Newspaper Tries Going From Free To Paid
from the good-luck-with-that... dept
A few weeks back, I wrote how, economically speaking, online news has no choice but to go free over time. It’s basically the same argument we’ve made with other versions of digital content. It’s an infinite good, and there’s enough competition out there that prices will get pushed to zero (which has already happened in a lot of cases). Some people took offense to this, claiming that I was wrong. The main arguments are twofold: (1) there are some online newspapers that have been able to charge and (2) free newspapers have no value and shouldn’t be produced.
Let’s take the second critique first. It is a complaint we’ve heard before, and shows a fundamental confusion over the difference between value and price, which definitely comes into play in the news business. Value is only one component of price, playing into the demand part of the equation. But, price isn’t determined by demand alone. It’s the intersection of supply and demand — and if supply is infinite, then pricing pressure will drive the price to zero. That does not mean the content has no value. It can be very valuable. But that doesn’t change what the price is going to be for one simple reason: some competitors will figure out how to exploit the infinite nature of the content as free, and other will find it difficult to keep up unless they do the same.
And, of course, that leads us to the first critique: that there are some newspapers that have been able to charge and seem to be doing well. Again, this is one we’ve discussed at length, in the past. These sorts of changes don’t happen overnight, but for the most part we’ve seen more and more newspapers move from paid models to free models (even the NY Times realized the math didn’t make sense to keep a paid version online), recognizing that even if the paid version was something of a cash cow, growth was very slow (or negative), as people were moving to free online news that was “good enough.” It’s the classic “innovator’s dilemma.” Other models for revenue are growing much faster than trying to force people to pay for news, and it’s nearly impossible to get a younger generation to ever agree to pay for news. It’s just doesn’t make sense.
With that said, it’s a bit surprising to find out that one newspaper is trying to go in the other direction. Bluffton Today, considered one of the more innovative newspaper experiments — combining a free newspaper with citizen journalism — has decided to try switching to a paid model. The paper itself will have a paid subscription, as will an electronic version of the paper. Its website will remain free, but that appears to be more limited than the paper itself. It will be an interesting experiment to watch, but if I had to bet, I’d say that the paper will find it difficult to get enough paying subscribers to survive, unless it comes up with something else in its business model.