How charging for articles could hobble the future of journalism

Apparently there was a big meeting of news executives today in Chicago under the auspices of the Newspaper Association of America. The de jure name for the topic at hand was “Models to Monetize Content” but the de facto subject of the conclave seems to be building paywalls and ending what James Warren glibly calls “the age of content theft.” Such conversation needed to take place under the watchful eye of a legal counsel to avoid antitrust problems; but who can doubt that some sort of collective action — simultaneous, if ostentatiously uncoordinated — is at hand?

We are, then, nearing a moment of real decision on the part of the beleaguered newspaper industry, a genuine fork in the road. The papers can decide to keep participating in the open Web, which would require accepting that their legacy business — the old paper bundle and the broadcast model — is going to change into something almost unrecognizable. Or they can decide to put up the walls and gates and behave as if it’s 1997 again, and the Web is just a better delivery truck rather than an intricately evolving social organism. Down one path, dissolve into the Web; down the other, secede from the Web.

These two paths map neatly onto the two camps into which you can group virtually everyone in the old argument about the news business and the Web. On one side, you have the people who feel that newspapers simply took a wrong turn on their journey to the Internet. They were seduced by the Web hypesters! They should have charged for their articles from day one! Because they didn’t, they’re in a bind now — but their only hope is to shut the door belatedly and salvage what can be salvaged. We heard this same cry back in 2000-2002, during the last Web-business ice age.

If this is what you believe, then the appropriate business strategy is a no-brainer: Start charging your readers. Start demanding that Yahoo and Google et al. pay to link to you. Then see what happens — and, I’d advise, duck as the masonry starts to crumble.

In the other camp, the one where I put my own tent, you find everyone who believes that the Web has radically and irreversibly changed the way people get their information, weakening or dismantling all of the buttresses and structures that held the old business of media together. This change is neither all good nor all bad; but it is real, and wishing it away won’t help.

I’ve argued this position consistently for years now, but here is another angle worth considering. In at least one area, the newspaper web sites of the 90s didn’t give away the store. The Web was an obviously superior platform for delivering classified ads, but newspapers traditionally made a good chunk of their revenue from classifieds, so many newspapers adopted a sort of half-hearted classified strategy: if you paid for a print classified ad, you got a web listing free. Or maybe the paper would sell you a Web classified at a different rate from a print classified.

So, in this realm at least, the papers never committed that original sin of offering their product for free. What happened? The papers mostly sat tight and figured that their brand and their prominence in their communities would outweigh the lameness of their software and their indefensible overcharging for a product that now cost little or nothing to deliver. There were big venture-funded startup companies that set out to build standalone classified businesses, and some of them prospered as for-profit enterprises. But the greatest success of all came in the unlikely form of Craigslist, a community-based enterprise led by a shy programmer who offered classifieds not as a profit-making enterprise but (in all but a tiny subset of categories) as a free service.

As a result, newspapers’ classified businesses today have been devastated. But you can’t blame Craig Newmark; if he hadn’t done it, others would have, in some slightly different form. The Web itself made that inevitable. Newspapers had the opportunity to be Craig Newmark; they couldn’t imagine that. Regrettable, but understandable.

Similarly, you can blame Wikipedia for the woes of Encyclopedia Britannica’s paper-edition business, but really, it was less that unforeseen project that doomed the bound-volume encyclopedia than the very existence of the Web itself, which gave people an ill-ordered but livelier source for much of the information they sought.

In each of these cases, no one gave the store away. The shopkeepers didn’t play along, they tried to fight. But the scope of Web-induced change made their battle mostly hopeless. And their choice to fight the Web rather than work with it meant they only hastened their own downfall.

Similarly with the pay-wall argument. I fear that if our newspaper publishers take the collective charge-our-users approach, they will not only doom their own enterprises but will also make the transition we are currently facing — from a paper-and-broadcast news world to a purely digital one — longer and more wrenching.

If news publishers today accept that their future is online and that said future will not and cannot offer the same profit margins, or support the same size staff, as a monopoly, they can still participate in building new models for the new world. Some will survive and some will fail, but all of them (and all of us) will benefit from the lessons they can teach us. But if they shunt themselves off behind pay walls, they will not only surely fail, they will also make it far harder to seed the Web with the knowledge and experience of today’s professional journalists. The work of newsroom professionals will be cordoned off into their own disconnected islands online that fewer and fewer people will visit. New traditions will evolve independent of the old ones.

I can understand that news publishers — the owners and stockholders and managers — will do everything they can to cling to a failing model, because that is the way of the business world. A revenue stream is a revenue stream; it’s hard to give it up today, even when you know it’s going away tomorrow. But the journalists who care about their own craft’s values and traditions should think twice before applauding the intransigence of their business colleagues. In the long run, it will do nothing to save their jobs. And it will make it that much harder for all of us to rebuild a vibrant and sound news tradition online.

UPDATE: Recommended reading – Steve Buttry on “Seven reasons charging for content won’t work”

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Comments

  1. Free isn’t. Never has been. Craigslist is no more a non-profit than is Microsoft. Somebody always has to pay. Most of what passes for journalism is habit. People are conditioned to look at the format that information is presented in and say it is news and that they are told it is important. Is isn’t really – always been just entertainment.

    The Internet has little useful information on it – like trade processes, metallurgy processes, detailed medical journals, insider stock information, and on and on. You have to pay for that kind of stuff and know who to ask to pay to get it.

    99% of journalists can disappear tomorrow and the world will be just fine. If you want them to stay then you have to pay them and give them medical insurance and dental care and IRAs – just like anybody else who works for a living. The nonsense about people having to find new ways to get paid, new models, whatever is just nonsense. If too many people don’t work and don’t feel that have a place you get USSR 1917.

    Google is just a TV network model, nothing new there. It is paid for by the people who sell you and I stuff to live our lives with. Just like CBS and NBC and the rest. Just like the Newspapers were.

    Nobody will pay for news that they have been getting for free since newspapers were invented! Subscriptions never paid the freight on newspapers and they have always peen priced far far below cost and supported by ad dollars. Just the dollars went somewhere else now.

    All the news on the web will dry up like grass in the summer as soon as the sources stop getting paid by somebody and the ad dollars leave them completely.

    The real question you have to ask yourself as a writer is what happens to you when books stop mattering so much and publishers disappear. Who will pay you then?

  2. Indian newspapers have still not gone down the ‘free’ path and Arun Poorie, the Founder, MD of India Today (a group that publishes in 13 indian languages and also has publishing and distribution rights for several international brands) has said recently that the free-on-web model hurts their business model and makes no sense at all! one might think ‘of course the publishers are going to say so..’ but as content creators we’ve seen that providing content for free is not a business model by any stretch of imagination. We have hosted short form content on youtube for eons on and havent made a penny (at least directly) from the content, the same material is distributed by the telcos and makes a tiny sum of money every month in royalties.

    I feel that consumers will pay for content (delivered digitally) that’s bundled well, available on the go (think mobile) and MUCH cheaper than its traditional counterpart. This is something that requires the industry to act in concert and that’s what they’ve been dragging their feet over

    The music business has already sunk its own ship by playing the stone age man game. there still is no other platform selling ‘units’ and accepting micropayments apart from itunes! Some of us would happily pay for tracks to save the trouble of searching, downloading and listening to poor quality mp3s. of course we’d like to pay less than what a CD costs, have the liberty to do what we want with the song after we’ve bought it and so on..

    free is not a business but nor is ‘only me’ a strategy in this economy and digital age

  3. Every time I see an article which characterises the debate in this way, I give a little inward sigh.

    Unfortunately, there’s a lot of myths passed around, and Scott I think you’re guilty of some of them here. First, there has not, ever, been a single model for monetizing news content. There have been newspapers (and magazines) which made most of their revenue through the money the customer pays. There have been freesheets. News mags which made almost all their revenue from subscribers. And so on. Why should we make the assumption that the only way forward will be free to the reader/paid for by ads?

    The second assumption is that digital MUST equal free-to-end-reader, because unless you have some kind of (pointless) DRM, everything just gets copied. The porn industry shows this to be false. Porn videos are copied endlessly over the net – and yet subscription sites exist, and make money (in some cases, a LOT of money).

    Looking for revenue models other than “pray that the ad revenue bubble comes back” isn’t intransigence: it’s realism. Characterising it as a “hip digital people” versus “old print people” battle, as you do here, is doing everyone a disservice. It’s easy, but like most easy copy, it’s also trite.

  4. Your point about Craig Newmark single-handedly upending the classifieds business is a worthwhile one–though I’d also point out that, as a user, I find the Craiglist user experience awful. But that’s commoditzation in action: it all comes down to price, and it’s hard to persuade anyone to upsell on quality. Though I would note that, at least in New York City, people to pay to have their apartments listed in the New York Times real estate section.

    But journalism is a lot different from the classifieds. Classifieds are the the canonical example of a peer-to-peer business. You don’t even need to point to Craigslist–consider what eBay did to that market. Sellers and buyers are naturally incented to participate, so it’s just a matter of supplying the right infrastructure and then taking enough of a cut to sustain that infrastructure and possibly take a profit.

    I’d like to see someone explain how journalism is supposed to work that way.

  5. Scott Rosenberg

    Ian, I try to avoid the “hip” vs. “old” style labeling. I’m more old than hip myself at this point. I know as well as anyone that there’s a diversity of revenue models in the Web. At Salon, over the years, we tried all of them — sometimes in sequence, sometimes in combination.

    My argument is not with “trying out different revenue models.” But it is pretty strongly, based on experience and observation, aligned against DRM and attempts to restrict the distribution of content. Why? Because such efforts are technically ineffective and they work against the grain of the medium. Ask the record labels.

    The porn industry, like the music industry, does not see the Web as a cornucopia of profits; they see it as a great reducer of profits that used to be far larger. I think the news industry needs to accept that reality too. There will be revenue; but there won’t be nearly as much as there used to be. Until publishers accept that in their bones they’re going to make stupid decisions.

  6. Perry White

    One word — disintermediation —

    This word has been in the lexicon for over 20 years now, and the dinosaurs still don’t get it.

    People confuse “Free Enterprise” with “Paternal Big Company”. Who will survive? The executive with nobody left to “manage” or the hustling reporter or analyst with a fresh insight? Who delivers real value to anyone?

    The promise of the internet is like that of “tunes”. People will be able to deal separately with their need for “Twittlilation” and useful content, and not have to pay for the bundling of desired and undesired into a watered-down “take it or leave it” package. (Hint, they are leaving it!)

    Advertising as we knew it is dead, dead, dead. No sense (even AdSense) trying to keep it alive.

  7. Ric

    Ian makes great points but in addition to that if you can exptrapolate delivery issues to consumption issues … that is where you will find the final frontier! Apple and jobs understood this better than most even though their hugely successful itunes juggernaut is not without criticisim. And as an extension of that the newspapers should NOT just be talking to themsevles, they should be in cahootz with Apple, and the kindle people and any other digital delivery innovator out there that willing to sit at the table with them. They should be looking at model innovators like netflix and hulu and anyone else they can find. Only then will they be pointed int the right direction, because as I see it their content will only redeem its value when they explore bundling value added to other digital content and even changing interface paradigms products like google wave represent. My news My way is all that is left to them at this point.

  8. Brien

    I would lay money that the instant AP, Reuters and others start charging for content, Yahoo, Google and other news aggregators will instantly form news pools full of copy writers and editors who will completely rewrite the articles and publish them for free.

    News is still valuable, but the pay-for-content model won’t work. News is added value – a way to draw eyeballs into a field of related ads. I agree that media creators are in a bad position, but they need to pay attention to what works on the web instead of trying to stencil what used to work in print on the internet.

  9. apetra

    Classic monopsony. A monopolistic buyer, rather than seller: that’s Google, which is using its market power to devalue the price of content and absorb unfair profits.

    The best economic solution toward a functional market outcome may be a monopolistic seller, which the major media could attempt to assemble if given appropriate antitrust exemptions, as regards publication of content on the Internet.

    Would consumers be better off, or worse off? Note, it isn’t that consumers necessarily need pay subscription fees, it’s that the publishers need at a minimum an appropriate share of revenues available from advertising.

    Setting corresponding prices for content, to be paid for by Google and other search engines and “aggregators”, could raise the production of high quality content and benefit consumers, even if it hits the shareholders of Google, for whom I would feel no sympathy.

    Come on, Obama Administration, get to work on some antitrust exemptions to save the newspaper industry! End Google’s glomming off the work of journalists, which in the end preys on all of us, as much as Goldman Sachs and other Wall Street houses took all of us homeowners for a ride.

  10. steve, boston MA

    two points:

    1) the quintessential capitalists, who are genetically speculative and for maximum profit at all cost, hate the likes of craigs list and ebay where used items recycled infinitely by consumers themselves and thereby driving profit minimal. this trend will only eccelerate until e-commerce is done by small biz fashin and just barely profitable enough. unless the fat cats monopolize the internet, that is.

    2) online news outlets will need and hire many of the capable current newspaper editors as aggregators / digesters / interpreters / commentators of (… and will provide (and pay for) links to the direct sources as well of course…) much of the investigative data gathered by local volunteer amateurs and their sites. finally, news and information will be free from the iron grip over the news production and distribution by the tiny minority with particular agenda. Plough ahead, brothers and sisters of the world!

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  2. [...] I’m exasperated too, but I won’t join the “put up or shut up” crowd because I’d hate to see the further ghettoization of oldfashioned journalistic expertise on the Web. New models for news are sprouting on the Web every day. The journalism profession has a wealth of expertise and knowhow; the support of a dying industry’s paychecks will continue to dwindle, but the expertise can still be transmitted to a new generation of journalism ventures. That won’t happen If major media outlets wall themselves off from the Web. They will cut off not only their revenue but also their chance to influence the practice of journalism as it evolves online. [...]

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