A way to measure the value of journalism: 1 news story = $55m
The conventional wisdom, as promoted by aggregators and search engines, is that there is little to 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, because individual news stories are valued at nearly nothing in terms of what online advertising networks produce.
However, I believe the long term outlook for journalism is excellent and that there is considerable value in professional journalism, much more than in aggregating news stories because the technology to do that is now a commodity. News is a value add that cannot be reproduced by algorithm and machine, it is a people skill.
The problem is that we don't yet have a good way to recover the value that journalism produces, and to recover its costs of production. But we know that there is considerable value in journalism and occasionally there is a really easy way to measure its material value.
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 distributes important information used to make business decisions that affect millions of people. There is a tremendous amount of social 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 nearly every publication around the world. This is a global crisis that will hit us much earlier than the global warming crisis, imho.
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 as a society. Google AdSense and other ad networks don't come anywhere close to covering the costs of running news organizations.
Unless we can solve this problem--and I strongly believe it is one of the most serious issues confronting us--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. Say goodbye to fair disclosure and universal access to the same financial and market information.
Like it or not, this is probably my future: Subscribe to my 10K Silicon Valley Watcher Deal Flow Newsletter--launching soon. It's $10k per year and only 100 subscriptions are available. Call now and reserve your subscription. (Seriously, call now.)