The business model for news is not being saved
August 18, 2009 by Dave Earley
Filed under Media, News, Print
The newspaper business model will not be saved with the introduction of paywalls because it is a rejection of the newspaper business model. The current model, entirely based on advertising paying for news, is in the process of being left behind by those who would defend it. It is worrying that users will now be made to pay for news simply because marketing departments are unable to make online advertising work.
The central argument, that users need to pay for news to recoup costs, is an effective raising of the white flag. It’s an admission that, unlike at Google, the media industry is bereft of ideas about how to make online advertising profitable. This extends to the entire industry, all of whom are discussing the merits and timetables of a user-pays model. It just so happens that the News Ltd announcement has thrust that model back into the spotlight.
It reminds me of a rant from David Cross in the outtakes of Arrested Development: “If you can’t market that kind of show and get better ratings, then maybe the problem doesn’t lie here, maybe it lies with marketing”.
In The Australian’s Media and Marketing section on August 10, Mark Day said a paywall would allow newspapers to wrest back control of their business model. How? The way the music industry did, through the “grim enforcement of copyright, uniform action by the music companies and technological advances such as the iTunes micro-payment systems”. The music industry business model was all but destroyed by online, and rather than bludgeoning users to return to the good old days, they instead bow to the consumer who is willing to pay, but demands to control how, when, and what they pay for.
I disagree completely that “the [music] industry was able to wrest back control of its product”. The music industry was dragged kicking and screaming to its knees, finally relinquishing control to a micro-payment model after consumer outrage put a gun to their head and forced the issue. Introducing a user-pays model isn’t about wresting back control of the news product at all, and you could not pick a worse example of an industry to emulate than the music business.
As an aside, in the music industry consumers have always paid for the product. In the news industry, consumers have never paid for the product, advertising has. The cover price of a newspaper wouldn’t cover the cost of the ink on its pages.
Surprisingly there were a few things I agreed with Mark Day about (despite the column’s title, Bloggers may howl, but cash for content makes sense), like his examples of the three strands of news (happening, manufactured, investigated) and what kind of news people might be willing to pay for. It’s a valid argument, and one industry people are having everywhere, but I do wonder if it’s the sense of inevitibility that is now driving the debate. Now that the introduction of pay-per-view content seems inevitable, everyone is expending cognitive energy on the issue, speculating about how the paywall could work, or what content people are willing to pay for. This, instead of developing a model where advertising still pays for news.
Whether it was the classified “rivers of gold” or advertising on the page, the news industry has for some reason given up on that model working online. I find it inexplicable that nobody in the news industry, across the globe, can figure out how to make advertising work online. Google are just smarter, I guess.
No less than the president of media at Thomson Reuters, Chris Ahearn, recently penned a piece titled, Why I believe in the link economy
Blaming the new leaders or aggregators for disrupting the business of the old leaders, or saber-rattling and threatening to sue are not business strategies – they are personal therapy sessions. Go ask a music executive how well it works.
From Mark Day’s Bloggers may howl, but cash for content makes sense
It is clear a free internet has the power to wreck the economic model of newspapers and news-gathering itself. But the irony is, if that were to happen, the most valuable elements of news — that which is investigated, tested and credible — would disappear because of a lack of funding. Ultimately, that serves no one. Society would be the loser.
We do a disservice to society by making that valuable and important news inaccessible, by telling society that, unless you pay, we will withhold the information that informs your understanding of the machinations of government and the economy.
Related reading:
I first started writing this post over a week ago. The biggest addition since then is the Associated Press plan for content charging online, assessed by Nieman Journalism Lab after they got hold an internal AP document labeled, “AP CONFIDENTIAL — NOT FOR DISTRIBUTION.”
- AP’s Online Strategy » Nieman Journalism Lab
- Why I believe in the link economy (Chris Ahearn, President, Media at Thomson Reuters)
- Will Rupert Murdoch Lead Way for Paid Online Content? – TIME
["the pay wall would have destroyed them. Or cured them"] - Economics for CEO dummies – The Future of Journalism – Open Salon
["He made an unfortunately apt comparison between a stale bagel and his newspapers"] - Pitfalls of the pay wall | Knight Digital Media Center
["Before they jump into charging for content, news organizations must bypass the quality journalism argument and answer these five questions instead"] - Rupert Murdoch’s move to charge for content opens doors for competitors | Media | The Guardian
- Economists on pay-per-view online print news – Terry Flew from QUT
UPDATE:
Last week I tweeted about an article that literally took the words out of my mouth in relation to this blog post.
Five Key Reasons Why Newspapers Are Failing | SPLICETODAY.COM
The first point there illustrates this post:
1. Consumers don’t pay for news. They have never paid for news.
