The value of one news post = $55m
By Tom Foremski - August 16, 2007
By Tom Foremski
The conventional wisdom as espoused by the aggregators and search engines is that there is no value in news except in the aggregate, as Google News, Digg, etc.
That's why these are tough times for newspapers and news organizations.
However, I believe the long term outlook for journalism is excellent and that there is considerable value in journalism, much more than in the aggregators of news because the technology to do that is now a commodity. News is a value add that cannot be produced by algorithm and machine.
The problem is that we don't have a good way to recover the value that journalism produces. And there is considerable value in journalism.
Let me give you an example. Tuesday evening I posted a story that Wind River was for sale and IBM is the likely buyer. The story has yet to be proven but it came from an excellent source and one that has proved extremely reliable in the past.
Wind River stock jumped 9 per cent at the market open and by the end of Wednesday locked in a gain of nearly 7 per cent, or about $55m. That piece of information created a tremendous amount of value for a lot of people.
And business journalism continues to create a tremendous amount of value. It levels the playing field, it distribtes important information that is used to make business decisions that affect millions of people. There is a tremendous amount of value in professional journalism.
Yet professional journalism is under seige, the San Francisco Chronicle cut 100 newsroom jobs recently, 25 per cent of its newsroom. Because it can't recover enough of the value its journalists produce. This is true at other publications around the world.
What is the future? The future is the privatisation of news to those that can afford it--unless we can develop a way to pay for it. Google AdSense and other ad networks don't come anywhere close to covering the costs of news organizations.
Unless we can solve this problem--and it is one of the most serious issues confronting our society--the news will be financed by small groups of wealthy individuals that can make money from the news, and the news will be kept private.
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Comments (6)
"Wind River stock jumped 9 per cent at the market open and by the end of Wednesday locked in a gain of nearly 7 per cent, or about $55m. That piece of information created a tremendous amount of value for a lot of people. "
like your source perhaps? Not sure there is much wisdom in highlighting how stories based on rumor can pump up a stock.
Posted: August 19, 2007 9:45 PM
Penguin, someone *always* profits from information. Someone is always trying to gain something by giving information or by acting on information.
Journalists know this and they try to be responsible in how they use information. Every day journalists deal with this issue because every day we have to deal with an army of people, which includes the PR industry, who have an axe to grind, who seek to profit from having information published.
Posted: August 19, 2007 11:11 PM
Tom--Good post. Speaking as a former (old guard) journalist, I think the industry's going through a massive transformation as we move into a new media era--more voices, more fragmentation, and disruption. There will be a lot of short term pain with the newspaper and other media layoffs, and I cringe at thinking of losing valuable journalists at these institutions. Longer term, though, it could be healthy if it unleashes these reporters to create their own brands and partner themselves with new types of alliances. In any case, I think we're witnessing history here (sorry, sounds like Karl Rove)
Posted: August 20, 2007 3:57 PM
Tom, what you say is very interesting. I was having dinner with friends and we got into a discussion while reviewing previous covers of the Economist and noticed that the covers followed business trends fairly well. It becomes a chicken and the egg problem: did the media influence the psychology of investors and business people or were they just "spot on" when identifying the trends of the time? It looks like your observations suggest the psychology and influencing aspect is what affects the market and/or valuation of a company.
Posted: August 21, 2007 5:09 PM
Mark: Yes we are witnessing history. At no other time in our lives will we be at such a huge disruption in the media industry.
Clara: That's a difficult one to judge. The media tends to chase each other's tales. If BusinessWeek has a big piece on Intel, then we have to have a piece on Intel and vice versa (when I was at the FT.)
Posted: August 21, 2007 9:15 PM
I think journalists will get syndicated online by some savvy entrepreneur who develops a new method for streaming RSS feeds of top journalists and editorialists by theme or topic, accompanied by related advertising. Google does it today with RSS, but it's still a rudimentary system that fails to build the brand of individual journalists by not including ratings, recommendations, etc.
Posted: August 22, 2007 8:49 PM