Online News Has No Choice But To Be Free
from the indeed dept
There’s a great opinion piece by Shane Richmond on the website for the UK’s Telegraph newspaper, pointing out that various newspaper execs complaining about the fact that news is free online seem to be missing the point. They are complaining about news being available for free, and claiming that if newspapers had agreed to charge online from the beginning things would be different. But, as Richmond points out, the only real way they’d be different is that no one would get their news from newspapers (online or otherwise) any more. News was going to be free online from the beginning because it’s the fundamental nature of information. When it’s abundant, it becomes free. That’s your basic economics of supply and demand at work. The whole theory that newspapers could charge is based on the false assumption that the only sources for news would be newspapers. If all newspapers charged, it would open up a huge opportunity for other news sources to make the news free online — and then why would people pay the newspapers? It’s sad, in this day and age, that so many newspaper execs still don’t understand this basic fact — because, until they do, they’ll never really be able to adopt web-aged business models. Instead, they’ll just keep (incorrectly) regretting that they didn’t charge.
Filed Under: business models, economics, free, newspapers
Comments on “Online News Has No Choice But To Be Free”
So what about free newspapers?
There is a little fla in your argument: Shouldn’t traditional newspapers long ago have been flushed away by free newspapers? It’s the same principle at work…
Re: So what about free newspapers?
No, because traditional newspapers and free newspapers are printed on paper. The only (recognized) way to get revenue with a newspaper is from the sales price and from advertising. This means free newspapers are filled with ads, and what you get, when paying, is the privilege of a paper with fewer ads in it – and they’re typically gathered in one, easily skipped, section. Like the “houses” or “used cars” section. This doesn’t work online, because of Adblock and similar applications.
Re: Re: So what about free newspapers?
AC had it almost!
Part of the reason is that printed material has a non-nominal cost associated with it. Thus there are limits imposed by that cost that paid papers can overcome with subscription price and advertising revenue based on readership.
However, he metaphor might be, if your local, printed, free newspaper ran all stories happening around the world, including opinion and public interest articles, then would you buy your local, non-free newspaper? This is the internet model. All of these news stories are available all around the world. Even if there was global agreement about charging for news, someone, somewhere would figure out a way to provide news for free. One issue is that facts cannot be copyrighted in the USA.
Re: So what about free newspapers?
They don’t operate in the same space, so while there is not as much overlap, there are still people who prefer to get their news from newspapers and people who don’t have access to the internet. That is, to name two would-be cases of people not viewing news online….
The bottom line? Value-add
The bottom line is that newspapers have not yet figured out how to add value to online news that people are willing to pay for.
Indeed, why pay for something when you can get just as good or better for free?
So newspapers have two options: (1) generate revenue with a different business model, (2) provide a service related to the core mission that people will pay for.
Many mainstream newspapers are missing the boat when it comes to social media. They already have a natural community — their readers — who share something in common: loyalty for the publication. A sense of belonging to such a community would provide tangible value-add to the readers.
If the newspapers made even a modest attempt to develop their readership into a cohesive online community, they could utilize various models to increase online revenue.
News pirates
News pirates have been stealing the news via “word of mouth” since the cave people days.
It’s about time that something was done to curb this most outlandish circumvention of a newspapers right to profit from everyday occurrences.
And if you happen to witness a newsworthy item, you are obligated via EULA to not tell anyone about it.
Avast yer talkin now
What newspapers used to provide
Before the WWW newspapers provided some things that radio and TV could not provide. 1)Large volume of current news items and commentary, 2)Ability to read the news at any time, 3)Coupons and information about local sales, and 4)local news.
All but the last two now have alternative sources. The WWW made the first two items obsolete as advantages for newspapers. In fact, the WWW probably does a better job of providing large quantities of news and information at any time of the day or night. In rural areas and small towns local news and advertising is about all that is left for newspapers. As small businesses get more sophisticated many of them are also migrating their advertisements to the Web. Local newspapers still provide an important service in providing local news. Our local newspaper looked like it was making good progress in moving to an online format. Then they started charging a monthly fee or requiring a hardcopy subscription to get full access. The local TV station saw the opportunity and jumped in with a local news site that seems to be better than the newspaper’s on-line site, and it has lots of local advertisements and coupons. Will the newspapers ever learn?
Well, the first thing a newspaper needs in order to distinguish itself is quality. Look at Huffington Post, for example. They’ve built a strong reputation with many “followers” because of the quality of their output (and also, their perspective). How do they take advantage of this economically?
Obviously, if a news organization is going to deliver consistently high-quality news, they’re going to have to pay people to research and investigate that news. Which means they have to generate revenue for this and other purposes. So the news that a particular organization delivers cannot be “free as in beer” … not really.
Ad placement doesn’t seem to be profitable enough to rely on that alone. People won’t pay for access (and you can’t lock it up anyway, as Mike is suggesting).
So I’m still wondering … what is the solution? I don’t see one yet.
Sincerity fee
Even if physical papers had enough advertising to pay for all the costs of creating, printing, and distributing them (and some do), there would still need to be a token price to keep people from taking them for other uses (doggie papers, mulch, recycling, crafts) that would fail to expose the users to the ads.
When content is distributed by home delivery (or as junk mail) there is a control on how it is distributed, so that can be free and those newspapers often are.
Online, there isn’t the issue of consumption (except for vandalism) for ulterior motives, and although the costs for creation and distribution remain, there is no cost for the materials, so the economics of token price is different.
This pricing issue is one of focus. The newspapers must find funds for their costs to hire journalists, support servers, and the like, and the consumers seem to only to think about the lack of costs to buy physical materials.
In addition, if another source were to copy the content of the physical newspaper, the secondary publication would be reduced in value by its lack of timeliness. Online, the redistribution can be almost instant.
Some have found a way to produce good content with only their advertising revenues, but I respect their need to require a subscription for additional features.
I do wonder, however, if we create an environment where responsible journalism or the creation of feature content cannot be supported, if the people who would do a good job at it can’t make a living, what will happen to the quality? Is there no way to develop a business model to keep incentives for the people who contribute in this way? They aren’t in the position of buggy whip makers with little market in a world as it has evolved, it is just that the traditional methods for rewarding their value aren’t there.
Do the Techdirt readers have any suggestions on how to properly reward the news gatherers and content creators?
Careful
Newspapers are free to do whatever to adapt to the modern age, but it really bothers me when journalists try to lecture me about how they are “entitled” a salary. Sorry, but I am not obligated to buy anything. If customers start to flock to free and/or online competitors, that is part of the game. Stop trying to make me feel “guilty” that your ancient business model is not working anymore.
Re: Careful
I can only speak for myself, but I’m not a) a journalist, or b) trying to make you feel guilty. I know you’re not obligated to buy anything. But let’s get some “granteds” out there:
1) We (as a society) do NEED good, accurate, well-researched, well-written/produced news … beyond some local blogger saying “this is what happened to me today.” It’s important, and especially so in a democratic society.
2) In order for us to have people who have the time, training, and skills to do this, they have to make a sustainable salary from that work.
If we grant 1 and 2, then the question becomes: how do we do this given the nature of the internet?
If you don’t agree with 1 or 2, start there and explain why those things aren’t true. If you do agree, then please notice I’m not saying that anyone is “obligated” to pay, nor am I arguing that we should somehow unnaturally curtail the power of the internet. I’m just asking: given 1 and 2 and the nature of the ‘net, what’s the solution?
How will aggregation affect the ad-supported model?
Reality check here: obviously journalists are no more “entitled” to their salaries than consumers are “entitled” to a proliferation of free news sources. That’s what the market are for.
The more interesting question is where the market will lead us. Several years ago, I predicted that ad blockers would kill off the ad-supported model. But the percentage of consumers using them, while unreported, is broadly agreed to be too small to have an impact. On the other hand, barely anyone is willing to pay for online news.
So, for now, it’s clear that the ad-supported model will stay with us. Moving forward, it’s unclear how aggregating technologies like RSS will affect the picture. For example, will The Guardian embed ads in the RSS feeds that now include their full content?
This isn’t a question of what anyone is entitled too. Rather, it’s a question of how the market will respond to technology developments. Count me in as an interested observer and participant.
Monetise your costs
Online news publishing has costs, and as pointed out it can simply be redistributed so while ad support may give you some revenue, but it’ll also give it to all the guys using your content. e.g. Google news could monetise news sites’ content a hell of a lot better than they ever could, the only reason they don’t is that all the news sites will throw a fit, and take their toys home.
So, the real quesiton is, if news is free, how can newspapers (online) cover their costs in acquiring the news?
My prime method of reasoning is to monetise what you’re spending money on. e.g. Amazon monetised their server farm, google monetised their search algo.
Say that news co’s spend most of their money on Editors (experts/analysts/etc) and Journalists (people who find new and interesting things).
As other’s have said, the Facts are free. but the involvement of the journalists and editors aren’t.
1) Editors can provide good insightfull commentary on the facts. The facts are free. the commentary is not. Financial services have had several models in place where you can pay (admittedly extortionate amounts) money to get analyst opinions on whatever news you’re reading. the same can apply to political or any other kind of news. The Editor Role gives you the 1000 foot view, and analysis.
2) The Journalist Role gives you the 1 foot view, setting up a twitter feed or something to your man-on-the-street where he can be contacted by John Q Public, asked questions, interact with the event, etc is valuable. and can be monetised either directly (subscription) or inderectly (through ads) but it can’t be copied. even if a transcript is taken, the uniqueness is in the interaction of the consumer/reader and the event.
Ok so twitter might be a bad example as it’ll be too firehose, but a twitter-ified Google Moderator might do the trick.
A secondary way to profit from the internet for news companies would be to stop thinking it as a one way medium. and no, comments aren’t two way either (read this and discuss amongst yourselves). if facts are free, you shouldn’t have to pay to get them, in fact, you’ll probably find people that are willing to pay to be told about interesting things in their area/area of interest that you’d like more information on.
3) So you have a new kind of journalist, Nancy Drew, and a new kind of editor, The Cat Herder, who work together to get the facts of a story. You still have to pay the Herder, but you can either use point 2) and monetise the interaction with the Nancy’s, or the Herder doubles up as an editor and you monetise as per 1). or you can try the intermediary where you have your Nancy’s pay for the new tidbits they can investigate, a little far-fetched maybe, but hey people pay $14 a month for an MMORPG. And the Nancy’s will probably blog/write/monetise themselves (possibly conflicting with point 2, but then you do 1)
Without Newspapers there are NO REPORTERS
News was going to be free online from the beginning because it’s the fundamental nature of information. When it’s abundant, it becomes free. That’s your basic economics of supply and demand at work. The whole theory that newspapers could charge is based on the false assumption that the only sources for news would be newspapers. If all newspapers charged, it would open up a huge opportunity for other news sources to make the news free online — and then why would people pay the newspapers?
I really don’t get this. News reports are not some abundant free resource that sit out there on its own. The newspapers hire and pay their reporters. The reporters report the news. The newspapers are not a middle man that can be eliminated. Someone has to hire and manage the reporters and consolidate and edit their output. If newspapers go away then reporters go away too.
Re: Without Newspapers there are NO REPORTERS
I really don’t get this. News reports are not some abundant free resource that sit out there on its own.
Once they are written and in digital form, then, yes, they are abundant. That’s not an opinion, it’s a fact of nature.
The newspapers hire and pay their reporters. The reporters report the news. The newspapers are not a middle man that can be eliminated.
No one claimed otherwise. I’m not sure why you set up this strawman.
Someone has to hire and manage the reporters and consolidate and edit their output. If newspapers go away then reporters go away too.
No. If there is demand for news, then there will be business models that support it. We’re already seeing plenty of non-newspapers that employ reporters. Why would you so blatantly lie and claim that we need newspapers to have reporters?
Here’s an experiment: Take this blog post, and in all references to “newspapers,” replace it with “movies” or “games” or “music.” Does it hold the same weight? Is everything meant to be free?
Re: Re:
Here’s an experiment: Take this blog post, and in all references to “newspapers,” replace it with “movies” or “games” or “music.” Does it hold the same weight? Is everything meant to be free?
Why not answer that question for yourself. We’ve discussed it many times in the past, and come to the conclusion that, yes, movies, games and music — basically anything that’s infinite — will eventually become free.
That doesn’t mean they won’t make money, it just means the business models will change.
good night
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