What If Newspapers Follow The ESPN 360 Model?

from the there-would-need-to-be-enough-value dept

Mark Cuban, picking up on the rumors last week that the cable companies are negotiating with content providers to offer their channels over the internet, has a suggestion for newspapers: do the same deal. Specifically, he’s suggesting that newspapers get broadband providers to pay them to provide access to their content to subscribers. The idea is that in a sort of Coasian bargain, it allows the newspapers to get more money (from just a few companies, rather than from tons of advertisers and subscribers) and it allows the ISPs to differentiate. In reality, this is just the controversial ESPN 360 model all over again. ISPs pay a content provider, and only subscribers to that content provider get access to that content. The content provider gets easy cash, and the ISP gets differentiation. It basically just hides the paywall. Rather than individuals paying for the content directly, they pay for it indirectly via their broadband connection.

What could go wrong?

Well, plenty, actually. First of all, that content really does need to be differentiated. That might sorta (but not totally) work with ESPN, but it’s not going to work with most newspapers — where the competition is pretty strong. The ISPs won’t be willing to pay very much because the “value” in differentiating isn’t very high. The fact that ESPN is getting away with this isn’t so much a statement on how good a business model this is, as it is an indication of just how lousy many other sports content sites remain. That, however, represents a nice opportunity for other sports sites to step up and provide better content.

But, more importantly, cutting off open access to news in this manner creates the same exact problems that paywalls created. It cuts off the ability to interact with the news: to share it and spread it to others. You can still comment on it… somewhat, but the inability to have everyone you interact with see the same content is a greatly limiting factor in discussing a particular story. It actively decreases the value of the news, which is the last thing news organizations should be doing these days. It shrinks their one real asset: their community. The problem is that Cuban (and many others) still seem to be thinking about the issue from the perspective of a broadcast media company, pushing a message out to people, rather than a communications media company. When you realize that news operations need to be communications companies, the idea of making content harder to access seems more and more ridiculous.

Either way, we may soon get an example of how poorly this works in practice. Many are suggesting that Cablevision’s decision to charge for access to Newsday is really a way to test this in action. The company can give Cablevision internet service customers Newsday for free as an extra incentive. But, once again, that assumes people think that’s actually an incentive.

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Comments on “What If Newspapers Follow The ESPN 360 Model?”

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Greg Spira says:

The problem here is simple – why should the cable companies/internet providers go along with it? What’s in it for them?

And someplace like New York City (unlike Long Island) would be the worst place to do it, because there’s so many ways to get news for the city. (Surburban papers might serve in some cases as incentives, since the competition for news in those areas is far less fierce than in big cities. But that still leaves the cable companies with no real reason to help out the newspapers with their cash flow unless they can get an exclusive deal, and that’s something that newspapers won’t want to do)

Anonymouse Coward says:

How to further decrease newspaper readers

I think you nail it with differentiation. ESPN has a license for the content it is showing, and therefore a mini-monopoly. No one else can show the X games or the college basketball that ESPN is showing.

But if the Washington Star said – only those ISPs that give us money can have our content – then the first question would be -> would they make up in revenue received from ISPs the revenue lost from blocked ISPs?

This is further problematic if, like you say, the newspaper content is in a competitive market. Or, in other words, the content is substitutable. If Wash Star content can be replaced by Wash Post content, and Wash Post content is available – their is no incentive for the ISP to deal with the content provider.

Further, news benefits from network effect. If the Wash Post is a widely read newspaper that is cited in the Sunday morning pundit shows, or by Colbert, or in the locker room discussing how miserable Ovechkin played last night – then people will want to read the Post. If, however, access to the Post is restricted and less people are citing to it, then less people will want to read it – they can go back to the Star.

To negotiate with the ISPs this way you must possess some type of market power. Having a monopoly (license) to content like the X games, then you have market power. Existing in a commodity market where your goods are substitutable, well only a “maverick” would be stupid enuf to go down that path.

Greg Lambert (user link) says:

How about a Package Model - Like Cable TV?

Seems that there should be some way to have a method of packaging these types of services and sell it to the public regardless of their internet provider. Same way that the Cable and Satellite providers do. Pull together regional packages and sell them at a set monthly price. I think the original AOL model was supposed to follow this line of reasoning, but fell apart after the Time Warner merger (which seem ironic now that I think about it…)

Brad says:

Re: I can't get ESPN 360

Exactly! The problem is that there is virtually no competition in ISPs, and where there is, the differentiation is typically on speed – not services. Would a customer pay $10/mo more and have a lower speed if it meant they could read some crappy newspaper online?

I sure wouldn’t. And if my ISP forced me to pay more and “granted” me access to something when I had no choice not to subscribe (I live in a place with a single MSO), I’d sure be pissed.

Ian Irving (user link) says:

a better idea would be for isp's to provide higher speed access to a newspaper's web site

it would make more sense for isp’s to provide high(er) speed access to a newspaper’s web site.

The Newspaper “sells” access (rights) to their content. (a server copy?) ISP’s make sure those packets get (much?) higher priority (something beyond caching the fresh site close to the customer), and get some differentiation as the higher speed provider of the X Times. breaking news and business news is often time sensitive, so maybe only those parts of the site?

Of course I see at least 2 big problems :

a) this would temp the Newspaper to hold back news (just a couple of minutes at first) for there non “fast” site users. Which will quickly erode their reputation as the first place to go.

b) this would break net neutrality. The temptation would be to slow down the site of competing newspapers. (even if that is not part of the deal)

still it seems a better business plan then what Mark Cuban is smoking.

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