Mar 182013

clip_image002Advertisers and Other Owners of Media:

The Search for Models of Survival among Media Organizations

By Chit Estella

In journalism school, students are taught how to write the news, how to produce a newspaper or radio or television news program. They are taught the parts of a newspaper, the ethics of the journalistic profession and, if they are lucky, they are taught the tricks of the trade. But there is one reality in journalism that students who eventually join mass media are rarely prepared for: the advertisers and their power over mass media.

This paper will examine the role that advertising plays in journalism and the influence it wields over mass media. It will explain how advertising has helped bring about change in the way that journalism is being done. Most importantly, it will point to the ways by which ownership in journalism is changing in the face of economic and technological challenges that have emerged at the turn of this century.

Advertising is the big elephant in the newsroom. No one really talks about it but it is there. On a daily basis, however, it makes its presence felt as soon as an editor is given the dummy sheet for the page that he is supposed to lay out. There, intruding on the rectangular news hole that represents the news page for the following day are boxes that have been crossed out. They are the spaces reserved for advertising. Sometimes, they are just a few square centimeters in size. A research presented in a colloquium at the University of the Philippines College of Mass Communication, Feb. 10, 2010.

Occasionally, they swallow up the entire page.

Big advertising space makes a media company happy. It makes journalists happy, too, for it gives the reassurance that the media organization will live for more than just another day. There are times, however, when too much advertising and too little news can make a journalist wonder what he is in that job for. At the other end, a big news hole and a small or virtually non-existence advertising space can make a journalist—and his company—nervous.

This is because advertising accounts for much of the cost of producing and delivering the news. The rule of thumb is that 80 percent of a media organization’s revenues come from advertisements and 20 percent from readers or the audience. (Saba, 2009)

The global economic crisis, however, has exerted pressure on every human activity, including advertising and consequently, mass media. This is not to say that before the crisis, things were very different. It was the accepted fact in the mass media that advertisers would put placements only on the top three newspapers (meaning, newspapers with the highest circulation: the Philippine Daily Inquirer, the Manila Bulletin and the Philippine Star, out of the 42 newspapers of national circulation) and the top two television stations (ABS-CBN and GMA7). The “lesser” news organizations had to make do with the crumbs, mostly obtained by offering basement prices for advertising space, invoking personal friendships and making editorial concessions.

But high circulation or not, the relationship between media organizations and advertisers has always been an uncomfortable one in so far as journalists are concerned. The facts of life easily overshadow any notion about how powerful the press can be when one takes into account that newspapers receive an average of P3.5 billion in advertising revenues yearly. This figure does not even begin to show how much the advertising industry is putting into media. The print medium receives only five percent of advertising revenues. Radio accounts for 19 percent while television gobbles up 76 percent. (Iglesias, 2009)

In the first three months of 2009 alone, advertisers have spent P40.7 billion or an increase of 14 percent over the same period in 2008, despite the global economic crisis. (Iglesias, 2009) Saatchi and Saatchi Asia-Pacific, the advertising giant, said it expected total advertising expenditures to hit P180 billion in the Philippines last year. (Estopace, 2009)

One question worth pondering is: how many people have that kind of money in this country? How many are willing to spend that amount for a newspaper, a radio station or even a television network? Only advertisers, it seems, have the wherewithal for this.

It is therefore not surprising that advertisers have become more assertive in the way they want their messages delivered. Ads have become more intrusive, literally going beyond the boxes that have traditionally set them apart from the news. And in a definite departure from a long-standing tradition, advertisements have found their way to the front pages of magazines, disguising themselves as news.

There was a time when readers could easily tell an advertisement from a news story just by looking at them. The two used different fonts. Ads also, as mentioned earlier, kept to their places inside the boxes. Not anymore. Editors have complained of advertisers demanding that stories about their products be written by the reporters and writers of the newspaper. And unless the reader is wary enough to look for tell-tale signs, feature stories promoting a product—or in these days, a candidate—take on the appearance of a legitimate story.

Advertisers go where the big circulation or viewership numbers are. Most media organizations therefore strive to be big in circulation or viewership. They feed on one another. Both go for the market—the consumer market. (It is, by the way, a strange market if one were to go by the products that advertisers sell. In the first quarter of 2009, the bulk of advertisements were selling shampoo and other hair-care products, followed by telecommunications and cough medicines.) (Iglesias, 2009)

So what is a media organization to do if it wants to corner a big chunk of the market? The very plain answer is: celebrity news. At a time when most newspapers are barely surviving, a bumper crop of glossy magazines have emerged and are doing very well, thanks to savvy strategies that look for niches among sectors with disposable incomes. Stories about the houses of celebrities, their real-life dramas, their clothes, and their romances hog the pages of these glossies that sell for no less than P100—a steep price that buyers are surprisingly willing to pay.

But such is the power of celebrity stories that, internationally, even those news organizations that have traditionally offered hard news—i.e., wars, science, governance and politics—have adapted themselves to accommodate such stories. While retrenchments in newsrooms are happening all over the world, the Associated Press, for example, said it was hiring 21 additional employees across Los Angeles, New York and London to expand its reportage on celebrity and entertainment news. In contrast, major news organizations like the Boston Globe and USA Today had to cut back on the daily coverage of their presidential election and relied instead on reports from the wires. (Trends in Newsrooms, 2009)

Indeed, times are getting harder for journalism. In a report by the World Editors Forum, it was said that “as celebrity news soars and well-researched investigative pieces flounder, both the public and journalists worry about newspapers’ ability to uphold their roles as watchdogs.” (Trends, 2009)

Besides the difficulties posed by the worldwide recession (which the US has recently declared as over), a more perplexing threat has emerged. It has been around for some time and it is turning the world of journalism upside down. It is the internet, the online news, which has promised unlimited information in exchange for practically nothing. Its audience is young, consumption-oriented and expanding. (Nielsen, 2008) These consumers want to look young, buy high quality goods, keep up with the latest fashion, and be on step with the latest in technology. As the market for this age group gets bigger, so does the interest of advertising in targeting this sector. Of the P180 billion of advertising expenditures earlier mentioned, P3 billion is expected to go to online publications. And so the traditional media get worried, very worried.

Seeking to cope with the economic and technological challenges being thrown their way, traditional media have devised various means of surviving. One was to cut back on costs in order to stretch limited resources. Layoffs and early retirements have been the order of the day even in the most established newspapers in the US and Europe. While cut-backs in the technical departments of most organizations have been going on since the advent of the computer, the ongoing ones are hitting what used to be the ultimate source of strength of news organizations: the editorial or news department. Reporters and editors are now being retrenched.

In the Philippines, while no massive layoffs are being reported, it is well-known that fewer beats are being covered by fewer reporters to cut down on costs. (In one newspaper, when the Lifestyle editor retired, her tasks were taken over by the executive editor.) “Major” beats have been defined to mean offices such as Malacanang, the Senate, the House of Representatives, the Supreme Court. Beats such as the Department of Health, the Department of Foreign Affairs, the Department of Labor, and the Department of Environment and Natural Resources do not have regular reporters who should seek out the news in these places on a daily basis. And yet, these “minor” offices bear on the daily lives of the people who have to contend with issues regarding health, the environment and overseas employment.

Another way by which news organizations have sought to survive is through mergers. Combining resources to meet a common need seemed to be a good solution to the problem of rising production costs. Such mergers, however, usually have their downside for their employees: seeking to avoid duplications in functions, certain positions are abolished and their holders retrenched. Needless to say, the experience is unpleasant, if not traumatic, for the employees of the merged companies. The newsroom situation can become so toxic that employees find themselves leaving the newspaper. The fear of being rendered “redundant” makes it impossible for most of the journalists to focus on their jobs.

A third way is for print and broadcast organizations to go online as well. If you can’t beat ‘em, join ‘em. At present, there is no print publication or television station of note that does not have an online version. Apart from being able to attract the online users, this strategy also aims to catch the advertising revenues that are expected to increasingly come this way.

But going online is apparently not doing as much good as it is expected for the increasingly cash-strapped publications. Recently, media mogul Rupert Murdoch announced that his online publications will start charging their readers next year. In preparation for that time, he has also warned Google against posting unpaid-for articles.

Murdoch is not alone in pushing for a stop to free online news. In the World Newspaper Congress last December, chief executive officers of giant media networks such as Dow Jones and Co., Singapore Press Holdings and Axel Springer of Germany, said charging for online news is a must. One of them said offering online news for free was the “biggest mistake” committed by his company. (Harris, 2009)

How this would be done is not yet clear but the concept of a “paywall” is one that is being actively discussed by news organizations. Some media organizations have already adopted this system in a limited way: they post on their websites the summaries of their stories and then advise the reader to buy the print version in the newsstands for the full stories. Others resort to the more ingenious method of ending their news stories with a cliffhanger and then letting the reader know that the continuation is in the print version.

A fourth way is for news organizations to seek government subsidy. In European countries like France, the government has stepped in to stop the downward spiral of the newspaper industry. Recently, the French government has announced that it was subsidizing the newspaper subscriptions of 18-year-old French citizens for one year to encourage them to read the news. In addition, it was giving tax breaks for the delivery of newspapers and doubling the volume of government advertising. In all, French government support would amount to 280 million euros (US$362 million) plus 200 million euros for three years.

So-called “second-place” newspapers in Scandinavia are also receiving government subsidies. Support comes in the form of financing newspaper education programs, training programs, and professional development programs for journalists—solutions that are expected to produce long-term gains.

In extending support to newspapers, the French government chooses publications that represent a variety of political standpoints. It has given subsidies to the Catholic newspaper, La Croix, and the communist L’Humanite. Previously, it has extended support to both rightist and leftist newspapers. The move is driven by the principle that the flow of information and its quality should not be dictated by the whims of the market. In other words, people should not be given only the news that they want but also the news that they need. Citizens should also be allowed to have multiple perspectives of an issue. By supporting news organizations that would otherwise have difficulty surviving because they are not popular, the government is helping to make available those information that is crucial to the lives of the people. Information is treated as a public good—something that every citizen is entitled to.

The final option is one that is available to journalists who have neither the huge capital nor the manpower to put up a traditional publication. It is the option of going “independent.” By this is meant that journalists can put up their own websites, provide information and operate either in a profit-making capacity or a non-profit one. The latter—operating in a not-for-profit capacity—is emerging as a sustainable, and respectable, option.

Here, a news organization is financed by endowments or grants from foundations willing to support the publication or any of its projects. One such publication in the US—Propublica—uses its funding to support a small staff of 28 people. It chooses the stories it wants to write, usually investigative pieces, and offers these for free to mainstream publications. Although its funder heads the board of the publication, the directors do not have an advanced knowledge of the stories that will be put out. They get to know this at the same time as the readers do.

It is an intrepid model because it could expose itself to the biases and agenda of the funding agencies. It does not offer stability or assure long-term economic viability. But it is left with the most important virtue that true journalism should have: independence.

A similar model is that offered by the Guardian, a newspaper in the United Kingdom. Originally owned by a family, the owner subsequently turned over the reins of the newspaper to a trust which oversees the organization. The members of the trust abide by the vision by which the newspaper was originally built.

Such models would return journalism to what it is supposed to be: a disseminator of needed information rather than a mere business enterprise. Because it does not intend to rake in money, a news organization is insulated from the vagaries of economics and the whims of the mass market. It plays a leading role in the formation of public knowledge and opinion and educates readers by offering different perspectives of the news.

There is one argument against it, though: a not-for-profit endeavor will never buy you a BMW.

For those who believe that journalism is—and should remain—a business enterprise, keeping one’s company lean and small and non-profit is not a true solution to the problem of ensuring the survival of journalism. A news organization will still need a newsroom and the people to get the news on a regular, if not daily, basis. Such an operation needs more than what a funding organization could give.

So what is the ideal ownership and operation model for a news organization in these times of economic unpredictability and technological boom? Academicians who specialize in journalism say that a mix-funding source should solve the problem of resources and diminish the possibility of any single person or vested interest group exerting control over the media organization. This means that an organization could be privately owned and still be qualified to receive government subsidy and private donations, and yes, even take in advertisements. The idea is for a news organization to depend on not just one source for its viability.

It is difficult to imagine how such a mode of operation could be brought about in the Philippines where government officials tend to think of public institutions as their private property, where private owners find it hard to think beyond their short-term private interests, and where press freedom is still regarded as an enemy by certain powerful quarters. It will take some time before we recognize that we are all stakeholders in a free press regardless of our stations in life and political beliefs. When that realization comes, perhaps the best option for the survival of journalism in the Philippines will be found.

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