Monday, March 14, 2005

"FREE" CONTENT ISN'T FREE. A couple of months ago, Slate's Jack Shafer set me straight on the notion of so-called free content on the Internet. We were talking about the future of online media following the sale of Slate to the Washington Post Company. Somehow, the discussion turned to the issue of whether online media would ever be able to charge for their content.

Here's how Shafer sees the world: online media have already persuaded you to buy a printing press (your computer), at a huge cost savings to them; and you've also taken on the cost of their distribution system (your monthly Internet bill). In such an environment, does it really make sense to talk about "free" content?

That conversation came to mind this morning, when I read Katharine Seelye's story in the New York Times, headlined (talk about stacking the deck) "Can Papers End the Free Ride Online?" There's a lot of weeping and wailing and gnashing of teeth over all the revenue that's being lost, but nowhere is there an acknowledgment of how much money media organizations are saving on printing and distribution costs.

Newspapers, of course, face tremendous challenges online, but for the smart and fleet of foot those challenges will be transitory, not permanent. One huge problem is that papers still earn most of their money from their printed editions, which means that they are not saving anything on printing and distribution, except for the incremental cost of not having to buy and deliver quite as much newsprint. At some point, though, the print products will cease to exist, and the presses can be sold for scrap metal.

Another is that though online advertising is growing rapidly, it's still not nearly as lucrative as print advertising. It amounts to just two percent to three percent of a newspaper's total revenues, according to Seelye's article.

Back in the early 1990s, I attended a conference at Columbia University whose topics included, among other things, a discussion of the coming world of online media. This was pre-Web, pre-Internet, at least for all except the most hardcore. So the discussions assumed an emerging world that would have been very different from what we have today.

The talk was of "digital tablets" - essentially magazine-size laptops stripping of everything but a docking port and some rudimentary navigation tools - that newspapers would give away as an incentive for you to stop having the print edition dropped on your doorstep every morning. At night you'd plug the tablet into a docking station on your cable box, and you would automatically receive your paper overnight - or parts of papers, such as international news from the Times, political news from the Washington Post, local news and sports from the Boston Globe, and the like.

Yes, you'd pay for these subscriptions, but look at what you would not be paying for. You wouldn't need to lay out $1000 to $2000 for a computer. You wouldn't need to pay for online access beyond what you were already paying for cable. In that world, it would have made perfect sense to pay for content. But that's not the world that came into being.

If the Wall Street Journal and Salon can succeed with paid-subscription models, good for them. But I suspect those are always going to be the exception. The problem with whining about "free content" is that free isn't free. When network news was in its heyday, you didn't need anything but a television set and an antenna; advertising paid for the rest, and the quality was a lot better than what we have today. Eventually, online news is going to become like the network news of years past - although, in world of a million blogs, the established news organizations will never assume the importance and dominance of CBS, NBC, and ABC in the 1960s, '70s, and '80s.

It may be taking longer than cost-conscious news executives would like, but we'll get there.

7 comments:

Anonymous said...

I believe the issue of use boils down to the specs: for the most part, readers who have historically paid for media strongly prefer the print version because of its ease of use (no boot time), its portability (you can take papers/magazines anywhere -- planes, bathroom, bed -- and no one will tell you to shut it off because the plane is landing), and its familiarity (content is always in the same place in the paper/magazine, and the length, headline size, etc., helps the reader browse).

I think papers and magazines will ultimately learn to truly integrate print and web. Instead of casting certain pieces into cyberhell, they will use print as a tangible form of Google: a reminder -- using specs we are comfortable with -- of where to find info of interest on the Internet. Magazines will take on abbreviated form -- almost like a newsletter -- with headlines, brief summaries, and links to where to find the full length stories. Newspapers very well may follow.

Mike_B

Anonymous said...

I believe the issue of use boils down to the specs: for the most part, readers who have historically paid for media strongly prefer the print version because of its ease of use (no boot time), its portability (you can take papers/magazines anywhere -- planes, bathroom, bed -- and no one will tell you to shut it off because the plane is landing), and its familiarity (content is always in the same place in the paper/magazine, and the length, headline size, etc., helps the reader browse).

I think papers and magazines will ultimately learn to truly integrate print and web. Instead of casting certain pieces into cyberhell, they will use print as a tangible form of Google: a reminder -- using specs we are comfortable with -- of where to find info of interest on the Internet. Magazines will take on abbreviated form -- almost like a newsletter -- with headlines, brief summaries, and links to where to find the full length stories. Newspapers very well may follow.

Mike_B

Anonymous said...

For a moment, return to the content, rather than how it is delivered. WSJ is by no means unique, FT, Bloomberg and many others do the same thing. Yet people like what they read in the WSJ. Might it be that people are willing to pay if they perceive differentiated value? NYT is already syndicating people like Dowd in papers across the country. Are the Converted willing to PAY to be preached to? Hard questions for those who consider the stereotypical WSJ reader to be a right-wing nut......

Susan said...

Traditional newspapers and magazines will NEVER be eliminated because they are portable and are not hard on the eyes the way computers happen to be.

Besides, very few magazines have all of their content online; you have to BUY the hard copy to get the most of the best articles.

Frankly, I FAR prefer the print versions of newspapers and magazines, where I can them, to the online editions.

They aren't going out anytime soon.

Neither are books.

Don't fall for all of the hype.

Anonymous said...

Dan, far from setting you straight, Jack Shafer misled you. What he said would be true if your computer and internet service were purchased only for reading online news media. I know that's a big part of your job but I suspect you and most people use your computer/internet for many other things - doing taxes, getting sports scores, listening to music, communicating with friends etc.

I can see why people at a conference in the early 90s would make that mistake - the myriad used for computers for the average home user were not apparent then - but not today.

There's an obvious difference between reading the NY Times at no charge and reading Salon for a fee.

I've actually always been surprised by the fact that newspapers fell over themselves to publish on the web for no fee. I don't understand what benefit they get from doing this, while the costs must be considerable.

Steve Turner.

tango argentino said...

susan is right.
printed news can never be replaced.

tango argentino said...

susan is right.
printed news can never be replaced.
please delete my previous post.