Will new business models for journalism challenge the journalists’ autonomy?

I’ve been thinking about new business models for the news media, and in my opinion we’re witnessing a trend where new entrants are proposing business models where the readers pay for individual stories instead of a monthly subscription. There are probably more solutions out there, but it seems like the two most popular models are to either start a Kickstarteresque campaign to fund individual stories (such as Finnish startup Rapport), or to solicit micropayments for every story a user reads (Dutch company Blendle).

My intention is not to piss on these ideas, but I find it interesting that no one seems to think about what this does to journalism (full disclosure: I haven’t actively looked for this type of critique, so I might just have missed the critical debate).

I will try to be specific:

Premise 1: The (modern) ideal of news reporting is that journalists are allowed to pursue stories freely without interference by the business department. By separating the creative and commercial interests from each other journalists are granted the necessary autonomy to scrutinize the powerful.

Premise 2: cultural creators (such as journalists) are often underpaid and on temporary contracts, which makes them highly dependent on the owners. Although they provide the creative content that media organizations profit from, they get a very small slice of the pie.

So while story-funding grants journalists some independence from the owners, they become subjected to market pressures.  Won’t this heavily affect the journalist’s autonomy?

The shrinking long tail of online media

For many media companies,  online distribution has been seen as a practical solution to audience fragmentation. Those who are not interested in primetime content can satisfy their needs by shows that are available online, on-demand. The problem with this “long tail” solution is finding the right content for these fragmented audiences. Going through an extensive catalogue of different tv and radio shows won’t bring you any closer to satisfaction than simply succumbing to the alluring yet numbing power of  American Idol or Big Brother.

The solution to this particular problem is, naturally, personalization. In an interview for Wired, Netflix’s Neil Hunt stated that in the future, Netflix’s recommendation algorithm will be so accurate that it will be able to give users “one or two suggestions that perfectly fit what they want to watch now.”

Obviously, Netflix is not there yet:

Huffington post
Source: Huffington post

Snide remarks aside, Hunt’s vision is probably true, but not because Netflix is about to find the golden piece of code that will make this prediction of the future reality, but simply because media consumption is very, very predictable. In a Harvard Business School study from 2008, Anita Elberse found that the top 10 % of songs on the music streaming service Rhapsody accounted for 78 % of all plays and that the top 1 % accounted for nearly one-third of all plays (cited in Misunderstanding the Internet, 2012). The tail had gotten longer, sure, but the big profits were still made where the tail was the thickest. A quick glance at YouTube statistics would confirm this.

“Predicting” that people will want to see Game of Thrones after seeing the Walking Dead isn’t difficult, it’s just … probable. Personal preferences play in, of course, but I don’t think I’m going out on a limb when I say that 10 viewing profiles with appropriate standard recommendations would fulfil 90 % of all viewers’ needs.

The thing with predictions is that they effectively make the tip of the long tail obsolete. It’s more likely that primetime shows will be predicted, since it is quite probable that a viewer will be content with what’s offered. Suggesting less-popular shows is riskier, as the prediction is more likely to go wrong. Instead of watching one primetime show we’ll watch nothing but primetime, as recommended by algorithms.  At least with Netflix’s failed recommendations, it’s possible to find something completely unexpected.

The mobile OS bubble

Much has been said about the filter bubble, how tailor-made search results are affecting how we see the world. The filter bubble is created not by sheer oligopoly, but rather algorithms which are used by most web shops, search engines and sites that have more advanced search functions.

A slightly more traditional expression of oligopoly is that of the mobile market.  Android phones and Apple Iphones account for over 90 % of all mobile shipments and that Facebook and Google together account for about 60 percent of the global mobile ad market, numbers which are likely to grow (the newest figures indicate that Android and Iphone devices account for 96 % of all new shipments).

Worldwide smartphone sales to end users by operating system in 2013
Android 79.0%
iOS 14.2%
Windows Phone 3%
BlackBerry 2.7%
Other 0.9%
Mobile OS Market Share as of 2nd quarter 2013 Gartner[15]
Mobile operating system browsing statistics on Net Applications
iOS 52.96%
Android 36.14%
Java ME 4.44%
Symbian 3.50%
BlackBerry 1.42%
Kindle 0.93%
Windows Phone 0.45%
Other 0.16%
Mobile OS Market Share as of February 2014[update] Net Applications[1]

Tables provided by Wikipedia

Dominance in the ICT sector is of course nothing new. Microsoft Windows obviously dominated the PC market for years, but access to programmes was not dictated by Microsoft as such, although it was all but self-evident that for software to be successful, it hade to be made for the Windows OS.

On smartphones, however, the OS largely determines what applications one uses as well. The OS comes with a lot of nifty pre-installed apps, often provided either by the maker of the OS or the actual smartphone.

On Android devices, almost all services are connected to the user’s Google account. Google Now is the next logical step: an application which combines information from all sources, creating a reactive (and proactive) application, which changes according to the individual needs of its users. It is not all-too inconceivable that Google will eventually try to replace existing apps with Google Now features.

Windows came with a lot of programmes as well, of course, and so one could say that the main difference is that the mobile apps tend to be a bit more usable. But this is beside the point.

The point is that the software ecosystem on mobile platforms is built around app market places, and not the actual technical platforms (as was the case with Windows). These market places are owned by the OS providers, who also charge a 30 % commission for every app installed. By providing these market places, the OS provider guarantees the quality of the product, at least to some extent, since apps have to be approved. However, the apps may gather whatever data they like to whatever purposes they like, and this is nothing the  OS providers care about, as long as the apps themselves don’t contain malware. But who needs malware when an app can gather data on where you’re located, what you search, who you call and who you’re with?

At the same time, however, this also means that the makers of the most popular mobile OS also determine which products can enter the market and how they will succeed – “staff picks”, for example, are bound to be successful. Although it is possible to create independent apps without going to the app market places, it is actively discouraged by the OS and it is also extremely difficult to make money of an app outside the market place ecosystem. This would perhaps not be so worrying, were it not for the fact that access to the global mobile software market is dominated by two single companies. This means a much larger concentration of capital than in the Microsoft days.

See when did Apple’s bank account start to grow? 2008. What else happened in 2008? The App Store opened. Apple assets

Source: asymco

And what else happened in 2008? The Android Market opened. Google’s assets have gone from $32 bn to $111 bn since then. Although the Android Market’s successor Google Play remains less profitable than the App Store, Google is also dominant in the mobile ad sector. So not only does Google determine which apps we use, but also the ads we see.