Introduction

Joan Shorenstein Center

on the Press, Politics and Public Policy

Research Paper Series

Journalism,

Value

Creation

and

the

Future

News

Organizations

Robert

Picard

Shorenstein

Fellow,

Spring

2006

Director,

Media

Management

and

Transformation

Centre

Jönköping

International

Business

School

Jönköping,

Sweden

Research Paper R-27

Abstract

_____________________________________________________________________________

News organizations in the United States are struggling to respond to technical and social changes

that are disrupting the business models that proved successful in the twentieth century. The

primary driver of change is that audiences are spending less time and money for news and this is

affecting the willingness of advertisers to support news products.

Value concepts are rooted in moral philosophy and economics. However, news

organizations produce intrinsic and instrumental value for society; however, this value does not

necessarily translate into exchange value.

This study considers why news organizations are, at present, having difficulty creating

value. It argues that journalism and the news business and argues it must improve value creation

for five central stakeholders: consumers, advertisers, investors, journalists, and society. It

examines why and how these organizations are delivering low value, shows why new value

creation is needed, suggests ways to do so in the coming years, and argues that new value can

only be created if news organizations adhere to fundamental values.

Biographical Note: Robert G. Picard, a former journalist, is now a professor and director of the
Media Management and Transformation Centre at Jönköping International Business School,
Jönköping University, Sweden. Picard is author of twenty books, is editor of the

Journal of

Media Business Studies

, and was previously editor of

The Journal of Media Economics

1. INTRODUCTION

Changes in technologies, society, and media-use patterns are disrupting the business models that

provided financial resources for news organizations in the twentieth century. Audiences are

spending less time and money for news than in the past, and this affects the willingness of

advertisers to support news products. The amount of news the public desires and the way it is

consumed has and continues to vary widely. However, there is a clear collective decline in news

consumption, and news organizations’ roles in society are changing.

This essay investigates the reasons behind the changing state of the news business. It

focuses on how news organizations create value and why they have difficultly creating as much

value today as they did in the past. It applies concepts of value to the strategies and products of

news organizations to show how their activities both create and diminish value.

Concepts of value are rooted in moral philosophy and economics, and both perspectives

are central to discussions of journalistic activities. News organizations produce intrinsic and

instrumental value, furthering the pursuit of truth, knowledge, self identity, and democratic

participation. Those values, however, do not necessary translate into exchange value, which is

determined separately in the marketplace. This value problem is crucial to the challenges faced

by news organizations today because American news organizations are primarily market-based

enterprises and must produce exchange value to survive.

This essay uses a value creation approach to show why it is essential for news

organizations to rethink their activities and approaches to journalism today in order to improve

value creation for five central stakeholders: consumers, advertisers, investors, journalists, and

society. It argues that the changing news environment requires commitment to and utilization of

2. AN INDUSTRY IN TURMOIL

Regular consumption of news is central to the political and social philosophies of liberal

democracies and to the existing business models of news organizations. Unfortunately, such

regular news consumption is an aberration rather than normal practice. The rates of news

consumption are declining precipitously, thus endangering the future of news organizations and

their ability to serve their functions in society.

For more than a hundred years the

business

of news organizations has not been content.

From the business perspective, contemporary concerns about the industry are not fundamentally

focused on content changes or changes in consumption, but rather on the effects of those

changes on the business model of delivering audiences to advertisers. From a social perspective,

concern focuses on how those changes affect the ability democratic societies to exist. The United

States and many other liberal democratic societies serve their communication needs primarily

through privately owned and operated media. In the case of these groups, therefore, the two

perspectives are inextricably intertwined.

We must not fool ourselves about the importance of news in the lives of

citizens/audiences. The reality is that the average person is not now—and never has been—

deeply interested in news. For most readers, viewers, and listeners, news consumption is brief

and consists primarily of scanning major developments. Most people have only a superficial

awareness of major occurrences and other things about which they should be concerned. In the

past this lack of interest in news was not a problem for news organizations because the options

for audiences to get news, information, and entertainment were limited. In order to promote the

consumption necessary an audience, news organizations provided large quantities of content that

interested consumers, such as human interest, sports, lifestyle, and entertainment material, as

well as advice and hobby features, comics, and games. Today, there is an enormous variety of

choice among content delivery systems and different content providers. Many provide non-news

content better than news organizations and serve the undemanding news consumption

requirements of the average consumer adequately and at no charge. These other content

providers have progressively drawn readers, viewers, and listeners away from news

organizations’ offerings and are destroying the value that made the business model work in the

twentieth century. These changes compel those who see the industry as more than a business to

consider fundamental questions of how news organizations create value and what must be done

to improve value creation to keep them viable.

This examination considers value creation in journalism, why and how perceptions of the

value of news and information are changing, and what the changes portend for the future of

established news organizations and their traditional role in democratic processes. The impetus

for the study involves questions of why large numbers of consumers are willing to pay for

entertainment but not news, and why many do not use news even when it is provided free or at a

low price.

News organizations today are confronted with social and economic conditions that

threaten their sustainability. Their historic stability and position in society has eroded

significantly and news executives are struggling to find means to regain stability and relevance.

Innovation efforts in news organizations are at their highest levels ever; unfortunately, these

efforts have been spectacularly unsuccessful.

Hundreds of millions of dollars have been spent redesigning newspapers and creating

content designed to appeal to marginal readers. Today newspapers are better designed and more

reader friendly than ever before. Television news organizations have the technical capabilities to

provide news and information from anywhere in the world with greater speed and in better forms

than in the past. Broadcast news providers reach audiences through program slots in general

content streams, specialized channels, and through new technologies. New technologies allow

news and feature services to distribute content more rapidly than ever before. Never before has

so much news and information been available. Across news media, innovative news gathering

and dissemination practices have been introduced and efforts have been made to break down

walls between news departments and business, marketing, and advertising departments in efforts

to deliver news and information more effectively and profitably. These efforts have created

mechanisms that allow much better ways to track and learn about audiences than existed before.

Yet none of these factors are solving the fundamental rejection of news and information by

audiences, which has been growing during recent decades.

The changes introduced in news organizations in recent decades have been highly

limited, cosmetic, and weak, preserving a gilded age of journalism, soothing investors and giving

the impression of active managerial responses to the changing environment. Concurrent with the

limited innovation efforts have been a constant and deleterious chipping away of resources and

diversion of profits to corporate owners, whose primary interests do not lie in improving news

organizations or their ability to carry out social roles.

At the same time, large-scale changes in lifestyles and communication technology have

changed the roles of news organizations in society and taken away control of the communication

space that they once enjoyed. These changes have not been addressed by the limited innovations

in news organizations and have run far ahead of the way news organizations’ perceive these

transformations. Today news organizations can no longer be concerned with mere improvements

and adjustments designed to sustain themselves in the short and mid-term.

For the past two centuries, news, information, and analyses provided by news

organizations have been the primary means by which the public experienced life beyond that

which they personally encountered and observed. New organizations have provided

understanding about that which the public has personally experienced or experienced at a

distance through their consumption of news reports.

News, of course, conveys information about that which is remarkable and noteworthy; it

chronicles and explains less dramatic events, developments, trends, and issues in society; and it

provides information about entertainment, sports, and lifestyle developments. News of the first

type focuses on the unusual, including information on disasters and social or political unrest. It is

normally highly salient to audiences. Media usage clearly spikes during times of social crises,

wars, and catastrophe. It is increasingly clear, however, that media are under-delivering value

and experience at the day-to-day level when the second and third types of news and information

are provided, and that other mediated experiences are being substituted because they also serve

the functions that were formerly limited to news organizations.

News consumption in the U.S. today is at its lowest point in half a century and is

continuing to drop at a significant pace. Network evening television, for example, drew an

average of 52.1 million viewers in 1980 but that number declined steadily to just 28.8 million

viewers in 2004.

During that period the population rose by more than 70 million persons, so

news viewers declined from 229 per 1000 inhabitants to 97 per 1000 inhabitants—a decline of

58 percent. Circulation of the three major news magazines,

Newsweek

Time

, and

U.S. News &

World Report

, declined 9.9 percent from 1988 to 2003.

In population per million terms,

however, it produced a decline from 42 per million to 31 per million, a drop of 26 percent. Daily

newspaper circulation was 53,829,000 in 1950 and 54,626,138 in 2004, but because of

population growth circulation declined from 353 copies per 1000 population to just 183 per

1000, a 48 percent decline.

Where have these news consumers gone? They have not switched in any great number to

cable television news, because the three main cable news channels combined are viewed in only

2 percent of U.S. households daily,

and viewers spend an average of only 15 minutes viewing

these channels. In national surveys, local television stations are reported to be the primary

sources of news for about half the public (about twice the amount for network news), but more

than half of viewers report that they do not view the entire newscast, and nearly 60 percent

indicate they are not loyal to a particular channel.

Some may be using Internet news, but there

only about 23 million unique users of MSNBC.com daily, 21 million for CNN.com, and 6

million for FoxNews.com.

Many of the users come from outside the U.S., however, and it is not

possible to count users who visit more than one site. NYTimes.com, the top rated newspaper site

in the U.S., has about 1.9 million unique visitors worldwide each day, but they view an average

of only one page a day (either headlines or a single story). Traffic for the Web sites for the

Washington Post

and

USA Today

are about three fourths that of the

Times.

The monthly reach

of Yahoo! News is only about 17 percent of Internet users, AOL News about 10 percent; and

Google News about 6 percent.

Most of that traffic consists of merely of a brief review of

headlines rather than reading stories. Given the relatively low consumption figures for Internet

news and the fact that the decline in news usage began well before the introduction of the

Internet, most researchers agree that there is a real decline in new consumptions and a wholesale

disconnect from news products and services.

Underlying this diminishing attention to news are issues related to the value of news and

why it is apparently less valuable today than in the past. It is based in the value creation concept

that successful companies follow as they seek to create and add value to their offerings. The

concept is grounded in the principle that value must be perceived by a range of stakeholders and

that consumption value is established by the consumers of goods and services rather than their

producers. Application of the value creation concept to media is relatively new. Its use is crucial

because of the shift developing in information societies, whereby control over content moves

from media personnel to audiences. The concept has significant implications for news

organizations and for society as a whole because it forces reconsideration of what content is

provided, how it is provided, the persons to which it made is available, and how they utilize it.

Changes in these factors are fundamental to issues of social and political knowledge and

participation in democratic processes, as well as to the sustainability of news organizations. It is

a central tenet of business that to be successful a firm must fulfill its customer needs and wants.

This is complicated in terms of media because these include both public and private needs and

wants of varying significance. Additionally, audiences do not currently provide the main revenue

stream for most news organizations.

An emphasis on value creation is important because the contemporary history of news

organizations has primarily involved value destruction. Changes in media, technology, and

audience and advertiser behavior have destroyed value for most media companies and news

organizations. Some of the changes have produced devastating losses of value, whereas others

have been less injurious.

Two important examples of how technology and new ideas have destroyed value for

existing media but created new value for the entrant firms and their stakeholders are the Cable

News Network (CNN) and the newspaper

Metro

. The idea of creating a news channel on cable

television was an outgrowth of cable and satellite technology and public policies requiring cable

systems to carry news and public affairs. At the time, network television news operations were

focused on their nightly news operations and had a great deal of disdain for cable companies.

This created a window of opportunity, which Ted Turner seized to establish CNN in 1980.

Turner established CNN using a new distribution system to reach audiences. He also introduced

twenty-four-hour news broadcasting.

Consequently, CNN became a major news brand, drew

viewers away from network evening newscasts, and increased financial pressures on the network

news operations because of its success.

Likewise, the establishment of the free distribution daily newspaper

Metro

in Stockholm

in 1995 ran against conventional wisdom and established a new type of newspaper funded fully

by advertisers. Today publishers in 36 countries produce free daily papers with a combined

circulation of 22 million copies that attract 45 million readers daily.

Metro

and similar titles

have been particularly attractive to young, urban professionals who were not readers of

established general circulation newspapers. These papers are making it difficult for traditional

newspapers to attract additional consumers and advertisers, and are increasing competitive and

financial pressures in the newspaper industry.

Research on value destruction has historically attributed its development to the effects of

new technologies and shown that firms who fall behind technologically have the value of their

existing products diminished and their ability to create value with new products destroyed.

recent years, however, it has been observed that not only large technological changes but also

smaller developments and market changes can produce similar results. In these environments,

firms must innovate and alter their products, organizations, and processes in order to create

value.

News organizations today are experiencing a continuing crisis of value destruction and if

they are to sustain themselves, they must find ways to create new value to replace that which is

being destroyed. If they do not do so, they risk their demise. That prospect has serious

implications not only for news organizations but for society has a whole.

The Challenge of Audience Needs and Wants

Needs are an expression of necessity and both individuals and societies have needs. As

individuals we need air, water, food, clothing, and shelter to survive, and we can sustain

ourselves with little else. Our other desires are more instrumental to achieve desired states or to

obtain desired items, and the necessity of these items varies widely. Societies also have needs if

they are to develop, survive, and flourish—resources, solidarity and common identity, security,

and justice.

Things and states that are not basic necessities but are desired are represented by the idea

of wants. Individuals, for example, may desire a luxury automobile or to be famous, and

societies may desire to fund symphonies and to provide activity centers for youths and the

elderly. These wants, however, do not rise to the level of necessity and the capacity and ability to

achieve them may be limited.

The concept of “need” as defined in journalism is typically based in concepts regarding

news that people require. This, of course, leads one to consider the question “Required for

what?” Traditionally, this need and requirement has been defined externally from the audience of

news, by philosophical ideas that the public needs information to partake in democratic

governance and to be engaged in society.

James Hamilton has observed that “news outlets that cover public affairs have always

struggled with the tension between giving people what they want to know and giving them what

they need to know.”

They do so to serve what Robert Entman calls the “key democracy-

enhancing purposes of news”

: its core functions of illuminating policy, power, ideology, and

self interest, that is, helping people monitor and cope with the world, exposing them to debates

on issues and ideas, and mobilizing them to participate in society.

The goals and purposes of journalism are traditionally rooted in ideas of how media and

journalism should affect audiences and society and how individuals can be induced to respond in

desirable ways. This approach originated first in democratic social theory and was embraced by

social and media theorists interested in influencing social behavior. This formulation of

journalistic needs contains a significant paradox that has been noted in David Mindich’s

exploration of why news does not interest young people today: “Journalists need to inform their

audiences. If their information is boring, they will lose readers and viewers. However, if they

pander to audience tastes, they may have an audience but nothing worthwhile to

communicate.”

However noble the approach of using media to inform audiences and influence

individuals to become engaged citizens, we must recognize that the definition of need in which

the approach is rooted is based on normative assessments about what is required for an effective

democratic society and what journalists should provide. This creates a relationship in which

news and content are thrust upon audiences based on the values and social need perceived by

journalistic professionals and social theorists. Needs as defined in this approach are thus external

to individuals in the audience and not necessarily related to audience members’ internal

perceptions of need. The traditional approach is thus concerned about

public

needs rather than

private

needs.

From the private need perspective, individuals seek information to find answers,

to reduce uncertainty, and to make sense, and their needs and uses for that information are driven

by many motives.

Although there is some convergence between public and private needs, the

approaches do not yield similar demands from the consumer standpoint. The traditional approach

may have been somewhat effective when media and technologies were limited and audiences

more passive in their reception of content—although one can seriously question whether an

informed citizenry and civic engagement were ever produced in significant quantities during the

golden age of media and journalism in the mid- to late twentieth century.

Concurrently, news media have been seeking to provide material in which people are

interested and that they want to read see or hear. Audience wants are, obviously, served by media

in hopes of becoming more successful by gaining larger audiences. Because audiences are

collections of individuals it is impossible to assess what each member wants. Consequently,

media managers make assessments of what they believe aggregate groups of audiences want to

receive. There is furthermore a tendency to try to serve the wants of the largest audience group to

the detriment of smaller groups. This market-driven approach has been understood by many

news organization managers to involve constant surveying in search of interests that will attract

large audiences of desired demographic groups. The results have been, predictably, to reduce

serious news and to increase health information, relationship content, entertainment coverage,

and lifestyle materials that reflect the content of magazines, niche cable channels, and Internet

sites and to attempt to provide something for everybody. These efforts attempt to reduce the

complexity of topics and their presentation so that content is usable by people with

comprehension abilities at a junior high school level.

This strategy behavior is a living illustration of Harold Hotelling’s economic model that

shows that competitors tend to provide similar products in order to serve the largest number of

customers. They imitate each other in order to benefit most from competition and to avoid

adverse effects of significant competition. The end result is “excessive sameness”.

News-

audience research recognizes that there is no single type of news consumer and that a range of

demographic and psychographic factors such as aspirations, values, and lifestyle produce

differing preferences and desires. Although media audiences have different preferences, media

managers have recognized that the greatest number of customers will congregate at the center of

the market and a smaller number of customers with other preferences at the edge. Because

managers’ decisions have been driven by advertiser wants for larger audiences, too little variety

results from media competition, and audiences are underserved by the excessive sameness

designed to provide lowest-common-denominator service to appeal to larger audiences.

This market-driven approach has been criticized as producing a dumbing down of

journalism

and a shift to soft news. Indeed, the amount of soft news has doubled since 1980,

accompanied by a marked increase in news with human interest elements, crime and disaster

stories, sensationalism, and stories without public policy components.

At one level this can be

seen as serving the wants of some members of the audiences to the detriment of others, but it

also must be seen as serving what media managers think they need—in the short run, at least.

Assessing what audiences want and providing it is often termed market-driven

journalism. It has been observed that critics use the term “as the sound-bite explanation for ‘junk

news’—the editorial equivalent of fast food.” Conversely, “Defenders of market-sensitive news

wrap themselves in the flag of majoritarianism, insisting that market-driven journalism is the

most democratic of new forms, responsive to a majority, or at least a plurality, of viewers.”

Casting the decision in light of polarities between need and want, between good and bad

content, and between non-market and market choices would seem to create a value dilemma for

news organizations that puts the industry in an adversarial relationship with its audiences. This

simplistic conceptualization of audiences and the market assumes that the public wants trash and

that they have no values because they are apparently rejecting news that is good for them. This is

a highly deprecating view of audiences and customers that will make it difficult for news

organizations to ever connect with them, as well as a dangerous conceptual trap. Merely because

large numbers of the public reject current offerings by news organizations does not mean they

want junk news or trash TV. In fact, those TV programs and channels that emphasize such

coverage have relatively low ratings as well. Casting the news industry’s future in simplistic

whatever-they-will-pay-attention-to terms is also problematic because it is a formula for even

further value destruction—there is always someone who can do it more cheaply and

salaciously—and because such a view sees value creation only in terms of a portion of the

potential audiences and does not consider how to create value for the range of stakeholders in

news and information.

Understanding private needs forces one to consider the motivations for news and

information seeking and use. The motivations for most news consumption primarily involve

answering individuals’ questions, for example, “Is there anything I need to be worried about?

What interesting things are happening? Information seeking involves finding answers, reducing

uncertainty, helping decision making, sense making, and satisfying emotional needs.

Clearly,

acquisition and consumption of news is less functionally oriented than most information-seeking

behavior, where education, research, curiosity, problem solving, and decision making produce

specific short-term information consumption. But for audiences, news consumption ideally

serves less instrumentally immediate needs of surveying the environment, developing

knowledge, preparing for social interaction, and becoming an educated citizen. At its worst it

provides distraction and engenders emotional rather than rational responses.

The challenge facing news organizations today, however, is not a relatively simple

want/need problem for which an effective balance can be sought that will provide a solution to

the industry’s problems. The fundamental challenge is that the roles and functions of media in

society are changing. In contemporary society, individuals are using media in a very different

environment than the twentieth century. Digitalization and new technologies have changed

communication functions and abilities from one-way to two-way communication, from passive

to interactive communication, from mass media to specialized media, and from fixed-location to

mobile-use devices. The most significant change is a shifting of the locus of control over the

content from communicators to audiences, who now play a more active role in information

selection and creation. Individuals in the audiences increasingly exercise selectivity and filtering

abilities, interact with content, and contribute content of their own. These changes represent a

fundamental power shift in the public communication sphere that requires all of us concerned

with the broader needs of society to alter our ways of thinking about audiences, the role of media

in society, and how we seek to develop informed and active citizens.

It is no longer adequate for us to merely think theoretically and philosophically about the

potential benefits of news and information to society. Lamenting change and longing for a past

environment will do nothing to improve the prospects of news organizations. To be effective in

the contemporary environment, we must increasingly understand the value of journalistic activity

from the audience viewpoint—that of a greatly empowered individual consumer. We must

understand needs and wants from their viewpoint, how news and information creates value in

their lives, and how that value can be enhanced to support the goals of an informed and engaged

citizen.

Because consumers are increasingly being asked to fund content and its social functions

through cable, Internet, and mobile phone services fees, we need to consider the value created for

them by focusing on how it serves their current needs and wants for information and their

psychological and social requirements for successful interaction. But we must be mindful of the

economic and business perspectives on human behavior that show that needs and wants are

nearly insatiable, and bound by rational maximization of the use of money, time, and other

scarce resources by consumers.

This discussion focuses on how those needs are met by the value produced in news and

informational content and the implications of the shift in determination of value from journalists

to audiences. This paper’s focus on creation of news from the value creation and consumer value

perspectives—i.e., the value created in the production and the value of the use of news and

information—differs from previous studies of news production that have focused not on value

but on process.

It places the flight from traditional news and information within the context of

declining value of content to an increasingly large amount of the public.

The value creation perspective asserts that value is in the mind of the consumer and is a

measure of worth or importance placed on a product or service.

There are clear indications that

consumers’ views of the value of contemporary news and information are relatively poor given

their unwillingness to make significant temporal and monetary expenditures for that content.

Two activities of news organizations are crucial to the concept of value creation. The first

activity is the actual creation of content by journalists, photographers, videographers, and related

content professionals. This process is influenced by the choices of what is considered

newsworthy or informative, how it is covered, and how it is presented. The second activity that

creates value is the selection, organization, packaging, and processing of self-created content and

content obtained from other sources. The value is created for audiences because content

organizers expend the time to consider the enormous amount of available or potentially available

materials and daily make hundreds and even thousands of decisions about its quality, usefulness,

and importance. Creation of news and informational content and its packaging with other

content are the core activities of news organizations and represent the essential elements that

produce value for audiences. How that activity takes place influences the value of that content.

Information and news analysis, for example, adds more value to content than mere basic

information and journalistic production because activities and processes that add knowledge and

understanding create additional value to audience members beyond that of receiving basic facts.

There is clearly a gap between what established news organizations and information providers

are doing in terms of content creation and packaging and how audiences value that work. This

gap is created by a variety of factors that have altered the media environment and the way media

are used by news consumers.

Media Proliferation and Audience Changes

Contemporary society has seen an explosive growth of media types and companies providing a

continuous supply of entertainment, news, and information.

The ability to provide audiences

with significant choices of content and its availability has resulted from great changes in the

technology, policy, and economics of media. Since the development of the telegraph and news

agencies, the ability to provide news and information to audiences has grown enormously as

telephony, broadcasting, cablecasting, satellite technology, the Internet, and mobile

communications have added increased abilities to gather and distribute news and other content.

These have been supplemented in recent years by the appearance of new journalistic and non-

journalistic sources for news and information including talk shows, websites, blogs, chat rooms,

and e-newsletters.

The technological changes that have altered the media environment have not

merely altered the technology available, but transformed who creates content, how it is created,

the methods of news work, how news companies are organized, and—most importantly—the

ways in which individuals use and interact with content.

During the past several decades, newspapers, television newscasts and news agencies

have progressively struggled with declining consumption of their content. Although the

fragmentation of audiences and distribution of media use across the growing types and amount of

media has been a factor,

there is a more fundamental challenge of audiences leaving traditional

news sources and traditional information dissemination channels behind. The problem is not one

of substitution of television news for news magazines or news on the Internet for that in

newspapers. Audiences are not switching from print and broadcast news to news in other forms;

they are reducing news consumption altogether.

Journalists and editors working for the Project on the State of American Newspapers,

which is sponsored by the American Society of Newspaper Editors, argued that news

organizations themselves are at fault. They blamed declining support for journalism on an

increasing separation between the interests of readers and newspaper owners.

The problem,

however, is deeper, more complex, and does not just involve skepticism about established media

or getting news from non-traditional sources. Instead there is a wholesale flight from information

that has produced a significant decline in interest in news altogether. A Times Mirror Center for

the People & the Press study in 1990 revealed a generational shift away from interest in public

affairs since the 1970s,

and a 2005 study showed that interest in and use of news across all

media is very low by persons under 40.

media consumption, and increasing reliance on technological means of communication have all

played roles in changing lifestyles and affected news and information needs and preferences.

These social and lifestyle changes have changed the ways people construct their identities

and the forms in which they connect to communities and society. This is seen as creating a public

detachment from many conventional forms of organized community activity

and from civic

processes that have been deemed fundamental to democratic society.

Declining civic

engagement has affected how people relate to society and each other and to a diminution of a

variety of activities and factors that traditionally have bound society together. It has reduced

political and civic participation and diminished connections with colleagues, friends, and family.

These changes are seen in diminished participation in traditional social organizations,

civic activities and elections at all levels of government. They are reflected the decline of

downtown districts that previously served as magnets for community activity, in declining

participation of parents in the activities of their children’s schools, and in the reduction of

volunteerism in traditional institutions.

The development of factors leading to this disengagement has been observed for a half

century. In 1950, Riesman, Glazer, and Denny argued in

The Lonely Crowd

that changing

personalities and relations of persons in society were altering work, leisure, and politics, and that

these factors were particularly noticeable in the growing middle class of postwar America.

Three decades later Christopher Lasch observed that social and psychological changes were

affecting individual behavior and national culture, leading to a loss of sense of history and social

context and an increasing withdrawal into the self. All of these are seen as producing negative

effects on politics, education, and interpersonal relations.

Disengagement is not total, however, and new forms of participation that are focused

through less traditional social institutions are evident. Special-interest groups, arts collectives,

clubs, professional associations, consumer cooperatives, and a variety of virtual communities

have emerged alongside traditional engagement mechanisms. These supplement and provide

different avenues for participation, but these new types of engagement tend to be focused on the

individual rather than collective social and political interests. It is more difficult for news

organizations to connect with and cover these newer forms of engagement and community

because they represent widely diffused interests and often are not supported by formal structures

and organizational arrangements that can be easily observed and contacted.

In the political realm, a disconnect from traditional political participation can be seen as a

response to the distance between government and the public that has grown concurrently with the

size of government since the mid-twentieth century. The professionalization of government—

evidenced by lifetime politicians; by governmental experts in foreign relations, education, social

service, environment, and scores of other fields; and by civil servants for whom the public

sometimes seems a bother—has produced a toll on public involvement. The number of issues

dealt with by national, state, and local governments has expanded widely, large bureaucracies

have developed at all levels, and governments have increasingly employed public relations and

marketing specialists to become intermediaries between decision-makers, civil servants, and the

public. The number of issues confronted and the information that citizens must have to

effectively participate in democratic governance has grown exponentially, and news

organizations have concurrently increased the amount of information they provide.

Simultaneously, the need for information brought about by globalization and economic and

social changes have added even more information to the flow. The result is that the public is

drowning in a tidal wave of information and fighting desperately to escape its hold. The force of

the disjointed, unconnected, and continuous wave of information is disorienting. There is so

much information that individuals are unable to process it. It has become a hindrance to life, not

an aid to it.

Because citizens feel incapable of managing the enormity of information needed to

participate effectively in society, we have seen the emergence of single issue politics on

individual topics in which individual groups of citizens are interested and can grasp. They seek

out information on those topics and participate in governance activities involving them through

non-governmental organizations and lobbying groups that monitor and represent their interests

and viewpoints.

The role of media, particularly television entertainment, in displacing other leisure

activities, including social interaction and civic activities, is also a significant factor in

disengagement.

The heavy use of television has effects beyond merely reducing time for other

activities. A number of observers argue that its overwhelming commercialization and overly

abundant provision of banal entertainment reduces the abilities of individuals to relate to society

and take part in serious public discourse.

The general social trend toward disengagement and detachment from traditional

organizations is directly related to the difficulties faced by contemporary news organizations.

News and information as conceptualized in modern journalistic practice most focuses on

traditional institutions of social interaction that reflect the interests of the most socially,

economically, and politically active members of the community. Because active engagement

with these customary institutions of society has declined and news organizations have not yet

effectively found ways to cover and illuminate many new forms of less structured and

institutional engagement, it should be no surprise that the percentage of persons who value news

and information that is primarily concerned about the activities and issues in traditional

engagement institutions and mechanisms has diminished.

The declining consumption in news has also occurred because the proliferation of

information channels, and developments in communication technologies, have fundamentally

altered the position of news organizations in the communication process. In the past, news

organizations existed in a supply market in which media organizations were able to direct or

control the flow of communication and dictate many consumption choices because of

oligopolistic and monopolistic conditions that existed in media industries. Today, however, much

of that control has shifted to audiences because of the changing industry structures and

technologies and they have created a demand market in which the traditional ways that news

organizations have selected, gathered, packaged, and supplied news and information are less

effective.

The continuing decline of audience interest in traditional presentation of news and

information and in consuming material from the established channels of news and information

indicates that there is a significant gulf between the content provided by established outlets and

audiences’ interests and needs. The available content is increasingly being seen as less valuable

by many readers, listeners, and viewers. This, of course, has fundamental implications for the

survival of news organizations and for the traditional functions of media in social life, politics,

and democracy.

The perceived separation of interests has also affected the trust placed in news

organizations. Although trust in institutions as a whole is diminishing, media and news

organizations rate particularly low on lists of trusted institutions. Trust and trustworthiness are

based in perceptions, observations, experience, and relationships. High levels of trust or distrust

both develop from experience and observation, with the consequence that it is easier to maintain

trust than to acquire it, and it is much more difficult to reestablish trust that has been lost than to

initially build it. Trust is thus a form of social capital that is central for the sustainability of large

organizations in the contemporary world

and necessary if a firm is to create effective, long-

term relationships with customers.

Trust diminishes with psychological and physical distance, so the relations between the

individual and subject of trust are central. The degree of trust is affected by perceptions of

similarity of interests, experiences, values and norms, and familiarity.

Thus individuals tend to

place the highest trust in family, friends, and teachers and in organizations with which they are

most closely associated and have regular interaction. Trust is given to persons and institutions

that are respected, seen as not unduly self interested, and can be relied upon. Trustworthy

individuals and organizations offer some degree of leadership, provide counsel and guidance,

and are perceived as reliable, sincere, knowledgeable, experienced, and approachable.

Trust, however, does not result solely because of rational strategic responses to behavior

that has been observed. It also emanates from moral foundations that affect how we relate to

others and perceive the world.

This permits trust to extend to institutions and people with

which we have had no previous knowledge and not yet formed an opinion of trustworthiness

based on experience or observation.

In general, the degree of psychological distance between individuals and institutions is

naturally higher than between people. Trust in institutions is based on perceptions and beliefs

related to shared interests and values, transparency in institutional processes, and the extent to

which the institutions give voice to their concerns and lives or provide service to their needs and

wants. This is one of the reasons why the public tends to place higher trust in local media than in

national media.

Problems with trust in media result because institutions generally tend to be perceived as

faceless and soulless. One of the paradoxes of media is that although the organizations may be

distant, persons within them have faces and make connections with audiences. We have in recent

decades experienced the rise of celebrity journalists, commentators, and program hosts with

whom audiences identify strongly. Although there is great distrust in media organizations, the

public to differing degrees places high trust in some media personalities such as Oprah Winfrey,

Bill O’Reilly, Jon Stewart, and Larry King. This phenomenon is especially problematic for news

organizations because it is easier to identify with people who express views—especially similar

views, hopes, and aspirations— than with people who are perceived as being detached. Thus

connections and trust between audiences and celebrities is easier to create than between

audiences and journalists who imbue the values of the profession.

The problems created for news organizations by diminished or lack of trust, and its

credibility component, have been recognized in the industry for several decades but they have

become more significant in an era in which consumer have large numbers of choices of sources

for news and information. The growing gulf between journalists and news organizations is also a

central issue because trust between organizations and their employees is an important factor in

the development of perceptions of trustworthiness outside or organizations.

To sustain themselves in the future, then, news organizations need to find ways to bridge

the gulf between themselves and their audiences and to develop greater trust. Without those

elements, their ability to create value will be inhibited.

Changing Business Models

The ways that news organizations obtain income from their activities and the opportunities for

continued revenue from the sources are changing along with audiences, creating the conditions

that bring the significant financial pressures to bear on the enterprises. These changes today

occur as the organizations are moving away from positions of high prosperity and stability rather

than towards them.

The situation is well illustrated by the modern history of newspapers, whose business

model is changing most among news organizations. Before the 1800s newspapers were read

primarily by elites made up of the royals, nobility, and wealthy landholders and merchants. This

occurred partly because the business model was based on costs for papers being borne nearly

entirely by readers, who paid a high price. It was necessitated because literacy rates were

extremely low among the general population, and many survived on non-wage paying economic

relations. Urbanization, public education, and the industrial revolution changed the nature of

society in the nineteenth century by creating a large group of wage earners with the ability to

read. The industrial revolution also changed means of production so that newspapers could be

printed at lower cost. Simultaneously, the increasing availability of manufactured and prepared

goods led to advertising intended for mass audiences, and revenue from advertising permitted

publishers to keep their prices for copies low enough to create mass audiences. This dual revenue

model became the base of advertising for newspapers (and, later, popular news magazines). This

change in the business model meant that advertising provided one-half of the revenue of

American newspapers by 1880, which rose to two-thirds by 1910, and is 82 percent today.

The flow of the advertising revenue stream increased enormously during the last half of

the twentieth century—particularly after the 1970s—making newspapers very profitable firms

and became the impetus for the growth of large, publicly traded newspaper companies. During

the period the amount of advertising income nearly tripled in real terms. This growth of

advertising income created a fundamental change in the newspaper business model, making the

industry increasingly dependent upon advertising revenue. The dependence on advertising

increased from 71 percent of total revenue in 1956

to 82 percent of revenue at the end of the

twentieth century.

This increasing dependence on advertising allowed newspapers to artificially maintain

low prices for readers. The price of a daily copy of the

New York Times

, for example, rose from

15 cents in 1950 to 75 cents in 2000. Had it merely kept pace with inflation the price would have

been $1.05 in 2000. The average cover price for newspaper throughout the U.S. was 10 cents in

1965 and rose to 50 cents in 2000, also an increase below the rate of inflation

All three types of advertising (retail, national, and classifieds) carried by papers

contributed to the increasing revenue stream. Retail advertising grew steadily throughout the

second half of the century, reaching a zenith in 1988 and 1989. National advertising

was

relatively stable from 1950 until the 1980s and then began growing, moving strongly upward

after the recession of the early 1990s. Classified advertising expenditures rose steadily between

1950 and 1980 and then surged dramatically in the 1980s and 1990s to become nearly as

important as retail advertising in terms of their contributions to newspaper finances.

These

shifts made newspapers more dependent upon classified employment, automobile, and real estate

advertising that tend to be more cyclical and respond more to changes in the economy. This

dependence on classified advertising also magnifies the threat posed today by competition from

Internet advertising.

Today there is no question that the twentieth century business model cannot be

maintained because rising production, labor, and circulation costs, changes in newspaper

consumption, and changes in advertisers' purchasing habits are altering the bases of that model.

The most significant change to the model is that it was based on a mass audience that no longer

exists. In 1950 total daily circulation was 53.8 million, spread among 1,772 papers; in 2000 it

had risen to 55.8 million, spread among 1,480 papers. Although circulation rose 2 million in the

50 years, the population of the country increased by 131.2 million. By 2000, newspapers reached

fewer than half of the households in the United States.

The business model of television news is also being altered. Initially network news was

generally not considered part of the business of television but as public service in the 1950s and

1960s. “We had 98 percent of the television audience in the country…and you all had to watch

us, and they made money. It was a machine. You printed it in the entertainment portion of the

network. So the news departments didn’t have to make money and they didn’t. They were loss

leaders,” Sam Donaldson recalls.

Technological developments such as color broadcasting,

videotape, and microwave and satellite image transmission changed the capabilities of network

television news, altered how news was gathered and broadcast, and spurred the networks to

expand their evening broadcasts from 15 to 30 minutes. These changes attracted large

audiences

who were less interested in news in print and by the 1970s the network evening news

broadcasts were highly attractive to advertisers and had become financially beneficial to the

networks. The business model that had earlier worked for televised entertainment now worked

for television news.

The success of network news served as a template for local stations and they expanded

their news operations significantly. Leading stations began to provide two and a half hours of

locally produced news in the afternoon and evening and a half hour to an hour of news after

prime time, attracting viewers away from the evening network news broadcasts. The financial

benefits that had accrued to networks were duplicated at leading local stations and news

broadcasts became the largest source of revenue providing the majority of their income.

The increasing competition between network and local news, between local stations, and

between broadcast and cable channels that developed in the later part of the 1980s and early

1990s reduced the profitability of all television news operations—as did advertisers’ resistance to

paying high prices for waning audiences. By the 1990s news budgets of both network and local

news operations were tightened and they increasingly relied upon video news services for

national and international coverage in order to cut costs. In the late 1990s many local stations

began shutting down their local news operations if they trailed large successful local news

providers.

Despite the difficulties, network television news is still one of the most stable revenue

sources for television companies because its viewership tends to be habitual and news operations

do not produce the high income fluctuations found in entertainment programming because of the

high failure rates of individual programs. Morning news, however, has become the financial

engine for network news divisions and produces about three-fourths of the news income of ABC,

CBS, and NBC. The Today Show on NBC brings in about $250 million in advertising alone.

The programs emphasize lighter news and presentation styles and put significant resources into

covering features, personalities, and self-help news and information that attracts large, primarily

female audiences.

Today, only 44 percent of the television stations in the U.S. produce local news and fewer

than half of those news operations are profitable. The percentage of those breaking even and

making profits remained stable at 68 percent between 1997 and 2005, but the number making

profits declined from 62 percent to 44.5 percent. For local television stations, however, news

operations broadcast an average of 3.6 hours per day and bring in 42 percent of the revenue

received by the station.

Network television news operations are increasingly selling national and international

news to local broadcasters and cable television news operations, and digital downloading is

creating a model from which these news organizations can receive additional revenue streams in

the form of payments from stations, from cable systems that carry the channel, or individuals

wishing to purchase copies of news packages. The broadcast, cable, and online news operations

are now sharing resources and cross-subsidizing operations as a means of keeping costs low as

they pursue these initiatives and the new business model upon which it is based.

The business models of news magazines have suffered significantly in recent decades as

readers have came to rely on other news sources. Efforts to stem circulation losses and make

news magazines more attractive through redesigns, changes in story presentation, and enhanced

uses of photography have not been successful because their content is “caught between the

immediacy of television news and the detailed interpretation and analysis found in

newspapers.”

This has left magazines in the position of having to increase prices for

subscriptions and copies and to seek additional income by using their archives of photography

and articles to create additional revenue streams. Of all news organizations, news magazines

appear to have the business model that is at most unstable today.

Radio news operations have not provided important revenue streams for stations for

decades and the average radio station broadcasts just 39 minutes of news on weekdays and 11 on

weekends, with two-thirds of the stations losing money on news activities. Only one-fourth of

stations have a news director specifically for that station.

The bulk of radio news was

traditionally called “rip and read” because it relied on news delivered from news agencies via

teletype. Today the technologies have changed but more radio news still originates with news

services and newspaper/Internet headlines rather than through original news gathering.

A number of radio stations operate in the all news format that began in the 1960s and

1970s as music channels shifted to the FM band, reducing demand for large audience formats on

AM channels. All-news radio rose to a height of 836 stations in 1999 (6.7 percent of the total

number of radio stations), but declined to 753 stations (4 percent) by 2005. Another format—

news and talk radio—gained popularity in the 1980s and 1990s and represented 9.5 percent of all

radio stations in 2000 but it too declined to 6.8 percent in 2005. The difficulties in maintaining

the commercial radio news business model have benefited National Public Radio and its member

stations, whose not-for-profit operations have increasingly attracted radio audiences for news and

information.

Business model pressures have also been felt in news agencies because they have

traditionally relied upon income from other subscribing news organizations. For print-oriented

news agencies, income initially came only from newspapers and the decline in the number of

newspapers significantly reduced their clientele. The agencies then repositioned themselves to

provide increased service to radio and television broadcasters and benefited from that

diversification.

In the last decade and a half, for example, the Associated Press has made significant

investments designed to produce additional revenue and diversify income streams by creating

new products and services, and improvements to non-newspaper services, including Associated

Press Television News, AP Digital, and AP Advertising Services. Reductions in local news

origination at radio stations have increased use of audio services for a few top news agencies and

new revenue streams have developed from online and mobile services for the largest providers,

particularly Associated Press and Reuters. Network television news operations also are acting as

news services and have upgraded services on CBS Newspath, NBC Newsource, CNN

Newsgroup, Fox NewsEdge, and ABC NewsOne to gain more income from local stations using

their material.

The common thread across news organizations is that the traditional single activity based

business with a stable business model is undergoing clear and momentous change. Newspaper

companies no longer produce only general circulation newspapers but are increasingly seeking

new revenues by publishing free dailies and advertising sheets designed to serve audiences who

do not use the paid daily. They are moving online and into mobile services to provide a variety

of types and sources of information ranging from news, to classifieds, to sites completely

unrelated to newspaper content but that build upon its information gathering, creation, and

distribution abilities. Video news providers are adding new cable, online, and mobile products,

and news and feature services are finding ways to serve multiple types of content users.

Although some initially believed that the additional operations would be free-standing, it is now

clear that the some of the multiple activities are interdependent and support each other. The

emerging business model is that various operations share expenses and that income and other

benefits are aggregated across the operations as a whole. Perhaps the most striking characteristic

of the change is that the new business model does not rely only upon news activities but a variety

of product and services activities that draw upon the organizations’ competences at processing

and distributing materials and provide new types of revenue streams.

The Growing Malaise in News Organizations

The changing natures of society, media competition, and operations have created instability in

news organizations and their markets. The rapidity of the change and market turbulence has

produced internal uncertainty and turmoil throughout the industry. These have been compounded

by financial pressures, reductions in bureaus and published editions, reorganizations, cost

cutting, and staff reductions. The changes in resources and personnel have made news

organizations more dependent upon individual journalists who work with less support and

oversight than in the past because of cutbacks in middle managers in newsrooms. Efficiency and

effectiveness have become primary objectives of media managers and produced increased

emphasis on performance appraisals of journalists

and journalistic productivity.

These new

approaches to management, staffing and work methods have altered traditional working

environments in news organizations.

All of these factors have significantly affected morale and job satisfaction

and are

creating a working environment in which those who prepare and disseminate news are

appreciably disaffected with their work and their employers. Studies of journalists have shown

the effects of the contemporary environment. For the past two decades levels of dissatisfaction

have clearly risen. Studies by the Associated Press Managing Editors reveal that one-fourth of

journalists were dissatisfied with their jobs in 1985 but that one-third were dissatisfied by 1993.

In 1992, one in five journalists reported that they wanted to leave their job, and job satisfaction

was reported by just 27 percent of respondents (down from 40 percent in 1982 and 49 percent in

1971).

By 2001 a survey by

Columbia Journalism Review

found that 84 percent of journalists

reported that poor morale was widespread among news people.

Issues involving leadership,

supervision, limits on creativity, lack of resources, and restrictions of news space and time all

played significant roles in their perceptions. Overall there is a high level of frustration that

aspirations to practice meaningful and socially beneficial journalism are being thwarted.

Levels of stress perceived by news employees have also been increasing, with financial

pressures, marketing requirements, and the effects of contemporary journalistic work on

lifestyles playing significant roles in creating that stress.

The increasing stress and job

requirements are placing considerable strain on journalists and leading to lost productivity and

burnout that are affecting retention.

Such prolonged stress is highly problematic because it

leads to behavioral and health problems and turnover that harms journalists as well as their news

organizations.

Job satisfaction and stress created by a variety of factors within the control of managers

are part of a company’s internal atmosphere and culture. The atmosphere and culture, in which

employees must carry out their activities, is the psychological and organizational environment of

a firm.

The conditions affect the attitudes, morale, amount of work, quality of work, and

commitment to the firm evidenced within employees. The factors that create atmosphere and

culture involve workers' perceptions of their work, co-workers, supervisors, and managers, and

the way that relations among the factors are manifested in policies, information, and relations

among persons in the workplace. Employees and managers who work together in a positive

atmosphere are likely to experience lower employee turnover, workers willing to do more than

required, higher productivity, and stronger expressions of the value of the company to others in

the community. Significant factors that influence atmosphere include content of the work itself,

meaningfulness of the work, management philosophy, internal communications, interaction in

the organization, human relations among workers and supervisors, and professional development

opportunities.

Respected journalists from newspapers and television are now regularly expressing

serious reservations about their working environments and the news that they produce. They

lament strong financial pressures, emphases on circulation and ratings, commercial ethics

replacing professional ethics, reductions in budgets that have damaged the ability to cover

significant public issues and developments, and the debilitating effects of these factors on their

ability to do their jobs and their organizations’ ability to serve audiences and society.

These challenges are not unique to news organizations in the United States. Reputable

broadcasters in other countries have also engaged in cost cutting that has reduced time and

personnel for productions, increased output required, resulted in reliance on cheaper, less

experienced workers, and reduced ability to invest in quality reporting and news analysis. It has

been argued that this has especially deleterious effects on the ability of those who produce

content to create value with quality products and on the social value created by the news

organizations.

All of these factors have palpably combined in a negative way within news organizations

today and it is telling that no media company with a news operation is included on the

Fortune

magazine list of the 100 Best Companies to Work For. The annual list is based on job

satisfaction, company culture, and policies regarding pay, benefits, diversity, and other factors

obtained from employee surveys and other research in companies of all size across the U.S.

This disquiet in news organizations is significant because employees are central

stakeholders involved in the creation of value. Their situation cannot be ignored if long-term

value is to be created within news organizations. The requirement that the organizational

environment, activities, and product produce value for employees is particularly germane to

journalism because news and information activities involve elements of literary and artistic

from above and are unable to offer effective visions or mechanisms of how to increase value

production with those organizations to offset those demands. Much of their inability to respond

to organizational necessities stems from their journalistic training and experience having not

prepared them to understand the business of news and information, how it creates value for their

organizations and their audiences, and how to structure their enterprises to respond to and

balance the competing and often contradictory demands of stakeholders.

Companies reduce budgets, discard personnel, and eliminate activities to demonstrate to

investors that they have identified and eliminated waste and that they have the will to change

rapidly.

Cost cutting and downsizing are painful, but they can be useful to enterprises,

including news organizations. However, these practices are only effective if they are

accompanied by strategy-driven reorganization and reconfiguration that produces new value,

improves the quality of products and services, and attracts new customers. These latter factors

create conditions for growth and development of the firm that thus make the enterprises

appealing to investors once again. Unfortunately, many corporate executives in media and news

organizations seem to have ignorantly or deliberately disregarded the vital developmental part of

the process, thus abetting uninterested investors in draining resources from the news

organizations without providing sufficient resources for the organizations to renew themselves.

Although it is tempting to say that the answer is to change leaders to find those who will

throw cash and other resources into news activities, it is a simplistic and unrealistic delusion.

Such an approach would soon drain news organizations of any remaining resources and strength

they possess. What is needed is leadership that is committed to the course of providing the

resources but not at the expense of stripping the organizations of their remaining resources.

Instead they must put them to work to create new value that helps the organizations grow and

3. VALUE, VALUES, AND VALUE CREATION

Economic and Philosophical Approaches to Value

The term “value” is now widely used in media enterprises, and buzzwords such as “value

proposition,” “added value,” and “value-driven products” are regularly heard at news

organization staff meetings and industry association conferences. Missing from most discussions,

however, are considerations of what “value” itself means. The casual use of the term has

weakened its semantic meaning, leaving it to be subjectively and individually determined by

individuals. Contemplation of value requires that attention be paid to moral and economic

philosophy, because the foundations of value are rooted in their considerations.

The concept of value has been debated by philosophers for at least 2,500 years and much

consideration has been given to the idea of intrinsic value. Intrinsic value is traditionally said to

exist if something is intrinsically good and cannot be bad or indifferent. Intrinsic value is not

established by relations to something or some other alternative,

but it must be perceived for it

to exist. Use of things of intrinsic value is understood to produce good outcomes. Facts, states of

affairs; and properties are abstract bearers of value;

thus truth, harmony, beauty, serenity, and

similar concepts and properties have intrinsic value. A normative definition of value involves

determinations that some things are good, whereas other things as bad.

Philosophical debates have also centered on the value of knowledge. Knowledge is

created upon a body of information and involves consciousness of knowing and consciousness of

factuality, truth, and belief in truthfulness of the information. Knowledge itself has little or no

intrinsic value because its value is external to it, relative to its truthfulness, and related to its use.

This conceptualization does not address the Socratic view that knowledge has intrinsic value

compared to the value of pure opinion, but I set aside that argument here because journalism and

news focus upon the use of evidentiary information and facts and deliberately eschew pure

opinion in establishing truth. The value of knowledge results from its usefulness and its

application to obtain benefits,

and its use does not produce only good outcomes, so it lacks

characteristics typically associated with intrinsic value. Thus knowledge of the number of federal

employees, the periodic table of elements, or David Ortiz’s batting statistics also has little value.

Experience also contains value, but that value is intrinsic only to the extent that its

authenticity represents truth. Experience occurs when something is not merely noted but the

individual becomes involved through a relationship to the object or occurrence. It creates

knowledge through that personal involvement that involves the senses, perception, emotions, and

personal interpretation. Firsthand experience involves both unconscious and subjective conscious

activity and is thus genuine and as close to truth as the limitations of human senses, perceptions,

and emotions permit.

Although journalism attempts to convey the knowledge of events it is difficult for news

to rise to the level of experience. Televised news coverage of events involves more senses and

the ability of viewers to perceive occurrences and attempts to place viewers as close to the reality

of the actual occurrences and the original conditions as the technology can permit. Although it is

not pure experience, it brings sights and sounds in a way not possible in text-based reports. If

news coverage is live the immediacy, confusion, and unfolding nature of events heighten

emotions and personal interpretation. Thus a 60 second story of a crippled airliner attempting to

land is not as compelling as live coverage of the event. Similarly a 1,500 word news story about

a presidential press conference does not covey as much information about the press conference,

what was said, and how it occurred as viewing a live broadcast of the event or being there in

person.

Experience is significant because it induces the participant to attach meaning to objects or

occurrences because of the perceptual and emotional interactions that occur. These factors lead

to the Kantian view that knowledge develops from experience but that it requires a sense of

relations to cause and effects and involves issues of perception and interpretation.

Although the

experience of individuals may be authentic, the experience of one individual will differ from

another. As a result, journalistic norms and practices dictate the conveying of the experiences of

more than one person involved in news stories as a means of trying to convey the truth of

occurrences and objects.

Understanding has value beyond the knowledge and experience upon which it is based. It

involves comprehension that something is the case, of its relationship to truth, of its associations

to other knowledge, and its explanatory abilities. One can have knowledge about stem cell

research without understanding it and one can know that there is a war underway in Iraq without

understanding the reasons and processes behind its initiation. Understanding is based on the

fabric of knowledge, not its individual threads. It adds meaning and purpose to knowledge and

utilitarian guidance related to action.

The moral philosophy perspective on value is important for discussions of the value of

journalism because it is a foundational concept in determining the value of news and information

to society, in the professional philosophy of journalists, and in non-economic decisions by

readers, viewers, and listeners. Value as seen from the philosophical standpoint is constant, with

truth being valuable in and of itself and knowledge and understanding providing value because

of their ability to provide meaning and to be acted upon and to provide meaning and purpose.

Economic philosophers have also debated the issue of value for several centuries. I wish

to set aside the eighteenth-century economic debates about whether capital or labor create value

that is exchanged in the marketplace because we are more concerned with the outcome of the

process of value creation. We recognize that enterprises marshal, organize, and utilize a variety

of resources to create products and services that are made available in the marketplace with

different degrees of success. Successful companies manage and combine resources in such a way

that the product or service has more value than the combined value of the resources used. This

surplus value is captured and combined to produce profits.

Information has unique properties compared to other resources because it exists only

through human perception, is easily transportable, is diffusible and sharable, and free flow

maximizes its use.

In addition, the business dynamics of media products differ from other

products because of important supply and demand side differences that affect their market,

financial, and operational characteristics and produce business environments and exchange

relationships unique to media.

On the supply side, news organizations face less competition

than firms in most other industries; are driven by cultural, artistic, expressive, and social as well

as commercial motives; are dependent upon content creators who have strong professional

autonomy; produce products with non-physical properties; and regularly produce an oversupply

of material. On the demand side, the oversupply creates diminished willingness to pay and, if

expenditures are made, they tend to be sunk costs and through subscriptions. Because

willingness to pay is low, primary income for news organizations tends to come not from its

consumers but from advertisers.

These factors create an atypical milieu in which value is created and captured. In this

information economy, additional surplus value is created by technological processes and by

being well known, by having a strong brand that attracts consumers more than the brands of

others.

The significance of creation of brands in media has been increased by the rising number

of competitors and the development of media product portfolios.

The willingness of consumers to pay more—but also sometimes less—than the aggregate

costs of the producer depends on their perception of the value of the product or service—and its

brand—in economic and other terms. Thus the ability to increase value in the consumers’ minds

leads to increased sales, higher prices, higher profits, growth, and increased company value. The

value perceptions of consumers are critical because economic value is contingent rather than

determinant and individuals make evaluations of contingency factors in the process of

determining the value.

Economic value is fundamental to success of news organizations—and all enterprises—

and must be understood in order to create and benefit from it. It is founded on the concept of

worth

, that something is useful, that it has importance, and that it can be used in an exchange.

Economic value, however, fluctuates and changes over time if conditions affecting the

usefulness, importance, or exchange terms are altered. This is illustrated by salt, which once had

high economic and strategic value as an essential ingredient required for human survival and as

the primary means of food preservation. The salt trade supported development of great empires

in China, Egypt, and Rome, as well as lesser kingdoms and empires on every inhabited

continent. At times it was used as a form of currency and it was an important source of tax

revenue worldwide. The development of modern food preservation techniques such as canning

and freezing reduced demand and—along with new salt production methods—the economic

value declined dramatically so that today it is an inexpensive and readily available product.

Similarly, the value of whale oil declined rapidly as kerosene (paraffin), which was cheaper,

easier to obtain, and offered more stability in supply, became a substitute for whale oil used in

lamps and candles in the nineteenth century. In 1854, for example, a gallon of whale oil sold for

$3.84 (about $83.67 at today’s dollar value), but the price dropped to $0.40 by 1896 (about $8.72

at today’s dollar value)—a loss of 90 percent of its economic value in 4 decades.

Economic value fluctuates due to scarcity and necessity. Scarcity exists when individuals

or society want more of a good than is available, forcing choices of whether and how to consume

and affecting the value placed on the good. Scarcity limits the ability for all to consume

similarly, so each has to make choices in determining what consumption will provided the

greatest benefit at what cost. Where scarcity exists, economic value increases, whereas

abundance removes price as a central element of decision making because price declines.

Scarcity requires choices; choices are influenced by costs, including the value given in exchange

for acquisition (price) and other potential uses of that value which are foregone. Value is thus

linked to the strength of desire of individuals to have something that is available in limited

quantity, the properties of the scare item, its uniqueness, and other things that could be done with

the value traded for the item. Because of scarcity, a 1938 Packard 1608 12 cylinder convertible

that originally sold for $5,390 recently sold for $225,000 because only 21 of the automobiles

were manufactured and less than half remain in existence today.

While individuals may choose not to acquire scare items because they prefer to use their

financial resources elsewhere, choices of consumption are more limited when necessity is

involved. This is illustrated by the value of water, which is affected by high elasticity of demand.

Although water is generally available and relatively inexpensive, its availability is crucial to the

survival of individuals and communities. Two-thirds of human body weight is water, and water

is necessary for heat dissipation and functioning of bodily organs. If water is not replenished

humans generally die within two weeks and can die within one day in a scorching desert. Water

is thus a necessity, an essential requisite required to maintain life and it has higher use value

compared to other items when its availability is low. Because water is a basic element for

continuation of life it has value above other items in certain settings—such as a man crossing a

desert—because no other items can substitute for the fluid. Thus the choice to sacrifice other

things to obtain it would be made because water is imperative. Thus, a man wandering parched

and lost in a desert would increasingly be willing to sacrifice other less essential things in order

to obtain water as time without it progressed. The value of a bottle of water would far exceed its

$1.50 retail price because of it necessity for his survival.

Because of the variable nature of value determinations, one must be able the answer the

questions “value for what?” and “value for whom?” to begin to determine the value of a product

or service. The “value for what” question involves the utility, characteristics, and attributes of a

good or service acquired in the market and considerations of price. The value of these items is

typically represented as “market value,” the price or exchange value that a good or service

obtains in a competitive market. It is determined by supply and demand for the product and by

consumers’ expectations of the satisfaction they will receive from acquisition and/or use of the

product or service. Decisions of whether to buy at the market price involve consumers’

perceptions of value for money provided by the good or service and non-economic value

perceptions. These consumer perceptions are central in answering the question “value for

whom.”

Part of the difficulty of understanding the value concept today is that the notion that value

equals price is embedded in neoclassical economics, but that view is not universally accepted.

Classical economics recognized that price and value were not equal and asserted that other

factors also influence value. Many of these factors are the results of the psychology and

perceptions of market participants and are difficult to translate accurately into a price that can be

independently constructed and added to prices based on the intrinsic cost factors in the creation

of a good or service. Neoclassical economics thus simplifies the situation by indicating that the

value of goods and services are whatever the market will bear. This allows economists to readily

account for prices of items such as heavily branded luxury goods—including perfumes, leather

products, and fashion apparel—whose prices far exceed costs of materials and production. The

functions of journalism and attention to news and information involve many more complicated

social factors and the price of consumption is often temporal rather than monetary, so the

simplification of neoclassical economics is not particularly germane to these discussions of

value.

Warren Buffett, whose financial advice has guided many for the past decades,

differentiates between market price and value and has produced the adage “Price is what you

pay. Value is what you get.”

Value need not be based solely on resources, time, and effort

required to create a product that can be readily translated easily into costs and a price placed

upon. Instead it can also be based on factors such as skills, intellectual property, and service that

provide consumers peace of mind and pride because of design, craftsmanship, quality, and

satisfaction obtained. Value, then, goes beyond functionality to include factors such as ease of

use and emotional ties to the product or producer.

The question “value for whom?” recognizes that value differs among individuals and

among individuals in different settings and that one can not approach value with the assumption

that it has universality. As a result, estate planning services have more value to wealthier persons

and that value increases as they grow older. In a news context, the value of information about the

condition of the housing market and sales prices increases when individuals are contemplating

buying or selling a home and the value of news about cuts in school budgets increases when it

involves the school that your child is attending.

The issue of value is complicated by the issue of private value, that is, non-pecuniary

value such as idealism, prestige, influence, or power. Some things can be more valuable to one

person than another, leading them to be willing to pay a higher price than the basic market value.

One coin collector, for example, may be willing to pay more than another collector for the

expected market price for an 1825 half-dollar coin because it completes his or her collection of

nineteenth-century American coins. Non-pecuniary value includes emotional value such as the

desire to be the first to know about events, the desire to be informed so one can carry on social

conversation, and the desire to be identified as a user of a particular media brand.

Economic value can also be based on irrationality. The tulip mania in seventeenth century

Holland is an example of irrational exuberance during which some persons paid tens of

thousands of dollars for a single bulb before the market for bulbs crashed.

Value is also

affected by the fact that some items are desirable, but not in themselves precious, and they can

achieve financial value beyond their intrinsic worth for a time if the desire for the items is strong

enough. Thus, ephemeral items may become collectables and command prices beyond their basic

worth. This phenomenon was starkly evident in the 1990s when Ty Beanie Babies

—heavily

branded soft, stuffed animals—became a fad and some were deliberately released in small

quantities to increase prices paid for them individually and for entire collections of the animals.

Because their worth was artificially inflated by the fad of collection, the value crashed after the

fad disappeared.

Social or public value is placed on behaviors or activities that have collective benefits.

Thus public service, philanthropy, and acting selflessly are cherished and honored, even if a

direct price is not placed upon the acts. Thus society as a whole and its individual members may

value and desire certain behaviors whether or not they reward them monetarily.

Once the broader value of a product, its ownership, and its uses are identified and

understood, producers can focus on value creation designed to enhance its value. This requires

understanding consumers’ determinations of the value and meeting or exceeding their

expectations. At the same time it requires realization that the value is not universal but will vary

among persons and groups, and producers must find ways to meet those various concepts of

value. To accomplish these goals, significant interaction with customers is a key success factor.

Types of Value

A variety of types of value can be created by news organizations and these can be conceptualized

within the framework of social and individual value and intrinsic and instrumental value. Social

value is that which supports broader collective interests and purposes that are primarily external

to short- and mid-term wants and needs of individual consumers. As noted above, these relate to

the functioning of the community, to culture, and to collective knowledge and understanding.

Individual value is determined by the wants and needs of individuals and separate decisions

about whether and how to satisfy them. Individual value will thus differ among persons and

fluctuates according to factors outlined earlier. Instrumental value involves utilitarian, functional

value in achieving the intrinsic or individual value. Thus truth and individual safety are intrinsic

values. Instrumental value is created by factors that support and expedite fulfillment of those

goals and desires. The pursuit of intrinsic value requires deliberate mental engagement, whereas

the benefits from instrumental value do not because “intrinsic value is something active, in that it

requires intention and attention…the same is not true of instrumental value, which can benefit us

without our awareness of the fact.”

The types of value are not mutually exclusive because

individuals have both individual and social wants and needs, and democratic societies not only

seek to satisfy broad social needs but to help individuals achieve their individual wants and

needs.

Figure 1. Selected Values and Outcomes on the Conceptual Value Grid

In addition to these fundamental value issues related to individuals and society, and the

actualization and functioning of persons and society, there are the economic issues of exchange

value and consumers’ views of the desirability of goods ands services and their perceptions of

value for money. Thus the issues of uniqueness, scarcity, necessity, and availability of substitutes

affect the perceived economic value.

Intrinsic

Instrumental

Value

•

understanding

•

truth

•

social interaction

•

honesty

•

engagement

Social
Value

•

identity

•

democratic
participation

•

community

•

correction of error

•

self determination

•

conflict resolution

•

awareness

•

knowledge and
understanding

•

learning

•

decision making

•

belonging

•

warning of dangers

Individual
Value

•

safety

•

improvement of life

•

self significance

•

expression

•

convenience

•

emotional satisfaction

We need to make a distinction between exchange value and use value because the

concepts are important in understanding consumers’ willingness to pay for news and

information. Exchange value involves what the buyer is willing to pay monetarily or temporally

for information, but use value of information is related to its usefulness to users in achieving

their individual goals. Determining the exchange and use value is difficult because the ultimate

value of information can only truly be assessed, after the consumption because its significance is

in its use rather than its mere existence. Nevertheless, it appears generalizable that the use value

for most pieces of information and news stories is low to moderate and that the exchange value is

relatively low. News organizations bundle multiple stories into newspapers, magazines,

newscasts, and news service feeds; encyclopedias, factbooks, and databanks bundle information

in order to benefit from greater collective use and economic values.

The extent to which consumption will provide functionality for the purposes the

consumer foresees is a significant factor in economic decisions. How well products and services

solve consumers’ problems, ease the tasks and challenges of life, and satisfy other needs are an

important part in the perception of their value. We also recognize that individuals’ perceptions

and emotions affect their value perceptions and influence their willingness to consume. Factors

such as delight and surprise in the consumption, alterations to their self image, and pride related

to acquisition, ownership, or use also create value for consumers.

Value and Values

Because value is a measure of significance, absent extraordinary circumstances—such as

people needing to preserve their lives—determination of value is heavily influenced by the

values that individuals hold dear. The significance they place on persons, things, relationships,

and behavior affects their perceptions of value. Central to this influence is the individual

construction of preferences, a form of decision-making based on judgment and choice.

Preferences can be reason-based or irrational and are formed based on articulated values and

basic foundational values that are often not articulated.

Values are affected by socialization, so the values held by individuals derive from

parents, friends, education, organizations in which one is involved, and the community in which

one grows up. The extent to which these are shared among individuals creates broader social

values in the community or society.

Douglas Smith has argued that contemporary society has separated the ideas of value and

values and that there is a critical need to reconnect the two. In much modern usage, “value

connotes a pointed estimation of current or anticipated worth never too distant from monetary

equivalence. There is no value that is not a dollar value,” Smith asserts. “Unlike value, talk of

values ignores money: it opines on timeless appraisals instead of transient ones. There is a deep,

backward- and forward-looking quality to values. If value is what makes us wealthy, values, we

assume and regularly assert, are what make us human.”

Values are particularly important in news production and consumption. They play highly

significant roles in the culture in which news and information are created and distributed. News

organizations and journalism have strong values that have endured for more than a century. A

Newspaper Management Center study found that “the traditional journalistic values are timeless,

they are also, for the most part, universal…the enduring values of journalism are not affected by

time or environment. The way they are interpreted and prioritized may change over time but the

values themselves do not change.”

These values include fundamental values identified by the

American Society of Newspaper Editors, such as fairness and balance, editorial judgment,

integrity, diversity, and community leadership and involvement.

News reports, feature stories, analyses, and information cannot help but reflect values

because story construction and language are dependent upon values. The underlying values of

news organizations are intended to help journalists exercise care in the linguistic and stylistic

presentation of events, issues, and developments in society to reduce distortion, but it is

impossible to do so completely because language itself involves words dependent upon values

and polarities. This is illustrated in words such as peace, harmony, and beauty that have

constructive value and words such conflict, depravity, and ugliness that have destructive value.

Choices in descriptions of persons, objects, and occurrences, and in the framing of news about

them, thus reflect the values of journalists, news organizations, and society.

Although gaps between these values and practice of news organizations are sometimes

evident in media, the values play a significant role in determining the strategic vision and

operations of the majority of news organizations and in providing best practice guidance for

content development and presentation. This is important because values must be embodied in

behaviors or they are merely empty statements and it is a primary task of leadership to ensure

that an enterprise lives up to its espoused values.

The issues of values have significant business side implications for news organizations as

well. Although the concept of brand is used over and over in the industry, there is often limited

understanding of its value. The value of a brand is not merely that of being known, but being

known for representing constructive values. A beneficial brand represents the embodiment of

those values and thus provides guarantees to the consumer that the product will reflect those

values. Organizational credibility and consumer trust are thus fundamental perceptions needed

for the brands of news enterprises to have positive meaning with audiences. The value associated

with an outstanding news brand can only be achieved if the values within the organization

support company-wide efforts to realize them in the products and services provided.

Values about news held by individuals are also important in determining the extent to

which they consume and how they consume news and information. Individuals who place

significance on values such as learning, obligations to others, and community are more likely to

place higher value on news and information consumption because of the functional value it has

in supporting those underlying values that they hold dear. Conversely, those who place less

significance on learning, who feel fewer obligations to others, and who do not find community

important are more likely to find less value in news and information because it does not provide

much support related to their values.

The activities of news organizations create instrumental value that provides means of

achieving intrinsic value, but news organizations rarely emphasize these factors or the values that

give them value beyond price (economic value) in marketing their products to consumers. The

emphasis in these contacts with consumers is primarily on individual instrumental value, and

news organizations seem uncomfortable specifically invoking, articulating, and tying their

products to greater social values. In doing so, they miss opportunities to assert that the value of

news and information is beyond the current low or absent price and to tap into fundamental

values that have led to business successes in such diverse products and services as socially

responsible investing, environmentally friendly products, healthful foods, and global

manufacturing that does not exploit workers or employ child labor. A wide variety of enterprises

have found that supporting fundamental values produces willingness in consumers to spend more

for their products than they would otherwise, because consumption adds value by underscoring

their own values and convictions. News organizations need to ensure that their value

propositions to consumers link news use to the public’s fundamental beliefs and value and show

how it serves those values. News organizations need to show how their content and the form of

its presentation support those values and why consumers should pay for it. Unless they do so,

news organizations can expect to receive only low exchange value created by commoditized

information that provides little intrinsic and instrumental value and is unrelated to consumers’

values.

The Need for Better Value Creation

One of the ugly realities of commerce is that anything that can be standardized or become a

commodity loses value, and enterprises providing that item cannot continue to make significant

money from it in the long run. Because commodities can be provided by other enterprises, they

lose their uniqueness, become overproduced, and decline in significance to consumers. It has

been observed that “virtually every industry is commoditizing. As much as we’d like to believe

that our product is superior and unique, the reality is that the differences between one product

and a competitor’s is a nuance a customer may not even discern.”

News organizations are not immune to this commoditization problem. Value creation is

influenced by the traditions and processes behind the creation and dissemination of news and

information and the underlying cultural norms and philosophies of those journalistic activities.

These professional values are created and maintained by social practices linked to the

professionalism of the craft. Many of the challenges of news organization today exist because the

professionalism of journalism and journalism education have determined the values and value of

the news, commoditized the product, and turned most journalists into relatively interchangeable

information factory workers. Average journalists share the same skills sets and the same

approaches to stories, seek out the same sources, ask similar questions, and produce relatively

similar stories. Few journalists encounter skills-related problems changing from one news

organization to another and the average journalist is easily replaced by another. This

interchangeability is one reason why salaries for average journalists are relatively low and why

columnists, cartoonists, and journalists with special skills (such as enhanced ability to cover

finance, science, and health) are able to command higher wages.

Across the news industry, processes and procedures for news gathering are guided by

standardized news values, producing standardized stories in standardized formats that are

presented in standardized styles. The result is extraordinary sameness and minimal

differentiation. Research shows a general lack of difference among news organizations in terms

of topics covered, sources of news, and means of presentation. When differences are apparent,

they are primarily observed in content of media serving local and national audiences or between

general and specialized news media.

The result of this situation is that news organizations are suffering from a loss of

originality and exclusivity. Many news organizations originate only 10 to 15 percent of their

content because there is a widespread reliance on the same news agencies, video agencies, and

feature services. As a result, the bulk of the news in newspapers, television, the Internet, and

mobile devices comes from the same sources and is presented in relatively the same manner.

In recent years some news organizations have begun to portray themselves as knowledge

organizations, a fashionable term in contemporary society. This effort is highly questionable

because news organizations are based not on expert knowledge, but on skills in information

gathering, tapping the knowledge of outside expert sources, and disseminating that information

and knowledge. If one carefully considers the value chains of most news organizations, one finds

that their primary value production comes from information sorting, packaging, and distribution

activities. Given that the professional norms for these activities are well entrenched in news

organizations, it is no wonder that differences in their content offerings are relatively small and

that the unique value created by each organization is limited. If this situation is to change, news

organizations will need to focus on becoming value creation organizations, making efforts to

ensure that their products and services provide value to their consumers which surpasses the

value provided by their competitors. They will need to establish unique, recognizable

information sorting and packaging characteristics that will make their news products and services

contain content that is presented in a manner distinct from their competitors in the market.

Market-driven journalism as currently practiced fails, according to John McManus,

because public policies, media ownership, and news choices interfere with achieving the

beneficial goals of the marketplace.

The allure of the market is strong, he admits. “For both

printed and broadcast news, the commodity system seems ideal. In print, a third party—the

advertiser—subsidizes part of the cost of producing the news. In broadcasting, advertisers pay

the entire cost. In both cases, society benefits because the news is made available to the public at

less than its true cost.”

McManus errs in his analysis, however, because these reasons are

precisely why the approach has failed in the past. The consumer to which attention is paid is the

advertiser and not the reader, listener, or viewer. Consumers are provided with content designed

to attract the largest possible audiences, not to serve the needs of individual consumers or

society. While the content is available at lower cost, it is not necessarily content that is valuable

to individuals or society. His analysis also does not recognize that the business model upon

which he bases his criticism is being significantly altered as the media environment changes

increasingly to a consumer-funded model in which the value produced for individuals is

paramount and the subsidization can be expected to diminish.

Seeking to create value does not mean that one must abandon a commitment to

responsible journalism that serves audience and social needs. Although the market-driven

management approach centers on the customer and customer satisfaction, it places an emphasis

on quality, service, the context of satisfaction, and on creating a sustainable company that is far

more complex than what is understood by many managers of news organizations and journalism

critics.

It requires a broader sensitivity to the effects on all stakeholders and the environment,

recognizing that choices must ultimately balance the value provided to all in order to remain

successful.

Pandering to audiences may create a short-term, bottom-line benefit for the company, but

it does not create sustainable value for customers, the company, or society. It is a simplistic and

highly dangerous approach that risks the future of news organizations. In recent decades, social

critics have widely accused news media of pandering with sensationalized content, dumbing

down news and information, and shifting to more commercialized content.

The willingness of

news organizations to continue this strategy is astounding, given that audiences clearly have not

responded by continuing to consume news products, by becoming consumers of news if they

were not previously consumers, or by returning to new consumption if they had reduced or given

up consumption.

If news organizations are to improve that situation in the coming years, they will need to

do so by focusing on the factors that make up value, how they can create value, and how to

sustain the provision of value for all their stakeholders in the years to come.

Value for Different Stakeholders

Value must be created by news organizations for multiple stakeholders. It will be necessary to

achieve a greater balance in the types of value created than exists today and to ensure that

sustainable long-term value rather than fleeting short- term value is produced. To do so will

require considerable thought within news organizations and an understanding of how and why

value must be created for stakeholders including investors, advertisers, journalists, audiences,

and society.

The various stakeholders of news organizations require different types of value. Unless

news organizations are able to simultaneously provide sufficient value for all stakeholders, they

will fall into situations more difficult than those in which they now exist.

Investors

Given that financial pressures from investors for high profits created some of the difficulties

experienced in news organizations that were outlined earlier in this study, it might be easy to

believe that news organizations create considerable value for investors and that little attention

needs to be paid to their needs and wants. This is not the case.

Despite negative feelings toward owners, managers, and sometimes the news

organizations themselves, those who embrace good journalism and are concerned about its role

in society need to recognize that news organizations must create value for their owners or they

will not be able survive. Companies need to have effective business models that provide

reasonable returns on investments and create diversified revenue streams that help avoid

dependencies. They need to have financial strength that provides them independence and the

ability to hold institutions and government accountable and to provide resources needed to carry

out quality journalism.

Investors receive value from stable and higher than average dividends and increasing

share prices. Companies try to provide this value by increasing sales, achieving market share

gains, increasing the worth of their assets, and projecting desirable images to investors.

Despite their size, many news organizations today face a crisis of value creation for

owners and investors because their ability to grow is limited, because consumption trends are

poor, because levels of profits are expected to diminish in the future, and because high levels of

uncertainty surround the enterprises. These challenges are producing the high levels of financial

pressures exerted by investors. Because perceptions of the sustainability and growth prospects

for many firms are poor, investors’ only strategy is to draw out large profits that will enable them

to benefit from their investments in the short run. Effective strategic thinking and choices are

necessary to create new value for owners by developing stability and creating new products and

business models that reduce the impetus for investors’ short-term strategies and provide mid- and

long-term mechanisms of value creation for them. That mid- and long-term value can be created

by making connections with readers, viewers, and listeners that allow news organizations to

reach and serve their needs regardless of the form of the content in the future, and by increasing

the importance of the enterprise as a provider of news and information and access to audiences.

For much of the history of journalism, news organizations have delivered news and

information with a one-type-suits-all-audiences approach. Readers and viewers received THE

newspaper, THE newscast, and THE news magazine. In a time of limited choices, this approach

was workable in reaching consumers who had high and low involvement with the news content,

those who purchased or used the news products frequently or infrequently, and those who had

paid for consumption with subscriptions and other sunk costs or who made inexpensive

occasional purchases.

The future requires that news organizations rethink their current roles as creators and

purveyors of information. Newspapers, for example, today try to provide something for

everybody though a wide variety of features and sections. This creates some material wanted by

some people but much material not wanted by others. Similarly, a large amount of material is

from feature services and syndicates that provide it to other newspapers, magazines, television,

and Internet organizations, so the same or nearly identical material is widely available in other

places. Businesses and organizations must solve the problems and serve the functions for which

they were established but today many news organizations are acting more like entertainment and

diversion firms than news firms and providing much material for which their expertise is lower

than other media firms.

Although media are often considered highly profitable and strong, publicly traded media

firms often show weakness in comparison to industries such as major drug manufacturers,

telecommunication services, restaurants, resorts, department stores, property and casualty

insurance firms, major aerospace and defense contractors, and hospitals. By comparison,

newspapers tend to be better than average on net profit and dividend yield, but average on return

on equity and price/earnings ratios. Television broadcast firms tend to be better than average on

net profit and price/earnings ratio but lower than average on return on equity and dividend yield.

Radio firms tend to be low on returns and average on dividend yield. These realities create

environments in which a number of important measures used by investors lead them to pressure

firms for better short-term value creation. Investors are also pressuring media companies for

returns higher than those expected in other industries because they do not see evidence that their

managements have long-term strategic vision and do not believe they are acting to create

sustainable futures for the organizations.

In order to create lasting value for the company and other stakeholders, however, news

organizations need to look seriously at the business fundamentals of who they are, what they are,

and how they serve consumers, not merely at their short-term bottom lines. The contemporary

emphasis on the profit margins has forced constant cost cutting but it is impossible to create

sustainability through continual cost cutting. To survive, news organizations must find ways to

improve their products and income and to increase value for investors in the long run as well.

Advertisers

Like investors, advertisers are typically deplored by journalists and social observers. However,

advertisers are the most important source of revenue for most news organizations. Creating

additional value for them is important if they are to continue contributing journalistic business

models. The contemporary marketing and advertising environment is changing dramatically with

many more media and non-media options providing means for advertisers to reach potential

customers.

For advertisers, value is obtained through cost efficient access to large audiences or to

niche audiences of their primary consumers. Additional value can accrue from effective

customer service activities and special services that provide convenience and improvements to

existing advertising processes. Observers of the relationship between advertisers and news

organizations clearly understand that a good portion of the value created for advertisers when

news products attracted large audiences has disappeared and will continue to be destroyed in the

coming years. News enterprises will have to find ways to create value without relying upon

delivering large audiences. This means they will have to help advertisers find new and effective

ways of reaching stable and desirable audiences that create additional value and make

themselves more important in the overall choices of advertisers.

It is highly doubtful that news organizations will ever duplicate the extremely high levels

of value they created for advertisers in 1970s and 1980s, but it is possible that they will be able

to provide sufficiently unique value that keeps certain types of advertisers and certain categories

of advertising interested in the access to audiences provided by news organizations. One of the

consequent effects of the changing value to advertisers is that news enterprises will have to

increasingly look to other stakeholders to provide revenue and growth, and this will create an

impetus toward increasing value delivered to them.

Journalists

Professional incentives and rewards are drivers of value creation in expert and knowledge

organizations. Professionals must be provided the ability to excel in their chosen field and to

develop and grow. Value for journalists is provided by reasonable wages and non-pecuniary

benefits. Value is supplied if they are able to pursue their career at desirable levels of quality, if

they can fulfill the social, cultural, and political norms of the field, and if they receive peer and

public recognition.

However, as noted earlier, the working environment for content creators in news

organizations is perceived of poorly and newsroom workers are expressing high levels of

dissatisfaction. Part of the challenge is that personnel are knowledgeable in the craft of gathering

and conveying information, but often are not able to employ that craftsmanship in the form of

significant inquiry and artistic and creative expression because of the lack of organizational

resources and because of choices made about the types of material to convey. If value is to be

created for journalists in the information society, organizations will need to shift from assembly-

line journalism to craftsmanship that employs the competencies of professional information

workers to create content that meets specific needs and requirements of individual active readers,

viewers, and listeners and meets the journalists’ beliefs and desires to serve society.

Audiences

Creating value for audiences who use news products and to whom costs will be increasingly

shifted as advertisers play a smaller role in the business models than in the past is the greatest

challenge facing news organizations. The flight of audiences from news in all forms continues at

a dramatic pace and signals a huge disconnect between the ways news organizations are

determining and providing the content and the value that it creates for audiences.

Compared to creating value for the other major stakeholders, creating value for audiences

is much more challenging. Value is created by news products that inform, entertain, and

stimulate, but also by providing audiences with knowledge and understanding that helps in

decision making and solving the challenges of their lives and professions.

Central to the change in the relationship between news organizations and audiences is the

need to re-conceptualize audiences as individuals and smaller groups of individuals. The idea of

“the audience” was always an abstraction, of course, made up of individuals but measured and

understood as a collection of people presumed to exhibit similar wants and needs and other

shared characteristics. In reality, audiences have only been constantly changing groups of

individuals. The audience concept was built upon the idea that they would passively receive

information of someone else’s choosing and when linked with political philosophy the audiences

of media became the “masses” or “public” that others sought to influence through content.

Today, most media personnel still approach audiences as a collective, but they must be

understood as individuals and members of communities with differing wants and needs if new

value is to be created and delivered. They must be understood as individuals who are

increasingly empowered by technical and economic changes that are moving news from a supply

market to a demand market. Information and newsgathering practices and content selection

choices need to be embedded in lives of individuals and the communities in which they

participate because creating value for consumers in the new environment is not about platforms

or content packaging but about establishing and maintaining connections with readers, listeners,

and viewers.

In the coming century, those news organizations that are more effective at creating that

value will occupy the living rooms and mobile environments of individuals; others will become

more peripheral. News organizations that are already marginalized risk being pushed further to

the periphery if they continue following the practices of the nineteenth and twentieth centuries

and do not find ways to create new value.

Society

News organizations must also create value for society or they risk losing the fourth estate role in

democratic societies that they have held for three centuries. If news organizations act and behave

just like other self-interested enterprises, if they do not carry out the roles necessary to help

democratic processes function and do not help society improve and better serve the needs of its

citizens, the necessity for their existence diminishes and those roles will migrate to other types of

organizations and enterprises.

4. STRATEGY AND VALUE CREATION

Value as Part of Generic Business Strategies: A Theoretical Background

Strategic literature includes resource-based, industrial organization- and transaction-based, and

innovation-based theories of value creation that help explain issues of value creation and suggest

strategies for firms to pursue to improve their value creation performance. Resource-based

theory is founded on the idea that organizations assemble resources and create value when those

resources are not imitable or perfectly substitutable.

The resources assembled by a firm create

value if they permit the firm to satisfy consumers at a lower cost than competitors

or allow the

creation of products or services that buyers perceive to be different from those of other firms.

100

Firms, however, do not all compete on an equal basis because size of firm affects the resources

and strategic choices available to them. Larger firms have greater access to resources and more

strategic choices involving cost leadership and differentiation, whereas smaller firms generally

must take more focused strategies.

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Managerial competence and effectiveness is particularly

important in creating value, and poor management can lead to poor value creation and even value

destruction. Companies capture value from capital sources, suppliers, labor, and customers and

then seek to maintain it within the firm and to use some as profit. Better labor within

organizations is particularly important because it creates greater customer use value that can be

captured.

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The industrial organization approach views value creation as a function of growth,

market power, and efficiency—such as creating value by controlling transaction costs for

resources and services.

103

Property rights theory approaches focus on capturing value and

protecting it in the exchange processes that take place surrounding a firm’s activities.

104

Innovation value theory asserts that innovation is the source of value creation and argues that

economic development and new value is created through change that destroys value produced in

existing firms and creates substitute value through new technologies and processes in entrant

firms or firms embracing the change.

105

Based on these and related theories, strategic literature suggests three generic competitive

strategies: the cost leadership strategy, the differentiation strategy, and the focus strategy.

106

These differentiation strategies are used for most products and services ranging from washing

automobiles to telephone services to microwaves to financial services. The cost leadership

strategy is based on the idea that cost advantages develop from the pursuit of economies of scale,

proprietary technology, and preferential access to raw materials, etc. that can be used to create

more value than competitors.

107

The differentiation strategy is based on differentiating the

features or markets of a product.

108

The focus strategy is one in which a firm concentrates on

specialized or limited target markets in which it can gain advantages.

109

These and most business

strategy literature and practice, however, are focused on creating heterogeneous products that are

protected through patents, first mover advantages, or superior features that cannot easily be

mimicked by other firms. Only limited attention is paid to homogeneous products, but clearly

cost leadership and competitive speed are significant strategies. Speed of market entry, speed of

response to market changes, and speed of delivery are important strategic elements for such

products.

110

The basic underlying factors that drive value creation strategy for companies that create

heterogeneous products are not often found in news organizations, where common professional

educational requirements and common cultural elements exist across competitors, where firms

tend to adopt similar technologies simultaneously, and for which professional organizations

assert and seek to maintain common standards. Because norms dictate work practices and

processes, and the forms and functions of the good or service provided, it is difficult for news

organizations to produce completely unique or non-substitutable products and services by

comparison to other industries. Additionally, news organizations tend to have relatively similar

cost structures, encounter limited competition for basic resources including personnel by

comparison to other industries and non-news media, and experience highly limited or absent

price competition. Thus, the generic cost leadership strategy for homogeneous products will not

produce great value returns in news and information products and only the generic speed

strategies involving speed of delivery and response to market changes are particularly relevant to

news organizations. News organizations, of course, are all committed to speed of delivery and

have generally responded equally to change so no great value creation advantages have accrued

to or been enjoyed by any single news provider in that regard.

The generic business strategies thus do not provide substantial guidance for news

organizations to significantly improve their value creation and the importance of news and

information to audiences and consumers. Instead, improving value creation will require news

firms to answer the question posed earlier: “Value for whom?” In this case it is the reader,

listener, or viewer of news and features from news organizations and the other stakeholders.

Determining how to increase the value currently being provided requires news organizations to

create and adopt strategies based on a value creation, particularly consumer value, approach to

content.

The Value Creation Approach

The value creation approach goes beyond basic approaches to strategy and argues that much

business theory creates artificial divisions between a firm and its stakeholders and tends to be

company centric in its approach. The value creation perspective asserts that creation takes place

in all interactions between the company and stakeholders, including customers, and that creating

value in many ways is critical to the success of firms. An important part of value creation is

increasing future cash flows and repositioning the company to increase market share and

differentiate itself from competitors.

111

However, the value creation approach also recognizes

that much value, both current and enduring, is co-created by customers, suppliers, and

distributors.

112

This view of value creation is not a buyer-centric, sales-oriented approach that places the

consumer in full control. It is not the simplistic provide-anything-people-will-buy approach that

has rightly worried critics of market-based journalism. Instead, it recognizes that joint value

comes not merely from a product sold to masses of consumers, but in the experience provided,

relationships created, personal outcomes for each individual customer, and benefits created for

all stakeholders including society as a whole, shareholders, and the range of participants in the

company’s value chain.

113

The value creation approach asserts that companies must have and embrace enduring

values and that they must reflect those values in all their activities or they cannot create

sustainable value for customers, employees, owners, the communities in which they are located,

or society as a whole. The approach takes a strategic, long-term view of enterprises and the

stakeholders in their activities and seeks to generate and expand value so that the enterprises can

remain relevant and viable. Although it recognizes short- and mid-term value creation needs for

some stakeholders, it is founded on the fundamental belief that managers need to balance the

value needs of all shareholders and to seek to create the greatest possible value for all over time,

not merely to maximize value for some in the short term.

The consumer value approach is a specific aspect of the overall approach that is

concerned with what the customer gets from the supplier and what the supplier gets from the

customer. It is central to the challenges of news organizations today because the greatest

challenges being faced are related to changes in audience behavior and responses made to those

changes. The consumer value approach has both supply side and demand side implications. The

supply side is concerned with value

provided

by the supplier and the demand side is concerned

with the value that the customer gets from the supplier. While both are important, the

contemporary situation of news organizations requires that news executives take a significant

look at the consumer perspective.

The customer value approach developed out of customer satisfaction research and efforts

to understand customers in strategic and marketing terms. It focuses on the connotation of the

value in the mind of the consumer and on not only providing goods and services but creating

relationships with customers that lead to customer retention and loyalty.

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Initially value to

customers was conceptualized as benefits of consumption relative to price, but that view has

been expanded to include the relative worth or importance of the product in terms of desirability

and usefulness as well as the relationships and context of the contacts between buyer and

seller.

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This is especially relevant to news providers because price is low or absent and its

significance is determined by values and utility.

The concept of value created for the customer brings together ideas related to consumer

demand, satisfaction, and loyalty that are key elements to successful operation of enterprises.

Customer value analysis focuses on customer needs and wants and in finding ways to better

serve their desires and expectations than competitors, with the goal of increasing use of the

company’s products and services, gaining advantages such as brand improvement and loyalty,

and improving the company’s financial performance. This concept of value creation relies on the

relationship between the satisfaction of many differing needs and the resources used in doing so.

The fewer the resources used or the greater the satisfaction of needs, the greater the economic

value.

The consumer value approach requires a deep understanding of the customer and a focus

on determining and providing those things that create value for them. It recognizes that the

perceptions of the consumer determine value and the value-added features that are desirable.

This does not mean, as some might cast the argument, that one gives the news and information

consumer only the content they want at the expense of what they need. The consumer value

approach focuses on the fundamental needs of customers and how using the product affects

them.

Woodruff and Gardial argue that “customer value is the customers’ perception of what

they want to have happen (i.e., the consequences) in a specific use situation, with the help of a

product or service offering, in order to accomplish a desired purpose or goal.”

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From this

perspective, value added is what the consumer receives beyond the basic product purchased.

117

As a result, it is necessary to focus on serving the broader hierarchy of customer value, with the

attributes of the product or service as the base, then on what the products does and any tradeoffs

of characteristics, quality, price, or ease of use, and finally on the goals of the consumer in using

the product or service. Most companies focus only on attributes, but focusing on the higher

Firms would thus normally seek to limit the delivery of excessive economic value in order to

achieve higher profits if profit maximization were the only goal. In a broader perspective,

however, there is no such thing as unwarranted value because it supports competitive advantage,

brand image, customer loyalty, and company value. One also needs to recognize that in the case

of journalism, the importance of non-pecuniary goals makes it impossible to supply too much

intrinsic and instrumental social value.

The amount of value that is created and delivered is affected by forces external to

enterprises, such as changing consumer needs, social developments, and innovation and

disruptive technologies. It is also affected by changes internal to enterprises involving

organizational values, strategies, and choices. The factors discussed in the first chapter of this

book have variously affected the different types of value produced by news organizations.

Value Creation in News Organizations Varies Over Time

Earlier we identified multiple stakeholders for whom news organizations must produce value, the

most significant of which are the society at large, its audiences, its investors, its journalists, and

its advertisers. Each of the stakeholders has interests that converge and diverge; thus

sustainability requires a balancing of those interests in order to maintain the functions and roles

of the news organizations for the stakeholders.

The role of the company is to serve the interests of the various stakeholders and create

value for them by attending to both short-term and long-term interests. To be successful and

sustainable over time, the company must create and maximize value across the stakeholders. The

decisions of the emphases given to the various interests reside in the top managers and boards of

directors of media firms. In recent decades, however, the value created for the range of

stakeholders has varied, with great emphasis placed on the interests of investors and advertisers,

and this has led to the criticisms explored earlier in this discussion.

Changes in value can be visualized using a multi-axes plot. Shown in Figure 2, value for

each of the stakeholders ranges from low at the center of the plot and moves to high on the outer

edge of their respective axes.

value for investors

value for journalists

value for society

value for audiences

value for advertisers

Figure 2: Value Conceptualization for News Organizations

If there ever was such thing as a “golden age” of news organizations, it would be

characterized by creating high value for society and for its employees (Figure 3). It would have

created good value for audiences—but its range of information of interest to smaller groups

within the audience would have been limited. This gilded age would have created value for both

the news companies and advertisers, but, because there would be lessened emphasis on doing so,

the value in economic terms and in terms of access to audiences would not have been high.

Perceptions of if and when the golden days of journalism occurred depend upon the

medium, but across all media journalists perceive those days to be periods in which resources to

sustain thorough reporting and contemplative assessment were available, when newsrooms

enjoyed greater autonomy from business activities of their organizations, when professional and

intrinsic rewards for individual journalists were high, and when companies cared about and

promoted quality journalism. For television news, that period is generally perceived to be the

1950s and 1960s (extended by some journalists who focus on televised news magazine programs

into the 1970s). Newspaper journalists regard their golden era as the 1960s and 1970s. News

magazine journalists tend to put the date between the late 1960s and the 1980s. Although there

are clearly elements of nostalgia in such perceptions, it is clear that significant changes in

resources, the position of news operations in their organizations, company structures and

decision making processes, and media markets occurred after those eras, so the perceptions of

change are undoubtedly somewhat more real than fanciful.

value for investors

value for journalists

value for society

value for audiences

value for advertisers

Figure 3: Value Creation in the Golden Age of News Organizations

The context of news organizations changed as their earning abilities rose with the

explosion of advertising expenditures in last three decades of the twentieth century.

Concentration, monopoly and oligopoly profits, and the growth of publicly traded companies

providing news produced a shift in the value production emphases within the organizations. This

“corporate age” has shifted the emphases from society, employees, and audiences to value

creation for the company through high profits and asset growth and to advertisers through

opportunities to reach larger and specifically desirable audiences (Figure 4). The diminution of

value for audiences, employees, and society has been a factor in declining use of news,

journalistic dissatisfaction, and social criticism of the performance of news organizations.

value for investors

value for journalists

value for society

value for audiences

value for advertisers

Figure 4: Value Creation in the Corporate Age of News Organizations

The changing environment of news consumption brought on by social, technical,

economic, and lifestyle changes has made this value creation emphasis unsustainable. News

organizations must either create additional value for those stakeholders for whom value

diminished in the corporate era or face destruction and loss of the value they have been creating

for investors and advertisers. This change is necessary in order to provide value that will attract

and retain motivated and skilled information professionals, provide the social service functions

of news, and induce consumption at the higher prices that will be necessary as advertising

support for news products diminishes. This latter necessity requires provision of high value

material that is generally absent from news organizations. In doing so, companies will have to

reduce their emphasis on short-term value creation only for their shareholders and seek longer

term goals of sustainability driven by high value production for customers. In the future, then, a

greater balance will be required in creating value for stakeholders (Figure 5), but the value will

news and information. Although we may view journalism as good, it does not necessarily have

value in and of itself or in terms of its exchange value in the marketplace.

The value of journalism to individual users and other stakeholders must be

conceptualized differently if one is to understand the value of journalism from the perspective of

audiences making choices of whether and how to consume news and information. When non-

socially based views have been employed to discuss value, the focus has tended to be on market

value, that is, what people are willing to pay for the news and information products and what

should be parts of those products. Unfortunately, it is clear that most people want to pay nothing

or very little for most news and information, that a few people are willing to pay for specialized

information of particular interest, and that when people are willing to pay for content it is for

content that does not typically serves the broader ideals of journalism and society. If we are to

understand the value of journalism to consumers, then, we must look beyond mere exchange

value. This is important because it has been observed that individuals value information

differently and that information needs and uses variety widely.

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In order to successfully serve

those needs one must understand, respect, and adapt to those differences.

Knowledge creation and dissemination are recognized as essential building blocks of

value in contemporary society. Nonaka and Takeuchi posit that

tacit

knowledge is subjective,

based on experience, context specific, and involves specific modes of thought, technical skills,

and intuition. They also assert that

explicit

knowledge is articulable, objective, rational, and can

be referenced easily. Both tacit and explicit knowledge can be transferred but doing so requires

shared beliefs, emotions, modes of thought, experiences, and willingness to learn from others.

125

Probst, Raub, and Romhardt assert that distributing knowledge is an important part of creating

value and that knowledge managers need to make clear choices about “who should know what in

what amount” in order to be effective.

126

These approaches provide important direction for value

creation in journalism, but they require news organizations to recognize that consumers are

different and have different information needs. The knowledge approach tells us that we cannot

expect a single type or form of news conveyance to be equally successful among consumers and

that different types of news products and services will be necessary to effectively convey

knowledge and develop consumers’ knowledge.

Fundamentally, there are three major types of knowledge: 1) knowledge about things,

events, and ideas, i.e., being aware of their existence; 2) knowledge about how to do things, i.e.,

skills and competences that allow one to use the first type; and 3) knowledge about why things

happen and their implications. The primary focus of contemporary journalism is conveying

knowledge of the first type, a category that we typically designate as news and information. The

three types of knowledge produce different amounts of value for consumers but the type most

prevalent in journalism produces the lowest value. The emphasis of news organizations on

creating simple knowledge is particularly problematic to value creation because it creates little of

the information itself and most of their activities involve processing information created or

originally conveyed by others. To understand why purveying such information in its traditional

forms produces limited value, we need to examine the underlying concepts of value and consider

the types of value produced by the activities of news organizations.

Three manifestations of value are created for consumers by journalism that are different

from value created with other products. First, journalistic content has

functional benefits

that

helps audiences understand their place in the world and the events around them, and provides

information and advice that helps them in their own lives and activities. Second, consumption of

news and information has

emotional benefits

by providing escape, companionship, senses of

belonging and community, pleasure, security and reassurance, and leadership. Third, media use

has

self-expressive benefits

in which audiences can identify with the perspectives, ideals, voice,

and opinions of a particular news source. The value also is provided when audiences are given

the abilities to converse with the news organizations, it personnel, and its audience, to add

information and comment, and to exercise choices about the content they wish to receive.

Functional benefits

involve the effect of the content on the users. The value is based on

the extent to which content helps them monitor the world around them, cope with issues and

activities in their lives, and provides some diversion and pleasure. Many of the basic professional

and news organization norms such as accuracy, reliability fairness, completeness, etc., are

designed to ensure that provision of this value is maintained. In addition, many of the features

and sections provided by news media—such as those related to automobiles, cooking, self-help,

and comics—are included to increase the functional benefits.

Emotional benefits involves the understanding, peace of mind, comfort, self esteem,

feelings of involvement, participation, belonging, and community that consumers receive as a

result of their use of the news product. Emotional benefits develop from the experience of use,

from sense of place created, from the psychic rewards of learning and being in the know, and

from the accompanying self development that takes place. This value is promoted and enhanced

by coverage of the local community, neighborhoods, clubs and organizations, and other arenas in

which the audiences engage in personal activity and help create their self identities.

Self-expressive benefits have never been a significant concern of news organizations,

except as a means of helping audiences find a news provider that is more representative of the

interests and values where competition exists. It is employed by news organizations to create

differences in tone and personality that will assist audiences choosing between the

Washington

Post

and the

Washington Times

, CNN or Fox News, or

Time Magazine

and

U.S. News & World

Report

. As a result, audiences of news organizations have historically been addressed primarily

as passive receivers of self-expressive determinations made by news providers or though limited

opportunities to express through letters to the editor. Today, however, a greater amount of self-

expressive benefit can also be created through various forms of interactivity made possible by

the Internet and mobile communications that support increased contact with news organizations,

their staffs, and other members of their audiences.

These three major manifestations of value are based in the individual/social and

intrinsic/instrumental conceptualizations of value discussed earlier. It is important to understand

that the content provided by journalism is not valued for itself by consumers, but that its value

emanates from its utility as a mechanism to achieve states and things outside the news and

information itself. Consequently, “the value and price of a knowledge product, in contrast to

industrial products like steel or paper, is not determined so much by the cost it has consumed

during its creation process, but mainly by the prospective value potential users and consumers

attribute to it.”

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The result of this situation is that news and information must produce value from both the

moral philosophy perspective and the economic perspective if it is supported in a commercial

environment (Figure 6). Unfortunately, just because news has intrinsic or instrumental value

does not mean that it has exchange value because the exchange value is separate and determined

in the marketplace based on the benefits received and the ability of consumers to receive them in

other ways.

Social
Value

I
Va

ndividual

lue

Intrinsic

Value

Instrumental

Value

•

truth

•

honesty

•

identity

•

community

•

self determination

•

understanding

•

social interaction

•

engagement

•

democratic
participation

•

correction of error

•

conflict resolution

•

knowledge and
understanding

•

belonging

•

safety

•

self significance

•

awareness

•

learning

•

decision making

•

warning of dangers

•

improvement of life

•

expression

•

convenience

•

emotional satisfaction

Ex
c

ge v

lue

News

Organizations

Produce

Benefits

Functional

Emotional

Self Expressive

Value from Moral Philosophy Perspective

Value from an

Economic

Perspective

Figure 6. News Organizations Create Value from Two Perspectives

As noted earlier, such a determination of value is influenced by values held. The

professionalism and populist values in journalism have led to the determination by journalists

that certain types and presentation styles of news and information are valuable. The values

behind these characteristics, however, are not widely shared with contemporary audiences and

much of the public has come to reject the content based on the values. Much news and

information coverage of public affairs, for example, has an institutional emphasis that runs

counter to ways audiences engage in life. Great importance is placed on coverage of formal

political practices and participation—institutions and processes—but less on private participation

outside traditional political arenas and less on the consequence of the formal processes. The

result is that public affairs news focuses on faceless institutions, processes, and insider

knowledge rather than on their implications and effects on citizens.

This occurs because there are different values and elitism in journalism that primarily

facilitates discourse and interaction among elites and formal organizations. The different values,

perspectives, and levels of interest in public life are partly created because the average journalist

tends to be better educated, has a slightly better income, and slightly more urban social values

than the average reader, listener, or viewer. It is further promoted because the aspirations of and

rewards for journalists are not linked to audiences but to other journalists and persons and

institutions of power. The various factors combine to create a disconnect between journalists and

their audiences. Journalistic and news organization values often impose distance between news

and everyday life and thus between news organizations and the audiences they serve.

Challenges also exist because news organizations often provide news whose import is not

immediately understood by the bulk of their audiences. The import of a news report that two

dozen people died in the collapse of a building being illegally constructed in Dhaka, Bangladesh,

or that investors are concerned about levels of debt carried by the California state government,

do not seem salient to many. Similarly, large amounts of news and information involve leisure

and entertainment, such as sports, television programs, and motion pictures. It chronicles the

passing parade of human foibles but doesn’t add much to audience knowledge or understanding.

Allegations of adultery in Jessica Simpson’s marriage or concerns about the handling of Jimmie

Johnson’s automobile in next week’s NASCAR race are not requisite for life. Lifestyle news

about cooking, automobiles, technology, and health are also provided in copious quantity to

serve varying interests among audiences and advertisers. The result is that news organizations

provide something for everybody but little for anyone. This problem produces great disinterest in

the news product and is evidenced in the fact that newspaper readers do not read three-fourths of

the material in their newspaper.

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Much content, then, produces limited value and produces

audiences who are often willing to skip consumption, thus producing an unstable customer base.

A base of stable clients is critical for companies because they are loyal to the firm and its

products. This customer base has value of its own. Part of that value is economic, but this

customer base can also be used to help improve products and psychological links to the firm, and

become a critical success factor. Although these later factors are difficult to measure

quantitatively, the economic value of the customer base is evidenced in the value of subscription

lists of newspapers and magazines that are often sold to competitors if a title ceases publication.

Influences on Value Created by Journalistic Activity

One must recognize that the amount of functional, emotional, and expressive benefit created is

related to a variety of factors such as uniqueness, desirability, immediacy, volume of content,

and relevance to audiences. These affect individual consumers’ estimations of the extent to

which it is worth the money or time required for its consumption.

In determining how and where value is created by an enterprise’s activities, the value

chain is sometimes charted to help focus attention on the variety of activities and to locate those

activities that are the core of value creation.

129

News organizations create value through the

knowledge of journalists and editors, their access to sources of information, their ability to sort

through the tens of thousands of news and information stories available, and the production of

continuously created products that are driven by continuity of a packaging format and concept

into which news and information are placed with each new edition.

130

Media executives and observers traditionally identify content creation as the core activity

of media firms. Only if they produce the majority of their content can they be seen as being

primarily involved in content creation with enterprises based on internal personnel with high

abilities and skills in that creative activity. As noted earlier, however, most media firms actually

outsource a great deal of this core activity. There is widespread and growing use of freelance

journalists, heavy reliance on acquired content from news, video, and feature services, purchases

of programming from independent producers, and outsourcing of Internet site creation and

maintenance in many media organizations. The core competence of news organizations that rely

primarily on others to create their content is the selection, organizing, packaging, and processing

of content and in its redistribution.

These selection and redistribution activities are significant as core competences, because

selection and certification of goods is an important part of value creation because it creates a

quality control mechanism and reduces consumer search requirements. As a result, “selection

and certification provides indispensable value to readers who want to be informed about current

affairs….The reader expects accurate descriptions of events and credible commentaries and

analyses. Since readers can hardly distinguish accurate from inaccurate coverage by reading a

story it is very important for a newspaper to establish a brand name that basically guarantees

reliable journalism. Quality is the basis for building long-term customer relationships.…The

value of quality and certification is increasing further as we are moving into an era of digital

media services and e-publishing.”

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The reliance on outsourced content requires greater

attention to its quality and to ensuring that it reflects the values of the media firms so it creates

more value for users.

The extent of redistributed content also creates a value challenge, because outsourced

content tends to create lower value in that it is rarely redistributed on an exclusive basis. As a

result, news organizations need to focus on ways to add value to syndicated news and

information though other activities within the value chain and they need to seek ways to alter the

chain to create more value. Value is generated by serving the functions for which people use

media, but most news organizations focus only on the functional activities, ignoring the other

two major means of creating value. Because it is necessary to create new value, it appears that

the emotional and self-expressive functions provide significant opportunities for doing so.

However, efforts to add value should build upon the foundation of journalistic values, not seek to

be substitutes for them. This may require developing and articulating additional values as

foundations to produce value beyond functional benefit.

Seven content approaches and strategies are commonly used in news organizations that

are relevant to value creation issues:

increasing volume of news and information

increasing the speed of news information gathering and distribution

increasing the distance from which news and information is provided

providing exclusive news and information

providing specialized news and information

providing news and information across media platforms

repurposing and reutilizing existing news and information.

The strategies, however, have differing effects on value creation for major stakeholders of news

organizations.

Media personnel generally recognize that value is affected by the volume of material

made available, the speed in which is distributed, the distance between location of occurrence

and news audiences, the exclusivity of the information, the degree of specialization of news and

information, and the availability of news across distribution platforms through repurposing.

However, the value of those factors is not constant, not universally perceived, and differs

significantly among stakeholders of news organizations.

Increasing volume, speed, and distance of news and information, for example, provides

some instrumental value for audiences but creates little economic value, as will be shown in

more depth shortly. When all stakeholders are considered, less value is produced by increasing in

volume, speed, and distance with the exception of some intrinsic value for society. Cross-media

activities and repurposing content creates some economic value for the firm, some instrumental

value for audiences and advertisers, and some intrinsic value, but increases in cross media and

repurposing both create and diminish value for major stakeholders so that their overall effect is a

wash. The only strategies that are positive in terms of use, economic, and intrinsic value are

exclusivity and specialization, with specialization being especially important because it tends to

increase value for all stakeholders.

Those value creation patterns for different stakeholders present significant challenges

because strategies created to create value for one group sometimes destroy value for others. The

reasons will be considered in greater depth.

Value, Volume, and Commoditization of Information

In contemporary society, volume of information is often conceived of as increasing value, and

significant efforts have been made to increase information and its flow through public policies

supporting development of the so-called Information Society. There is value in having more

information available, but there is a significant difference in its value to society and its value to

news and information audiences. This factor creates a central challenge to the future of news

organizations.

Although the value to society grows as the volume of information rises, the same result

does not occur for individual consumers of information (see Figure 7). For individuals, the value

of volume initially grows, but then slows and ultimately declines. This occurs because as the

volume of information increases diminishing marginal utility sets in for individuals, lowering its

value. As additional information and news is provided, it serves the interests of fewer and fewer

members of the audience, although it may be highly valuable to those few. Ultimately, increases

in information produce negative value because of the inability of individuals to cope with the

flood of news and information. This produces information overload in individuals “in which

excessive communication inputs cannot be processed, leading to a breakdown.”

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Because of the

problems of coping with the profusion of news and information and the wide variety of media

sources, they focus their media use and engage in information avoidance.

133

The latter practice of

deliberate ignorance has a comforting psychological basis. As Abraham Maslow observed, “We

can seek knowledge in order to reduce anxiety and we can also

avoid

knowledge in order to

reduce anxiety.”

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The problem of information overload is not a problem unique to journalism

and has been recognized in businesses in which information technology and management

information systems create similar challenges. One observer has noted that the premise behind

management information systems is that “more information enables better decisions…yet adding

data can actually worsen the decision-making process.” This occurs because adding large

amounts of information subtracts information value.

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This value problem creates difficulties in value creation for advertisers because audience

avoidance and unwillingness to pay for more material produces declining value in terms of

audience access. It also creates declining marginal returns for investors and tends to reduce value

channels providing live coverage and discussions of congressional activities.

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The amount of

televised news and information has been even further increased by more than 30 regional and

local cable news channels that provide news, weather, documentaries, and public affairs shows,

and by state public affairs channels that provide more than 20 million homes with live broadcasts

of government meetings.

138

In additional, basic news and information is available on television

and computer screens in many public places, including public squares, elevators, subway cars,

and restaurants.

Changes within contemporary journalism itself have brought more information about

some stories and more stories about some things. Long-form and short-form journalism have

contributed to two seemingly contradictory but actually complementary trends. Long-form

journalism provides longer stories with greater explanation and contextualization, whereas short-

form journalism provides quick short stories that provide a brief overview. These trends are

evident in the fact that average story length in newspapers doubled during the twentieth century,

that the number of page-one stories declined 80 percent, and that more stories overall are carried

in the average newspaper. In television news since the 1960s, the amount of time in which

journalists speak on camera has increased in stories, journalists’ appearances in stories have

tripled, and sound bite lengths have declined about 75 percent.

139

Although there has been a

steady growth in article size and analysis, it has been noted that journalistic style is increasingly

changing information provided to reference form that is “meant to be referred to, not read.”

140

Simultaneously there has been an emphasis on briefer stories, news round-ups, and quick news

bits that increase the overall number of news stories presented and allow readers to quickly

consume news. Some observers have linked this type of new reductionism with fluffy or banal

“junk-food” journalism.

USA Today

(disparaging called “McPaper” by some) is often cited as an

originator of the trend.

The results of increased education, technology advances, and social development are

producing information overload. A University of California project on information development

and storage shows that new information is growing at a rate of 30 percent a year. “800 MB of

recorded information is produced per person each year. It would take about 30 feet of books to

store the equivalent of 800 MB of information on paper,” it says.

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The inability of individuals

to handle just a portion of the information is evident. This is true of even mediated portions of

that information—the study shows that part of the information created includes more than 320

million hours of radio broadcasting and 123 million hours of television broadcasting.

Abundance of news and information is related to its commoditization. Because there is no

longer scarcity of news and information or sources of that content, the instrumental value

provided by the content of individual news organizations has been lowered, and news and

information have become commodities. The ubiquity of general news and information makes it

possible for the basic instrumental value of surveillance of the environment to be available to

many individuals at low or no cost, so its economic value declines as well.

This creates contemporary challenges previously unknown to news organizations because

it shifts control over news and information choices to consumers rather than leaving them in the

hands of journalistic professionals. As with other goods and services, consumers now make

information choices based on perceptions of functionality, reliability, and convenience.

Consumer research has shown that if functionality is offered by competing goods, reliability

becomes the motivating factor in consumer choice. If consumers perceive no difference in

reliability, then convenience of use becomes the motivating factor. If consumers see no apparent

difference in convenience of use, price becomes the driving factor in choice.

Journalists are affected by volume as well because they are constantly pressured to

increase output by producing a larger number of shorter stories. These types of stories tend to be

less professionally satisfying and produce fewer intrinsic rewards. Thus, as the volume of news

and information increases, the value created for journalists declines.

The volume of information, combined with journalistic values and professionalism that

created strong industry-wide norms of what information is selected for inclusion in news

products and how it is presented, have made news and information commodities that are

inexpensive, substitutable, and obtainable equally well from many sources. This promotes

instability in audiences because they can choose to get their information in a number of places

and this, consequently, reduces value for advertisers and investors by increasing substitute

products and advertiser discontent. Overall, increases in news and information volume subtracts

value from the majority of stakeholders, including those who provide the revenue in the business

models of news organizations directly supplying audiences with their content, by reducing

functional benefits and providing little or no emotional or self-expressive benefits for consumers.

Its exchange value is exceedingly low.

Value and Speed of Information Distribution

Changes in communication technology have amplified the speed of news and information

provision in the past three decades. Information flow today is nearly instantaneous with news

agencies flashes and live broadcast coverage spanning the globe within moments of occurrences.

The speed of communications has overcome spatial constraints that required days, weeks, and

even months for news to reach remote locations in the past. In a slow distribution environment,

information and news that was conveyed tended to be primarily news of import, but the rapid

distribution environment allows a far wider variety of information and news to be distributed.

The speed of distribution has become so rapid that intelligence agencies and world

leaders are more often alerted to and gain initial information on important national and global

events by news reports than by their own organizations. Rapid dissemination of information

provides the ability to respond to occurrences more rapidly and to gain information needed for

swift decision making by those for whom quick reaction is most important—including

government agencies, aid organizations, financial firms, and businesses whose activities may be

affected. For general audiences, reaction usually is not imperative, but significant national and

global events generate high interest and psychological responses. Processing the high speed,

constant flow of information creates difficulties for some people because they perceive, react to,

and organize information at different speeds.

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The tempo of distribution is clearly more vital for some types of news and information

than for others. In the past, editors and news producers exercised judgment in determining

whether news or information warranted increased speed of distribution by interrupting normal

broadcast programming or producing extra editions of newspapers. Today, however, continual

news distribution via news channels, the Internet, and mobile devices has replaced much of that

function. Because continual news provision forums are readily available to audiences, fresh news

and information is constantly being provided to audiences. Because major incidents and

developments are infrequent, much of the information that is regularly provided is mundane and

relatively inconsequential. The emphasis on up-to-date material results in audiences receiving a

disjointed flow of bits and pieces of information. Other news operations, such as daily

newspapers and news broadcasts, have also been affected by the speed of information flow

because of their reliance on news sources emphasizing rapid and large-scale information supply.

As a result, much of their content similarly lacks continuity and context.

Although there are benefits to speed, the velocity of information flow reduces the

reliability and clarity of information because many initial reports in which facts are still unclear

are disseminated and the processes of confirmation and clarification have not been completed.

The problem was horrifyingly illustrated when news organizations carried misinformed reports

in January 2006 that 13 miners trapped after an explosion in Sago Mine in West Virginia had

been rescued, when in reality all but one had perished. The tradeoff between speed and accuracy

has long been recognized in many fields of endeavor and it is seen as especially important

regarding communication activities ranging from stenography to typing—in which the

QWERTY keyboard was deliberated designed to reduce speed to increase typists’ accuracy—as

well as in research activities, reading and comprehension, and news. Speed clearly has value in

information flow, but it also carries the price of incompleteness, confusion, and error that

reduces the substance, dependability, and consequence of large amounts of news. It is

understandable that many people find the swift unfinished flow of news to be lacking in

usefulness and meaning to their daily lives.

One must recognize that distribution speed is more valuable to some news users than to

others. Thus speed of distribution of news of an explosion and serious fire in an oil refinery in

Lake Charles, La., has greater immediate value to local residents and those purchasing oil futures

than to a nurse in Cleveland or an engineer in Seattle. Similarly, speed in conveying some types

of news is less important than others. Distributing news of the discovery of fossilized remains of

a previously unknown two-legged dinosaur in New Mexico has less immediacy value than news

of the discovery of mad cow disease in Texas cattle.

The value of information distribution speed to individuals declines as speed increase

because it benefits fewer and fewer people (Figure 8). For society, the value increases because of

its aggregate value to different individuals and in its ability to facilitate rapid responses to events.

The social value declines at some point, however, when error, imprecision, or lack of clarity

exists.

Value for

Society

Value to

Individuals in the

Audience

Value for

Advertisers

Value for

Investors

Value for

Journalists

Speed of Information

lue

Figure 8. Relationship between Value and Speed of Information Illustrated as the Marginal
Value of Increased Speed

Because of the high degree of similarity in speed of information flow across news

organizations today—whether radio, television, and Internet or newspaper online sites—speed

does not provide significant advantages for any one player that directly improves its revenue

streams in a way that benefits or harms investors, and it does not affect value generated for

advertisers by access to audiences. It has some effect on value for journalists. Although there is

initial value in being first with information and on top of developments, demands for speed

require that journalists produce shorter stories, often with incomplete information, and this

reduces the value created in terms of personal and professional rewards related to their activities

as speed increases.

Increasing speed adds some limited functional benefit, creates emotional benefit only for

a small amount of content in which immediacy is critical to consumers, and does not improve

their self-expressive benefit. The exchange value added by speed is limited to only a small

portion of the audience for which it has immediate functional use.

Value and Distance to News Events

Modern systems of communication make it equally easy to move information across a country or

around the world and their capacity to carry information is large, so more and more information

is being distributed. The capabilities of these systems have significantly reduced the effect of

distance relative to audiences, social groups, consumers, and markets.

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The ability of news

organizations to convey text and video from across the country and around the world permits

easy flow of distant news stories, whether momentous or inconsequential. These items are

relatively inexpensive when they are part of a stream of items from news services and they make

it easy for newspapers and broadcasters to use to fill the space and time they have available.

Distance to events or developments affects their relevance and significance to news

audiences. Distance in this context relates to being removed in space or time, but that remoteness

also creates a psychological separation that that makes identification difficult and leads to

inattention. This occurs because the perception of relevance is a function of proximity, and that

perception has an inverse relationship with distance. Relevance involves the functional benefit of

news and information and how it can be usefully applied in the life of the reader, viewer, or

listener. As relevance is related to context, the degree of relevance is variable. The amount of

effort required to process information and establish context influences individuals’ perception of

relevance.

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Creators of search engines focus on these issues and give a weight distance from

the user that ranks the relevance of listings for retail businesses and classifieds based on distance.

People, not technology, must determine the significance of news—its connection to consumers

and its consequences. To make these decisions requires a level of comprehension that technology

does not possess.

One of the challenges of conveying news from a distance is the idea of the “other.” This

element of group consciousness leads to an us-and-them mentality, which places a higher value

on “our” experiences higher than on “theirs.” It is therefore easy for many people to dismiss

news and information from afar as unimportant.

News and information that helps people understand the effects of policies, global trends

and development, and threats is clearly relevant regardless of location, but much of the reporting

on distant events and developments does not make clear connections between those events and

peoples’ lives. Much of the distinction depends upon whether the information relates a single

occurrence or episode, whether such episodes are used as an exemplar to explain broader

developments, or whether their relevance or significance to news audiences is explored at all.

Thus, a who-what-when-where-and-how story of the death of 3 infantrymen dying when their

humvee is destroyed by an explosive in western Iraq is subsumed in the passing flood of

information and in itself does not have significance to people not connected to those servicemen.

However, a story about their deaths that is used to illustrate overall problems in the prosecution

of the war or in the equipment provided soldiers has more significance.

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Because of the link between relevance and proximity, the greater the distance between

the news consumer and the location of news, the less familiarity the consumer generally has with

its origins, and more context and explanation is needed to perceive the relevance. As James

Rosenau has observed,

“distant proximities are not simple interrelationships, readily discernible and easily understood.

Distant proximities encompass the tensions between core and periphery, between national and

transnational systems, between communitarianism and cosmopolitanism, between cultures and

subcultures, between states and markets, between urban and rural, between coherence and incoherence,

between integration and disintegration, between decentralization and centralization, between universalism

and particularism, between pace and space, between global and local….with the result there is enormous

diversity in the way people experience the distant proximities of which their lives are composed.”

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The relevance of news from a distance is thus lost on many in audiences unless it is

consciously constructed to clarify the underlying issues to reveal its salience to the audience.

In many cases, news from a distance is selected and published or broadcast not because

of its distant proximity but because it is amusing, entertaining, salacious or shocking. The result

of this trivialization and inconsequentiality of news reduces the perception of its importance and

thus the value of news from a distance. A televised police chase on the freeways of Los Angeles

to viewers is not relevant to audiences in Miami except as entertainment. A newspaper story

about the trial of an alleged cannibal in Germany is not significant except to produce horror. A

news agency report about Dutch islanders scavenging athletic shoes, toys, and other items from

containers washed overboard from a ship during a storm conveyed in an Internet news section

has little import except human interest and amusement. News consumers do not particularly

benefit from consumption of such news nor are they significantly harmed by ignoring it.

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If episodic and trivial news is the norm for distant news, it becomes unimportant and

readers, viewers, and listeners are not willing to invest much time or money in its consumption.

Because limited efforts are made to relate much distant news to the lives of audiences or their

communities, it has limited individual value. The further away from the individual, the less value

it has (Figure 9). Its value for society as a whole is greater because information from a distance

has different relevance and salience to different people in society and because it makes it

possible for some individuals and organizations to gather together information from disparate

locations to look for trends and patterns of occurrences and developments that may have

significance.

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Value for

Society

Value for the

Individual

Value for

Advertisers

Value for
Investors

Value for

Journalists

Distance to News Location

lue

Figure 9. Relationship between Value and Distance to News Events Illustrated as the Marginal
Value of Increased Distance

News from a distance is more costly to acquire if it is original content produced by the

news organization. This increase in cost is undesirable to investors because it reduces returns

thus producing lower value for investors. Distance also reduces value to advertisers because

fewer readers, listeners, and viewers are interested as distance increases. When they are

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uninterested they change channels, skip pages, or otherwise cease consumption, thus reducing

the access to the audience that advertisers desire. Distance affects value to journalists variously.

At the level of professional norms and interests it is high, but its value diminishes personally

unless the journalist is involved in its creation. Because the number of journalists involved in

producing news and information from a distance is relatively low, the overall value of distant

news for journalists declines.

News from a distance creates limited functional benefit and minimal emotional or self

expressive benefit for consumers. The value that is added, however, has minimal exchange

value.

Value of Exclusivity of Information

Exclusivity adds value because the information or content is not generally available from sources

and individuals cannot receive the material if they substitute a different provider. Thus, the

monopoly on the material increases value beyond the low value of widely available information.

The result is that exclusive content differentiates one company from others, raises the value of its

content, and increases the willingness of the audience to pay because they can receive it no other

place.

The importance of exclusivity has been long recognized in news organizations and its

presence is used extensively to market news products. Newspapers, magazines, and public affairs

programs regularly promote consumption by promoting exclusive interviews and other content.

Similarly, television newscasts repeatedly tout exclusive video or stories.

Exclusivity of information is problematic, however, because it is short-lived and

primarily provides a first disseminator advantage. This occurs because only the specific

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expression of information is protected by copyright and the information can soon be conveyed by

others. The problem of maintaining exclusivity of information in text does not extend to photos,

video, and audio where the specific visual and audio recording is unique and protected. News

organizations thus are willing to pay a great deal of money for exclusive photos such as the video

of the Chalks Ocean Airways plane crashing off Miami Beach in December 2005 or Britney

Spears illegally carrying her child on her lap while driving her automobile in February 2006

because those help attract and hold audiences and can be acquired with full or partial exclusivity.

Yahoo! has recognized the problem of exclusivity and that the news it provides widely

available elsewhere because it is based on redistribution of material for news services,

newspapers, television networks, and other sources. In order to start increasing value and to

position itself as a creator of original content, it has begun building up its news operation and

hiring journalists to create exclusiveness. It has begun providing a different type of coverage of

conflict and war zones than other news organizations with its Kevin Sites “In the Hot Zone” and

is investing in its own sports and entertainment coverage. This comes at a time when other news

organizations are increasingly reducing original material and relying on news service and

syndicated material.

The value created by exclusivity for individuals grows with degree of exclusivity. This is

especially true for exclusive information that can help provide advantages in ease of life,

obtaining scare items, or achieving financial gain. The relationship for society, however, is not

linear (see Figure 10). Value to society increases because exclusive information differentiates

news operations and makes them more sustainable. In the long term, however, it diminishes the

social benefits of ready and widespread availability of information, thus reducing value to

society as a whole.

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Value for

Society

Value for the

Individual

Value for

Advertisers

Value for
Investors

Value for

Journalists

Degree of Exclusivity

Valu

Figure 10. Relationship between Value and Exclusivity of Information Illustrated as the
Marginal Value of Increased Exclusivity

Because exclusivity leads to higher economic value, exclusivity increases revenue and is

beneficial to investors. In practical terms, however, this benefit is limited because the amount of

exclusive news and information provided tends to be limited in overall terms. Exclusivity’s value

to advertisers rises to the extent that it increases audience access, but because the amount of

exclusivity is low, the value of exclusivity to advertisers is relatively negligible. Exclusivity

produces high value for journalists because it produces intrinsic and professional rewards and

notice.

Overall then, exclusivity produces value primarily for journalists and some individuals in

the audience. It adds some functional benefit but minimal emotional or self-expressive benefit.

Exclusivity, however, does create—to a point—beneficial exchange value for news organizations

and their investors.

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Value of Specialized Journalism and Information

Specialized information generally has higher exchange value than generalized information. This

typically occurs because it has high use value or has high interest for some consumers. The value

is increased because there are typically fewer competitors providing specialized journalism and

information. Examples of specialty materials include financial, sports, fashion, shipping and

transportation, and scholarly news and information.

Such materials have high value because of their high functional benefit for users. They

can be used to obtain personal pleasure and pursue personal goals, and they can be used to

achieve positive outcomes or to help avoid negative ones. Thus an attempted bombing of oiling

processing plant in Saudi Arabia is general news, but specialty publications such as

Financial

Times

add further information that give it immediate functional benefit, such as its effects on

global oil supply and prices and interviews about its meaning with petroleum industry analysts.

The higher value of specialized information is translated into higher prices for circulation

and advertising. Although the national circulation of the

Wall Street Journal

is about 20 percent

smaller than that of

USA Today

, its cover price is 25 percent higher and a full page of advertising

costs double that of

USA Today

. An annual subscription to

Sports Illustrated

is about double that

for

Time

magazine and its advertising prices are roughly equal, even though

Sports Illustrated

has about 20 percent fewer readers for its national circulation. When highly specialized and

professional news and information are involved, the value of the information, and the price, rises

sharply. For example, individuals wishing to read the journal

Plasma Physics and Controlled

Fusion

for its specialized information will pay $1,579 for an annual subscription in their home or

106

office but they can read it at a subscribing library for no cost because the cost is borne by the

institution.

On the Internet, general news media have been largely unable to charge for use, but

providers of specialized news and materials such as financial news providers

Wall Street Journal

and

Financial Times

and trade news providers

Women’s Wear Daily

and

Automotive News

have

had greater online success because their value is perceived as higher by groups of consumers.

A rising form of specialized news is that of personalized news, news that somehow is

directed to the specific interests of audiences. In the past, readers paid for a newspaper or

viewed a newscast and received a range of content reflecting different interests—world, national,

and local news, sports, finance, and entertainment content. Today, however the ability to

disaggregate those elements is increasing so audiences can seek only the content they want, such

as news but no sports, finance but no local news, national news but not entertainment, or baseball

but not hockey coverage. This is possible because of the opportunities provided by the

specialization and niche elements of the Internet, cable channels, and magazines. Even

newspapers have explored the idea of the personalized newspaper based on individual readers’

interests, but they have not yet found production and distribution solutions that will allow them

to do so in a cost-effective manner.

Specialization of content—and specialization through personalization—adds value for

individuals and society overall (Figure 11), but its value to society begins to diminish when

individuals’ choices fragment too widely and some shared elements of mediated experience,

knowledge, and culture vanish.

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Value for

Society

Value for the

Individual

Value for

Advertisers

Value for
Investors

Value for

Journalists

Information Specialization

Valu

Figure 11. Relationship between Value and Specialization of Information Illustrated as the
Marginal Value of Increased Specialization

Because the higher value created for audience increases revenue, specialization is

beneficial and produces increased value for investors. Specialization also produces clear

audience demographics that, although not always large, provide benefits to advertising in

reaching target audiences, thus raising value. This, in turn, also increases value for investors.

Specialization also increases value for journalists because it draws on special expertise and tends

to produce longer stories written for a highly interested audience, thus providing strong

professional rewards. Specialization, then, produces high functional benefit and some emotional

and self-expressive benefit. For news organizations and their investors it is beneficial because it

also tends to produce higher exchange value.

Value of Cross Media and Repurposing Activities

In recent years, news organizations have put great emphasis on finding additional uses for

content and engaging in a wide variety of cross-media activities in hopes of creating economies

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of scale and scope. The strategy is built on the idea of better serving audiences through activities

made possible by convergence. Newspaper publishers, for example, are seeking to provide news

and information through a wide variety of media because “astute publishers know that their

survival depends on meeting the audience members on their terms—any time and any place.”

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The central idea of cross-media activities is to make the news organization more central to the

lives of audiences, to be their provider of news and information throughout the day, and to

strengthen the brand of the news organization.

Because cross-media activities increase availability of news and information at times of

audiences’ own choosing, the value produced for audiences increases somewhat because

additional service is provided, but it reaches a plateau (Figure 12). The activities produce rising

value for society overall, however, by making news and information widely available without the

constraints that previously made news available only at established time periods.

Advertisers benefit somewhat by gaining new access to audiences, but the value plateaus

because the forms and formats of cross-media communication do not provide equal benefits to

all advertisers or types of messages. Value for investors increases to the extent that cross-media

activities produce revenue from advertisers and audiences that exceeds the costs of operations

and to the extent that they improve the brand and asset evaluation of the firm. Currently the value

produced by these activities for investors is relatively low. For some journalists, value is

increased by bringing them more recognition across distribution platforms, but it is diminished

for others because of the additional work requirements and difficulties in producing at the same

quality level for different media types.

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Value for

Society

Value for the

Individual

Value for

Advertisers

Value for
Investors

Value for

Journalists

Extent of Cross Media Activities

Valu

Figure 12. Relationship between Value and Cross Media Activities Illustrated as the Marginal
Value of Increased Cross Media Activities

Cross-media activities produce some functional benefit for the news organization and

consumers, but as provided today create little emotional or self-expressive benefit. For most

news organizations, cross-media activities themselves have yet to produce much exchange value.

A related activity intended to create value is repurposing content. Repurposing content

involves using it for secondary purposes and is related to cross-media activities if it is used for

that purpose. Examples of repurposing include newspapers that put material prepared for their

print editions into their Internet editions, television stations that prepare news for their newscasts

but also provide headline and user-selected news notification services to mobile phones, and

radio news organizations that provide Podcasts of their broadcasts. Repurposing gains the

benefits of stronger ties to audiences noted above but is also said to achieve synergies that allow

firms to gain additional benefit because of the high fixed costs and low variable costs of content.

Repurposing, however, increases commoditization of news, produces price competition,

and induces some competitors to give the repurposed content away without monetary cost

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because they can obtain income from other sources or because doing so supports brand goals.

The process results reduces economic value that has the greatest effect on occasional readers,

viewers, and listeners—the largest portion of news consumers—rather than the smaller number

of core users. The end result is that news is seen as widely available, not a prized good, and

worthy of only a negligible price (if at all).

Repurposing benefits advertisers if it increases beneficial audience access. It benefits

shareholders if it increases revenue and returns from audiences and advertisers (Figure 13).

Repurposing provides limited benefits to audiences in terms of more access to information in

other forms, but with extensive repurposing, the same information is available over and over in

different formats and its value declines. Repurposing provides limited benefit to journalists in

that it distributes their stories more widely and increases recognition. It provides some benefits to

society by spreading information more widely, but repetition keeps that value from rising

endlessly. Finally, repurposing benefits investors by increasing revenue and spreading costs

across uses, thus creating additional value as the extent of repurposing increases.

Value for

Society

Value for the

Individual

Value for

Advertisers

Value for
Investors

Value for

Journalists

Extent of Repurposing Content

Valu

Figure 13. Relationship between Value and Repurposed Information Illustrated as the Marginal
Value of Increased Repurposing

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Repurposing provides additional functional benefit for news organizations and

consumers, but little emotional or self -expressive benefits for consumers. It does provide some

avenues for increased exchange value by syndicating material for purposes by other media and

by offering consumers new products based on already available material.

Limitations of Current Value Creation Approaches and Strategies

The seven major content approaches and strategies related to value produce very mixed

results when overall value creation is considered for the various stakeholders (Table 1). Volume

of information and information from a distance tend to reduce value for shareholders, cross-

media activities and repurposing content somewhat increase value for some shareholders, and

exclusivity and specialization of information tends to raise value for most shareholders. Speed of

information, which once provided significant value difference among news organizations, is not

a significant factor today.

Individuals

Advertisers

Investors

Journalists

Society

Volume of
Information

Speed of
Information

— —

Distance to
Events

Exclusivity of
Information

—

Specialization
of Information

Cross-Media
Activities

Repurposing
Content

increased value

decreased value

somewhat increased value

somewhat decreased value

somewhat increased value — no significant affect

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Table 1. Summary of Value Effects of News Organizations’ Content Approaches and Strategies

The only stakeholder to consistently enjoy benefits across the methods is society and this

underscores the general commitment of news organizations to serving higher ideals and

functions. The poorer delivery of value to the other stakeholders is highly problematic, however,

because news organizations are dependent upon them for consumption, revenue, and capital and

the creation of the content that spurs that use and provision of financial resources. Unless

additional value can be created for them the current problems with consumption and the

increasingly unworkable business model of news organizations will deepen.

Information, Knowledge, Experience, and Understanding

To better understand the value of content that is conveyed by news organizations and its value, it

is important to distinguish between the concepts of information, knowledge, experience, and

understanding. All are related to the activities of news organizations; however, they tend to

place most emphasis on gathering and disseminating material related only on the first concept.

Information is the rawest and lowest form of material or meaning communicated. It

involves collections of facts that are processed and conveyed that provide descriptions of events,

situations, or developments, but those facts are not coherently formed into a broader view.

Knowledge develops from an array of facts that provide broader explanation of events,

situations, or developments by providing a mental picture of what has been perceived,

discovered, and learned. Knowledge involves ideas, beliefs, frames of reference, and theories

that structure, explain, and interpret information or facts. Experience involves information and

knowledge gained through participation or direct observation of specific events and situations

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persons whose political, economic, and social activities are directly influenced by the immediate

content. News organizations also make some effort to move up the pyramid by developing

knowledge through stories that combine raw disjointed information together, provide

background information, and analyze events and trends. Because of the effort and cost for doing

so, this portion of news content is small by comparison to their basic informational activity.

Experience has not traditionally been a part of news, but has increased in recent decades.

Experience creates more effective processing and storing of events and information because it

involves multiple senses and greater self-involvement, and embeds more deeply in memory.

Experience is a great teacher and it is well recognized that humans learn and develop from

experiences. Much entertainment content in media and other leisure activities are experience

goods. Historically, communication technology and coverage methods made it inefficient or

impossible to make audiences witnesses or have direct contact with witnesses or those involved

in news. The development of live news feeds of disasters, wars, congressional hearings, police

chases, etc. now allows audiences to experience events more directly than in the past and to do

so in real time. They become “witnesses”; they are “at” the locations where things are

happening. This makes coverage of events more “real” and heightens the involvement of

individuals. The development of the Internet and digital television technologies allows them

more control over the experience by permitting them to select camera angles or to focus on

specific activities. The Internet, messaging services, and e-mail permit individuals to seek more

information, to react to live coverage, to see things others may have missed, and to converse with

others about what is happening. This involvement changes news provision from a passive to a

dynamic activity and information received through the experience has more mental impact and is

often perceived as being more significant than information and understanding received in less

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experiential ways. Although this is superior, the time required to “experience” makes it

impossible for individuals to rely upon this method for most information and understanding

because other activities—work, sleep, life maintenance, social interaction, etc.—also place

demands on the limited time available to individuals.

The development of understanding has not traditionally been a major focus of news

organizations, although newspapers attempt to do so through editorial and op-ed materials, and

broadcast news organizations through public affairs and discussion programs. Most of this

function has been left to specialty media such as social and political magazines, niche cable

channels, book publishers, etc.

The challenge for news organizations is how to survive in an environment in which their

primary activities are at the bottom of the pyramid information-knowledge-experience-

understanding pyramid and are inherently less valuable to both individuals and society.

Functional and emotional benefit for consumers increases if content moves them up the pyramid,

and self-expressive benefit for the consumer is improved by providing understanding that can be

expressed in interactions with others. The creation of this value also increases the significance of

content to consumers and enhances exchange value.

The Need to Add Value to News and Information

The widespread and inexpensive or free availability of basic news and information requires news

organizations to expand their emphasis to creating additional value outside the intrinsic and

instrumental value of the basic flow of content itself.

News organizations and journalists place a high premium on the social value of news and

information, embracing populist arguments that it makes individuals better informed, better

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educated, and more able to take part fully in democratic society. Although there is salience in

this argument, when it comes to news and information consumption, there are difficulties of

translating these welfare gains into performance in the media marketplace. This is in great

measure due to the fact that the majority of content of news organizations is basic, raw

information and not information that promotes knowledge and understanding. Because of this,

the public as a whole tends to be less accepting of the social value argument, which appears to be

about as successful at producing healthy media consumption as arguments that that public should

eat nutritious, well-balanced diets and exercise so they can live longer, healthier lives.

ews organizations and journalists who believe information for information’s sake is

valuable do so because of the

values

they place on the information itself. The public, however,

does not seem to fully share these values; otherwise higher education would be the norm and

most people would be actively seeking daily doses of news and information. Douglas Smith has

argued that part of the reason journalism is perceived to have little value is that it is separated

from values to which the public can relate. As a result, he says, news seems to focus on alarming

trends—bad news, depravation, and social deterioration—and human interest stores that play on

emotions in audiences. Even stories about value do not relate to values because of the

narrowness of concept of value in many news organizations.

“Value is the dominion of business and economic news, and political news devoted to

business and economics. Inflation, taxation, deregulation, reregulation, recession, growth,

budgets, and deficits—all are the recurring themes of value sounded through the news.

Whether packed in sound bites or played out at feature length, the messages speak to

value without reference to values. Meanwhile, following the commercial break or upon

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6. VALUE AND THE FUTURE OF NEWS ORGANIZATIONS

The difficulties of creating value for stakeholders, especially those who provide the

financial resources necessary for continued operations, are the central challenge facing news

organizations today and the root causes of the turmoil and discontent being felt both inside and

outside the enterprises. For news organizations to create conditions of sustainability, they must

create value for a range of stakeholders. It is not a matter of mere desirability. They must either

produce more value or they will experience further decline and demise.

The fundamental problem faced by news organizations today is not technology—it is

merely a delivery system—and it is not lack of interest in media, because audiences use more

media and media outlets than ever before. The underlying challenge isn’t even the competition

that the media abundance produces. The essential issue is making the news and information

content important and useful to audiences so that they perceive material from news organizations

as more vital and valuable than the brief overview and bits and pieces provided by non-news

organizations. If that is accomplished, consumers will be willing to give news organizations

more of their time, attention, and money and those changes will make it possible to alter their

business models into ones that are sustainable in the twenty-first century.

Enterprises die or are merged away when their products or services do not keep up with

changing needs, when consumers become indifferent to their products or services, when their

product ideas are surpassed by better ones, when their management makes poor choices, when

they lose workable business models, and when capital issues interfere with continued

operations.

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If we consider the situation in news organizations today it is clear that news

products and services are not meeting the needs of large numbers of consumers, that consumer

indifference to news is a serious problem, that new ideas about how to provide news and

information are taking hold, that there are problems in the strategic and managerial choices of

media firms, that current business models are increasingly problematic, and that issues involving

capital are growing. Unless news organizations are able to effectively respond to these

challenges, their futures are in jeopardy and their abilities to carry out the important roles they

play in democratic society will wither with them.

Increase Value or Face Demise

The focus of attention throughout news organizations needs to be on the stakeholders and how to

increase the value they currently receive. This cannot be merely the focus of top managers, but

must be addressed in every department and by every employee of the enterprises.

Increasing Value for Consumers

Because contemporary media developments are increasingly driven by consumer choices and

behavior, news organizations must deal with them in different ways than in the past and must

continually consider how they can increase value for them. To address this issue, news

organizations must be able to clearly identify their value proposition, that is, the reasons for

consumers to spend their money and time with the news and information content products.

Because consumers can increasingly get news from many places, it must be clear why they

should get it from one organization rather than another and what the news provider does better

than the others. Audiences need to understand the differences, to see that they are meaningful,

and to feel that they serve their needs and wants best.

One of the perverse realities of most news organizations today is that the news and

information products are provided on a take-it-or-leave-it basis and in settings in which existing

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consumers are consulted less often and treated less well than potential customers. In the new

environment, news organizations must become much more customer friendly and have a greater

degree of intimacy with their viewers, listeners, and readers than the arms-length approach taken

by many in years past.

Most news organizations have the same value proposition, but to survive and prosper in

the contemporary media environment they will need to develop unique value propositions that

separate them from other providers of news and information. Standardization and imitation

reduce value of a product; thus news organizations need to ensure that their offerings are not

duplicated by other providers. Merely taking readers, listeners, and viewers from competitors

does not improve one’s product. Long-term strategy must focus on how to create better and

different value. Only by being distinct can one achieve higher value and profit. It is not possible

to do away with all similarities because of the dictates of professional journalistic norms

practices and processes, so news organizations will have to seek advantages in content offered

and other factors. This challenge is not unique to media. There are a number of other business

environments in which standardized technologies and processes exist. In such environments,

success results from advantages in product design, ease of availability and use, quality,

additional features, and experience. All these factors can translate well into the journalistic

environment.

In improving and developing products and their distribution, news managers must

constantly remember that customers don’t pay for value

created

but the value

received

. As a

result, news organizations must continually concern themselves with what is actually delivered

to readers, viewers, and listeners. The intangible aspects of user experience—perceptions,

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feelings, motivations, and emotions—are as crucial to that value perception as the tangible

content itself.

Customers need and want different types of news and information in different ways at

different times of their daily lives. The media used, the kinds of news, and its presentation form

will differ while they are dressing, sitting at the breakfast table, commuting, working,

maintaining the household, and engaging in leisure activities. The challenge for news

organization is how to create value by providing that material, in those different ways, at the

different times, and in manners that serve customers’ broad individual needs and wants as well as

the collective needs of society.

The fundamental ethic of journalism has long been serving the reader, viewer, or listener,

but that ethic has diminished in many media companies because the interests of other

stakeholders have become predominant. However, the future of news organizations requires a

renewal of that ethic—not just in terms of its public service aspects but in terms of its business

aspects of solving the customers’ problems of getting news and information throughout their

days to help them function and flourish as individuals in contemporary society.

The value of content needs to be increased through exclusivity, specialization in topics

and coverage areas, and better quality content produced by better content creators. Content must

generate understanding. Forms of news and information delivery increasingly need to permit

interaction and participation that engage audience in selection, reaction, and conversation.

Increasing Value for Journalists

Because of their central role in creating value, the working conditions and status of journalists

and other content personnel in news organizations must become a central concern. The value

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they place on their work and its outcome can only be raised if resources are provided to ensure

quality and the ability to do significant reporting, to reduce the unacceptably high stress levels

currently reported, and to correct spiraling morale problems.

It will also be necessary to find ways to increase professional rewards and value for types

of reporting that did not gain acclaim from colleagues in the past, especially for coverage of local

news and the variety of non-institutionalized communities in which the public participates in

society.

Increasing Value for Investors

Increasing value to investors is critical, but that value must not be merely the high profitability

that has dominated investor value creation in recent years. It can also be produced in the form of

company and asset growth that increases the value of their holdings. Undertaking initiatives that

lead to growth will reduce and balance pressures for profit maximization, removing some of the

criticism and discontent of other stakeholders as well. To do so, news organizations will need to

invest in new enterprises and operations designed to produce significant new revenue streams,

not merely keep current revenues stable. It will require levels of creativity, innovation, and

entrepreneurship seen infrequently in news organizations in recent years.

Another alternative is to find investors who view news organizations as socially

responsible investments or to find individuals and firms who share the values of news

organizations and can purchase them from commercial entities. These types of investors may be

willing to take lower profits than other more financially reward driven investors because they

receive non-pecuniary rewards from other value that is created.

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For those who cannot accept the idea that any investors may want things other than short-

term profit, an option is to remove investors who are only interested in short-term financial gain

from news organizations by creating or supporting not-for-profit newspapers, magazines,

broadcasters, and Internet news organizations such as cooperative news agencies, foundation-

owned newspapers, and public service broadcasting. Similarly, private ownership structures that

are not dependent upon stock markets and may involve non-pecuniary goals of individuals and

families can be promoted.

Increasing Value for Advertisers

There is a growing need to increase value for advertisers regarding the kinds of access provided

to news audiences in print, television, radio, the Internet, and across media. Because news

organizations can no longer deliver cost-effective mass audiences, they must deliver result-

effective niche audiences in ways that support advertiser needs. This includes delivering

different message types at different times throughout the day to news audiences.

In addition, news organizations can create value by providing better customer service and

new types of services built upon their existing advertising resources and structures.

These measures, however, will not solve the problem of advertisers’ reactions to audience

fragmentation and their diminishing interest in media as a means of reaching their potential

customers. As a result, news organizations can expect continued dilution of advertising

expenditures and a growing need to rely upon news consumers for a greater part of their revenue.

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Increasing Value for Society

The contributions of news organizations to society will also be improved by better content and

quality that raises value for core news consumers and journalists and by new mechanisms for

engaging audiences that lead to greater news consumption

Many news organizations have devoted much effort to content designed to create other

type of value, sometimes at the expense of that which produces social value. Attending to social

needs and pursuing content that has instrumental value in achieving intrinsic social value is

necessary if news organizations are to maintain the high ground in debates over their functions

and roles and are to play the roles they have asserted for themselves in political and social

discourse.

The diminution of news and information that provides social value is not the source of

the rejection of news and information by audiences. However, we must recognize that increasing

the social value of content alone will not induce audiences to return to previous higher use

patterns of news products, because other factors play significant roles in the consumption

choices.

Raising the Value of Content

Because news organizations are content gathering, creation, packaging, and distribution

organizations, increasing value to all stakeholders is dependent upon increasing the value of

news and information so that audiences will use it and pay for it and so that others are also

willing to provide funding because it supports their commercial or social goals.

This means that they must be not only premiere information providers but must create

additional value by becoming a trusted advisor who sorts through and reduces the information

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about the events of the day to manageable form and is perceived as a respected interpreter of that

flow of information. People want leadership and clarity and knowledge that their interests are

being looked after. Although some require large amounts of detail, many do not, but all want

their overview of the world to come from a credible and trusted advisor. News organizations

need to play that role and produce and distribute multiple types of news and information

products that meet the varying needs of the public.

Enterprises in low or negative market growth situations have limited strategic options,

but if they have resources and competitive advantages these can be used to innovate, to develop

new products, and to reposition the companies. If the companies do little, they will watch those

resources and advantages slowly diminish until the firm is unable to sustain itself any further.

This is the essential situation faced by news organizations today. News organizations must

innovate to increase value delivered by the existing news products and create additional value

with new types of news products or they will face more decline in the coming years.

Value creation essentially revolves around three strategies: 1) delivering performance

equal to competitors but at a lower price, 2) creating additional value by offering different

features than competitors, or 3) delivering greater value to the consumer than other competitors.

The first strategy is essentially denied to news organizations because the price of news to many

consumers is zero or relatively low because of the dependence upon advertising revenue. The

second strategy requires thinking and doing things differently and making oneself distinct from

competitors, elements that are difficult in an industry where the characteristics of the product and

the processes of its creation are often stipulated by professional norms. The final strategy

involves managerial and financial investments that many firms are not willing to make to

produce continual improvements and quality leadership.

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In considering how to increase the value of journalistic products we must recognize the

essence of the craft and the nature of its products. Journalism, fundamentally, is story telling—as

is much of human interaction—because stories are useful for illuminating how things work, for

illustrating the invisible, for explaining what and how things are, and for telling people what they

ought to do. In many ways the development of print media brought with it the industrialization of

storytelling, substituting the journalist for the priests, wise men, family, and community

members who were the previous tellers of stories. The development of news video transformed

and commercialized story telling further into story showing.

Journalism conveys observations of witnesses and the personal experiences and

knowledge of sources to audiences. It embraces journalism based on observation in which

journalists relate what they have seen and determined. Throughout the history of journalism

these processes and these types of story telling have separated the events from the audience.

Video and newer technologies reduce that separation by allowing viewers to observe for

themselves—at least in the directions cameras are pointed—and to observe raw journalism in

which journalists gather and organize information live and thus remove some of the mystique

about the knowledge and skills they have.

One problem with story telling is that journalists and news organizations focus on

telling

audiences things rather than engaging them in conversations or facilitating interaction. This is

problematic because individuals are not mere receivers of content. Instead they express

themselves, they compare ideas and information, they share information, and they react to it.

This challenge is compounded because media story telling takes a linear form that is required by

the work methods and technologies involved. This promotes the narrative linear form, which

worked somewhat when audiences were passive receivers of news with limited sources and

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opportunities from which to gain other information. Linearity is problematic because news and

information must be pared down and simplified to fit the format, whereas life itself is not linear.

New media overcome this issue because their technologies provide opportunities for both linear

and non-linear story telling and information conveyance, thus imitating life better than traditional

media.

In addition, news and information today is no longer constrained by processes dictated by

time-determined distribution that require audiences to use the material when media deliver the

content. The communication sphere that was historically limited by technology, economics and

production forms, and one-way flow of communication is being replaced by a new

communication sphere based on two-way communications and a wider array of participation by

participants that provides not only commercially or organizationally created content but a wide

range of consumer generated and non-commercial content. We cannot understand of the roles of

media and news organizations in the new environment in the same old ways. In the new

environment, media organizations need to reevaluate and redirect their thinking about their tasks,

their content emphases, the ways they handle and present news and information, and the ways

they conceptualize their products.

Emphasize Journalism and News Processing

Because there is an explosive proliferation of sources of entertainment, information, and games

and other diversionary content, news organizations have to focus on what they do best. In case

anyone has forgotten, news organizations are supposed to do

journalism

and

news processing

better than any other content providers. There has been a blurring of the line between news and

entertainment during the past 25 years as news organizations have attempted to solve their

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consumption problems, but that practice has clearly not worked. News organizations need to

refocus their attentions on how and why consumers need news and information and how to best

provide it to them.

New communications technologies increase the need for this focus on journalism and

news processing because news organizations must provide unequalled excellence to differentiate

themselves from the weak competitors whose forte is not news and from the rising amount of

consumer-created content. In order to compete with this non-journalistically produced

information, value must be added through the reliability, credibility, breadth, and presentation of

material. Unless news organizations do so, they will lose significance and be replaced by content

services provided by non-news organizations, and by specialized news and information services

focused on narrow interests, websites, and blogs.

This would be problematic because the majority of sober and thorough journalism is

produced by news organizations that have greater resources and staffs to conduct the journalistic

inquiry and the strength to challenge politically and economically powerful entities. The biggest

advantages of established news organizations are their

personnel

structures

, and

processes

for

undertaking organized, broad-scale information gathering, selection, and distribution. Although

others can distribute some information, they lack the personnel, structures, and processes for

doing it as effectively as existing news organizations. These structures and processes, however,

can become disadvantages to news organizations if they inhibit innovation and the creation of

additional value.

Focusing on journalism and news processing creates both intrinsic and instrumental

value, manifested as functional and economic benefits. If news organizations are to strengthen

themselves, create value for their stakeholders, and survive in the coming decades, they will need

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to keep their business focused on journalism and the provision of news and information that

serves their customer needs.

Specialize or Localize

Because of the increasing range of information sources, greater abilities to access material from

anyplace at anytime, and requirements to create tight bonds that lead to loyal consumers, news

organizations will have to move away from the unfocused, something-for-everyone, one-size-

fits-no one news products characteristic of the second half of the twentieth century. In practice

this will mean that they will need to use their resources to specialize in national and international

coverage, financial news, or other specialty areas. Specialization of these types will be most

successful at the national tier but there is some opportunity at the regional level as well. Regional

news organizations in oil producing area might become the leading specialists on the oil industry

or energy issues, those in areas with large defense contractors can take a role providing the best

coverage of the military industrial complex; whereas those in areas with large numbers of

colleges and universities can become the leading source of coverage of educational issues and

challenges.

For most news organizations, specialization will necessarily take the form of localization.

The greatest provision of information is global and national news and there is great competition

among all types of sources—print, broadcast, the Internet, and mobile—to provide that

information. To be competitive and create economic value, media will need to increase their

differentiation, and thus exclusivity. The most effective way to do so is to create value through

local coverage that is linked to the lives, aspirations, and understanding of individuals in the

locations in which they live. It is this kind of coverage that other news providers cannot do well.

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In many ways journalism and agriculture have many common characteristics. Farmers

work a territory and gather the harvest, which is then processed into foods available for the

general public. Today, farmers provide the basic raw foodstuffs, but their activities produce

relatively low value added. Instead, the preservation and processing of the raw foodstuffs into

packaged foods available in supermarkets adds far more economic value than the basic food

production. The same is true for journalism. Basic raw journalism provides a flow of news and

information that has relatively low value, but processing by journalists, editors, and

commentators adds significant value.

The value of news and information increases with the amount of processing,

contextualization, and interpretation that takes place. It increases when its import to the local

community and audiences is clearly explained. When raw, commoditized news and information

is transformed by compilation, by linking it to other information, and by adding context, the user

gains knowledge and understanding that has more intrinsic, instrumental, and exchange value.

Thus, the future emphasis of news organizations needs to be on p

rocessing information, not

merely finding and conveying it. Content that explains developments and that reveals links to the lives of

readers, viewers, and listeners is not alien to any of the core values and norms of journalism. However, it

requires redeployment of resources in news organizations to put greater emphasis on showing connections

and relevance

and to focus on developments and trends rather than mere events.

Changing the content emphasis increases intrinsic and instrumental value by moving

from mere information to knowledge and understanding. This has both intrinsic and instrumental

value benefits, and creates conditions in which that greater benefit can increase exchange value.

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Provide Salvation from the Flood

The rising flow of news and information that is inundating the public makes it difficult for them

to cope and they are struggling for survival in a flood of content. News organizations can add

significant value if they increase activities to organize and reduce the flow of raw news and

information and provide services that reduce the time and effort that readers, viewers, and

listeners must devote to surviving and managing the torrent of news and information.

Perhaps the most important mental change that needs to take place in journalism is a shift

from the conviction that journalists and news organizations are in the news and information

business to the idea that that they are in the knowledge and understanding business. News

organizations have dedicated themselves to conveying information and facts, but people need

meaning and understanding. They are so inundated with news and information that it makes it

difficult for them to determine that meaning and understanding themselves.

Because information volume reduces value and leads to avoidance, news organizations

can add value by becoming more than mere conduits for the flow of news and information. News

organizations need to place more emphasis on their editing and packaging activities. They need

to add value by devoting more attention to sorting through and organizing news and information,

by calling attention to the most important information and best materials available in the flow,

and by combining disparate raw bits and pieces of information into a coherent and manageable

form that provides knowledge that services users’ needs.

In the contemporary environment, less is more. News organizations need to begin to re-

conceptualize the news products and services into backstream and frontstream news and

information characterized respectively by raw news and information and by processed feeds.

Although the backstream may be available directly to those consumers who are interested, the

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majority of readers, viewers, and listeners should receive specifically constructed frontsteam

products that fit their needs. This means not only the broad topical or lifestyle streams based on

the typical divisions of world news, national news, sports, entertainment, etc., but also urban-

and rural-oriented feeds and feeds based on socioeconomic factors and lifestyles. News and

information can be targeted to serve the needs of singles, young families, established families,

and seniors. This approach, of course, forces news organizations to think in terms of producing

more than one type of newspaper, newscast, or online or mobile service and to leave behind the

outdated and failing idea that one type of news product must serve all potential users.

This consumer approach to news is required by the greater choice and shifting locus of

control over news and information to users, but it also has benefits for news organizations.

Helping consumers cope with the flood of information by focusing the content helps produce

instrumental value, which also produces intrinsic value because people reduce information

avoidance. The functional and emotional benefits produced increase exchange value by making

news products more relevant and important to users.

Become the Trusted Advisor

News organizations that were once closely aligned with the interests of the public are today

perceived by large numbers of the public as soulless, faceless enterprises pursuing their own

interests. Before the professionalization and commercialization of mass media developed,

American news organizations—particularly newspapers—tried to improve people’s lives, to

educate them, to empower them, and to mobilize them. They specifically linked themselves to

the needs and aspirations of their audiences, sought to promote and protect the interests of their

readers, and had far closer relationships with their audiences than today.

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Part of the difficulty arose because in the mass-market approach to news, professional

norms required that news organizations be all things to all people. The result has been that news

and information is presented without links to specific readers, that all things and ideas are treated

equally, and that news organizations reflect distance, uninvolvement, and disinterested

observation of the world. This approach, however, reduces news organizations’ positions of

leadership, and promotes the idea that all values and ideas are equal or should be addressed

neutrally.

This approach, however, runs counter to individuals’ basic needs for leadership and

security and forces them to seek it elsewhere. Jack Fuller has noted this fundamental problem,

writing that “people come to a newspaper craving a unifying human presence: The narrator in a

piece of fiction, the guide who knows the way, or the colleague whose views on values. They

want a synthesizer who can pull a world together from the fragments….They want knowledge

rather than just facts, perhaps even a little wisdom….They want to get a sense of character. They

want their newspaper to stand for something. That begins with honesty and the related news

values … and people want leadership.”

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News organizations need to provide that leadership, becoming the trusted advisor to

which people turn to gain orientation, reflection, and direction. The social, political, and cultural

functions of news organizations cannot be served effectively unless news organizations are

willing to be more involved in the lives of their users and the world about them. Good leaders

and advisors do not embrace false neutrality and objectivity, but give fair and accurate

consideration to competing ideas and explanations, exercise judgment and wisdom, and protect

and reassure those they lead. News organizations need to reassert their roles as leaders and

advisors because it has instrumental value for readers, listeners, and viewers and produces

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functional and emotional benefits that bind them to news organizations in ways that can produce

badly needed exchange value.

Use News Organizations’ Certification Abilities

The development of the information society and its myriad of sources of information worldwide

create the need for individuals to have someone serving them by sorting through the material that

is available to telling them what is important, what is useful, and what is truthful and fanciful.

News organizations can use their credibility and the strength of their underlying journalistic

values to make such evaluations by helping audiences determine where their attention should be

focused and what can or should be ignored.

Because people’s time is limited news organizations need to help them determine what

to attend to quickly or slowly, and in large or small amounts. Instead of trying to tell news

customers everything there is to know, news organizations will increasingly need to tell their

customers where they can get what they need and want to know, whether the source is the news

organization itself or other sources that the news organization certifies as credible. The need for

reliable information grows as sources multiply. News organizations create additional value when

they gain the trust of loyal consumers and help their audiences by evaluating other information

sources.

Certification has both intrinsic and instrumental value, manifest in functional and

emotional benefits, and creates additional exchange value for some consumers.

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Emphasize Ease of Use and Convenience

Value is added to products by making them easier and more convenient to use. News

organizations can still do a great deal to create improvements for their users through

presentation, structures, and formats. Other industries have long understood that providing a

quality product at a good price alone is insufficient to attract and keep customers. News

organizations can add value by placing attention on factors related to the packaging, availability,

and use or their content.

Text-based media tend to employ a journalistic writing style that was created by scarcity

of space and requirements for speed in preparing and distributing news by telegraph and print.

Many of the historic conditions that led to the creation of that style have been altered in the past

century and a half, but the style has remained relatively static. Many readers are uncomfortable

with the formal and rigid journalistic writing style because it does not employ the conversational

and story-telling styles that they commonly encounter and use. Similarly, the journalistic voice

employed in the style is alien to the voices they encounter throughout their lives.

Large-scale research by the Readership Institute at Northwestern University has found

that better content, narrative presentation, ease of use, and customer service are crucial in

creating value for newspaper readers. The institute, sponsored by the American Society of

Newspaper Editors and the Newspaper Association of America, has also found that readers want

not only for papers to inform them, but for them to be community leaders and look out for reader

interests.

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Improving readability and usability and providing leadership does not require a

dumbing down the content or altering the values that underline news.

Value is also created by lowering the time and effort necessary to get information, by

making it available at opportune moments, and by making its use handy. In the past, newspaper

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readers gained convenience through home delivery and well-located newsstands and news racks.

Radio news provided such convenience by making news and information available on the hour

or throughout the day in all-news formats. Cable news channels added to this convenience by

allowing viewers not to have to wait until the evening network newscasts. Today, the access to

news and informational content provided by the Internet and mobile services gives additional

convenience.

Convenience is also created when news organizations recognize that users have different

news needs and different abilities to devote time to news throughout the day. They employ

“dayparting” to determine and offer varying kinds of news and information in different forms at

different times of the day. This technique recognizes that distribution opportunities are not equal

at all parts of the day and that the types and length of content needed differ. Cross-media

operations create conditions for news organizations to use various distribution technologies to

serve these differences and to help audiences shift time use to meet individual preferences for

types and amount of content.

Ease of use and convenience also involve the formats and presentation of material. Well-

constructed newspapers, news magazines, newscasts, news sites, and notification services can

make users better off by using one news product compared to others. How stories are presented,

the locations of stories in print and on screen displays, the use of adjacency and juxtaposition to

call attention to related items, indexes and teasers, and the flow of stories in newscasts all present

opportunities to improve convenience.

Ease of use and convenience create instrumental value, which makes products more

desirable and has exchange value. The emotional and functional benefits associated with ease

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and convenience may lead to greater and more loyal consumption that produces not only greater

exchange value but also supports the intrinsic value of news consumption.

Become the Preferred Provider across Platforms

As noted earlier, the concept of single news products designed for all users at the same time is an

artifact of the past century. In the contemporary environment, greater emphasis must be placed

on the organizations’ unique abilities to serve the varying needs of customers at different times.

All media are not the same, have different communication advantages and disadvantages, and

can be used in different ways at different times. News organizations needs to present different

types of content, in different ways, to meet those needs.

In such an environment the values and underlying approaches to news and information of

the organization become paramount because they produce several products and must seek to

become the preferred provider of audiences across different platforms and under different

conditions. The brand of a news organization in such a setting is not merely a name, but its entire

approach to news and information so that consumers’ have a clear understanding of the values

behind the presentation regardless of platform. Although the actual presentations will vary across

platforms, the underlying values cannot or no clear brand identity will exist.

In order to produce value and sustainability, news organizations need to be more than

anonymous suppliers of raw content and must become the central and preferred news and

information source for their communities, not merely publishers of single paper or the provider

of a newscast. They need to see themselves as providers of news and information in a variety of

forms that serve users who are loyal to the news organization because of their trust and

relationships with the media firm.

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In doing so, however, content cannot be merely replicated and repurposed. News

organizations will need to provide some general service across platforms but they must also

provide some exclusivity on each of the platforms in order to drive users to different platforms at

different times in order to optimize income. This can be done by creating special content and by

embargoing content created for one platform during the primary period in which it serves and is

sold to audiences. Working across platforms will require attention to the uniqueness of what is

provided in the different locations so that each provides something special but does not become a

full substitute for the value produced in the other news and information products. Although

exclusivity can best be protected through excludability, it is difficult to accomplish this with

news and information; care needs to be taken to ensure that the best content is not given away

across platforms without an appropriate value exchange.

In the new environment different products may be offered that have different emphases

and presentation styles that provide different value to different audiences. A newspaper, for

example, may publish a general circulation paid daily newspaper, a free circulation daily paper,

and maybe even publications aimed primarily at young people or senior citizens. The paid daily

may provide more content and analysis than the free daily, but both should provide a good

overview of daily activities with the same sense of purpose. Because the audiences of the various

publications are segmented, the content can be more focused so that more of the material

interests and is consumed by the targeted readers.

Different approaches to news and information across platforms are needed because

consumers require content that adds value through background and analysis, as well as content

that adds value through quick bits of news via the Internet, mobile services, free dailies, and

wrap-up columns in general newspapers. Audiences gain value from the immediacy of some

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content, as well as from time taken to sort out developments before conveying other content.

Although the approaches may differ across platforms, the basic values, quality, and practices of

the news organization offering the content should be consistent and apparent to users.

In the past the approach of news organizations has been to assume that all content should

be equally valuable to all users all the time. In the contemporary environment, they need to have

a far better understanding of how they create different value for people at different times and to

construct varying methods and mechanisms for providing it. This approach means that new

products will need to be created and that existing products will have to be re-conceptualized.

Large, something-for-everybody general circulation papers and newscasts will need to become

better focused and do better in providing material for their core users. This is important in the

current environment because “readers want smaller newspapers and publishers should not be

frightened to reduce their content offer, providing they know precisely what content appeals to

their target audiences and what they can drop.”

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Doing that, of course, will make these papers

less appealing to irregular readers or to those less committed to news and information as the core

target audience. To serve these other readers, new kinds of print and non-print products will be

required. Similarly, broadcasters and Internet news providers will need to develop new means of

serving multiple news and information audiences and opportunities provided by digital and

broadband technologies make such service possible.

Creating a brand that crosses platforms means that news organizations will have to be

able to articulate values and approaches, make them visible in their multiple products, and strive

to make audiences prefer to get their news and information from those organizations rather than

from others. Readers, viewers, and listeners will need to be able to determine why it is better and

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more valuable to obtain content from those sources than from other media, bloggers, and other

sources.

Basic environmental scans and event-driven spot and breaking news may be emphasized

on one platform, processed news and analysis on others, and background on others. The primary

value of mobile news alerts, free daily newspapers, radio news, and Internet news headlines is

that they provide instant information and a rapid overview of what is going on in the world.

Much television and cable news does little more, but requires viewers to invest somewhat more

time.

One of the underlying difficulties for news organizations is that news gains attention for

only about 3 percent of the waking time of regular readers of newspapers and viewers of

newscasts; that number is far lower for those who aren’t regular news consumers. News

organizations essentially give up serving their customers during 97 percent of their conscious

time unless they create different types of news products and delivery methods to provide news in

forms that are appropriate during different dayparts of their customers’ lives.

Becoming the preferred provider creates instrumental value for audiences by making

choice among providers easier and it also produces instrumental value for investors and

advertisers through the increased and stabilized access to audiences that are produced. It

produces functional benefits for audiences and advertisers that can increase exchange value and

allows the news organization to aggregate revenue across platforms..

Provide Participation in Journalism Processes

Human beings by nature are not passive receivers of information. They ask questions about it,

they evaluate it, they discuss it with friends and colleges, and they share it with others. Receiving

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and responding to information and news is a more social activity than facilitated by traditional

news media. The traditional one-way flow of communication in news and information media is

one of the reasons that that the context of news use has been somewhat artificial and separated

from individuals’ more fundamental methods of communication. It was forced into the news and

information form in the past two centuries because of available media technology, but consumers

and news organizations no longer have to accept this situation and can benefit from the

contemporary changes.

Technological developments now allow individuals to react to information and

participate in news and information processes in ways that are more closely aligned to human

tradition. News enterprises that facilitate this communication and interaction will develop new

types of links to members of their audiences, increase audience engagement, empower

audiences, and strengthen their bonds with the news organizations.

Internet-based technologies are permitting significant opportunities for interaction with

news content and with writers, editors, and producers. This has beneficial effects by increasing

engagement with the content and creating intellectual and emotional interaction. Online news

operations have added opportunities for users to rate stories, to respond with comments, to

engage in conversations about events and ideas, and to share information stories with colleagues

and friends by e-mail. These activities create collaborative thinking and discussion that directly

involves news consumers. It allows them to express their opinions and reactions, to ask

questions, and to add information beyond their physical social circle. These functions, which

closely parallel those of celebrity pundits on talk shows, in blogs, and in newspaper columns,

significantly widen participation and the available opinion base so that social value is added as

well as self-expressive benefit to the individual.

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Interaction with those who create, organize, and disseminate news creates a conversation

dialogue that overcomes the monologue that has been experienced since the founding of

journalism. Unfortunately, anonymity and lack of easy contact with many journalists and news

executives remains the norm in most news organization. This makes it difficult for audiences and

journalists to come into contact, gain better understanding of each other, overcome suspicions,

develop respect, and improve news organization credibility. Easier contacts made possible

through Internet and mobile communication can be used to bring new information to journalists,

to add perspectives to their work, to critique performance, and to let off steam. Although

journalists sometimes may not wish to hear comment and criticism from their audiences, much

of it may be warranted. The interaction serves important purposes of improving content,

reducing the perception of distance between journalists and audiences, addressing complaints of

arrogance on the part of news media, and engaging with customers.

The new technologies also allow audiences and news organizations to interact with

content, to personalize information they receive, to search for specific news and information

more effectively, and to acquire content on demand. This permits individuals to receive

customized content packages that remove information they used to ignore, thus making the

content received more valuable to them.

The changes also allow audiences to participate in the gathering and dissemination of

news and information. This participatory journalism is not the same as the content produced by

journalism professionals, but it provides the ability to members of the public to take part in the

process by gathering photos and home video of news events, by sharing what they have observed

during events of importance or interest, or by creating their own information or commentary

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services. The new technologies allow individuals to become involved more easily and media can

aggregate and amplify these voices in their audiences.

Although many journalists find this audience involvement disturbing, it is not highly

different than contemporary practice. Journalism has always used other observers as sources

about events, occurrences, and trends. It seeks news tips, reports quotes from witnesses to

accidents, gathers knowledge from social observers and experts, and reports public opinions.

Participatory journalism—whether it be providing news and information or providing

commentary through blogs and other techniques—follows that tradition. Over the past centuries

journalists have developed techniques of attribution, reliance on multiple sources, and fact

checking as part of professional practice. Today, there is a need to develop new practices to deal

with issues created by participatory journalism.

Information value is increased when it has more relevance to the consumer and it is

increased when control over information selection is passed to the consumer through interactivity

and navigability. The technical ability to have audiences to select and customize information

selection criteria so that irrelevant material is excluded and materials in which they have higher

interest is increased also makes them participants in the selection and organization processes of

journalism.

Increasing involvement of audiences with the information gathering and choice decisions

permits organizations to use content as a stimulus to promote more information seeking and

audience participation in understanding its relevance. This has both intrinsic and instrumental

value for consumers, and the strengthened functional, emotional and self-expressive benefits can

produce higher exchange value.

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Create Compelling Experiences

Improving the credibility of news organization and ensuring the satisfaction of existing users will

not create sufficient value necessary for their survival in the future, however. It is not enough to

make content informative, relevant, interesting, and believable. To gain loyal audiences willing

to provide the financial support needed for the future, news organizations must provide

engaging, pleasing, and memorable experiences to their users.

Experience involves what the use of a product or service does for or to the user. How the

user interacts with it and whether the experience is perceived as positive or negative are central

factors. Obviously, enterprises that can create unique positive experiences—especially intensive

and engaging experiences—are likely to satisfy consumers and keep them as repeat customers.

For news organizations this means that they must find ways to provide better user experiences

that drive engagement, that inspire, that stimulate thought and action, and that connect individual

readers, viewers, and listeners with others in their communities and across the world.

To do so requires that there be a clear target group of users and that the news

organizations themselves have clear personalities and roles. This requires creating relationships

that provide unique content, extras, and services not available from other enterprises and by

emphasizing customer support and service to create loyalty and a two-way relationship that

focuses on users’ needs and wants more than the organizations’ needs and wants.

Experience is also important because engagement and involvement are central elements

in developing knowledge and understanding. As news organizations increasing shift their focus

from being news conduits to providing services for news users, the importance of experience will

increase and provide means for differentiating the services from those of other providers.

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7. CONCLUSIONS

Most of the contemporary challenges faced by news organizations result from changes in the

media environment and media markets that have reduced the value of news and information and

disrupted the existing business models of news producers. Many of these changes are the

outcome of technological developments that are fundamentally altering communication

processes and making twentieth-century approaches and processes in journalism and news

provision less relevant and necessary. Disruptions caused by the arrival of television and the

Internet, social and lifestyle changes, and disengagement from traditional institutions have not

been adequately responded to by news organizations. Most have continued doing things in

traditional ways, viewing the damage done by each change as minor and not perceiving the

collective value destruction effects of the changes.

Many managers of news organizations have shifted efforts and money from content to

sales and marketing in the belief that this will solve their problems. Others have seen business

diversification and the creation of portfolios of newspapers, online, mobile, television, and other

operations as the solution. These practices can provide short- and mid-term benefits but they will

not sustain news organizations in the long run because they do not fundamentally address the

underlying problems of new enterprises and create significant new value. There is no simple fix

for the current state of affairs. News organizations need to go much further than current

strategies to provide uniquely valuable solutions that address the underlying issues that are

negatively influencing consumption of news and information.

The single most important challenge of news organizations is how to create economic

value in the future. Newspapers, television, radio, and Internet services have all provided news

below cost to audiences by transferring some or all of the costs to the price of advertising. As a

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result, price is not now a significant reason for substituting news among the various media

sources. Because there has been a traditional separation or uncoupling of value provision from

the revenue stream of news organizations, there are opportunities for competitors who can

provide greater value to become more successful.

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There is a future for news organizations but no one can hope to return to the days of mass

market journalism in which advertisers enriched the industry. In the future, news organizations

will have to live with comparatively less revenue from advertisers and provide content that is

more closely focused and packaged to meet the needs of differing news consumers. In doing so,

news organizations will be able to lower some costs by reducing or eliminating content that was

primarily designed to serve consumers uninterested in news but necessary to attract mass

audiences for advertisers. Research indicates that readers only read one-fourth of the content

provided and even the World Association of Newspapers now recommends that papers reduce

content. “By so doing the perceived relevance and value of the newspaper is increased because

the reader is less likely [to] feel that much of the content is [of] no interest.”

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Similar types of

analyses will need to be undertaken in other news media as well to determine how to ensure that

content is relevant and appropriate. In the developing environment of news organizations, costs

of operation will increasingly be shifted to consumers and products will have to create

significantly more value than they do today to make readers, listeners, and viewers willing to

bear higher prices.

The challenges of journalism and news organizations in the twenty-first century are not

merely of creating value for consumers but also of creating value for citizens and society. To

produce value for consumers and society, news organizations need to recognize that values

create value. They will need to reemphasize the values underlying news consumption: the

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provision of information that helps in people’s daily lives, informs them as citizens, and helps

them participate in and engage with society.

Putnam observed in 2000 that “America’s major civic institutions, both public and

private, are somewhat antiquated a century after most of them were created, and they need to be

reformed in ways that invite more active participation.”

156

He argued that the tradition of passive

interaction with media and communications increases the isolation of individuals and that new

forms of interaction are needed that reinforce community engagement.

157

News organizations that align themselves closely with their audiences, that emphasize

processing news and conveying understanding rather than undigested news, that become a

trusted source and certifier of news and information from other sources, that become providers of

news in multiple forms, that create beneficial experiences, and that allow their audiences to

participate in journalism and communication processes will be able to create the value needed to

sustain themselves and financially benefit in the new environment, while at the same time

providing value that serves social goals.

A particular challenge for news organizations will be how to create growth in an

environment in which advertising support will be diminishing. The only way to accomplish this

goal will be to provide news and information with higher exchange value across a variety of

news distribution platforms and to aggregate income across them. Even small increases in

growth can significantly improve share value, so firms will need to balance strategies of profit

production and asset value growth.

158

In a market system, people get the kind of news and media they are willing to pay for.

Unfortunately, most news organizations have been unsuccessful at efforts to get audiences to pay

sufficient amounts for the kind of news and information that news organizations want to provide.

150

A good part of the problem is related to functional and exchange value because little news and

information can be immediately acted upon and the value of consumption is not evident.

This challenge can only be overcome by adding value through functional, emotional, and

self-expressive benefits. Value-oriented audiences, consumers, and advertisers are less price

conscious than others, so increasing value will allow news organizations to raise their prices—

whether measured in monetary, temporal, or psychological involvement terms.

Despite many people’s conviction of the importance of news and information,

professional journalism itself is not a necessary and sufficient condition for democracy.

Although news organizations can create public forums for discussion and review of public life, it

is not an exclusive function to media. In the past, lack of effective options made news

organizations the focus of this activity but changes in communication technologies and abilities

have made other forums possible. Given the poor value produced for society today by many

news organizations and the rising possibilities presented by these new technological capabilities,

we may need to seriously consider whether the conditions that led the press to become the fourth

estate still exist or whether the diminished role that many news organizations play today will

make them irrelevant in the future.

The classic roles of news organizations in the past were based on coordinating activities

and representing interests among citizens and governmental/legal, social/cultural, and economic

institutions of society, informing citizens of developments in society, overseeing the actions of

government and other powerful institutions and entities, and ensuring that citizens’ views and

interests were effectively represented in society.

The press interjected itself between the people and the government because it was not

possible for individual voices to be widely heard or to carry significant influence given the

151

historic communication sphere. The public opinion concept—linking citizens to governors—

developed in an era when the speed of communication and the technical ability of individuals to

communicate were highly limited. Although the need for such linkage remains, new technologies

are empowering individuals to do this themselves by other mean such as talk radio, web sites,

blogs, and discussion groups. Unless news organizations can increase the value they create in

these social processes, their significance in the processes of democratic participation and

governance will continue to decline.

The future of news organizations is not solely in the hands of their owners, managers, or

employees, but in the hands of the consumer. With the shifting control over communication,

aggregated audiences are being broken down into empowered individuals. In most cities people

no longer have a choice among paid newspapers, but between paid and free newspapers. They

don’t have to choose among a limited number local radio or television stations but among

hundreds of stations delivered from a distance. Their choice among Internet sites ranges to the

millions. If they don’t like what is offered, when it is offered, or its price in time or money, they

can easily change their news or information provider or simply refuse to consume.

As news organizations’ revenue streams are increasingly based on these consumer

choices, central challenges for society are how to address gaps between value created for

consumers and value created for society in a commercially funded media system and how to

structure the media system and induce behavior that supports social needs.

It may be desirable to move news organizations out of larger, entertainment-oriented

companies through spin-offs or leveraged buyouts, or to create incentives through capital gains

tax laws for sales to individual rather than corporate owners. Foundation or not-for-profit

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ownership may also provide mechanisms for survival and further development of some news

organizations.

Even if kept within existing companies, owners can be pressured to treat news

organizations differently from entertainment operations. Demands for social responsibility have

induced many boards of directors to change their behavior regarding the environment, employee

diversity, and child labor. Similar pressure can be used to produce changes in the ways media

companies manage their news operations. The public and sympathetic investors can pressure

firms to ensure that their boards include members who are tied to communities, supportive of

social values, and committed to the company. Today, many board members represent banks and

financial institutions and major advertisers and few represent the interests of the company itself

or society at large. By ensuring that board representation and corporate governance consider

social responsibilities and the long-term interests of news organizations, some improvement in

current practices can be achieved.

Rejuvenating news organizations and their ability to produce value will require that their

leaders play new and decisive roles. Both journalism and business histories show us that great

leaders produced influential and lasting companies because they believed in an idea, struggled to

achieve it, and did so with attitudes and moral standing that made others willing to join their

efforts. Unfortunately, such leadership is lacking at most levels of news organizations today.

Corporate executives have little vision for their companies and how news operations can be used

to achieve them. News executives have been turned into relatively passive administrators and

managers who no longer lead by stature and vision. Everyone talks of decline and only feeble

efforts to respond to the changing environment are underway. No one talks of achieving

greatness, few are innovative, few produce quality content, and fewer still seek to increase value.

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ENDNOTES

http://www.stateofthemedia.org/2005/chartland.asp?id=211&ct=line&dir=&sort=&col1_box=1

http://www.stateofthemedia.org/2005/chartland.asp?id=274&ct=line&dir=&sort=&col1_box=1&col2_box=1&col3

_box=1

The Nielsen Media Research household ratings for cable news channels in the last quarter of 2005 were CNN, .53;

Fox News, 1.1; and MSMBC, .29. They combine for a rating of 1.92, which translates to about 2.1 million
households out of a total of 110 million households.

2003 Local Television News Study of News Directors and the American Public

. Washington, D.C.: Radio and

Television News Directors Foundation, 2003.

Nielsen/Net Ratings, December 2005

January 2006 data. There are differences between the Personify internal data of the company and Nielsen

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indicator of use. In the context of this study, that is the most conservative choice.

Nielsen/Net Ratings, Dec. 2005

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. Princeton University Press, 2000; Russell Hardin.

Trust and

Trustworthiness

. Russell Sage Foundation, 2004.

Eric M. Uslaner,

The Moral Foundations of Trust

. Cambridge University Press, 2002

Roderick M. Kramer and Tom R. Tyler, eds.

Trust in Organizations: Frontiers of Theory and Research

. Newbury

Park, CA: Sage 1995.

1956 is the first year in which such data is regularly available.

156

Robert G. Picard, “U.S. Newspaper Ad Revenue Shows Consistent Growth,”

Newspaper Research Journal

23(4):21-33 (2002).

This category includes preprints.

Picard, “U.S. Newspaper Ad Revenue…,” op cit.

Sam Donaldson, “The State of Television News: In the Business to Make Money,”

Vital Speeches of the Day

, pp.

64(6):168-171 (1998).

Beginning with CBS Evening News in 1963.

Ken Auletta, “Annals of Communication: The Dawn Patrol,”

The New Yorker

, August 8, 2005 and August 15,

2005. Available at http://www.newyorker.com/fact/content/articles/050808fa_fact1

Bob Papper, News, Staffing and Profitability Survey,

RTNDA Communicator

, October, 2005, pp. 34-38;

Supplemental charts for News, Staffing and Profit Survey, available at www.rtnda.org/research/chart_05.shtml.

Philip S. Cook, Douglas Gomery, and Lawrence W. Lichty,

The Future of News: Television, Newspapers, Wire

Services, Newsmagazines

. Baltimore: Johns Hopkins University Press, 1992, p. xvii.

Bob Papper, 2005, op cit. ibid.; Supplemental charts, op cit.

Steve M. Barkin, “Satellite Extravaganza,”

American Journalism Review

, September 2001

See Doug Underwood, “Assembly-Line Journalism,”

Columbia Journalism Review

, July/August 1998. Another

example of this trend is seen in the inclusion of the seminar, “Managing Performance: Aligning Employee
Performance with Strategic Goals,” in the training offered by the American Press Institute in 2005.

See Mal Mallette. “Counting Bylines to Measure Productivity,”

Editor & Publisher

, April 20, 1996, pp. 48, 37

and Robert G. Picard, "Measuring and Interpreting Productivity of Journalists,"

Newspaper Research Journal

19(4)71-84 (Fall 1998).

See Lewis, Regina Louise. "How Managerial Evolution Affects Newspaper Firms,"

Newspaper Research Journal,

18(1-2):103-125 and Demers, David and Debra Merskin, "Corporate News Structure and the Managerial
Revolution,"

Journal of Media Economics

, 13(2):103-121 (2000).

Jim Kelly, “Newsroom Attitude Starts at the Top,”

The Quill

, May 2001, Vol 89, No. 4, p. 5.

Mark Fitzgerald, “Sinking Morale,”

Editor & Publisher

, Oct. 2, 1993, p. 26

David Weaver and G. Cleveland Wilhoit. The American Journalist in the 1990s: U.S. News People at the End of

an Era. Mahwah, N.J.: Lawrence Erlbaum, 1996.

Neil Hickey, “Low—and Getting Lower,”

Columbia Journalism Review

, Sept/Oct. 2001, Vol. 40, No. 3, p. 37-40.

Diana Brown, “Newsroom Stress is Growing,”

Bulletin of the American Society of Newspaper Editors

, Jan. 1993,

p. 10; Sarah Gerry, “Low Salaries, High Stress are Among Young Journalists’ Worries,”

ASNE Reporter

, April

13,2000.

Joanmarie Kalter, “Burnout,”

Columbia Journalism Review

, July/August 1999; Betsy Cook and Steven R. Banks,

“Predictors of Job Burnout in Newspaper Reporters and Copy Editors,”

Journalism Quarterly

, 70(1):1-10; Betsy

Cook, Steven R. Banks, and Ralph Turner, “The Effects of Work Environment on Job Burnout in Newspaper
Reporters and Copy Editor,”

Newspaper Research Journal

, 14(3):123-136.

Robert H. Giles,

Editors and Stress

. Associated Press Managing Editors Association, 1982; Gene Foreman,

“Stress Doesn’t Have to Control the Newsroom,”

The American Editor

, June 1996.

For discussion of issues of atmosphere and company culture, see Picard, Robert G. and Mikko Grönlund.

Managing Company Atmosphere: Relations Among Organisational Characteristics and Employee Perceptions

Series B Research Reports, B 2/1999, Business Research and Development Centre, Turku School of Economics and
Business Administration, 1999; “Kung, Lucy. “Exploring the Link Between Culture and Strategy in Media
Organisations: The Cases of the BBC and CNN,”

International Journal of Media Management

2(2):100-109

(Summer 2000); Daymon C. “Culture Formation in a New Television Station: A Multi-Persective Analysis,”

British

Journal of Management

11(2):121-135 (2000).

See Michael Stoll and John McManus, Downward Spiral,

The Quill,

93(3), p. 10+, April 2005; Tom Fenton

, Bad

News: The Decline of Reporting, the Business of News, and the Danger to Us All

. New York: Regan Books, 2005;

Bonnie M. Anderson,

News Flash: Journalism, Infotainment and the Bottom Line Business of Broadcast News

. San

Francisco: Jossey-Bass, 2004; Bill Kovach and Tom Rosentsteil,

The Elements of Journalism: What Newspeople

Should Know and the Public Should Expect

. Three Rivers Press, 2001; Eugene Roberts with Thomas Kunkel and

Charles Layton, eds.

Leaving Readers Behind: The Age of Corporate Newspapering

. Fayetteville: University of

Arkansas Press, 2001; James Fallows,

Breaking the News: How the Media Undermine American Democracy

. New

York: Pantheon, 1996: Leonard Downie Jr. and Robert G. Kaiser,

The News About the News: American Journalism

in Peril

. New York: Alfred A. Knopf, 2002.

157

Gill Ursell, “Creating Value and Valuing Creation in Contemporary UK Television: or ‘dumbing down’ the

Workforce,”

Journalism Studies

, 4(1): 31-46 (2003).

See Fortune Magazine, The 100 Best Companies to Work For 2006,

http://money.cnn.com/magazines/fortune/bestcompanies/

See Howard Davis and Richard Scase,

Managing Creativity: The Dynamics of Work and Organization

. Brunner-

Routledge, 2001; Albert Shapiro

, Managing Professional People: Understanding Creative Performance

. New York:

Free Press, 1985; Frances Horbe,

Managing Knowledge Worker: New Skills and Attitudes to Unlock Intellectual

Capital in Your Organization

. Chichester, UK: John Wiley & Sons, 1999; Thomas H. Davenport,

Thinking for a

Living: How to Get Better Performances and Results from Knowledge Workers

. Boston: Harvard Business School

Press, 2005.

Richard Sennett,

The Corrosion of Characters: The Personal Consequences of Work in the New Capitalism

. New

York: Norton, 1998.

See Noah M. Lemos,

Intrinsic Value: Concept and Warrant

. Cambridge: Cambridge University Press, 1994.

Michael J. Zimmerman,

The Nature of Intrinsic

Value, Lanham, MD: Rowman & Littlefield, 2001; Lemos, op cit.

See Gilbert Harman,

Explaining Value and Other Essays on Moral Philosophy

. Oxford: Clarendon Press, 2000.

See Jonathan L. Kvanvig,

The Value of Knowledge and the Pursuit of Understanding

. Cambridge: Cambridge

University Press, 2003 and G.E. Moore,

Principia Ethica

. Cambridge: Cambridge University Press, 1903 and

Philosophical Papers

. London: Allyn and Unwin, 1959.

75 Immanuel Kant,

Critique of Pure Reason

. Mary J. Gregor, ed. Cambridge University Press, 1997

A. J. Repo, “The Dual approach to the Value of Information: An appraisal of Use and Exchange Values.”

Information Processing and

Management 22(5):373-383 (1986).

Robert G. Picard, “Unique Characteristics and Business Dynamics of Media Products,”

Journal of Media Business

Studies

, 2(2):61-69 (2005).

Bengt Carlsson and Paul Davidsson, “Surplus Values in Information Ecosystems,”

International Journal of

Information Technology & Decision Making

, 1(3): 559-571 (2002).

See Sylvia Chan-Olmsted,

Competitive Strategy for Media Firms: Strategic and Brand Management in Changing

Media Environments

. Mahwah, N.J.: Lawrence Erlbaum, 2006 and Robert G. Picard, ed.,

Media Product Portfolios:

Issues in Management of Multiple Products and Services

. Mahwah, N.J.: Lawrence Erlbaum, 2005.

Barbara Herrnstein Smith,

Contingencies of Value

. Cambridge, MA: Harvard University Press, 1988.

An interesting exploration of the value and historical role of salt is found in Mark Kurlansky (2003),

Salt: A

World History

. New York: Penquin Books.

Good economic and general histories of whaling include Lance E. Davis, Robert E. Gallman, and Karin Gleiter.

Pursuit of Leviathan: Techology, Institutions, Productivity, and Profits in American Whaling, 1916-1906

. University

of Chicago Press, 1997; Ivan T. Sanderson.

A History of Whaling

, Barnes and Noble, 1993; some pricing

information is found at: www.oilhistory.com/pages/Whale/prices.html.

This is often attributed to Warren Buffet as a quote but is actually a paraphrase of ideas in his 1996 Chairman’s

Letter to the shareholders of Berkshire Hathaway Inc. See http://www.berkshirehathaway.com/letters/1996.html

For discussion of such exuberance see Charles P. Kindleberger.

Manias, Panics, and Crashes: A History of

Financial Crises

. New York: John Wiley & Sons, 2001 and Mike Dash.

Tulipmania: The Story of the World’s Most

Coveted Flower and the Extraordinary Passions it Aroused

. Three Rivers Press. 2001.

Daum, Juergen.

Intangible Assets and Value Creation.

Chicester, U.K.: John Wiley & Sons, 2003.

Joseph Raz,

Engaging Reason: On the Theory of Value and Action

. Oxford: Oxford University Press, 1999, p.

203.

A good discussion of the issue of preferences can be found in Fischhoff, Baruch (2004). Value Elicitation: Is

There Anything in There? Pp. 620-641 in Kahneman, Daniel, and Tversky, Amos, eds. (2000).

Choices, Values, and

Frames

. Cambridge: Cambridge University Press.

Smith, Douglas K.

On Value and Values: Thinking Differently About We…In the Age of Me.

Upper Saddle River,

N.J.: Financial Times/Prentice Hall, 2004, p. 1

Smith, Michael P. Values. Culture. Content. Three Keys to Journalism in a Strategic Newspaper. Newspaper

Management Center, Northwestern University, 1997, p. 8.

American Society of Newspaper Editors.

Journalism Values Handbook

. Reston,Va.: American Society of

Newspaper Editors, 1996.

Linguistic research includes significant efforts to understand values behind words and their uses. One example of

the classification of words and values can be found at www.uia.org/huval.htm.

158

Ackerman, Laurence D.

Identity is Destiny: Leadership and the Roots of Value Creation

. San Francisco: Berrett-

Koehler, 2000.

Hurd, Mark and Nyberg, Lars.

The Value Factor: How Global Leaders Use Information for Growth and

Competitive Advantage

. Princeton: Bloomberg Press, 2004, p. 3.

John H. McManus,

Market-Driven Journalism: Let the Citizen Beware?

Thousand Oaks, CA: Sage Publications,

1994.

McManus, op cit., pp. 5-6.

Excellent presentations of the approach are found in B. Charles Ames and James B. Hlavacek,

Market Driven

Management: Prescriptions for Survival in a Turbulent World

. Baker Business, 1989; George S. Day,

Market-

Driven Strategy: Processes for Creating Value

. London: Collier Macmillan, 1990; Frederick E. Webster,

Market-

Driven Management: Using the New Marketing Concept to Create a Customer-Oriented Company

. New York:

Wiley, 1994; Jean-Jacques Lambin.

Market-Driven Management: Strategic and Operational Marketing

. New York:

St. Martin’s Press, 2000; and Frederick E. Webster,

Market-Driven Management: How to Define, Develop, and

Deliver Customer Value

. New York: Wiley, 2002.

See McManus, op cit.; Ivo Mosley, op cit.; Roberts, Kunkel and Layton, op.cit.; and Tom Fenton,

Bad News: The

Decline of Reporting, the Business of News, and the Danger to Us All

. New York: HarperCollins, 2005.

See Wernerfelt B. A Resource-based View of the Firm.

Strategic Management Journal

, 5 (2): 171-180 (1984);

Rumelt, R. Toward a Strategic Theory of the Firm in R. Lamb , ed.

Competitive Strategic Management

. Englewood

Cliffs, N.J: Prentice-Hall, 1984; Barney, Jay. Firm Resources and Sustained Competitive Advantage.

Journal of

Management

17: 99-120 (1991); and Amit, Raphael and Zott, Christoph. Value creation in E-business,

Strategic

Management Journal,

22: 493–520 (2001).

See Barney, J. B. Organizational Culture: Can it Be a source of Sustained Competitive Advantage?

Academy of

Management Journal

11(3):656-665 (1986); Conner, K.R. A Historical Comparison of Resource-Based theory and

Five Schools of Thought Within Industrial Organization Economics: Do We Have a New Theory of the Firm?

Journal of Management

17(1): 191-211 (1991); and Peteraf, M.A. The Cornerstone of Competitive Advantage: A

Resource-based View.

Strategic Management Journal

14:179-191 (1993).

100

Conner, 1991, p. 132.

101

Wright, Peter. A Refinement of Porter’s Strategies.

Strategic Management Journal

8(1):93-101 (1987).

102

Bowman, Cliff and Ambrosini, Veronique. Value Creation Versus Value Capture: Towards a Coherent

Definition of Value in Strategy.

British Academy of Management

, 11: 1-15 (2000).

103

Williamson Oliver E. Transaction Cost Economies: the Governance of Contractual Relations.

Journal of Law and

Economics

22: 233-261 (1979) and Williamson, Oliver E. Strategizing, Economizing, and Economic Organization.

In R. P. Rumelt, D.E. Schendel, and D.J. Teece, eds

. Fundamental Issues in Strategy

. Boston: Harvard Business

School Press, 1994.

104

Foss, Kirsten and Foss, Nicholai.

Creating, Capturing and Protecting Value: A Property Rights-based View of

Competitive Strategy

, DRUID Working Paper, Department of Industrial Economics and Strategy, Copenhagen

Business School, 2002.

105

Shumpeter J.A.

The theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest, and the

Business Cycle

. Cambridge, MA: Harvard University Press, 1934 and Schumpter J.A.

Capitalism, Socialism, and

Democracy

. New York: Harper, 1942.

106

Porter, 1980 and 1985

107

See Roy, Abhik, Hanssens, Dominique, Raju, Jagmohan S. Competitive Pricing by a Price Leader,

Management

Science

, 40 (7), 809-823 (1994); Besanko, David, Dranove, David and Shanley, Mark. Exploiting a Cost Advantage

and Coping with a Cost Disadvantage,

Management Science

, Vol. 47, No. 2, (Feb., 2001), 221-235 (2001).

108

See Hauser, John R. Competitive Price and Positioning Strategies,

Marketing Science

, 7 Winter, 76-91 (1988);

Hill, Charles W.L. Differentiation versus Low Cost or Differentiation and Low Cost: a Contingent Framework,

Academy of Management Review

, vol. 13. No.3 (1988).

109

Wright, 1987.

110

Li, Lode and Lee, Yew Sing. Pricing and Delivery-time Performance in a Competitive Environment,

Management Science

, Vol. 40. No.5, May, 633-646 (1994).

111

Raymond J. Trotta,

Translating Strategy into Shareholder Value: A Company-Wide Approach to Value Creation

New York: American Management Association, 2003.

112

See C.K. Prahalad. and Venkat Ramaswamy.

The Future of Competition: Co-Creating Value with Customers

Boston: Harvard Business School Press, 2004.

159

113

Anjan V. Thakor,

Becoming a Better Value Creator: How to Improve the Company’s Bottom Line—and Your

Own.

San Francisco: Jossey-Bass, 2000; Erik Stern and Mike Hutchinson,

The Value Mindset: Returning to the

First Principles of Capitalist Enterprises

. Hoboken, NJ: John Wiley & Sons, 2004.Erik Stern and Mike Hutchinson,

The Value Mindset: Returning to the First Principles of Capitalist Enterprises

. Hoboken, NJ: John Wiley & Sons,

2004.

114

For more in-depth discussions of the customer value approach, see Gale, Bradley T.

Managing Customer Value

New York: Free Press, 1994; Ravald, A. and Grönross, C. The value concept and relationship marketing.

European

Journal of Marketing

, 30(2): 19-30 (1996); and Hennig-Thurau, Thorsten and Hansen, Ursula, eds.

Relationship

Marketing: Gaining Competitive Advantage Through Customer Satisfaction and Customer Retention

. Berlin:

Springer, 2000.

115

See William C. Johnson and Art Weinstein.

Superior Customer Value in the New Economy: Concepts and Cases

ed. Boca Raton: CRC Press, 2004.

116

Woodruff, Robert B. and Gardial, Susan.

Know Your Customer: New Approaches to Understanding Customer

Value and Satisfaction

. Malden, Mass.: Blackwell Publishers. 1996.

117

See William C. Johnson and Art Weinstein.

Superior Customer Value in the New Economy: Concepts and Cases

ed. London: CRC Press, 2004; Woodruff and Gardial, Ibid.; and Ravald and Grönross.

118

An larger discussion of this approach is found in Woodruff and Gardial, Ibid.

119

Populist values stem from the populist movement at the turn of the twentieth century and include concepts of

enhanced democratic participation, justice, individualism, opposition to abusive exercise of power by political or
economic entities, etc. Excellent explications and discussions of the ideas at the foundation of journalistic practice
are found in Overholser, Geneva, and Kathleen Hall Jamieson, eds.

Institutions of American Democracy: The Press

New York: Oxford University Press, 2005.

120

The motto is found on the grand archway of the University of Missouri School of Journalism, which was founded

in 1908.

121

See, for example, discussions in Geneva Overholser and Kathleen Hall Jamieson

, Institutions of Democracy: The

Press

. New York: Oxford University Press, 2005

122

The development of the Western news approach is well discussed in Høyer, Svennik, and Pöttker, Horst, eds.

Diffusion of the News Paradigm, 1850-2000

. Göteborg: NORDICOM, 2005, and the influences of the approach and

the news production context on news selection and presentation are significantly explored in Gans, 1980, Tuchman,
1980, Guant, 1990, Barnhurst and Nerone, 2001, Schudson , 2002, and Hamilton, 2004.

123

Harmon, op cit. p. 130.

124

Wayne Wiegand, “Mom and Me: A Difference in Information Values,”

American Libraries

, August 1998, pp.

56-58.

125

Ikujiro Nonaka and Hirotaka Takeuchi,

The Knowledge Creating Company:

How Japanese Companies Create

the Dynamics of Innovation

. Oxford: Oxford University Press, 1995.

126

Gilbert J. B. Probst, Steffen Raub, Kai Romhardt,

Managing Knowledge: Building Blocks for Success

, New

York: John Wiley and Sons, 2000, p. 53.

127

Daum, (2003), p. 75.

128

See

Editorial Measurement

, SFN Strategy Report 1(5), May 2002, Paris: World Association of Newspapers, and

The Value Driven Newspaper

, SFN Strategy Report 1(6), May 2002, Paris: World Association of Newspapers

129

Value chains and core activities are well described in Porter, M. E.

Competitive Advantage: Creating and

Sustaining Superior Performance

. New York: Free Press, 1985; Karlöf, Bengt.

Business Strategy: A Guide to

Concepts and Models

. London: Macmillan, 1989, and Prahalad, C.K. and Hamel, G. “The Core Competence of the

Corporation,” Harvard Business Review 68(3):79-91, 1990.

130

The production and value chain elements of media and news organizations are discussed and illustrated in Robert

Picard,

The Economics and Financing of Media Companies

. New York: Fordham University Press, 2000.

131

Eric K. Clemons and Karl R. Lang,, “The Decoupling of Value Creation from Revenue: A Strategic Analysis of

the Markets for Pure Information Goods,”

Information Technology and Management

, 4(2-3) April-July, 2003, p.

278

132

Everette M. Rogers,

Communication Technology: The New Media in Society

. New York: Free Press, 1986.

133

Doris Graber,

Processing the News: How People Tame the Information Tide

. New York: Longman, 1984: Lee

Becker and Klaus Schönbach.

Audience Response to Media Diversification: Coping With Plenty

. Mahwah, N.J.:

Lawrence Erlbaum, 1999.

160

134

Abraham H. Maslow. “The Need to Know and the Fear of Knowing,”

The Journal of General Psychology

, 68, p.

122 (1963).

135

Peter Coffee, “Too Much Data?” eWeek, April 19, 2004, p. 56.

136

See Barnhurst and Nerone, 2001.

137

See Sterling and Kittross, 2001.

138

See Mark Thalhimer, Keith Hartenberger, and Stewart Schley.

Cable News: A Look at Regional News Channels

and State Public Affairs Networks

. Radio and Television News Directors Foundation, 2004.

139

See Barnhurst and Steele, 1997.

140

Barnhurst and Munz, 1997, p. 48

141

See University of California, Berkeley, School of Information Management and Systems (2004). Project: How

Much Information. How Much Information 2003. Available at:
http://www.sims.berkeley.edu/research/projects/how-much-info-2003/execsum.htm#summary

142

See Philip A. Vernon,

Speed of Information-Processing and Intelligence

. Ablex: 1988 and M. J. Tovee.,

The

Speed of Thought: Information Processing in the Cerebal Cortex

, Springer Verlag-Telos, 1998.

143

Frances Cairncross,

The Death of Distance: How the Communications Revolution is Changing Our Lives

Boston: Harvard Business School Press, 2002.

144

See Dan Sperber and Deirdre Wilson,

Relevance: Communication and Cognition

, 2

ed. Oxford: Blackwell,

1995.

145

James N. Rosenau,

Distant Proximities: Dynamics Beyond Globalization

, Princeton: Princeton University Press,

2003, pp. 4-5.

146

John Hamilton has been one of the most vocal proponents of the need to localize foreign news coverage and to

show its impact in reader lives. See his books.

Main Street America and the Third World

. Seven Locks Press, 1986

and

Entangling Alliances: How the Third World Shapes Our Lives

. Seven Locks Press, 1990.

147

Martha L. Stone,

A Guide to Practical Convergence: What Every Media Company Must Know About their

Future

. Dallas: International Newspaper Marketing Association, 2006.

148

Smith, Douglas K.

On Value and Values: Thinking Differently About We…In the Age of Me.

Upper Saddle River,

N.J.: Financial Times/Prentice Hall, 2004, p. 42.

149

Harvard Business Review on Turnarounds

. Boston: Harvard Business School Press, 2001; Carter Pate and Harlan

Platt,

The Phoenix Effect: 9 Revitalizing Strategies No Business Can Do Without

. New York: John Wiley and Sons,

2002.

150

Thomas P. O’Neill,

All Politics is Local: and Other Rules of the Game

. Crown, 1993.

151

Fuller, Jack.

News Values: Ideas for an Information Age

. Chicago: University of Chicago Press, 1996. pp. 227-

228.

152

The body of research and what newspapers are doing to improve value can be found at the Readership Institute’s

website: http://www.readership.org/

153

The Value Driven Newspaper

, SFN Strategy Report 1(6), May 2002. Paris: World Association of Newspapers, p.

17.

154

See Clemons and Lang, op cit.

155

World Association of Newspapers,

The Value Driven Newspaper

, Strategy Report vol. 1, no. 6, May. Paris:

World Association of Newspapers, 2002, p. 31; World Association of Newspapers,

Editorial Measurement

, SFN

Strategy Report 1(5), May 2002, Paris: World Association of Newspapers, 2002.

156

Putnam, Ibid, p. 413.

157

Putnam, Ibid, p. 410.

158

Nathaniel J. Mass, “Relative Value of Growth,”

Harvard Business Review

, April 2005, p. 102-113.

161

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