*contains graphic material

Artist's impression of the media landscape in the near future

Quick response to Tim Dunlop’s piece at The Drum, ‘Hold your nose and support the coming media paywalls‘

Here’s Dunlop’s argument in a nutshell:

Constant, day-to-day, up-to-minute, comprehensive, fair, balanced, accurate and compelling journalism that can hold power to account is the work of big, mutha-fuquing corporations, not half-a-dozen well-meaning people and the smell of an oily rag in somebody’s spare room.

[...]

Put simply, the mainstream is the only game in town and we have to support them – with actual cash – even if we have to hold our noses to do it.

If I genuinely thought that we could starve the mainstream into better journalism – that is, if I thought that the loss of one of the two big newspaper corporations would somehow open the way for a viable alternative – then I would be all for it.

But the if-you-destroy-it-they-will-come plan is a fantasy, and as Robert McChesney says in Will the Last Reporter Please Turn Out the Lights, “It is impossible to conceive of effective governance and the rule of law … without a credible system of journalism.”

In other words ‘support your local multimedia conglomerate’. My position on this issue, having spent years thinking about it, including being paid to do so in a newspaper company, is that I’m very short traditional newspaper companies, but long journalism. Here’s my response in bullet-form:

1. If he really believes that, then the battle’s already lost. No scaled industry or business ever survived on that kind of quasi-charitable appeal. Not for long anyway. People have been saying ‘buy Australian-made’ for decades but it failed to stop our manufacturing sector going into steep decline. Industries survive because they provide value to customers, not on philanthropy and good intentions.

2. Why is media special? Many industries – e.g. manufacturing, above – have gone through equally painful restructuring and decline, with hundreds and thousands of job losses, and yet (a) Australians have more, and cheaper, consumer durables than ever, and (b)  unemployment sits at a respectable 5%. In other words, the ‘if-you-destroy-it-they-will-come’ scenario is not a fantasy. It’s been played out many times in this country, and the market has always done it’s work because the underlying consumer demand is there. Demand for journalism is there – based on time spent with media there is more journalism consumed in Australia now than ever before – so why not be bullish about its ability to restructure?

But to the detail: where’s the journalism going to come from? Here is what I think.

3. About 90% of newspaper journalism output can be easily supplied by the market. Newspapers do 3 basic kinds of journalism: 60% is basic reportage: who said what, when, and where. 30% is opinion. The smallest part, 10%, is hardcore investigative journalism.

• Basic reportage is a commodity that will consolidate with fewer companies. Put simply, it’s absurd, irrational and unsustainable in the future for 50 media companies to provide 50 slightly different descriptions of a single football match. So the market for commodified reportage will simply consolidate, whether with a wire service like AAP or with a news masthead.
• The internet can supply opinion. I don’t think we’re in danger of running out of opinions.
• The last 10% – investigative journalism, proper journalism – is the hard bit. Here’s what I think will happen…

4. It’s the age of the whistleblower. The internet makes it possible for any insider with juicy information to get it out. Two of the biggest stories of the past 5 years – Wikileaks and the MP expenses scandal in the UK – were broken as a result of whistleblowing activity. Obviously both used newspapers to disseminate the information, but it’s impossible to argue that newspapers were necessary in this. In the case of Wikileaks whistleblowers newspapers were simply more convenient; for the MP expenses whistleblower, the newspaper route was infinitely more lucrative. But both stories could have happened anyway, without the support of the NYT, the Guardian or the Daily Telegraph (UK).

Investigative journalism is expensive because of the investment of time and effort in journalists understanding the issues, chasing down leads, finding the right people to talk to etc. Reaching all those people and finding out what they know takes a long time and is very hard to do – that is, unless you are already one of those people. An insider in a corrupt organisation already has the info the journalist strives for and the newspaper invests $ in acquiring, and they can now disseminate it for free. The barriers to whistleblowing have never been lower, and the potential liabilities are not stemming the flow of information.

One of the best examples of investigative journalism has been the phone hacking scandal in the UK, with The Guardian’s Nick Davies leading the charge. But surely a big reason the story came to light is because the hard yards were already done. The journalists already knew the main players in the story – other journalists – already had a full book of contacts and phone numbers, and probably knew peripherally that the practice was going on. Journalists-investigating-investigative-journalists is a comparatively easy beat. If the same scandal was happening in a mining company or a software company, it would likely never have been discovered, not without a whistleblower.

Phone hacking is the worst example to use to make point: “If it wasn’t for professional journalists, it wouldn’t have been discovered”. If it wasn’t for the professionalised, industrial journalism, under pressure to fill pages with content to support advertising targets … it would never have happened in the first place.

5. Crowdsourced investigation has a business model. Look at TMZ. Seriously, don’t be put off by the fact it’s lowbrow, it’s still ‘investigative’. When I worked at the Daily Mirror in the UK, celebrity journalism was the most expensive thing to do – they sent multiple journalists and photographers overseas, often to expensive locations, to hunt down reports of celebrity behaviour. Now TMZ has a business model of supplying the exact same product at a fraction of the cost using crowdsourced tips, photos and stories. The company is valued at $100m. Explain to me why this can’t be done with ‘hard’ journalism?

6. Enthusiastic amateurs are pretty amazing. It’s easy to say that amateurs can’t do investigative journalism. But why bet against it? Amateurs have put together high-quality full-length feature films with basic equipment; they’ve built incredibly sophisticated and powerful pieces of software. There are thousands of people doing these two things right now. No offence to the journalistic profession but both of these things require astronomically higher skill levels, and a much bigger investment of time, than journalism.

7. There are too many newspapers anyway. I don’t think all newspapers will disappear. I just think many of them will because the sector will consolidate around a few key titles. Newspapers in the pre-internet days relied on a monopoly of distribution in their geographic area. The New York Times, the LA Times, the Washington Post all owned their cities. But thanks to the internet that monopoly is gone and these mastheads all compete in a geography-free marketplace, and frankly, there’s just way too many of them.

So the weaker of these mastheads will fail. And you know what – who cares? Because if the WaPo falls over, the NYT moves in and eats up its audience. So the WaPo is conservative while the NYT is liberal and famously NYC-centric? The NYT puts more journos on the ground in DC, employs more conservatives (probably ex-WaPo ones), and repositions itself.

As the NYT has gone behind a paywall The Guardian is ramping up its website coverage of USA news, including employing more US-based journalists. The Daily Mail (UK) is doing the same. Should paywalls in Australia fail, who’s to say that successful media brands like the NYT, Guardian, BBC won’t expand out here and fill the gap? Why bet against it?

Summary: Demand for journalism is as strong as ever. There’s no reason to think the market won’t supply this, and in fact it’s already happening. Short newspaper companies / long journalism.

Due to a recent purchase of an XBox360 and an ever-expanding collection of digital movie/TV/music I needed to buy a new hard drive and preferably a multi-terabyte one. Google’s utility for product research is dramatically decreased these days, due to paid search and the SEO arms race, so my first port of call, as always was Amazon.co.uk (only because I still have a UK credit card).

I settled on the Western Digital 2TB Elements hard drive, as I have used the brand before and am happy with it. It was advertised at £68.99 which I naturally assumed – being Amazon and given the exchange rate – it’d be as cheap and more convenient than almost anywhere else.

But before I clicked ‘purchase’ I decided to have a look around and see if any reputable retailers were offering a better deal. Officeworks in Australia were selling the exact same model at $98, which was pretty surprising to me, as I am used to seeing technology costing 30-40% higher in Australia as a rule. Even taking into account the current exchange rate (where the AUD is at near historical highs against the GBP) it was $5 cheaper from the Australian store.

The website was a joy to use – very simple, apart from no option to checkout as a guest. The biggest surprise however was that Officeworks were offering

FREE

SAME-

DAY

DELIVERY

!

Amazing. In the end I ordered the item at about 10:30am and it had arrived by lunchtime. No non-magical US or Europe-based retailer that could hope to compete with that. Even if the product cost had been slightly more expensive the free, same-day delivery would be more attractive option by far.

So my question is: why is e-commerce so hard for every other Australian retailers? Why do much larger retailers like Harvey Norman and David Jones get it so hopelessly, sadly wrong? Or, perhaps, how do Officeworks manage their supply chain to deliver this incredible service, and why can’t others replicate it? And why hasn’t Wesfarmers better leveraged Officeworks’ expertise with other group retailers like Kmart and Target?

Edit: The hard drive ended up not working at all, despite being compatible with OXS 6 which I’m running. Which is frustrating. I rang up Officeworks and they arranged to replace the drive, no questions asked, with a new one which they’d again deliver later the same day. They also arranged to pick up the faulty drive at the same time at no cost to me.

I am not interested in the tech press, really. I skim, but I also trust that if there’s some big tech news I need to know about, I will find out soon enough through Twitter. If it’s big news, I would rather read it in the business press, like the FT, as they actually have an understanding of running a large consumer-durables manufacturer, which is what the tech sector is made of. I would certainly rather eat a razor-blade croissant than read Techcrunch, with its insider-y, deal-making, high-fiving bro-dudes, whom I loathe with a passion that breaks all barriers. Less said about Mashable the better.

But a major Apple announcement is one of those occasions you can’t ignore tech news, so through scarcely any fault of my own, I found myself reading about Apple’s fairly major upgrade of one of their highly successful products. And what a pile of complete bullsh*t it was. I’m not even talking about the incredibly-specific-yet-100%-wrong predictions about an iPhone 5 release, which Gawker hilariously chronicled here. I’m more concerned with the [ahem] “analysis” after the launch.

I take as a typical example this piece. It wasn’t the worst I read; far from it. In fact I actually value Delimiter’s coverage, when I read it, and think the site’s operator, Renai Lemay, is perhaps the best tech journo in Australia. It just happens I didn’t rate this piece, and it is the closest to hand. Let’s begin with the Survivor-referencing headline:

Apple just lost Australia’s smartphone conch

It’s never properly explained what it means to own the ‘smartphone conch’, although it doesn’t relate to anything significant like  sales or market share. My best guess is that ‘losing the smartphone conch’ means Apple has lost whatever it is that makes the tech press breathlessly report everything they do – and frankly I don’t believe that for a second.

The handset’s predecessor, the iPhone 3G, had, after all, literally set the world on fire when it launched 12 months previously

Apart from a few episodes like this I feel this is something of an over-claim.

The launch of the iPhone 3G was particularly huge in countries like Australia, [...]. The week of the launch felt like a festival in Sydney, where many fans queued up for days to buy an iPhone at midnight, accompanied by lavish parties put on by the major mobile telcos.

Do you remember that wonderful, magical time, back in 2009 when the iPhone 3G was launched? Feasts, all-night parties, Roman orgies and dancing in the streets? Nope, me neither. I also question use of the word ‘many’. According to analysts from IDC, Apple iPhone accounts for approximately one-third of all new Australian mobile phone sales. Only a tiny proportion of these millions of phone buyers actually “queued up for days” and I’d suggest the behaviour of a very small segment of atypically-loyal consumers is a poor metric to gauge success of what is mass-market consumer hardware.

By comparison, iPhone 3GS week in Australia in June 2009 was still big, but there was a more muted feeling about the festivities. [...] Engadget summed up the feeling well in its review of the iPhone 3GS. “The iPhone 3GS is a solid spec bump to a phone you already own … but it is, at its core, a phone you already own,” wrote the publication, questioning whether a tech specs speed bump, a compass and video recording features were worth paying a hefty upgrade fee.

For 99% of consumers, there is no level of upgraded tech enough to justify a ‘hefty upgrade fee’. Consumers – actual, normal civilian people of sound mind – don’t just throw their old phones in the bin every time a new iPhone is announced. That is what tech journos do. Normal people wait until their contract is up and then they buy the best new phone available, based on comparisons of price, features etc. If Apple can make a competitively priced and featured phone, and history proves they can, then they will sell very well.

HTC’s Dream handset, which was viewed principally in Australia as a curiousity which would appeal to die-hard anti-Apple bigots who would prefer to opt out of its somewhat restrictive ecosystem and choose a more open source, half-baked iPhone alternative.

Rubbish, unless by ‘Australia’ you mean  ’me, and other tech journalists’ rather than ‘actual Australian mobile phone buyers’. In which case Android models like the HTC Dream were viewed as possibly inferior but also cheaper iPhone alternatives and purchased accordingly.

In short, the iPhone 3GS succeeded in Australia because it represented a substantial upgrade on a phone which was already independently setting the market on fire, at a time when the competition was extremely tepid. The iPhone 3G was a paradigm changer and the 3GS accelerated the change.

[...]

Unlike that previous incremental Apple upgrade, the iPhone 3GS, the iPhone 4S is not a paradigm-changer, and it does not launch in Australia at a time of diminished competition in the market.

This whole article is making a tremendous song and dance around a simple, banal fact which ought to be obvious to anyone with business sense: the smartphone market is reaching maturity. A mature market is defined by a relative (a) lack of innovation (b) stable market share and (c) slowing growth. Having said that, the smartphone market is still growing relatively sharply, although innovation and market share have stabilised. And none of this is Apple’s fault; it just happens as markets play themselves out. There’s not a lot, having created this market through their own innovation, that they can do about it, other than the totally unrealistic expectation that every product release would be revolutionary like an iPad or iPhone 3G.

And furthermore, it’s not in Apple’s interests to be totally revolutionary with every announcement. As is pointed out in this excellent post, the R&D cost of a major hardware form factor upgrade is significant. So much so that if Apple invested in ‘revolutionising’ their hardware with every update it’d cut into their profits quite a bit. Having a minor upgrade in between cycles allows them to recoup their R&D investment and make a handsome profit.

[When considering those casual, non-early-adopter customers] who are coming to the end of their Apple or Android plan, that you start to realise that the company is going to face a pretty harsh dogfight for market share in the short to medium term.

These customers make up 99% of mobile phone buyers, and the author is describing a normal, mature market. However, with Apple’s excellent pedigree and world-leading branding, I think they’re pretty well placed. In fact, I can’t think of any other company in any other consumer segment the size of the smartphone market that is doing anywhere near as good as Apple is. Not computing, not apparel, not automotive, not retail, not entertainment, certainly not FMCG. After all, there’s only really two smartphone brands in the market: iPhone and not-iPhone.

Australians are currently quite enthused by the [Windows Phone 7] system in general.

Oh, come on. Citation needed. Really needed. I am peripherally interested in tech, and have never heard of the Windows Phone 7, so am frankly sceptical that actual, normal Australian phone buyers could care less about it, let alone be enthusiastic about it.

Now, none of this is to say that the iPhone 4S won’t sell well in Australia. The iPhone 4 needed an update to keep up to speed with the competition, and the company’s announcement this morning was precisely that. On paper (we won’t know more until review houses get it into the labs for testing), the iPhone 4S will easily take its place amongst the top ranks of Australia’s smartphones. It will hold the line for Apple in terms of market share.

In other words, the Apple iPhone 4S release is the entirely predictable continuation of a proven, successful product strategy the company has pursued for quite some time, and any sensible person who isn’t a complete idiot can see that it will likely continue to be successful.

Oh look! iPhone 4S preorders have completely sold out! As did the iPhone 4, the 3GS and the 3G! WHO WOULD HAVE GUESSED?!?!?!