The argument that has dominated my career has been about journalism business models. Over 40 years ago, while at Northwestern’s Medill School, I insisted to my teachers that journalists would prosper in the coming online age. They could do more than sell billboards, I said. They could earn commissions by helping sell products.
The reaction I got from the industry was dismissal. Most memorably, in the mid-1990s, Cox Enterprises CEO James Cox Kennedy claimed his company would profit by simply “repurposing” stories from its Atlanta newspapers through sites like yall.com. I laughed until I cried.
Today, 20 years later, the print news industry is dead, the broadcast news industry is moribund and the internet news industry still doesn’t have a business model. That’s why the purchase of Time Magazine by Salesforce.com (NASDAQ:CRM) CEO Marc Benioff matters.
The question isn’t whether he has, wants or can gain political power. It’s whether he can find a way to make money while doing it. My profession is riding on it.
Death by Facebook
The business model of journalism is to aggregate groups of people based on their location, industry or lifestyle, then sell access to them at a premium price.
Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Facebook (NASDAQ:FB) destroyed the business model. They track people through their online day, then let advertisers target any group they want at a run-of-network price. This intrinsic targeting is less efficient than the extrinsic targeting of finding people based on the content they’re viewing, but it’s so much cheaper that it has become the standard.
This is also Salesforce’s bread-and-butter. Customer relationship management software aggregates all the data companies have on each customer, then uses it to maximize profits and customer satisfaction. It’s good to know whether the person walking through your front door is a big customer or a crank.
But this leaves journalism out in the cold. Who cares if you reach 70% of local car buyers when a dealer can just use Facebook to find people who’ve been asking about buying cars?
Journalism has become “content,” no different than pictures of cats sitting in a sink or videos of a lunatic spouting conspiracy theories on the street.
A Smarter Market
There are now three journalism business models. You can demand readers pay for what you do, in which case only 10% of your market sees it. You can get a political sponsor, who will drive people toward their policy positions. Or you can beg for money.
The assumption of most writers is that Benioff, like Pierre Omidyar of eBay (NASDAQ:EBAY) and, now, First Look Media, Laurene Powell Jobs, the widow of Apple (NASDAQ:AAPL) co-founder Steve Jobs and now owner of The Atlantic and Jeff Bezos, the Amazon.com (NASDAQ:AMZN) founder who now owns The Washington Post, is making a play for political power.
I think that’s short-sighted. Benioff and his wife Lynne have bought a brand, one that competes directly with every other internet news brand. Time is the same as the Post, the Atlantic, InvestorPlace or MSNBC. (Remember, kids. The MS stands for Microsoft (NASDAQ:MSFT)
Words, pictures, graphics, audio and video — they’re all the same thing. They’re all moving toward the same business model. They just don’t know what it is. Benioff has gotten himself a seat in this new game for just $190 million. It could be a bargain.
That’s because an educated market is as vital to a company like Salesforce.com as an educated polity. Facebook has made customers stupid. Lacking unbiased views, lacking voices that support the customer’s needs and demands, the market is missing the context that makes a salesman’s tools valuable.
That’s what journalism provides. Creating a business model for that, one that works for both readers and writers online, is the challenge Benioff has now taken on. It’s not a political story.
It may be the most important business story of our time.
Dana Blankenhorn is a financial and technology journalist. He is the author of a new mystery thriller, The Reluctant Detective Finds Her Family, available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in MSFT and AMZN.
