine, crank up some ‘N Sync on your CD Walkman and let’s take a look at the state of Online News, circa 2000.

Some key points Hamilton makes:

1. Newspaper web sites’ relevance on the web — as defined by links from other web sites — and, by the way, good job on noting that key metric years before it became a common indicator of success — do not necessarily track with the circulation of the newspaper. In other words, just because a newspaper has been successful in building an audience in print, that’s not a reliable indicator of how well it will do online.

Following a somewhat complex formula, Hamilton plots where a newspaper’s online popularity should have been in 2000 versus where it actually was. The straight line in the chart below from the book represents the predicted popularity and the scatter points represent the actual popularity.

As you can see, most of the top 100 papers in the U.S. at the time clustered at the lower end of the scale, with many more falling below the line than above. The few outliers above the line are those online papers which more aggressively embraced the medium, and those below are either online laggards, like the L.A. Times, or the sole experimenter in paid subscriptions, The Wall Street Journal, which by the 2004 publication of this book had not yet turned a profit from its paid strategy (a goal since achieved).

2. As the cost of publishing online plummeted, more voices began to be heard online. These voices, while skewing somewhat toward higher incomes, were less skewed than in other forms of expression, including individuals who had published traditionally (i.e., books) or contributed money to a campaign. The earliest stages of citizen publishing on the Internet can be seen emerging in this 2000 data. 

3. Hard news is a hard sell to make to advertisers. Hamilton looked at four sources of information:  

For my snapshot of the Internet, in May 2000, I thus use four different types of information. The stories from the Lehrer program represent hard news topics. The people, groups, and entertainment products described on the USA Today Life section (front page) define soft news. The Go To queries represent consumer and producer information demand. The Lycos data represent the most popular search terms on the Internet. 

What did he find? In 2000, people searched more for things that were entertaining or personally useful and less for information related to broader social or political decisions. Not surprisingly, advertisers followed that traffic:

The willingness of advertisers to sponsor links for hard news is less robust than for soft news, whether the measure used is total advertisers, average bids, or dispersion of support across topics within a news category…

Overall, these results show the strong advertiser support for information related to consumer and purchasing decisions and the relatively weaker advertising support provided for hard news topics.

From our perspective as virtual time-travelers, would it have helped in 2000 — or even 2004 when the book was published — to listen more closely to James Hamilton? Does the removal of barriers to publishing, combined with the difficult-to-monetize hard-news focus of newspapers (and, largely, their web sites) sound a warning bell about the business model of giving away the content — both in print and online — and supporting its creation by selling access to the consumers of that content to advertisers? Once the scarcity of distribution disappears — as we now know it did, not just for print, but for audio and video as well — where does that leave the business?

Reading in 2009, it’s almost impossible not to shout at the page: “How did we miss this? Why didn’t you see the current crisis coming?”

Because, I’d argue,  many in the business made a critical error in judgment, one that Hamilton makes here as well:

In a world of many outlets and scarce attention, consumers on the Internet are likely to go with familiar media brands.

“Where else will they go?” was the prevailing thought at the time. Into the anarchy of the web? In a choice between an unvetted site and an edited news brand, the answer would be clear. Readers might flirt with other web offerings, but at the end of the day, they’d come home to the familiar newspaper brands they know and love.

So, how did that all work out? Fast-forward back to the present. Here’s a recent ranking of the top 15 web destinations in the U.S., from Alexa:

  1. Google
  2. Yahoo
  3. YouTube
  4. Myspace
  5. Facebook
  6. Windows Live
  7. MSN
  8. Wikipedia
  9. eBay
  10. Craigslist
  11. AOL
  12. Blogger
  13. Amazon
  14. Go
  15. CNN

The best-performing newspaper brand, nationally, is The New York Times, which comes in at No. 26 in the Alexa rankings.  In local markets, the story’s not much better, with local newspapers fighting for audience among the incredible abundance of online content offerings.

So what happened?

Many of the blockbuster brands in today’s list did not even exist in 2000, including YouTube, Myspace, Facebook and Wikipedia. Blogger had launched in 1999, but was yet to become the force it is today, together with WordPress. Craigslist — the company that would make unnecessary 60-65 percent of local newspapers’ business by giving it away — existed, but had not yet gone national. eBay, another nibbler of traditional newspaper revenues, went public in 1998. 

And yet none of the companies that were already well on their way toward at least partially supplanting newspapers as a marketplace of ideas and commerce are mentioned in this 2004 book. Where’s Craig Newmark? What about eBay or Wikipedia, also absent? Is it fair to look back from the remove of 2009 and wonder how this could be? Perhaps not, but it is suggestive of why it is that newspapers found themselves in the role of the frog in the gradually boiling water; they didn’t see it coming because they just couldn’t imagine it happening. These upstart brands were irrelevant. Until they weren’t.

The brand wasn’t enough, it turns out. As options for readers increased and as scarcity as a monetizable asset essentially disappeared in the nine years since Hamilton gathered his data, much of what he predicted came true, with the notable exception of the silver bullet that he thought would help: the brand.

Clearly, that’s not the end of the story. Newspapers would be in even worse shape without their digital assets and their revenue streams. In nearly every market, newspaper web sites remain reliable drivers of income for their parents. But the business model is not optimized yet for the modern online world, and it’s instructive to look back, with the help of this book, and realize that the clues were always there, hidden in plain sight.

POSTED     Feb. 24, 2009, 3:30 p.m.
PART OF A SERIES     Lab Book Club: Jay Hamilton
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