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FYI

Fixing The News Business Means Learning To Think Differently (Guest Column)

Change is coming quickly to the news industry, and innovation has to come just as quickly.

This is the second part of a series of guest columnsseeking answers to the financial issues that have plagued Canadian news organizations.

My prescription for change is very clear. Stop trying to solve today's problems through yesterday's lens.


None of that stuff is relevant today.

If you are looking for an old-fashioned, connect-the-dots prescription for change, you'll continue to be part of the problem rather than be part of the solution. There is no connect-the-dots. No balance sheet says 'we can do this and spend this.' There is no prescription where you fill in one piece and something comes out the other end. Today is like the Renaissance in the 15th century or the Industrial Age of the 1800s and early 1900s. Huge opportunities exist but you have to think very differently.

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It is going to be painful for many people to do what has to be done if we are going to change things. However, there's so much pain right now that focusing on some of these solutions will be less painful than what's going to happen if it's not addressed.

Here’s how the “traditional” old-school mass media got in trouble.

To be clear, it was the fault of their executives and boards. Why was it their fault? Because they wanted to keep doing what they were doing without putting their positions and their finances at risk. And, with consolidation, the opportunity to loot these industries was irresistible. Yes, loot. By piling them with debt, focusing on cost-cutting — instead of innovation — and pocketing huge bonuses at the top.

This happened to the news industry, but it didn't happen in a vacuum. The news industry was intricately tied to the technology, distribution and advertising systems that had supported it for decades during which the world changed all around them.

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The biggest issue was a failure to innovate. Why? Because old-school CEOs and boards looked at innovation as a cost rather than an investment.

However, if there's one truth of business, it is that innovation is worth a fortune, and that the failure to innovate can cost a fortune. We’ve seen it so many times before. It’s why Kodak (who invented the digital camera in the '70s) went broke by sticking with film. It’s why Netflix could become a huge #1 by disrupting the DVD business with streaming.

Here’s how we got here:

Digital Disruption: The rise of online platforms and social media led to a decline in traditional advertising revenue for newspapers and TV.

Ad Revenue Shift: Advertisers increasingly favoured digital platforms over traditional media, impacting the revenue streams of radio, TV, and newspapers.

Changing Consumer Habits: The younger generation prefers digital sources, leading to a decline in readership and viewership of traditional news outlets.

Subscription Decline: Newspapers and some TV networks have experienced a decline in subscription rates as people turn to free online news sources.

High Production Costs: Maintaining high-quality journalism required significant resources and many news organizations struggled to balance these costs with declining revenues. Because they were looking in the rearview mirror, they refused to recognize the power of crowdsourcing and the fact that crowdsourced content didn’t even have production costs. Another failure to innovate. Perhaps the most innovative business in the media in Canada was Citytv, which turned its videographers into reporters, among other things. They showed the future, and nobody followed.

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Fragmentation of Audiences: The proliferation of channels and online platforms fragmented audiences, making it challenging for traditional news outlets to capture a broad demographic. The power vested in an expensive distribution system (printing and distributing newspapers, owning frequencies for TV and radio, etc.) evaporated.

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Fake News and Trust Issues: The spread of misinformation eroded public trust in news sources, impacting both audience engagement and advertising revenue.

Newsroom Layoffs: Many news organizations continued to cut staff and resources, affecting their ability to produce in-depth, investigative reporting. This was a vicious circle. In the U.S., there was no way out. In Canada, it didn’t need to happen this way. There was a failure of imagination.

Legacy Systems and Infrastructure: Outdated technology and workflows hindered efficiency and adaptability in the rapidly evolving media landscape.

Generative AI: It will be a tsunami over the next 9 months. Yes, it will happen that fast.

At this point, most executives don't have the skills to lead innovation and don't have the corporate cultures that encourage people to speak up, share ideas, figure out which ideas are going to create meaningful value and put these ideas to work. This is especially true of the traditional media.

Here are a few ideas to help.

Diversify Revenue Streams: News outlets need to ramp up alternative revenue streams such as special events, “exclusive” memberships and partnerships to reduce dependence on traditional advertising. If performers can charge $300-$1500 a seat for a concert (which was something that supposedly couldn’t be done) traditional media can figure out ways to monetize what they’ve got. Once again, it requires innovation and brave leadership to steer the ship. If they don't, everybody who works for them will sink with the boat. Look what happened at Bell Media. Over 4000 people sinking.

Enhance User Experience: Focus on what people want from the news. Not the reporting from the scene, rather the way that they want to feel. What do they want to reinforce in their lives? Work cross-platform in new ways. This is still seriously underutilized by the old school, who simply repurposed their existing platforms and content on digital platforms. How many of them have gotten serious about using platforms like TikTok as new ways to communicate and drive revenue? How many of them have an influencer? How many of them have a de-influencer? Do they even know what a de-influencer is? That's just for starters.

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Collaborate and Share Resources: Collaborate with other news organizations to share resources, reduce costs and increase the efficiency of reporting. This is a really big deal and goes to the heart of the challenge. How do we keep diverse news voices if we collaborate? How do we go forward if we don't collaborate? Are any companies doing the heavy thinking that leads to breakthrough ideas? I haven't seen it yet.

Think About Fake News: Invest in fact-checking initiatives and transparent reporting practices to rebuild trust and differentiate from unreliable sources. Although, I think this is important, the scariest thing is that the public doesn't seem to care whether they are being told lies. In some cases, they are glad because it lets them behave terribly and then point to media that supports toxic thinking and behaviour. We see it with Fox News and X in the U.S. This is not a new phenomenon.

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I remember researching Vancouver Radio 20 years ago when we asked people which was more important, to have news quicker or to have it be more accurate. I was stunned when I saw that speed trumped accuracy. 20 years ago! I knew we were in for some serious trouble in the future. Because our research showed this, I knew that every other company must have seen it in their research as well. Yet, they did nothing. There is still an opportunity for someone to claim to be the source of truth and deliver it very fast, even if they aren’t.

Local, Local, Local: Although everyone is starting to focus on local more than ever, they need to understand that local doesn't just mean potholes in the road. It means appealing to people based on their "tribes.” (McLuhan noted the shift to tribalism in media 60 years ago!) For example, mothers of school children are a “tribe" who have a local focus. It's not enough to say that school is closed today. They can already find that on their phones. Local is about making people feel like they are part of something and then showing them the value of what they are part of. Why doesn't local TV have a reporter who tells the school stories? In many cases, these moms and dads have gone to social media and created their followers, monetizing the results for themselves.

AI: Every board of directors and every senior executive needs a crash course on the 10 most important things to know about AI. They need to understand the difference between algorithms and GPT models. They don't need to be technologists or IT experts. There are plenty of those to hire. AI is not complicated when looked at from the structural level. It's very complicated at the execution and implementation level because of all the things it disrupts when activated. For example, have the executives seriously thought about the fact that their jobs may become less relevant as AI looks ahead better, does scenario planning, better and never wants any stock options?

They need to understand how to use AI as a partner, a sounding board and a source of ideas. They have to understand what they can't trust and what they must trust about AI. That's going to be the very tough part. Because, whether you are a leader or an employee, you're going to have to see your job in a very different way than you've become accustomed to. You're going to have to think about how to collaborate with activated technology as much as you do with your colleagues.

The good news is that there are lots of people out there offering help with AI. In my case, I have been working with AI for well over a year with executives as well as some top AI firms and I already have several ideas of how it will help innovation and growth. I’ve been giving workshops to select groups of executives and I’ve noticed two very distinct trends.

One trend is that they simply don't believe it's going to happen as fast as it's going to happen. They are in a state of shock and denial.

The second is that they don't have an organizational structure that allows them to capitalize on this huge transformation. I've been lucky enough to consult some of them on how to take advantage of that. I think the ones who are paying attention, racing to understand and implement, are going to succeed and the others are going to be hit by the train. They were hit by the train when the internet came. They were hit by the train when the smartphone came. And still, they didn't do much more than focus on cutting costs. I'm hoping that for many of them, they aren't hit by the train a third time.

John Parikhal is recognized as a global market researcher, creative strategist and tactician who helps companies expand by identifying current and emerging trends. Over a 30+ year career, his clients have included Pepsi, Viacom, Disney, MTV, Rolling Stone, SiriusXM and hundreds of others. A Canadian, he currently operates John Parikhal + Associates and lives near New York City.

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Phil Nimmons
Bill King

Phil Nimmons

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Obituary: Phil Nimmons, The Dean of Canadian Jazz

The acclaimed jazz composer, educator and clarinetist died on April 5, at age 100, leaving behind a formidable legacy and inspiring musicians throughout multiple generations.

Phil (Philip Rista) Nimmons, a Juno-winning and highly influential Canadian jazz composer, educator and clarinetist, died on April 5, at age 100.

Receiving honours that included the Order of Canada and the Governor General's Performing Arts Award testifies to the impact Nimmons (often dubbed the “Dean of Canadian Jazz”) had on Canadian jazz over a long and prolific career.

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