Funding Quality Content?

Hamburg.
We move on now to the economic perspective on quality content at Alcatel-Lucent Foundation / HBI 2009, and begin with Klaus Goldhammer from Goldmedia. He notes the current financial crisis; Germany's economy is expected to shrink by 6%, for example, and this has led not least also to the demise of a number of major magazine publications in the country. There has been a 20% decline in the circulation of German newspapers over the past ten years (leading some to increase their sales price); there was a 82% decrease in the stock price of leading commercial television company ProSiebenSat.1; while at the same time proceeds from television licences to the public broadcasters have increased substantially.

In newspapers, some 25% of costs are editorial; the majority is related to the production and physical distribution of dead-tree products. A move online is logical in this context. In commercial free-to-air television, the situation is different - broadcasting itself accounts for only 9%, for example. What are the sources of income for media organisations, then? These include direct income (under user-pays models, e.g. on-demand payments, or independent of usage, e.g. through subscriptions), and indirect income (advertising and state support).

One approach here could be to expect a certain profit margin for each hour of broadcasting, independent of content, but this is difficult to achieve under the present circumstances. Especially the smaller programme providers, but also pay-TV and teleshopping programming hardly, if at all, manage to make their money back - and this is based on figures from before the current crisis. Similar problems exist for print media.

It is important here to observe what actual media users do and want. Those age cohorts who read newspapers in 1984 still read newspapers today; those who don't read newspapers today are unlikely to do so 25 years down the track. Younger cohorts are increasingly using online media; older cohorts remain followers of more traditional media - but the change in usage patterns is happening.

In China, Google has recently launched a new Website for the free legal download of music in MP3 format, with some one million tracks now available. This is operating on a revenue sharing model - and it is likely to fundamentally undermine iTunes and other for-pay models. User demand and user practices have led to the development of fundamentally new business models. (Another example for user-driven change is the 44044 Website, which enables users to SMS their knowledge questions to the online community, with answers texted back as soon as possible to the user.) As Chris Anderson has said: every economy that becomes digital eventually becomes free - the Google MP3 site exemplifies this.

But what about journalistic quality in this context? First, the quality of journalistic content needs to be questioned - some 70% of what ends up in the daily newspapers has gone through the hands of PR professionals at some point, studies have shown. (Online fora are similarly manipulated by commercial interests, of course.) Journalists are increasingly pressed for time, and are therefore less and less able to research their stories; they also rely increasingly on news agency stories whose staff have even less time to do research. Is there still quality in 'quality' journalism, then?

Instead, Klaus suggests, news bloggers and citizen journalists may provide better quality because they operate out of their own interest and enthusiasm, and are not commercially funded. Additionally, there is also the emergence of a variety of business models for online content, offering new alternatives for the funding and creation of quality content. (Klaus also points to the much-publicised Ashton Kutcher/CNN Twitter duel as an example here.)

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