Who Watches The News? Seriously?

I can’t remember the last time I sat down and watched “the news” on either TV1 or TV3.

At 6pm most people I know my age are barely home from work or still at work or grabbing a beer / quick dinner in town before heading home.

How do I consume “the news”?

Well, I occasionally listen to Radio New Zealand’s news on the hour things on my phone, browse news websites in the morning and use Digg Reader to get my daily fix of blogs.

I occasionally will listen to Checkpoint’s “Top Stories” podcast – but that’s rare. I do listen to Bloomberg Radio which is good for finance news and interviews.

The ratings for “the news” aren’t that hot – and the demographic is unlikely to be worth it much longer because the only people I know who watch “the news” are almost qualifying for NZ Super. So why would you pay to advertise around “the news”?

It says something that the most exposure I have to TVNZ or 3News video is if someone I follow on Twitter retweets it / talks about it.

The worst thing about “the news”, and this includes the “trained and skilled” journalists at Fairfax and APN – is that most of your content is face-palm inducing.

If you have a functioning brain, read widely and have a decent body of knowledge on which you assess new information or stories, then sitting down for a whole *hour* of a flagship news program sets off the “this does not compute” siren to the point where the disutility from “the news” sees it booted from your content consumption routine.

And then there are people who think that if you watch “the news” you’re an informed citizen. God help us. It’s almost an inverse indicator these days.

Stagnating Sunday Newspaper Circulation 2005 – 2012

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Source: Audit Bureau of Circulations, Statistics New Zealand Yearbook 2012

I can’t remember the last time I purchased a Sunday paper. There is one explanation for the above graph though – SST has lost about 50k readers as has Sunday News. Thus the HoS’s 100k could be interpreted as SST loss + Sunday News loss therefore no market growth at all since 2005.

For many young people, Sunday is now a “social media” catchup day as opposed to a read the paper with a coffee day. When you add in the decline in newspaper advertising spend from $830 million dollars in 2005 to $540 million in 2012, keeping subscriber numbers up at all costs is essential to stop the bleeding.

Stuff Nation Sucks But Will Slow Fairfax Death Spiral

Stuff Nation sucks because it is simply depressing content to consume. The submissions to the assignments posted by Stuff Nation editors are a fascinating insight into how the median voter thinks. The comments are even worse. But I think that Stuff Nation will eventually make Fairfax a fortune, relative to the decline of the dinosaur print industry.

One of the differences between Stuff Nation and the blogosphere is that bloggers seem to post more interactive content. We link to data, journal articles, opinion pieces and even source material like interviews if we’re that advanced in our blogging. But we are content production and content consumption outliers – political nerds, news nerds, sports nerds, finance nerds. We are not the target market for advertisers paying the bills of sites like Stuff.

Fairfax have been very clever in getting social media accounts linked to Stuff Nation accounts. Why? Because every time someone gets a submission received, they’ll boost their traffic slightly. It is easier to get thousands of people sending an extra couple of dozen pageviews – we have to remember that not everyone consumes content at the level or frequency of the blogosphere bubble.

There is evidence that when people read a newspaper, they tend to look for something that confirms what they already believe. What executives at Fairfax probably realised is that even though their journalists and columnists were producing content that many people liked, they had nowhere near the level of engagement that 17 Hottest Puppy Outfits would get on BuzzFeed.

Giving ordinary Kiwis a platform to share their opinion is like a self-reinforcing traffic machine. There is also a higher likelihood that the whole process can be manipulated by trolls or astroturfing operations. Considering how lobbyists can get hundreds or thousands of select committee submissions that use the same phrases, it’s possible to get thousands of submissions to things like Stuff Nation past the editors who are unlikely to be paid enough to care.

Stuff Nation and the Stuff website itself are stuck in “post and forget” mode. Other news organisations like Reuters, Quartz and even USA Today have made the move towards “flow” content where there are constant updates throughout the day for different content streams.

Because Fairfax needs to make money from online advertising somehow, anything that increases the amount of content they produce is a good thing. Stuff Nation is a cheap way of getting enormous amounts of additional content available at almost $0 save the additional server and data expenses. It is easily to hide an advertorial when there are 100 posts a day as opposed to 10.

I am sure that Fairfax will eventually ditch the old school Stuff website and integrate everything with Stuff Nation. Sprinkled amongst the assignments and the editorial content from a very small number of Fairfax journalists will be “sponsored assignments”.

Because most people have adblock installed and the constant increase in banner ad supply driving prices down to really cheap levels per CPM, sponsored content – like advertorials – is the only way for them to monetise that content.

How does this fit in with trends in journalism? Well, algorithms can produce stories indistinguishable from what an entry level journalist would produce with the same inputs. There is no need to pay someone $30,000 a year when an upfront investment in IT enables you to get rid of most of your newsroom.

If you are a content producer – journalist, reporter, columnist, editor, whatever – being inside the matrix is likely to be a net negative for your lifetime earnings. Having your own domain name and your own self-publishing projects is likely to be more profitable than locking up all of your content with Fairfax or APN or whoever you want to work for.

Stuff Nation sucks, but it is sadly the way of the future. The economics of online advertising dictate pandering to the lowest common denominator if you are targeting the mass market. The low entry costs for competitors mean that there is no guarantee that Stuff will be one of the top news websites in 2 years time let alone 10 years time.

Fortunately, the economics of the internet permit the long tail – the niche content producers – to earn a decent living. The value of journalism has been determined for 99% of the world’s journalists – it’s worthless unless you are the winner in the market like the NBR, Financial Times, Bloomberg or the Wall Street Journal.

VFX Industry Worker Rights (The Real World Comes To Creative Workers)

This morning on my way into university I listened to a very interesting piece about VFX industry worker rights. There wasn’t much discussion of why Hollywood needs to squeeze margins of contractors whenever it can, and why it constantly looks for government handouts around the world. If there is one industry that displays the very worst behaviour in terms of rent seeking in the form of subsidy / tax credit shopping it is the film industry.

But why do big Hollywood studios have to make a dollar any which way they can? Well, it’s because contrary to popular opinion they lose money hand over fist. Hollywood studios are enormous money losers. They are playing a numbers game where they incur substantial upfront costs on a chance that a movie becomes a hit and not only pays for itself, but pays for the studio’s other losers that season.

The success of Disney has been in realising that movies are loss leaders for massive merchandising and alternative revenue streams. Think about the Pirates of the Caribbean and how they will milk that franchise just from the merchandising alone. In the real world, when your business model depends on your winning hit movies paying for all the losers and the administration costs of running a studio and all of the interest on the short-term financing you use to rollover your monthly cash flow requirements while waiting for a hit, squeezing the lowest person on the totem pole is not surprising behaviour.

Apparently every other part of Hollywood has a guild operating on its behalf – directors, writers, cameramen, makeup artists – they all have an organisation lobbying on their behalf and hooking them up with pension and health care support in exchange for their dues. This also means that it is hard to squeeze labour costs here, so of course studios will squeeze labour costs elsewhere which means outsourced VFX workers.

This isn’t good or bad – it’s simply the real world, moving up the socioeconomic ladder from the working class to the creative class. And Radio New Zealand workers would have been absolutely furious listening to how big bad studios don’t offer any job security to VFX industry workers. They might even be awarded contract extensions as late as 1 week before a contract expiring. Quelle horreur!

All I have to say to VFX workers trying to soften up people for supporting your industry is welcome to the real world. Because of globalisation and the ease of outsourcing, your labour is interchangeable with lower labour cost countries. There is no such thing as rights when there’s a temporary contract involved.

This has been the situation in the construction sector for the past few decades. Risk is shifted down the totem pole to those least able to bear it. High volatility in wages and difficulty obtaining prompt payment lead to enormous strife and second-order effects. Sadly, you won’t find Kathryn Ryan getting so worked up about the inability of a builder in Petone to put food on the table after getting screwed over by a contractor even after protecting himself as best as he could under the Construction Contracts Act and prudent practice in the construction sector.

It is things like this that make me laugh. The creative class are being brought down to the level of insecurity that the working class have had foisted upon them over the past few decades, and they don’t like it one bit. But sadly, because they are essentially a branch of the government, they are more likely to hear their pleas heard and get something done whether it be subsidies, tax credits or other forms of government support.

The guys on the interview talk about how studios send the easy shots to India and the hard shots to places like New Zealand, and then whittle down the VFX margins because they can’t put much markup on a time intensive VFX process. It sucks if you are a VFX worker, but please, complaining about a few months delayed payment from a corporate is a whole different kettle of fish compared to a few months delayed payment from a developer or local construction firm – the studio is several orders of magnitude more reliable, they’re just managing their cash flow extremely well because their business model loses money most of the time.

Now, I’m not unionist, but as an economist it would be remiss of me to ignore the role that unions play in exercising collective bargaining rights and other sorts of behaviour some on the right would call blackmail. In a way, the myth of the independent bargaining agent is that some people actually think that, by themselves, they will be able to achieve a bargain better than they would under a union arrangement.

In theory, contracting is a fantastic way of doing things. But in the real world, it sucks. It is a winner take all competition, not an auction for skills. Many contractors have essentially bought themselves a job – think of the Chorus linesmen made to buy their vans and gear who are now making a pittance on what they used to.

The trend in the labour market over the past few decades has been away from stable employment relationships towards unstable employment relationships. Yes, it makes sense for an industry that works on a project-by-project basis to use contractors. It saves the cost of paying someone to do nothing while there is no work to be had. But it also incurs other costs, as VFX industry workers are finding out.

The creative class used to think that they were above the costs of competitive markets. They thought that they were special, that they deserved privileges and that their role as the anointed ones set them in such a position in society that they are somehow worthy of government assistance if their privileges are attacked or whittled away through maximising behaviour of those they enter into contracts with freely.

The working class have been pushed towards contracting arrangements for a long time now. They got no support. They’re internalising the costs of their situation, and for VFX industry workers, who earn more when they actually are working than many working class contractors, to have the chutzpah to have a moan and ask for mummy & daddy taxpayer to make things better for them is hypocritical in the extreme.