LA Times business columnist David Lazarus argues this week that newspapers are crazy to be giving away all that valuable information they produce (via Romenesko):
Newspapers, including this one, give away the store online, all the while wringing their hands about declining revenue and circulation. Everyone says the Net represents the future of journalism, and that’s probably true. But at this point, no one knows how to make much money at it.
I’m scratching my head trying to come up with another financially challenged industry that found salvation by charging people nothing for its output.
It’s a favorite theme for Lazarus, who garnered a lot of withering commentary from uppitty bloggers for a column he wrote a few months ago, when he was still at the SF Chronicle, arguing that
It’s time for newspapers to stop giving away the store. We as an industry need to start charging for — or at the very least controlling — use of our products online.
This time around he talked to a bunch of students at his alma mater, some fancy private school in Santa Monica, who told him they’re happy to pay for music via iTunes but would never pay for online news.
Now that was interesting. These bright, info-hungry, computer-savvy kids willingly paid for the latest cuts from Alicia Keys or Fergie. But they couldn’t imagine having the same relationship with the New York Times, say, or the much-respected, widely esteemed news outlet you’re currently enjoying. “A lot of this has to do with a big generation gap,” explained Phoebe, 15.
Actually, no, it’s not really about a generation gap. News was already pretty close to free long before the Internet came along. It was free on TV, free on the radio, and effectively free in newspapers when you consider all the valuable stuff that came packaged with it for 25 or 50 cents, from comics to crosswords to classifieds to supermarket ads. And unlike, say, a song–which was free on the radio but worth spending money on to be able to play again and again whenever you wanted to hear it–a day-old newspaper was usually less than worthless.
What’s hurting newspapers now is not the fact that people were willing to pay for news offline and aren’t willing to do so online, but that their days as the monopoly conduit of timely written information into Americans’ homes are over. The delivery boys have been displaced by Comcast and AT&T and Google and Yahoo, and there’s no way newspapers will ever reclaim that role.
Those that produced such valuable content that people were and are willing to pay a premium for it offline, such as the New York Times and Wall Street Journal, are in a different and less leaky boat. (And both of those news organizations, which have demonstrated that they can get hundreds of thousands of people to pay for their content online, are nevertheless headed in the direction of giving everything away free because they think they can make more money that way.)
For metro dailies like the SF Chronicle and LA Times, though, the new reality is a terribly frightening one. I don’t see how they’ll ever be able to make anywhere close to the kind of money online that they did offline in the good old days. But charging people for content that they’ve always gotten more or less for free certainly doesn’t seem like a promising path to salvation.
Update: Lifted from a comment by Gregg Turk:
I started my career in newspaper circulation many years ago. Our purpose was to get the paper in front of eyeballs for our advertisers without losing any money. In other words we were revenue neutral. It seems to me that the internet does that quickly and easily today.
Exactly. The “stop giving away the store” argument is mostly a red herring for newspapers, because they were already giving away the store. Among general interest publications in the U.S., only a few (the NYT, the New Yorker, and People are the three that spring immediately to mind) charge serious money for print subscriptions. With business and special-interest publications the equation has always been different: Some chose to charge serious money (like my former employer American Banker, which currently costs $995 a year) while others went for free but controlled circulation (like Institutional Investor). For them, the question of whether to charge for or otherwise restrict access to online content is a serious one that most have answered in the affirmative. But for newspapers, in particular the metropolitan dailies that Lazarus is talking about, virtually every attempt to charge for something that they’ve effectively been giving away for decades has resulted in such dramatic declines in readership that the suits have decided to pull the plug. I guess that, in theory, newspapers and wire services could create some kind of cartel (the Organization of News Exporting Corporations, say) whose members would all agree to charge for news. But that just strikes me as way too far-fetched (and probably illegal) to seriously contemplate.