The next AppleTV, and the future of newspapers

Posted November 1st, 2011 @ 11:51 PM by

A few weeks back, the Cap Times rolled out their iPad app. Now, I don’t use it much (I still mostly read the CapTimes on my Mac through a web browser) but I do like that it’s a nice interface to the various blogs they carry. I’m not opposed to it eventually becoming the primary way I read the Cap Times; the Economist app has changed the way I read that “newspaper.”

Paul Fanlund wrote a nice piece asking for feedback on the future of the Cap Times. Like many, I was sad when it ceased print publication, but I never viewed it as a defeat for a progressive viewpoint, just as the acknowledgement that the afternoon newspaper in a two-paper town will suffer, especially if it doesn’t have a Sunday issue. I was hoping that the end result would be that the Editorial Board of the remaining Madison newspaper would be a better reflection of Madison, but alas, they’re still spewing conservative talking points. I also wish that the two newsrooms would better integrate: often Deborah Ziff (WSJ) and Todd Finkelmeyer (CapTimes) will write the same UW story, which seems like a waste. But, mostly, I’m just glad the CapTimes has found a way to keep publishing its progressive editorials, and to ensure that there are two reporters for many local beats.

I’ve been thinking about media some over the past few days and stewing on this post, and today’s move by the Daily Cardinal to become part of the Madison.com online presence only added to that. I like that the Madison.com “empire” is growing with things like WisPolitics.com. Shawn Doherty’s eyebrow-raising interview with TIF Coordinator Joel Gromacki and her earlier story on the Edgewater demonstrate just how much value a professional journalist can bring to advancing the civic conversation and informing the public.

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What really got me thinking about this post has been a flurry of blog posts about the true “Apple TV”, the long-expected true vision of the product that Steve Jobs claimed to “have finally cracked.” Joe Hewitt (who was one of the two creators of Firefox, and wrote the Facebook app for the iPhone) speculated on his blog  on how such a TV would work, Dan Frommer gamed out why he thinks the real Apple TV will be an entire TV, and not just another box you plug into your TV, and John Gruber gave us the soundbite: “Apps are the new channels“. The thesis is simple: Just as the iPhone managed to convince you to replace your phone with a computer without any objection, so too will the Apple TV manage to convince you to replace your TV with a computer without you really realizing it. You’ll still use your AppleTV (or iTV) for everything you use your TV for, just as you use your iPhone for everything you used your old phone for, but you get a considerably richer experience. The software stack, the technology, and the zeitgeist understanding from years of DVRs, Youtube, and Netflix streaming have primed us for a realization that consuming TV only based on what’s on the schedule is the wrong way to go, and it’s time for someone to step forth with an integrated project that throws the whole thing away, and I have no doubt that it will be Apple that really makes this market. You may not actually own an AppleTV – it’s likely that Apple will reset the marketplace and others will enter, just as many people own Android phones and not iPhones, but no one would own an Android phone were it not for the iPhone. It won’t be an easy path there – Frommer lays out the case against it too, but I’m hopeful.

So what does this burst of Apple-fanboy-ism have to do with newspapers? I think if there is a shakeup of TV into a world that is much more on-demand, newspapers will be part of what wipes out local TV stations.

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Local TV stations, and the television “networks” are an anachronism. Once upon a time, local stations produced much of their own content, but over the years, it’s gotten to where they now distribute little of their own content, instead syndicating content from other producers, either the big-four networks or directly from content producers (e.g. Oprah). Their primary purpose today is to provide advertising for local businesses, to function as the last-mile distribution system over the airwaves, and to create some local content like the local news broadcasts.

I don’t pretend to understand the economics of running a local broadcast TV station, and who pays who in the various relationships, but it’s largely irrelevant. The functions of the local stations face difficult trends that make their future doubtful.

The first is advertising personalization. The blanket advertising that dominates the TV model is absurd: neither I nor my boyfriend will ever need a product aimed specifically for women, but my household see the ads regardless. In theory, targeting ads to my household should be simple: the cable company certainly knows who lives in my house, and if it doesn’t know it can purchase that information easily, and give me much better ads, regardless of what show I’m watching. (This holds true even for Brand Awareness advertising) Personalized targeting is standard operating procedure on the web, and eventually, advertisers will demand it for television, even if it requires some changes to the infrastructure. Even if none of the Apple “apps as channels” comes to pass, the cable companies or Google (I’m convinced offering personalized TV advertising is why Google is building its gigabit fiber network) will make it happen in some form. And, as localization is a subset of personalization, it will eventually be easy (in fact, easier) for local businesses to build individualized campaigns in their communities. The utility of these personalized campaigns will so outpace nontargeted advertising that it is inevitable that anyone who cannot offer them will suffer, which especially dooms the revenues of over-the-air broadcast TV. Furthermore, it’s hard to see the local TV stations as anything other than rent-seekers (in the economic sense of the word) if they are only agents trying to sell advertising in a personalized world on someone else’s distribution platform, and they don’t hold many cards in that arrangement. Targeting favors consolidation of as much data as possible from across multiple sources, which implies fewer, bigger organizations. Long term, I’d be very bearish on the advertising revenue of local TV stations.

The second trend is the eventual end of over-the-air broadcasts in the first place. A much more detailed version is in Heller’s ‘The Gridlock Economy’, but the gist is spectrum is very, very valuable, and as more people get online with mobile phones and devices, devoting so many megahertz of space to Digital TV broadcasts will be hard to justify. Already, somewhere well over 80% of households get their TV signals from cable or satellite, and the cable infrastructure passes 98% of all households. Hazlett estimates for $4.5B the remaining few households could be connected. From the cable company’s perspective, the marginal cost of these households is minimal (they have to maintain the cable regardless) and from a societal-good standpoint, we are much better off ending all TV broadcasts, finding a way to get everyone who currently gets the free broadcast channels over the air to get them through cable, and repurposing the entire TV spectrum into mobile communication bandwidth. If (and, I think, when) this happens, then what’s the point of the local TV stations?

And before you go all Tea-Partier on me and accuse me of wanting to give poor people free HBO, that’s not what I’m saying. All I’m saying is that only a small portion of the population is currently using the TV spectrum and we should look at ways to move them off of that spectrum. It may require a small investment, like the free DTV converter boxes as part of the analog-digital conversion, or we redirect some of the Universal Service Fund fees. Or, with increased advertising revenue from better targeting, it might be possible to fund basic tiers entirely with no public support.

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If future advertising requires a more intelligent infrastructure than over-the-air broadcast can support, and/or over-the-air broadcast is ended, that leaves just local content like the news as the remaining function of local stations. To be clear, I believe that there is and will be a strong market for the local news, and the market is sufficiently large that even if the only distribution channel was the web or something like apps on an AppleTV the news would probably survive. But the same web/app distribution model that an NBC15 or Channel3000 could move into is the same model the Capital Times could enter, and that brings me back to my point. If I’m going to bet on who better moves into a web/app only ecosystem, my bet is the newspapers.

I don’t want to disparage the work the local TV stations do: Jessica Arp does some of the finest political breaking news reporting in the state, David Douglas has a great feel for bringing interesting stories to life, and the NBC morning team has a very watchable chemistry. I’ve never done it, but I’m reasonably certain that on-camera reporting or story-telling is not trivial and not everyone would be good at it.

The trouble is that TV news has a very constrained format for their output: stories that are never more than a few hundred words of content, a total package that can only be 22 to 24 minutes long, covering news, sports, weather, and a minute or two of something else on occasion. Their staffs are relatively small because they simply couldn’t use more material if they created it. They’re good, but they’re not in any position to do anything new.

On the other hand, the newsroom of a good-sized paper, like Capital Newspapers, is much bigger, even with all of the cutbacks in newsrooms. It’s not huge, but there’s a bigger support staff and it’s expected that it will be more versatile than that of a TV station. It’s not uncommon for a paper to put together visualizations or data analysis, and do in-depth, long form journalism – something that a TV station wouldn’t have time to show even if they devoted the entire half-hour to the story.

At their core, local TV news and newspapers are fundamentally reporters. However, I believe that it would be easier for a newspaper staff to put together the content for a TV broadcast than a TV station could put together the content for an issue of a newspaper.

I hope that the AppleTV version of the TV news is something new. (I’m also sure that Clay Shirky has written about some of what I’m about to write about, but I can’t find a reference right now.) Remember that TV News has been under hard constraints: The same 22 minute show has to appeal to everyone. Again, that’s absurd. What I do want in a TV news broadcast? Good coverage of local news. The weather. No high school sports. Some Badger coverage, like an interview with Jared Abbrederis that no one else is doing, but no other college or pro sports news – I’ll get that from ESPN. Other viewers want something else: skip the weather, and give them highlights of every local high school football game. In an AppleTV “app” delivered newscast, there’s no reason that a “station” couldn’t provide both. I still want a final product feels like a TV News show, something I can sit back, press play, and watch without having to do anything for the next 30 minutes – I just want it spliced together with different material. Computers are really good at doing that splicing.

You need a larger library of content to be able to stitch this together, and so it’s the newspapers who are better suited to create this library. The newspapers are also better positioned to reuse this content – as part of their “TV News”, on their websites, as the basis for more in-depth long form work, as rich content on their tablet app. They should be taking Joe Hewitt’s advice and support AirPlay in their apps now, and start thinking of a world that the TV and the iPad are aware of each other and interact, each handling the content to which it is best suited.

This vision depends somewhat on the AppleTV/”Apps as the new channels” paradigm to eventually come forward, and while I do believe that personalized advertising and the eventual ending of over-the-air TV broadcasts are inevitable and doom local TV, so long as the “Apps as channels” paradigm opens, the opportunity for newspapers to move into the TV news space will also open. Even if the traditional TV News broadcast survives unchanged, there is room enough in the market for both the broadcasts and the app version to exist.

* * * * *

I am never going to subscribe to a paper newspaper again. I would watch a newscast  more tailored to my  interests with more frequency. I still want to know what’s going on in the local community. The opportunity to do all of that – better – is coming. Clay Shriky has written about how we need some chaos in the new news environment to mix things up and see what works and what doesn’t. The “newspaper” and the “TV Station” will hopefully be things of the past. It might take a bit of chaos to get there, but the core essentials have a bright future.

So, Paul, my advice to you: keep investing in the Cap Times app. Get video going. Poach a person or two from the local TV stations to help you get started and to be your “anchor.” Keep providing, and provide more of, the great in-depth work that your reporters are doing. The revolution and reinvention of TV will be fast, but the Cap Times is in a great position to come out stronger.


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