I’m no journalist. Never have been. But News junkie? Yes! Digesting News has been central to my daily routine for quite some time.
It has partly been an occupational hazard, thanks to my now erstwhile career in investment banking. In addition...perhaps I’m motivated by an innate urge to be a well-informed citizen, always equipped with a healthy supply of thought-strains and information at any given point in time.
My decision to quit banking was followed by a painful process where I needed to figure out my next move. An overdose of inspirational YouTube videos, articles, research reports, and meetings later, identifying and locking my next project became an almost existential exercise. I was obviously done with being an employee in a big company and thought perhaps it is time to venture in a space I’m passionate about. Aside from passion, the target sector in my mind had to be lightly regulated (duh!) and “not yet disrupted.”
After months of soul searching, News media seemed to check all these boxes.
What bothers me?
Any entrepreneurial project should start with the problem to be addressed.
What is wrong with today’s News media? What bothered me?
News, like any other business, is a combination of product, distribution, and business model. The product being News generation, the distribution being print, electronic, digital (the last two in the list are increasingly muddled these days), and the business model being who pays and for what (advertising, subscriptions etc.). I could quickly see that the product drives everything else.
So, I ask: Why hasn’t technology yet disrupted the product i.e. the process of News generation?
It is not like technology hasn’t had any impact.
Any News shop worth its weight, irrespective of being “digital first” or “legacy”, has a website. Distribution has been democratized and moved away from offline agents onto online platforms, be it Google Search, social media, aggregator referrals etc. Barriers to entry have gone down. Going on print, a capital-intensive activity, is no longer a mandatory requirement to become a News publisher. Any Tom, Dick, and Harry can publish directly without an “intermediary” with a smartphone. Most government media relations now happen on Twitter. Snack-able formats are in. Text is passé, Video and GIFs are the future. Distribution through platforms has become lightning fast.
Old business models are dying, with subscriptions barely covering the costs of reaching the customer, and advertising revenues being funnelled away by Facebook and Google.
But has the product really changed? Strangely, no.
Newsrooms worldwide are still driven by Editors and in-house teams. Reporters and correspondents provide the information and basic facts. News Editors write the story. Copy Editors do the proof-reading. In-house photographers and visual designers make the stories look good. You can call it the in-house approach. I call it the “old world”.
The first tech bubble and rise of FAANG stocks hasn’t yet shaken this old world – irrespective of format, be it a traditional newspaper, a snazzy News website or an App! That was the problem that bothered me.
The Scale-Quality Gap
Let’s give this problem a name – the scale-quality gap.
The first leg (i.e. the lack of scale) is as old as the News business itself. In the old world, which would include most News outlets out there, the product i.e. News generation depends on efforts of an in-house team comprising reporters, correspondents, editors, copy-editors etc. Any desired increase in content quality or quantity would result in a higher headcount. With ad revenues declining and a low subscriber appetite to pay, the challenge to scalability is obvious.
However, what choice do they have?
The creation of credible News still lies within the domain of professional journalists. No matter what medium you prefer, be it social media or Flipboard, you trust a Wall Street Journal or a Times of India more than someone’s Facebook post. Till this dependency on paid-for journalism for high quality credible content is not challenged, the lack of scalability in News is not going anywhere.
The second problem concerns with the News quality itself. Paid-for journalists & editors, which form the backbone of the in-house approach, are not always objective.
The News eco-system, by definition, is closed to external view-points, unless asked for. It is easy for Editorial bias to creep in. Echo-chambers are prevalent.The urgency to be the first to Break News often means fact checks take a back seat.The “Church and State like separation” supposed to exist between Editorial and Business easily gets blurred. Large advertising clients and politically conducive players become holy cows. Governments use patronage of media as a common propaganda tactic.
What is the fix?
Technology to the Rescue?
You may say words which are music to a Tech CEO – you don’t need to create Newsrooms. Technology has shown the most scalable form of publishing is user generated, evidenced by the rise of the Facebooks and Twitters of the world. Don’t hire anyone. Build a platform and let the users create the content. Monetize that content by pushing through ads. Social media is the perfect blend of News creation and distribution, and its success is for everyone to see.
I, and increasingly many more, would disagree. Whilst social media may have solved the problem of scalability, it has only accentuated the perceived quality gap. Far from taking accountability of the content it is pushing, it has repeatedly given a voice to non-credible and malevolent players, kicking off the dawn of “Fake News” and “Post Truth”, terms which have now hit mainstream relevance.
In fact, social media has made citizens realize the value of information validated by professional journalists.
Results of the 2018 Edelman Trust Barometer Study shows how the challenges of Fake News pushed the perceived trust of traditional journalism vs. platforms:
The study also reveals the overall extent of distrust prevalent in media across nations:
The Problem Statement
How to challenge News media’s scale-quality gap? How to develop a business model aligning the need for objective and independent News coverage with a scalable content generation process?
On one end you have the old world, where News publishers who are stuck in an in-house, siloed, and journalistic approach to News generation. There is low scalability and more focus on quality (in the relative terms).
On the other you have pure play distributors (or platforms), call it social media, instant messaging Apps, News aggregators etc. who have a completely tech-oriented open architecture where anyone can publish anything instantly. Scalability is not an issue here but there is hardly any emphasis on quality. This is the new world.
We need a middle ground which takes the best of both.
Transfin. is our start to tackle this problem. To be continued...