How collaborative capitalism could reinvent newspapers
I'm convinced that ki work's platform for collaborative capitalism is part of the future. Why? Partly bImage via Wikipediaecause I can see how it could be at the heart of successors to the newspaper industry which has provided me with a living for most of my life.
The credit crunch might seal the fate of these once great institutions, but they were dying anyway. It's a sad time for me. This is the family business which is receiving the last rites. Both my parents were newspàper journalists. Printing ink runs through my veins.
Wishing for a swift demise
Now part of me wishes papers would just hurry up and disappear. Newspapers may be dying but the global appetite for news is alive and well. What remains will be a perfect candidate for virtual organization, for collaborative capitalism, for the ki work model.
To explain this I'm afraid I'll have to look a little at newspaper economics. Don't worry this isn't too complex, but I need to show how this isn't a business which is going to re-emerge from the other side of the recession.
As I've said, demand for news is not in decline. The audience is generally increasing. It's just that in developed countries the growth is online or for rolling TV news channels. Newspaper circulations are falling, but not at a speed that explains the catastrophic state of the industry's finances.
The central problem is lost advertising revenue. And you don't have to look far to see what's gone wrong. In the US it's craigslist that's most clearly wielded the newspaper-killer's knife. It's stolen the biggest newspaper income stream - classified advertising. It might sound as if I'm accusing craigslist-founder Craig Newmark of robbery and murder, but it is really closer to euthanasia.
Where have all the ads gone?
Before the likes of craigslist came along anybody wanting to fill a job vacancy, sell real Image via Wikipediaestate or rent an apartment would almost certainly have turned to their local newspaper. Individually, the classified ads they paid for might not have cost much, but together they represented a very profitable business.
Unfortunately any industry that's too reliant on one source of income is vulnerable. A large proportion of classified advertising has moved online and it won't return to newspapers if and when the recession ends. But ironically the readership for many newspaper titles is larger than it has ever been. It's just the audience is visiting websites rather than buying papers from newsstands. And nobody has yet figured a way of sufficiently monetizing news websites. In reality they're all losing money.
The only way a newspaper can claim to have a profitable website is through an accounting trick. The cost of news-gathering, administration and real estate has to be stripped out. Newspaper websites are really no different from the leech-like news-related blogs which simply comment on stories that have been tracked down, researched, written or broadcast by 'traditional' media. Running a newspaper is very expensive.
It all sounds hopeless, but I remain optimistic that although newspapers are dying, something different and better can take their place. The future is virtual. Strip out most of the costs of real estate, printing presses, management, computer networks and administrative infrastructure, then you've got the potential for a sustainable news organization.
In my next blog posting I'll outline how I think a virtual news organization would function.
UPDATE: Robert Peston, the BBC's economics editor, has an interesting take on how a different form of capitalism might look. Read his view on New Capitalism here.