Monday, May 11, 2009

Grumpy about the newspaper industry

Various people say, "the newspaper industry is dying because it's giving away its content for free online!" But the problem with that notion is that they have no (zero) clue about the business model for every newspaper in existence for the past 200+ years. Newspapers have pretty much *always* given their content away for free. That subscription you pay for? It barely pays for the cost of the newsprint and the paper dude to plop it at your doorstep. At best. All the infrastructure (printing presses and such)? Paid for by advertising. All the reporters? Paid for by advertising. All the bought content from AP, Reuters, etc.? Paid for by advertising.

The basic problem isn't that newspapers are giving content away for free, because that's been their business model since, like, forever -- the news-stand price has never covered content. Rather, the basic problem is that newspapers screwed the pooch on Internet advertising. If newspapers had set up their classifieds sections online early on, Craigslist would have never existed and sucked the guts right out of their dead trees classifieds. If newspapers had set up online jobs advertising systems early on with the ability to submit resumes through the newspaper's computer systems, and its ilk would have never existed. And so on and so forth. There's a *ton* of ways that newspapers could make money online to replace the off-line advertising income, and they just freakin' screwed the poch on *all* of them, instead using their outrageous profit margins to buy up other media outlets all over the country, run up oodles of debt, and now... now that debt is killing them.

So the whole "giving content away" thing isn't their problem. It is the fact that, given a choice between investing in new technology (Internet advertising) and buying the Boston Globe, the New York Times decided to, err... buy the Boston Globe. Morons! They're like buggy manufacturers that invested in a new buggy assembly line to compete with Henry Ford's Model T, instead of themselves going into the automobile industry. It's not a case of them "giving away content". It's a case of them failing to see that the news industry is undergoing the same sort of paradigm shift that the transportation underwent in the first decades of the 20th century. They're buggy-makers in a time of automobiles, and unless and until they retool to meet the current conditions, they're going to continue losing market share and readership every year until they finally collapse and go away.

- Badtux the Business Penguin


  1. It isn't like the newspapers are alone in this. The movie industry continued to fight VCRs long after they were making more money from tape sales and rentals than they were at the box office. And the RIAA still doesn't seem to understand that digital distribution has fundamentally changed the viability of their business model and they are never going to be able to go back no matter how many 19 year olds they take to court.

    There's just no excuse. Nicolas Negroponte spelled out the whole idea in Being Digital over 14 years ago and the whole atoms vs. bits thing wasn't a new idea back then. It's just another example of head-in-the-sand business management that has crippled banking and the US auto industry as well.

  2. Speaking of Negroponte's early vision, I had a brief correspondence with Mike Kinsley of Slate in which I urged him to adopt the micropayment strategy. (He thought it was ludicrous at that time.)

    This was the early 90's - maybe '94 - as nearly as I can place the memory.

    I also wrote letters back then to WaPo and the NYT suggesting that they get on the e-bus in advertising ASAP.

    More brushoffs that could have saved them (perhaps). I also was incensed about the anti-Clinton positions they all took as though there was no worry about who was orchestrating such.

    Former software wizard

  3. Here are nine ways newspapers can survive.


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