News vs coffee: It’s still about value, not price

We often confuse cost with value when thinking about what people will pay for. There’s a crucial, oft-neglected distinction, and recognizing that reality is central to determining the future of paid media.

Years ago we made a useful analogy about paying for a cup of coffee vs paying for a newspaper. I used it first, as nearly as I can tell, in a 1996 strategic plan for digital publishing at McClatchy:

... at the end of WWII a cup of coffee and a newspaper each cost about the same -- let’s say 10 or 15 cents; today a cup of coffee can fetch $3.00, while a newspaper at most costs 50 cents. The essential difference is that the coffee sellers learned to give their customers choices --  you can go to any espresso stand in any airport in America and order a double tall decaf skinny latté. They added value to their basic product.

The distinction between pricey coffee and cheap news is more nuanced than that, of course. In addition to offering choices, coffee houses created a cultural dimension to enjoying their product; think about the way Starbucks adapted the concept of the “third place” as a profitable niche between your home and office. 

Coffee itself is a commodity, and nearly any cup will serve the utilitarian purpose of spreading caffeine through your system. The same is often true of news: pretty much any source can give you basic facts and headlines about most things. Coffee houses overcome the commodity problem by offering not only many choices but also sociability, relaxation and a sense of community. They’ve created coffee snobs who can discern the difference between the tang of Kona roast and the smoothness of a nice Sumatran. (I know this; I am one). They’ve made coffee a broader and richer experience than simply an injection of caffeine. 

News companies haven’t done nearly as well, although there are some important exceptions. Almost any news consumer can tell the difference between the products of the New York Times and those of Fox News, and many choose which to consume precisely because of that. For a Fox News customer, the NYT is *not* a commodity replacement, and vice versa.

Others are trying hard. I’ve worked some with the Civil Beat organization in Honolulu, a membership (subscription) digital news service. They’ve picked their target carefully: in-depth, local civic news. They foster community through f2f meetings for members only, by focusing on coverage others aren’t providing (especially investigations and analysis), by maintaining easily accessible archives to help bring context to coverage, and much more.

Huffington Post is recognized as a leader in applying “virtual goods,” theory to its community, applying lessons learned from online gaming. You can earn digital merit badges based on levels of participation that in turn confer some status benefits on the HuffPo site. I’m sure others are doing similar (and I hope more meaningful) experiments. I wrote about the concept possibilities for virtual goods in news communities a while back; see Why is a Facebook beer worth more than your news story?

I was reminded to revisit all these ideas this morning when I saw “The Oatmeal” illustrated post about people who pay for all kinds of things but flinch at 99¢ apps for their phone. The same was true about shareware, a system where you downloaded and used software for free but were asked to voluntarily pay something to defray costs and support the programmers. (The general failure of the shareware system helped ruin my faith in peoples’ inherent willingness to do the right thing).

Have a look at The Oatmeal’s commentary, one panel of which is used above. Then think about the same argument relating to news, and whether there are ways to make it something other than a free commodity, something with enough value to attract paying customers.

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Like books of old, today's web is in its swaddling clothes

Excerpt from an essay I wrote in 1999 about — you guessed it — "the future of newspapers":

"While we know the impacts brought by new digital media will be profound, none among us is able to divine their precise shape. The pace of change in the networked era is such that we are denied the luxury of extended study and careful reflection. The product development strategy of the digital age, it is said, is: Ready, Fire, Aim.

"Our uncertainty should come as no surprise. We know from history that it took more than 50 years for Gutenberg's invention of moveable type to result in the creation of anything that would be recognized today as a book. After Gutenberg, somebody else had to discover the form that best took advantage of his technology -- things like legible typefaces, numbered pages arranged in chapters, hard covers to bind the work together coherently in a convenient, portable size. Indeed, books printed between the invention of Gutenberg's press in 1455 and about 1501 are known to collectors today as incunabula -- taken from the Latin for 'swaddling clothes, indicative of a technology in its infancy.

"Similarly, the invention of moving pictures  in the 1890s did not immediately result in what we know today as movies. Here, too, was a technology in search of a format. Motion pictures initially were simply films of stage plays. It took time to discover the elements of cinema we all take for granted at the movies today: close-ups, flashbacks, shifting focus and so forth.

"The parallel between incunabula  books and those early moving pictures and what is happening today on the World Wide Web is inescapable. The technology has been discovered; we are searching for the format."

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Turtles all the way down

I gave up on ‘truth’ a long time ago, 

but I’m having a hard time letting go of facts

I know folks have been fighting about “What is truth?” since way before Aristotle, and I’m comfortable leaving that debate to poets and philosophers. Obviously, it’s a topic way above my pay grade.

Until recently, however, I still placed a lot of faith in facts.

I cautioned journalists over several decades to remember that “truth is a plural noun ... there’s a lot of truth out there.” Instead of concentrating on somebody’s protean definition of truth, we tried to focus on things we could measure: accuracy, fairness, accountability, documentation.

Lately I’ve come to a deeper realization of how the nature of fact and authority themselves have fundamentally changed. I haven’t yet come to grips with what this means.

In the old days (five years ago) one poster child for this debate was Wikipedia vs Britannica. If a crowd-sourced, infinitely editable, volunteer encyclopedia could trump the venerable text with all its credentialed authority, we’d know some kind of milestone had been reached.

In many ways, the battle was already over by then. Wikipedia was already quickly craigslisting Britannica’s business model and seemed sure to outlast it. We were losing Britannica. so the question was mainly about what that was going to mean. Was Wikipedia really as good?

Web triumphalists were certain it was. To confirm that, they delighted in citing a study published in the journal Nature, usually asserting that it had found Wikipedia was as good. Inconveniently, the study didn’t actually say that.

Nature’s press release was more qualified than that, saying that “Wikipedia comes close” to matching Britannica’s accuracy. Even that, it turned out, was considerable overstatement.

What the study actually found was that Wikipedia had 100 errors for every 75 in Britannica. The actual numbers were that the Britannica articles studied averaged 2.9 while Wikipedia averaged 3.9. Now, I was schooled on newsroom math, but my calculation says that four errors instead of three errors per article amounts to 25% more errors. That’s hardly trivial.

I made that point in the comments section every time I saw somebody cite the study as “proof” of Wikipedia’s success. Almost nobody even acknowledged the challenge, much less bothered to consider it.

I was frustrated by that at the time. This was arithmetic, damn it. How could people just ignore it?

I understand better now. The real debate was over the nature of facts, and I was trying to assert one particular kind of fact (math) to make my point — but I was already too late. The post-modern fact train had already left the station. If enough people wanted to think Wikipedia was equivalent, nothing as small as mere arithmetic was going to change it. 

Now I realize that’s okay. I'd still argue some things require precision and hard facts — chemical reactions come to mind, or surgical procedures — but for many debates these days, “fact” is itself debatable. 

At one level this only recognizes a reality we long ignored. Few of the “facts” that were the foundation of my education were absolute. History books are written by fallible, often prejudiced people. Scientific theories, once memorized, will summarily be eclipsed by new data or another discovery. The scholars upon whose authority Britannica was founded knew this, and in the academy they’d argue endlessly about the stuff that later became typographic fact in their encyclopedia.

At some level, the experts in any field are telling us we weren’t smart enough to follow all the details, so we’d have to take their word for it.

And of course that’s largely true. You and I are never going to know enough about the history of Islam or the probability of Iran making a nuke to render reliable independent judgments. We have to rely on expert knowledge, and that means trusting somebody.

That trust is shifting. The catchphrase today is “algorithmic authority,” and the most illuminating and articulate spokesman I’ve encountered is Clay Shirky. It’s a gross over-simplification to put it this way, but you can think of this as a shift toward “trusting everybody.”

This turns Thoreau and Andrew Jackson and a lot of Enlightenment philosophy upside down, of course. (Thoreau: “Any man more right than his neighbors constitutes a majority of one.” Jackson: “One man with courage is a majority.”) Philosophers and polemicists will continue to insist they’re right — that there is a singular truth out there somewhere, independent of what our collective wisdom says about the subject. But in practical terms, this game is over.

News media and politics provide clear examples. It no longer matters if I think there is documentary evidence of Obama’s birth. Huge percentages of American voters think otherwise — for whatever reason — and they will act on what they believe. “Authority is as authority does,” Shirky has noted, and we must now learn to deal with the consequences.

The “wisdom of crowds” is both broad and deep, but it is not ubiquitous. James Surowiecki, who popularized the concept, was careful in his book to point out that crowds are wise only in certain, constrained circumstances: for example, when they are diverse, when they allow every voice to be heard, and so forth. Most folks who cite the wisdom of crowds don’t know that, and may end up putting trust in conclusions drawn by crowds that are anything but wise.

Algorithms, likewise, are subject to distortions of their own. Google’s “page rank” algorithm is often cited as a prime recommendation for crowd-based authority. It is useful and hugely successful, to be sure, but it is also the product of decisions made by a select few individuals in total secrecy. Few of the people who simply “Google it” to answer questions understand that.

Making these kinds of cautionary points to algorithmic advocates isn’t easy. Too often, their faith is built on unexamined assumptions that aren’t as firm as they imagine.

Shirky, characteristically, faces these issues head on. In acknowledging the lack of “root authority” for any definition of fact, he cites the old tale of “turtles all the way down”:

A well-known scientist once gave a public lecture on astronomy. He described how the earth orbits around the sun and how the sun, in turn, orbits around the center of a vast collection of stars called our galaxy. At the end of the lecture, a little old lady at the back of the room got up and said: "What you have told us is rubbish. The world is really a flat plate supported on the back of a giant tortoise." The scientist gave a superior smile before replying, "What is the tortoise standing on?" "You're very clever, young man, very clever", said the old lady. "But it's turtles all the way down! 

Later, Shirky amended his conclusion: “I lied before. It’s not turtles all the way down; it's a network of inter-referential turtles.”

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