Why People Just Don't Pay for News

CMS Report has an interesting rant about micropayments, and how they never got off the ground... many people have tried to convince me to pay a quarter or a nickle to view their online content, but I've never done so. Every few years, somebody comes up with some master plan based on the theory that "this time it's different!!!" But sadly -- and totally predictably -- they failed.

Why don't people pay for news? Because the most powerful word in marketing is "Free." No matter how little you charge for "quality" content, if somebody else is offering a reasonable substitute for free, you will always lose.

The latest "big idea" in this history of failures is Rupert Murdoch's attempt to charge for their online content. Some folks see Apple's new iPad as a game changer here, perhaps shaking up the market and getting people to pay for quality content. I'm skeptical... Yes, the iPad is pretty, and yes it is probably the best possible platform that "paid content" could ever hope for... but that doesn't change the economic realities.

Yes... the Wall Street Journal's articles might be exceptional... they might be light years better than what you can find for free on blogs and Bloomberg.com... but how can Murdoch prove to a skeptic that "paid-for" content is worth the extra cost? Unless they give away the whole article for free, nobody can judge it's quality. Also, just because one article was great, does not mean future articles will be great... Finally, if it really is a great article, people will blog about it, or editorialize about it, after which I can find a decent summary elsewhere.

People just don't have much brand loyalty to information sources anymore... Whoever gets it to me in the way I want it, will win my loyalty for today... but once you're boring, or ask me to login, or ask me to pay, then I might take my eyeballs to one of the other bazillion sites out there.

News is a commodity, and therefore subject to the economics of commodities. There is a little bit of profit in their creation, but much more in their distribution. In the past, the newspapers owned their distribution channel: printers, packers, delivery trucks... heck, the New York Times even owns their own forests and paper mills! The majority of their expenses are spent maintaining their distribution channel, not in paying people to write quality content.

Rupert Murdoch whines very loudly that his content is valuable and Google should have to pay to spider it... what he's really saying is that he's mad that the internet has made his distribution channels less profitable. If Fox truly cared about creating "quality content," they'd probably drop half their sitcoms.

Is there a way to save newspapers? Sort of...

Obviously, companies with good content need to get into the new distribution channels if they want to survive. The NBC/Comcast merger is a good example... although as a consumer I'm not a fan of so much power being in one single entity. I hope other companies get into the residential high-speed internet business so we have more competition... I'm happy to see that Google is getting into the residential ISP business, and I hope to see more competition soon...

In other words... The New York Times and the Wall Street Journal will survive... but their distribution channels will not. The sooner they get out of the dead-tree-scattering business, the better!

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