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A Newsroom is born


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The Newsroom you are reading turns five-years-old next March. But Newsroom.co.nz actually turns 25 today, the day the url was registered and it began as a pioneer in internet news distribution in NZ. The founder of founders, Peter Fowler, explains.

Few web sites can say they have operated continuously as a business for 25 years. Not Google. Nor Facebook. But newsroom.co.nz can.

For a quarter century NewsRoom has delivered quality independent journalism under various mastheads, with the latest editors Tim Murphy and Mark Jennings rebranding and revitalising what remains one of NZ’s leading news services.

Back in 1996, media dismissed the Internet as a fad. “Like CB radio except it’s full of porn.” They poo-pooed my warning it would kill newspapers. “You can’t read a computer on the toilet or the beach,” they said.

It was in 1995 while working at RNZ that overseas wire stories about the “information superhighway” caught my attention. I became obsessed with this amazing new mass-communications technology with a low entry cost and high audience potential. But it was difficult to find anyone who understood what was happening.

So I decided to show them by building “NewsRoom – The Interactive News Station.” On 21 November, 1996, I registered the NewsRoom.co.nz domain name and New Zealand’s first Internet news service was born, despite friend and foe alike telling me it would never work.

Fax vs Email

My plan began with tapping into the flow of press releases, which is a core source material for newsrooms. My idea was revolutionary: move press release distribution from the fax to the Internet – from paper to digital. In the mid-1990s, the fax was the quickest way to send releases to newsrooms and chief reporters and editors would then decide what to follow up. NewsRoom could make these press releases available to everyone at the same time on the Internet within 5 minutes of being released, and not just to newsrooms.

It was a doomsday machine for the fax press release. The fax machine had major drawbacks including the time it took to transmit information. Emailing a press release to NewsRoom took seconds. NewsRoom quickly became the de facto place to get breaking news, and it was free. Often major announcements would appear before they had even come off newsroom fax machines. We knew, because we were getting the faxes as well.

But in the beginning there was a big problem. What’s email? When I asked contacts in Parliament if they would email me their press releases, the response was typically: “What’s email?” I met with head of ministerial services Joe Frahm and his assistant, David Farrar, to ask if ministers’ offices could send electronic copies of press releases via email.

They were both nerds, up with the latest technology and aware of the massive change that was coming. Joe said he’d love to, but ministers’ offices didn’t have email. In some quarters, there was resistance to using it. New Zealand had just held its first MMP election and New Zealand First leader Winston Peters held the balance of power. As we waited for a government, Labour, Act and the Alliance started logging in to NewsRoom and posting their press releases in real-time.

“Peter Fowler could not have dared ask the gods for the kind of political climate into which they’ve been able to launch the ‘interactive information station’.” – The Listener, June 18,1997.

By the time a government was formed, based on what the opposition was doing, Frahm and Farrar had convinced the Beehive to get email and send press releases electronically, In the middle of 1997 we were distributing all the press releases out of Parliament in real-time, and it took on a life of its own.

Blasphemy

To other journalists, publishing press releases and calling it a news service was blasphemy. But NewsRoom just cut out the middleman. Our journalists highlighted top stories and reactions on the front page, and also wrote fresh stories. Long before the notion of hit rates, releases that generated chains of releases in response indicated what was a hot topic. We were giving the wire services NZPA and Reuters a run for their money, and inadvertently exposing the extent to which mainstream journalists reproduced press releases almost word for word.

Those press releases in electronic form were our “rivers of gold”. Law firms, political parties, lobbyists, PR firms and you name it were glued to the site, hungry to be the first to find out and sometimes respond with their own release. We learned a press gallery member had a side business faxing press releases press secretaries had dropped into his office in tray to various PR companies, for a fee that we understood to be $50 per press release, demonstrating among other things the value of the information. We found out because a PR firm thanked us for saving them lots of money.

In a couple of years NewsRoom achieved its goal of shifting the news distribution system from the fax machine to the Internet and email, and through NewsRoom specifically. We were approaching a million page views a month making us one of the biggest websites in New Zealand in the late 1990s.

NewsRoom “dragged the parliamentary political parties into the internet era…” Computerworld, 12 July 1999.

But the web site wasn’t making money. In 1996, the advertising market was immature and fickle and was not providing a foundation for growth and hiring more journalists.

Bread and Butter

In the late 1990s and early 2000s, businesses started building websites and they wanted dynamic content, such as a news service. When you looked for local news on the Internet back then, NewsRoom was the only show in town. Early on we gained Internet news-supply contracts with companies such as Yahoo!, CLEAR, Fonterra, XTRA and AMP. These contracts allowed us to hire more journalists, and plugged into a real-time electronic feed of press releases, we constantly broke news first.

In 1999, global telecoms giant Ericsson approached us to design a news service for their latest mobile phones that had a brand new Short Message Service (SMS) and Wireless Application Protocol or WAP, where you could read stories on a mobile phone. The iPhone would not appear for another 8 years. By the early 2000s, NewsRoom employed 12 journalists and had an office in the Press Gallery where political editor Marie McNicholas was the first Internet journalist to be elected Chair of the Press Gallery.

The political news service augmented the press release service and once again, leading the pack, NewsRoom chose to highlight climate change policy, and reflecting the interests of our business audience, led coverage on the turbulent development of New Zealand’s emissions trading scheme at a time other media had put it in the too hard basket.

The wider team mixed students out of journalism school such as Brody Sinclair, now New Zealand’s Trade and Economic Counsellor to Washington DC, with former RNZ editors such as Frank Perry, Allen Walley and Jenny Davies.

Personalisation

Our real-time analytics told us people were glued to the site, constantly refreshing it. But this was time-consuming for readers. One site user asked if releases could be emailed to them directly, preferably by category or keyword. The personalised news service, NewsMail, was born. Finally we figured out how to make money from the web site: Subscriptions.

By the turn of the century we had three streams of income: subscriptions, news to web sites and news to mobile phones. I didn’t have a clue how to run a business and my brother Michael Fowler, an accountant, saw us through years of rapid growth, one year trebling revenue, and making sure we did essential things such as pay taxes and honour employment contracts.

Back then Newsroom was primarily aimed at the business market. That’s where the money was, and we were charging $150 per month which was a fraction of what clients paid for other wire-type services such as NZPA and Reuters. When big law firms started expressing a desire to have up to 100 Newsmail accounts, we built customised Intranets that they could host internally. These could each fetch up to $30,000 a year.

It was “money for jam”, because it simply mirrored content we were already producing. That’s how you make money out of news. You produce one story, but sell it repackaged for different places – ideally with technology you control. Or at least that’s how you used to make money.

Just before Y2K, something happened that would largely wipe out this model for selling news to web sites.

The Aggregators

I first came across “aggregators” in 1999. We were supplying news to a prominent ISP website, IHUG, when they suddenly cancelled. Next day we saw moreover.com scraping our headlines and abstracts with a robot and placing them where they had been before, and it looked almost exactly the same. For this, they charged 10 percent of what newsroom.co.nz was charging. If this wasn’t stopped it would destroy an important online news revenue model. But nobody cared or understood and this part of our market stagnated and dried up by the mid-2000s.

The way it should have gone was the aggregators were stopped from taking content unless they paid a fee for each story they were monetising. Google became the God of Aggregators and the journalists who had given away all their content to the aggregators were left to fight over the advertising scraps, and do so to this day.

The value of news lies in its exclusivity. As robots, freeloaders and copycats increasingly scraped and republished our content with no regard for copyright, it became increasingly difficult to sell. So to counter this, I decided to take NewsRoom subscription-only in 2002.

Pushing the Barriers

Newsroom.co.nz has a tradition of pushing the barriers. Back then a territory grab was underway between Microsoft developers and Open Source developers, all competing for unprecedented demand for websites. It was a digital gold rush. In the middle was a surfer dude and Microsoft guru, Rod Drury from Glazier Systems, who showed an interest in what we were doing.

In 1999 he would build the third version of the website in brand new Microsoft software, which was so new we discovered bugs like a dot in the wrong place would send 30,000 emails to clients overnight.

The fourth version was built by a small group of open-source software nerds who had just founded a company called Catalyst IT, including my business partner to this day, Andrew McMillan, who would go on to work at Google as Site Reliability Manager.

Around 2004, Rod Drury introduced me to a talented developer, Craig Walker, who built the fifth version of newsroom.co.nz. In late 2006, Craig left NewsRoom to become the first employee of a company Rod had just founded, Xero, worth about $10 billion today.

Around that time I was approached to sell NewsRoom. Tech bubbles had ballooned and burst but NewsRoom grew through it all. On Budget Day 2007, in a meeting with stock exchange CEO, Mark Weldon, investment banker Stephen Eaton struck a deal to sell NewsRoom.co.nz to its second owner, NZX. He made me leave the room for the final nerve jangling bit. Yet I was never motivated by money. I saw an opportunity and just wanted to show the people who said it would never work that I wasn’t crazy.

Editor’s Note: Newsroom.co.nz was for some years part of the NZX information stable, with a sixth version launched, but was later sold to Craig Pellett’s online business Sublime (now Streamline), where it continued providing a personalised online news release service until 2017. They generously allowed us to take over that business and fold it into our new Newsroom.co.nz. Thus began the Newsroom site of quality, independent NZ journalism that you are reading today. Subscribers to the Newsroom Pro business, economics, policy and politics service can still register for a limited service of emails with menus of government and political press releases. The current, (seventh) version of the Newsroom site was built by PageMasters (formerly part of the AAP news agency in Australia). The ever-supportive Rod Drury has also backed this incarnation of Newsroom, funding development of a comments facility for our subscribers.



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