Old Media Jump on a Stalling Digital Bandwagon

Traditionally, the arrival of an online name generator mocking any enterprise is the first sign that a business is too ridiculous to survive. So it's with mixed feelings that I report a new name-mocking machine aimed at newspaper companies.

The gag was inspired by the newly "rebranded" version of Tribune Publishing, now known as tronc. That's not a typo: they're calling it tronc, lower case "t." No it's not in a story from The Beaverton, The Onion, or This Is That. I checked. It's real.

The name generator will turn up a similar moniker for anyone who wants to follow the lead of the company that publishes once-great newspapers, including the Chicago Tribune and the L.A. Times. Suggestions include junc, sponc and func. Personally, I favour "cronk" in the way the generator styles it: "Let's cronk out some content!"

According to tronc's CEO, the new name is an acronym for tribune online content -- all lower case as part of the signal that they are "pivoting" into digital (which almost always means promotional content instead of journalism). And after reading the press release, all I could think was maybe the Americans do have a good argument for on-the-job drug testing.

Once, I would have been tempted to ask how tronc's C-suite is still in the game. But after a couple of seasons of watching Silicon Valley -- the tech world sitcom that insiders say is eerily accurate -- I think I know. It's some unholy combination of investors with money to burn and the smoke-and-mirrors allure of all things digital.

Although the smoke is clearing over media sites, where it appears the era of growth as a synonym for success is almost over. Buzzfeed is growing fast, but the company cut its revenue projection for 2016 from $500 million to $250 million after missing last year's financial targets. Of course, Buzzfeed, which launched in 2006, still has a valuation of $1.5 billion based on... well, it's never quite clear what tech valuations are based on.

It's no secret that most internet media companies are rich in investors but poor in actual profits. As the Guardian reported earlier this spring, a host of big media outlets are in trouble. Mashable, the International Business Times and Salon are all suffering.

Meanwhile old media attempting to mimic new media tricks have lost their audiences. Al Jazeera America closed shop in April. In the U.K., The Independent recently closed its print operation, where circulation had dropped to about 40,000 a day. Now it's hoping to become a digital-only paper with a global reach.

Good luck with that. The Guardian has been trying to do this for years and it lost $120 million in 2015 alone. The newspaper is backed by a trust fund established in the 1930s to ensure the paper could practise journalism without pandering to advertisers. But at the rate they're burning through their funds they will have exhausted the nest egg in about five years.

Salon, which launched in 1995, is the grand dame of online news sites, but its success has always been measured in hits rather than profits. As Politico.com recounts, the digital mag that was intended to be a "left-coast, interactive version of The New Yorker" rode the wave of the dot-com boom of the 1990s and reached the ultimate goal of all tech sites by going public in 1999. But it has struggled financially ever since the dot-com bust of 2000.

Recently, the site laid off senior staffers, prompting a snarkfest among former writers, who complained the current incarnation of Salon, featuring clickbait headlines and sensational content, isn't the magazine they knew.

The Huffington Post, which launched in 2005, seems to be chugging along. But it's not clear if that site, powered by hundreds of free bloggers working for "exposure," has ever made a profit for anyone but founder Arianna Huffington and her investors. They sold it to AOL in 2011 for $315 million. (She came away $21 million richer.) Last summer the New York Times reported that the site is still only breaking even on $146 million in revenue -- despite attracting 200 million unique visitors a month.

This suggests two things. That when it comes to news media the tech company maxim "get big fast" doesn't work for anyone but a handful of investors who have figured out how to sell sites of debatable worth to someone else. (Cynics call this technique pump-and-dump, an allusion to stock scams based on creating an illusion of value.)

But it also raises a question that should never be asked about a "news" outlet: Is there anyone in charge doing the relevant research? Talk about digital ironies -- the companies that make most of their dosh on datascraping seem to have turned a blind eye to the data.

For an insightful analysis of how digital media companies work you can't do better than media critic Douglas Rushkoff's latest book, Throwing Rocks At the Google Bus: How Growth Became the Enemy of Prosperity.

Rushkoff argues that we've reached the limit of an economy that is based on datascraping and marketing, partly because the tech companies are running out of data to gather on their readers and companies to sell it to.

With so many businesses trading on the so-called attention economy and measuring their worth in growth, influence, traffic, exposure, likes, followers or a host of other things that have no inherent value, everyone is now attempting to profit off the saturated advertising market. And since these companies are usually pumped up by investors who have unrealistic expectations for how much profit they will earn, it is just a matter of time before digital media content companies go the way of tulip bulb futures.

It's simple math. Rushkoff, a professor of media theory and digital economics at City University of New York, notes that in the U.S., advertising and marketing as an industry has never produced more than five per cent of GDP. (That's because advertising has no value as an end in itself: it profits by selling something of real value.)

But now every new social medium or news outlet wants to sell data and "influence" in an already crowded market.

"And where's the revenue in that?" Rushkoff asks in one of the videos he did for BigThink.com. "How can the whole Nasdaq stock exchange be one big advertising play? It can't. You still need enough razor blades, and bananas, and milk companies to support [the economy]."

The book is a delight. But if you're short on time you can hear his views in a speech he gave at the SXSW tech conference in March. Judging by the lack of applause, he got a cool reception. Perhaps that's because the blunt-talking Rushkoff compares the internet companies of the last 15 years to a Ponzi scheme?

The good news is that Rushkoff says the way tech companies work to extract wealth from their users isn't inevitable. He reminds us of the early days of web commerce and sites like eBay and Etsy that echo ancient marketplaces by connecting creators and consumers in ways that serve them equally well and build wealth for everyone.

And he has some ideas about how community-based businesses that trade in items of real value could still offer an alternative to the digital behemoths. Certainly his approach is proving to have some success for news media willing to accept modest profit margins in lieu of a winner-take-all score. Outlets like The New Yorker, which has clung to the old-fashioned business model of offering high quality journalism for a relatively small audience of devoted subscribers and is doing well.

Not all digital outlets are opting for advertorial and clickbait. One of the oldest, Slate, which launched in 1996, is selling memberships with perks (like special articles and podcasts) for devoted readers, while keeping the site free-with-advertising for American readers.

The New York Times, which has a metered paywall, is also profitable -- although "barely," as Fortune magazine puts it. They're still laying off staff. But it's proof that quality journalism is a better long-term strategy than clickbait if you're planning to stay in business.

So it seems that tronc may have made an even bigger mistake than its name: the newspaper company is jumping on the digital content bandwagon long after the wheels have started to wobble.

That doesn't mean they're doomed to obscurity of course. I can imagine "tronc" becoming a verb that means to ignore the data. As in, "Did you hear they tronc'd their way into bankruptcy with that old-fashioned tablet app?"

And it gives me an idea for another T-shirt aphorism in my growing list of Things I Learned in the News Biz: "Don't just scrape the data, read it."

© Shannon Rupp. For permission to reprint this article please contact the author: shannon(at)shannonrupp.com.