On Saturday I spoke at a panel at Peking University on the topic: “New Media vs. Traditional Media: Cooperation or Competition?” It was hosted by the Global China Connection, an organization imbued with special meaning for me because a similar exchange organization, FACES, changed the course of my life by first bringing me to China 5 years ago.
I’ve paraphrased my
bloviations remarks here, as well as a few of the comments from the other panelists–any mis-transcriptions of their statements are my own fault:
- Moderator: Lea Yu, former journalist at Caixin
- Liu Haining, CCTV Reporter
- Jing Xu, Associate Professor of Journalism at PKU
- John Garnaut, Sydney Morning Herald, China Correspondent
- Kai Lukoff, TechRice.com
The Three Crises
The title of this panel is, “New Media vs. Traditional Media: Cooperation or Competition?” As the representative of New Media on the panel, let me spice things up out of the gate.
It’s predominantly a competitive relationship. At least the technological mediums of traditional media as we know it (print newspapers, print magazines, radio, and probably television) are bound to die. Some of the media organizations that broadcast via those mediums of traditional media will successfully manage the transition to the mediums of new media (online newspaper, iPad magazine, podcast, online video, etc.), but most will not. Sadly, that means a lot of good journalists from the traditional media sphere will end up unemployed.
Second, the term “traditional media” is a euphemism. “Old Media” is really a more descriptive term, because it’s a dying industry. When staring at their red bottom line, most traditional media probably wish that whole Internet thing never happened. Making the transition is really, really tough.
Note: I took a little heat for my dire prognostications about the business of traditional media, but not nearly as much as I expected.
Worldwide, Old Media faces two crises:
#1 Death by demographics: how you young punks are a huge pain-in-the-ass for Old Media.
#2 The new business of New Media: how New Media is drawing and quartering Old Media to sell it piece-by-piece at a lower price
And in China, Old Media faces one additional crisis:
#3 Crisis of Credibility: how New Media has exposed the propaganda side of Old Media
#1 Death by Demographics
It’s apparent to the young audience today that traditional media faces what I’d call “Death by Demographics.” Old people spend their time with dead trees and televisions, whereas young people spend their time on computers and mobile phones.
I’ll start talking about what’s happened the United States because it foreshadows what’s coming in China. This narrative borrows heavily upon Henry Blodget’s excellent piece in Business Insider, “Don’t Mean To Be Alarmist, But The TV Business May Be Starting To Collapse.”
In the mid-90s, traditional media was scared shitless. The hype about New Media was like a TV infomercial: the Internet was going to transform your life and create new $100 billion dollar companies like AOL. All you needed to do was take a free CD from AOL and invest in the company’s stock, and you too could become a newly-minted multi-millionaire. So when the tech bubble collapsed in the year 2000, traditional media in the US breathed a collective sigh of relief.
But after the hype died down, a strange thing happened: it turned out geeks were right in their vision, but off on the timing. And over the last 12 years, the newspaper industry in the US has died a painful death. Advertising revenue peaked at $60 billion in 2000, but it’s only $20 billion today. NYT stock down from $50 to $7 a share.
By the way, I also agree with Henry Blodget when he says that TV is next: and in my opinion, good riddance. l’ll never in my life subscribe to one of the appalling TV cable packages sold in the US. TV has to dramatically rethink the way it packages content for $70 a month for 300 channels of which you’ll only ever watch maybe five, or it too will follow the newspaper industry and become an endangered species (here is, however, a well-reasoned financial defense of TV). Fortunately for Chinese TV, its packaging is much better: it’s basically all free.
I think we’ll see this death by demographics in China over time too: when eyeballs move to a new medium, the money follows.
#2 The New Business of New Media
Old Media, for a longtime, was like this: you walk in the ice cream store and your only option is the big tub of “chocolate | vanilla | strawberry”. Everything is bundled together. If you’re like me and you don’t like chocolate, tough luck.
And then the new media ice cream store opens up next door and they sell chocolate, vanilla, and strawberry separately. In fact, there’s about one million different flavors on offer: you can get coconut, pumpkin, and lichi. You can even get Dennis Kucinich vegan peace ice cream, or Glenn Beck fanatic nutso crunch, or Justin Bieber and Jay Chou flavored ice cream.
And the other thing about the New Media ice cream store is that their prices are dirt cheap: a lot of the ice cream is free or it costs pennies where traditional media cost dollars.
The most profitable sections for newspapers used to be not politics or economics for which they win Pulitzer Prizes, but instead it was always the Automobile or Home and Garden section that brought home the bacon. If I’m a newspaper and I have a breaking story about the appallingly inadequate medical care for Iraq War veterans at Walter Reed Hospital, what can I possibly advertise next to that story? Health insurance? There’s nothing that the reader wants to buy. On the other hand, if you’re reading reviews of the latest sports car in the auto section, an advertiser will pay a lot lot more to advertise to you.
Many small-town papers have died out completely as their classified advertising has gotten destroyed by Craigslist, a company that doesn’t even care about making money: more people than ever are probably viewing classifieds today, but the total industry has shrunk from $20 billion to $5 billion. Paid search advertising (i.e., Google’s bread-and-butter) has also taken a cut from Old Media.
Online advertising is still a very very tough business, so Old Media is trying desperately to get people to pay for content. But it’s a very challenging new business model for Old Media and most won’t make it. Note: One audience member asked how to save the journalism of traditional media. And I said, start paying for your favorite online news site, because online advertising revenue isn’t cutting it.
In China, most of Old Media has shelter against economic forces. The New York Times is responsible to its financial shareholders. CCTV is responsible to the state: its bottom-line is of secondary concern. The People’s Daily is building a new search engine not because it makes any financial sense (it does not), but because it’s a political imperative.
But the same Old Media that’s sheltered by the Chinese state, faces an even more severe crisis…
#3 Crisis of Credibility
The greatest crisis for Old Media in China is a crisis of credibility. The single biggest domestic story of 2011, the Wenzhou train crash in July, throws this into sharp relief.
The train crash was first reported on Weibo. While that’ll occasionally happen in the US (Bin Laden’s death first broke on Twitter), Old Media will very quickly recover with a breaking news release and follow up with detailed reportage.
In China though, journalists are handicapped by the state. Here are the directives from Central Propaganda Department:
In regard to the Wenzhou high-speed train crash, all media outlets are to promptly report information released from the Ministry of Railways. No journalists should conduct independent interviews. All subsidiaries including newspaper, magazines and websites are to be well controlled. Do not link reports with articles regarding the development of high-speed trains. Do not conduct reflective reports.
Additional directives for all central media: The latest directives on reporting the Wenzhou high-speed train crash: 1. Release death toll only according to figures from authorities. 2. Do not report on a frequent basis. 3. More touching stories are to reported instead, i.e. blood donation, free taxi services, etc. 4. Do not investigate the causes of the accident; use information released from authorities as standard. 5. Do not reflect or comment.
…Do not question. Do not elaborate. Do not associate. No re-posting on micro-blogs will be allowed!
Incidents such as this shatter the credibility of Chinese state-owned media. It casts a pall of doubt over every story they run, even when they’re doing a clear service to the nation. Instead citizens rush to buy iodized salt upon the rumor that it’ll reduce radiation risk and are reluctant to trust the dissuasions of the media.
Note: On the panel I asked Liu Haining of CCTV whether New Media sometimes creates space for Old Media by bringing topics into the open. Yes, said Liu Haining (speaking in a personal capacity), in the case of the train crash, Weibo significantly expanded the space for Old Media to cover the story.
In the US, media is often called the “fourth estate” after the the executive, legislative, and judicial branches of government, because of its role as a watchdog. It’s important to note that the paramount objective of US media organizations is to make money, not to serve as a watchdog. But it so happens that one can also make a business out of watchdogging–or at least that model used to work for some Old Media outlets.
In China, Old Media has its roots as propaganda and has only partially transitioned to a model of independent media, with commercialization coming before watchdogging. A watchdog role is still severely lacking, but Weibo and New Media are a step in the right direction. That’s a large part of the reason that Weibo is more popular and far more societally influential in China than Twitter is in the US.
Note: On the panel, John Garnaut pointed out that China’s state-owned media has made big strides over that past 20 years. But the problem is that the bar has been raised far faster still: private media (still heavily state-regulated) like Caixin, Caijing raised the bar 10x. And Weibo raised it 100x. State-owned media hasn’t kept up with its competition.
I like Bill Bishop’s analogy of an invisible birdcage that surrounds the Chinese Internet. Weibo is pushing up against those murky restrictions. And while many talented and courageous Chinese journalists would like to do the same in Old Media, they face a much smaller birdcage and operate under much closer observation.
To retain its influence, China’s Old Media will have to face up to three crises: death by demographics, a new business model, and a crisis of credibility.
Good night, and good luck.
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