The decision to close the News of the World in the UK because of the fallout from the phone hacking scandal shows the importance of ethical behavior and public credibility for media firms.
The paper had been hacking the private communications of celebrities, politicians, crime victims, and even relatives of soldiers killed in Afghanistan and then spent four years trying to cover it up by paying hush money and—according to some reports—bribing police officers to ignore its crimes.
The paper, owned by Rupert Murdoch’s News Corp., was Britain’s largest selling Sunday newspaper until it spectacularly unraveled in recent weeks. Continuing revelations of illicit activities and the announcement of Parliamentary and police investigations led advertisers including Ford, Sainsbury, Lloyds Banking Group, Virgin Media, Dixons, and Vauxhall to pull their advertising.
Perhaps it was embarrassment—but it was more likely the loss of revenue, the loss of almost $3 billion in market value for the parent company because of declining share prices, the hundreds of millions of pounds in damages that will have to be paid, and the fact that the paper’s meltdown was endangering Murdoch’s takeover of BskyB—that led him to kill the paper.
Unfortunately, the scandal shows that some journalists and news organizations will go to any length to get a story, no matter how disgraceful and unethical it may be. Fortunately, the number of journalists who will go as far as those at the News of the World are limited, but the outrageous conduct highlights the growing chasm between those who believe everything should be public and that journalists have a right to do anything to get information and those who believe in a right to privacy and a right to be left alone.
The culture at the News of the World that led to the behavior shows that pressures on organizations to put their interests above those of the public needs to be resisted. It is hardly a culture reputable news organizations and companies should emulate. Not only the reputational costs—but the economic costs as well—are far to high.
MySpace Sale Underscores the Risks of Exuberant Digital Investments
The decision by News Corp. to dump MySpace once again reveals the risks of over exuberance toward digital companies that do not have a proven business model or long-term customer loyalty.
There are plenty of digital investments that meet those requirements, but a number of the most hyped firms moving toward IPOs and acquisitions do not. They need to be considered with hard headed pragmatism.
MySpace was launched 2003 and rapidly became the toast of the digital world as a social networking site and “the place” for musical stars and fans to connect. By 2005 it was the fifth most visited site on the Internet.
New Corp., which was anxious to benefit from growth in digital media, jumped at the opportunity to acquire the service and paid $580 million in 2005. It was an enormous price for a company with an unclear revenue potential.
Within two years MySpace had grown to be the world’s number one social networking site and was receiving 100 million unique monthly visitors. But it still had revenue problems; its visitors weren't paying customers and advertising wasn't paying its costs.
Despite landing a $900 million ad deal with Google, MySpace reported just one period of profitability. On top of that, it lost its cache with users and its leading position was soon eclipsed by Facebook.
Overall, it is estimated that the MySpace lost at least $1.5 billion under News Corp. and those losses dragged down the News Corp.’s overall earnings. The extent of its losses has never been completely clear because its results were not transparently presented in News Corp. financial reports.
After desperately trying to revive MySpace, News Corp. put it up for sale with an asking price was $100 million. It was sold in June to the online advertising network Specific Media for $35 million (about 6% of what News Corp paid for it), but the company was really just giving it away to get it off its books. As part of the deal, News Corp. took a minority equity stake in Specific Media.
Investing in emerging industries is always more risky than investing in established ones, so it requires a good deal of realism and clear headedness about the opportunities and their potential. It is not good enough merely to throw money on the table in hopes of drawing a winning hand or because the crowd is encouraging you on. A solid business plan that it is already working and producing financial growth and a user model based on more than popularity and status are required unless you investing high-risk capital you can afford to lose, as well as other opportunities it might have funded.
There are plenty of digital investments that meet those requirements, but a number of the most hyped firms moving toward IPOs and acquisitions do not. They need to be considered with hard headed pragmatism.
MySpace was launched 2003 and rapidly became the toast of the digital world as a social networking site and “the place” for musical stars and fans to connect. By 2005 it was the fifth most visited site on the Internet.
New Corp., which was anxious to benefit from growth in digital media, jumped at the opportunity to acquire the service and paid $580 million in 2005. It was an enormous price for a company with an unclear revenue potential.
Within two years MySpace had grown to be the world’s number one social networking site and was receiving 100 million unique monthly visitors. But it still had revenue problems; its visitors weren't paying customers and advertising wasn't paying its costs.
Despite landing a $900 million ad deal with Google, MySpace reported just one period of profitability. On top of that, it lost its cache with users and its leading position was soon eclipsed by Facebook.
Overall, it is estimated that the MySpace lost at least $1.5 billion under News Corp. and those losses dragged down the News Corp.’s overall earnings. The extent of its losses has never been completely clear because its results were not transparently presented in News Corp. financial reports.
After desperately trying to revive MySpace, News Corp. put it up for sale with an asking price was $100 million. It was sold in June to the online advertising network Specific Media for $35 million (about 6% of what News Corp paid for it), but the company was really just giving it away to get it off its books. As part of the deal, News Corp. took a minority equity stake in Specific Media.
Investing in emerging industries is always more risky than investing in established ones, so it requires a good deal of realism and clear headedness about the opportunities and their potential. It is not good enough merely to throw money on the table in hopes of drawing a winning hand or because the crowd is encouraging you on. A solid business plan that it is already working and producing financial growth and a user model based on more than popularity and status are required unless you investing high-risk capital you can afford to lose, as well as other opportunities it might have funded.
What Makes Good Journalism?
Journalists and others concerned about the status of the news industry in North America and Europe keep arguing that we are getting poorer journalism because of the economic state of the industry. But when you ask them “what makes good journalism?” they find it nearly impossible to articulate the concept.
Those trying to articulate the elements good journalism tend to use comforting and immeasurable platitudes and to describe it through attributes based on professional practices: pursuit of truth, fairness, completeness, accuracy, verification, and coherence. These are not a definition of quality, but a listing of contributors to or elements of quality practices. Each attribute alone is not sufficient for good journalism and degree to which each contributes is unclear.
In practice, most of us settle on identifying journalistic quality by its absence or by its comparison to poor or average quality journalism. Thus we know it when we don’t see it or we describe by giving examples of excellent journalism.
Other industries are far better in establishing their definitions of quality. If you ask what is quality in washing machines, the answer is that it quality machines clean clothing more effectively, operate quietly, are safe, and are durable and reliable. All of those can be measured by specific indicators of dirt and stain removal, water and energy use, noise decibels generate, user injury rates, and breakdown rates. A quality manufacturer strives for better performance on those measures, provides effective support and service, handles feedback and complaints well, and strives for high customer satisfaction.
The reason quality journalism is difficult to describe is because it involves a body of practices and the mental activity that goes into those practices. Good journalism results from the information gathering and processing activities, PLUS the knowledge and mental processes applied to it.
It is thus labor intensive; it involves collecting, analysing, structuring and presenting information. The best journalism comes from knowledgeable and critical individuals determining what information is significant, backgrounding and contextualizing it, and thinking about and explaining its meaning. It is a creative and cognitive activity. It is difficult to articulate what makes good creative and cognitive activity and nearly impossible to measure these mental processes. Thus, we are forced to use surrogate measures of quality journalism.
Good journalism involves engaging language and fluid prose, but it is not merely a well written and good story; it is not necessarily evident in stories that make the most popular list of stories or are most shared on social media. Good journalism involves stories that have import, impact, and elements of exclusivity and uniqueness; it wrestles with issues of the day, elucidates social conditions, facilitates society in finding solutions to challenges, and is independent of all forms of power. Good journalism is rational and critical; it is infused with scepticism, but not cynicism.
Although it is difficult to effectively measure such attributes of quality journalism, it should be much easier to define and identify quality journalism providers. There are some surrogate and attribute measures available to rate them, such as the percentage of total costs devoted to editorial costs, the amount of serious news content, the percentage of content originated rather than acquired, the amount and handling of errors, levels of reader satisfaction, and brand reputation.
In the end, however, the question of what makes good journalism has to be answered by answering the queries: Good or valuable to WHOM? Good or valuable for WHAT? Only then can one begin to establish direct measures that determine the effectiveness of journalism in achieving those objectives.
Those trying to articulate the elements good journalism tend to use comforting and immeasurable platitudes and to describe it through attributes based on professional practices: pursuit of truth, fairness, completeness, accuracy, verification, and coherence. These are not a definition of quality, but a listing of contributors to or elements of quality practices. Each attribute alone is not sufficient for good journalism and degree to which each contributes is unclear.
In practice, most of us settle on identifying journalistic quality by its absence or by its comparison to poor or average quality journalism. Thus we know it when we don’t see it or we describe by giving examples of excellent journalism.
Other industries are far better in establishing their definitions of quality. If you ask what is quality in washing machines, the answer is that it quality machines clean clothing more effectively, operate quietly, are safe, and are durable and reliable. All of those can be measured by specific indicators of dirt and stain removal, water and energy use, noise decibels generate, user injury rates, and breakdown rates. A quality manufacturer strives for better performance on those measures, provides effective support and service, handles feedback and complaints well, and strives for high customer satisfaction.
The reason quality journalism is difficult to describe is because it involves a body of practices and the mental activity that goes into those practices. Good journalism results from the information gathering and processing activities, PLUS the knowledge and mental processes applied to it.
It is thus labor intensive; it involves collecting, analysing, structuring and presenting information. The best journalism comes from knowledgeable and critical individuals determining what information is significant, backgrounding and contextualizing it, and thinking about and explaining its meaning. It is a creative and cognitive activity. It is difficult to articulate what makes good creative and cognitive activity and nearly impossible to measure these mental processes. Thus, we are forced to use surrogate measures of quality journalism.
Good journalism involves engaging language and fluid prose, but it is not merely a well written and good story; it is not necessarily evident in stories that make the most popular list of stories or are most shared on social media. Good journalism involves stories that have import, impact, and elements of exclusivity and uniqueness; it wrestles with issues of the day, elucidates social conditions, facilitates society in finding solutions to challenges, and is independent of all forms of power. Good journalism is rational and critical; it is infused with scepticism, but not cynicism.
Although it is difficult to effectively measure such attributes of quality journalism, it should be much easier to define and identify quality journalism providers. There are some surrogate and attribute measures available to rate them, such as the percentage of total costs devoted to editorial costs, the amount of serious news content, the percentage of content originated rather than acquired, the amount and handling of errors, levels of reader satisfaction, and brand reputation.
In the end, however, the question of what makes good journalism has to be answered by answering the queries: Good or valuable to WHOM? Good or valuable for WHAT? Only then can one begin to establish direct measures that determine the effectiveness of journalism in achieving those objectives.
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