Railroad tracks amid green

Media Funders: Value the difference between Creation and Distribution

This post will draw a very bright line between the Creation and Distribution of verified information for communities, and argue for that distinction’s importance for understanding today’s news-gathering and journalism climate.

One of my favorite pieces of business-reporting conventional wisdom is that everything in the economy is cyclical. It just depends on how big the circle is this time.

That goes for business building. As early web entrepreneur Jim Barksdale famously put it, “there’s only two ways I know of to make money: bundling and unbundling.”

Information gathering (what we roughly call “journalism” today) has been a strategy for businesses for half a millennia. In its early commercial forms, the act of gathering that information and the act of distributing it were essentially two different businesses. In Barksdale’s parlance, they were “unbundled.”

In his 2014 book The Invention of the News, author Andrew Pettegree doesn’t dive as deeply into the raw economics of it as I’d like (though, really, it’s a great book, and you should read it). But it’s plainly clear. By the mid-1400s (before there even was such a thing as a joint-stock company), the things most resembling a “news organization” were the landowners, lords and kings who (a) had relatively formal flows of information, on things like the movements of troops, castle intrigue and crop yields (the Creation of source-based information) and (b) couriers and trade routes who would take handwritten letters and bring them to others, who would essentially pay a tribute or, you know, a subscription (the Distribution of source-based information).

They were separate processes. You’ll note that from the very beginning, the Distribution is where the financial transaction took place.

(I like pointing out that foreign affairs and business reporting came long before government reporting, given who was funding the work.)

As a relevant aside, this also is an apt time to share one of my favorite historical facts ever: at just about the same time in history, in the mid-1400s, the Inkan empire in South America employed hundreds of men whose sole responsibility was to remember the past, and essentially contextualize it. They were the first, largest and most influential news organization of the Americas, albeit a state-sponsored one in a culture without what we consider written language.

Beginning in the late 1600s, we saw a curious thing: the consolidation (bundling) of The Creation and The Distribution of news and information.

The rise of commercial publishing led to pamphlets and, later, newspapers (essentially collections of pieces of information in one central place). These started as private-sector distribution tools that relied heavily on relatively informal news-gathering efforts. Again, the commercial transaction was in the Distribution.

As these continued to professionalize and standards and expectations grew, a reputation for quality and accuracy carried weight. User-generated content still dominated, but fact-checking developed a market incentive. The most established of these companies were publishers that developed commercial appeal; They sold directly to individuals, adding newsstand revenue to existing subscription models.

Earlier this year I read Todd Andrlik’s fun 2012 book Reporting the Revolutionary War, which contextualized transcripts of American colonial newspapers from the 1770s that were reporting on rising tensions and, eventually, active warfare with the British empire. A common theme of that era’s newspaper reporting was the publishing of letters from everyday citizens (you know, user-generated content).

Depending on the newspaper, there might have been some fact-checking and curation. Competition grew, with more newspapers popping up in any city with enough activity and intrigue to warrant it. A natural extension of this business model was to invest in full-time news-gatherers, which today we call reporters. This early newsroom concept blossomed with the help of early advertising models (“hey, we have an audience you might want to put your message in front of, we’ll sell you space to give that message directly!”)

By the early 1800s we had completed that full transition to the bundling of The Creation and The Distribution. If you wanted to compete heavily in publishing, you had a newspaper (Distribution) and full-time reporters (Creation). The biggest cities were publishing daily, resulting in the concept of journalism (those of you who took high school French might recognize the word’s root word, jour, which means the day, or daily).

This may seem like a mighty tangent, from a handful of books and years of tinkering on my part with a tiny niche news site. But something clicked for me in the last few years, of why my obsession with tiny beat-level business-model building seems to me to be the point of our work. In contrast, I’ve found that to some our reporting (with a network of local tech beat reporters via Technical.ly and local nonprofit-sector-news reporting with Generocity.org) can seem too small and trivial to matter much for understanding the future of how professional acts of journalism take place.

I argue that the web ushered in our next big era of unbundling. But nobody much is saying it.

News gathering began unbundled: “I’m a king who will maintain my own information-gathering corps; I’ll defray the cost by sharing that information with others for a price.” Then the enormously successful business model that emerged from the early 19th century was an advertising model built for the bundling of Creation and Distribution. “We have access to information no one else has, so we have a relationship with readers that no one else can recreate,” was the central sales pitch. “Do you want to access it?”

Then the Internet happened, which resulted in one of the most important collaborative inventions in human history: the Web, a highly collaborative, open and, with other tools, searchable network of, effectively, all of the transcribed ideas ever created by humans.

It’s unbundled us again, but we keep funding and focusing and building highly bundled packages, centralizing a relatively disparate audience. That’s why this isn’t working.

The Web is a marvelous Distribution platform. On it, a slew of experimental Distribution businesses have been built on it. Some of the early winners are social web companies, most prominently Facebook (“we connect you to other people”) and others are tools to use the Web, most prominently Google (the card catalog system of the Web). In these early days, Web businesses are following the most successful business model of the Distribution businesses that preceded it: advertising (which is the business that mostly all commercial media are still in, reflecting how we employ most journalists today).

Today’s advertising companies (which is what Facebook and Google are, after all) take the very logical step of saying: “a newspaper approximates who picked up your advertisement as part of a bundle; We can tell you specifically who clicked on the exact message that you, the advertiser, wants to send.” Which sounds more valuable to you?

Logically then, the beleaguered, lingering contingent of newspapers that exist today are in the unenviable position of being in the same (advertising) business of some of the most financially successful, technologically-protected companies in the 500-year history of human corporate history (Facebook, Google). Except those newspapers are bringing the proverbial knife to the gun fight. That fight’s conclusion is quite inevitable; the only question is the time of its conclusion.

A coterie of well-intentioned journalism-champions are rallying against the big tech giants. One of those coalitions, which uses the #SaveJournalism hashtag, is fairly well organized and undeniably in it for the right reasons. They’re lobbying for concessions against Facebook and Google.

To be entirely honest, as a business reporter, I find this genuinely embarrassing. It sounds entitled. In contrast, I believe they could have more success if they understood this massive unbundling that has taken place.

One of the most frustrating beliefs that I’ve encountered countless times with media funders and journalism flag-wavers is that the thing we’re trying to save is the consolidation (bundling) of the Creation and the Distribution of professionally-verified information. This goes by many names but a common one is “The Town Square,” a phrase popularized by the meaningfully influential Knight Foundation.

The idea goes that in the the town square, people come with ideas (Creation) and share them with their neighbors (Distribution).

But to bring us back to this post’s beginning, one of the most fundamental trends in market forces is, to use Barksdale’s phrasing, the bundling and unbundling.

We are in an era of unbundling. The Distribution of information, which continues to be as (or more?) monopolistic in today’s digital age as it was in the late 20th century (with huge newspaper margins) is quite healthy. By all means, challenge the problems of information being distributed by algorithm; That really is one of the most important democratic and societal questions of today. But, I would argue, that is a philosophical question, not a journalistic one.

The social web is the Distribution platform of today. They are the horseback couriers of the 1400s. The content creators are the local townsfolk who amble into the castle with their bit of information. It’s quite illogical for those townfolk to grumble about those on horseback being better paid. Our collective response would probably be: Well, then you better get a horse.

Some of us (and I am in this number!) care about those townfolk—who are they and why and how do they get their information and where do they bring that information to be distributed? The journalistic challenge we are facing today is this one of the Creation of professionally-verified information. How, who and why will we find information and tell stories about the society in which we live? Media funders: care about the Creation, not primarily the Distribution, of information.

Instead, I fear the vast majority of media-funding dollars have missed this enormous change. They’re focused on what can do both the Distribution and the Creation, ignoring the most important experiments of today (on the Creation alone). Many want to maintain, or recreate, those publications that promise to create a “town square” and fill it with its information.

But this generation of unbundled business models that deploy journalism thinking will happen at the beat-level, because to build a business, you need to solve a meaningful problem for a group of people. The 20th century bundling came about for a wildly successful advertising model that has been displaced.

This is self-interested, of course. I run a small, decade-old, 20-person, independent local media company that has painstakingly aimed to build a sustainability model that solves problems for beat-level communities. We are solving sustainability on the Creation-level. But funders are entirely focused on the Distribution-level, which I’d argue is actually quite healthy (but doesn’t look like the news-first models funders expect from being trained to look at things from a bundled environment)

If the age-old business axiom of bundling and unbundling holds true, media funders should be far more concerned with getting reliable information created. Solve problems for communities that leverage newsrooms. The consolidation will come later. Cycles guarantee it.

(Photo of a Railway Crossing in Ooty, India by Sayan Nath via Unsplash)