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Please pay us for our news — please?

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As the financial pressures on newspapers continue to increase, the chorus of voices calling out for a new kind of payment scheme grow louder and louder. Some, like New York Times writer David Carr, have argued that newspapers should be able to concoct some form of “iTunes for news” that would allow them to pool their resources and charge users for their content (provided they get a waiver from the anti-trust authorities, of course). Others — including Carr’s boss Bill Keller, in a recent interview — have mused aloud about whether they couldn’t just re-erect the old pay wall and convince some people to pay for the news that way.

The latest voices to add themselves to this chorus are Stu Bykofsky of the Philadelphia Daily News and veteran journalist and author Walter Isaacson, writing in Time magazine. Bykofsky wrote a piece that managed to hit pretty much every highlight (or lowlight) of the crotchety old newspaperman genre: bloggers can’t replace journalists, every other outlet copies the news from newspapers, and if it wasn’t for the darn Internet we would all be a lot better off. Isaacson is less crotchety, but still thinks that advertising isn’t a suitable business model (even though it has been the driving force behind the newspaper business for half a century or so) He and Bykofsky both think maybe micro-payments are the way to go (and the latter recommends a few lawsuits aimed at Google, just for good measure).

As Mark Potts at Recovering Journalist points out (along with a few others), this entire argument is based on a fundamental misunderstanding of the industry. Newspapers have *never* been paid directly by readers for the news. When readers pay for a paper at the box or at the store or by subscription, they are paying for a small fraction of the content in the newspaper — maybe the first half a dozen pages or so, for a large metropolitan daily. Everything else is paid for by advertising. What newspapers have been in the business of doing is aggregating attention and influence, which they then transfer to advertisers in return for cash and other items of value.

Now, of course, anyone can aggregate attention and influence with very little effort. Perez Hilton — a blogger who started as a one-man shop just a few short years ago and now runs a multimillion-dollar empire with a pageview count higher than most major newspapers — is a great example, and so is the Drudge Report, and the Huffington Post. Newspapers have to work a lot harder to accumulate the kind of attention they used to command from readers, and they’re just not sure how to do it. But the idea that people will suddenly volunteer to pay the full freight for all of the great journalism that newspapers do is just wishful thinking.

It has nothing to do with how easy it is for a reader to click a “tipjar” button and drop a few virtual coins. Why should they? For most readers, the daily news is a perishable product of limited value that is here one minute and fish-wrap the next. Not only that, but — despite what many newspapers fervently believe — many people don’t care (and in many cases don’t even know) whether they read a story in your paper, or your competitor’s paper, or heard it on the radio, or saw it on TV, or read it on Perez Hilton or found out from their friend at work.

What newspapers need to do is find ways of creating content that is more valuable than the perishable daily news — either by finding material that no one else has, or packaging it in a certain way, or by creating relationships around that content that draw people in — so that their readers either volunteer to pay, or spend more time with that content and as a result become more valuable to advertisers. As Rex Hammock notes on his blog, don’t blame readers for the loss of your old business model — figure out how to make what you do more valuable to them in some way, and readers (or advertisers) will be lining up to pay you.

                                   
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Joseph Lichterman    Aug. 26, 2014
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  • http://bizop.ca michael webster

    Matthew, pretty good analysis of why national papers don’t command monopoly attention anymore. I stopped reading the Globe in paper several years ago.
    Of course for many markets, Craigslist just destroyed the newspaper revenue, and that is not coming back.
    I don’t see newspapers surviving as basic bundlers of news, carrying ads. Too much of that revenue is now dispersed.
    Whether newspapers online can create the type of communities that people will pay to join is an open question.

  • http://www.mathewingram.com/ Mathew Ingram

    I agree, Michael — thanks for the comment.

  • Rudolph

    Matthew, you are wrong.

    Your observation that subscription revenue has never paid for the entire cost of producing a newspaper is beside the point.

    Isaacson isn’t arguing for newspapers without advertising. He’s arguing for newspapers to collect revenues from readers as well as advertisers.

    This was always the case before newspapers started giving away their content for free online.

    The biggest problem you “information wants to be free” types have is that the industry has followed your model. And guess what? It ain’t working.

    Meanwhile, Steve Jobs and Jeff Bezos grow rich selling content on the Web.

    There’s no reason newspapers can’t do the same.

  • http://www.mathewingram.com/ Mathew Ingram

    Rudolph, my point is that newspapers may well be able to charge readers directly — but not for access to the news. It’s just not going to happen, however much we might want it to. Do television networks charge viewers directly for access to the news? No. Do radio broadcasters charge their listeners for access to the news? No (satellite radio charges for music, not for news). So why should people pay newspapers? Because we want them to, and keep telling them that they should? That’s not going to make it happen.

  • Rudolph

    I see no reason to believe that people won’t pay for news, if they have to.

    What about cable subscribers who pay to get CNN, CNBC, Fox, etc.? That’s news. And that’s national and world news, a commodity these days, unlike local news.

    What about people who paid for newspaper content before the Internet came along, and those who still do even though they can get it for free on the Web? What were/are they paying for? The comics? Dear Abbey?

    People will pay for news, if they have to. It’s just that now they don’t have to because newspapers have believed the lie of Webnik culture that it all has to be free.

    If people had to pay for news, they would. What evidence can you muster that they won’t besides simply asserting that they won’t?

  • http://www.subhub.com Evan Rudowski

    Mathew,

    Good post. I know that people will pay for content. My company, SubHub, hosts hundreds of subscription websites on its publishing platform. I know that the trend toward paid content is growing, because we are growing at a rate of more than 10 percent every month.

    However, I also know what kind of content lends itself to paid content, and it’s not general news content such as what you’d find in the typical newspaper. People are most willing to pay for content that possesses four characteristics:

    * It’s unique and not readily available elsewhere (this rules out most commodity news content)

    * It’s fresh and frequently updated

    * It’s from an authoritative, trusted source in the relevant niche

    * It’s actionable — it enables the reader to make money, save money, further a professional activity or further a personal interest such as health or a hobby

    Some newspapers can tick some of these boxes but usually not all of them. They can adapt, and create more content with these characteristics, if they choose to.

    For now at SubHub we see very few newspapers amongst our clients. We do see print newsletter publishers who target specific niches, individual journalists, authors, experts and others.

    There’s no doubt that people will pay for the right kinds of content. That’s why I frequently weigh in against the “content must be free” types (“socialist digerati,” as Henry Blodgett recently called them) who reject the model outright.

    You are absolutely right, Mathew, to belittle those who think they can ever get away with forcing people to pay online for their standard, commodity news product. However, newspapers do possess the skills to create online content that people will pay for. They ought to be encouraged to go for it, rather than being told that the model can never work.

    Kind regards,
    Evan Rudowski

  • http://www.houndstv.com/wp02 Richard Budman

    Why even have the debate over paying for news content? If Bykofsky, Isaacson, or Carr think what their creating can be charged for. Go ahead and charge. Put up a pay-wall and see what happens to their audience.

  • John Boor

    The catch, as I see it, is that many newspapers still don’t understand that they no longer have a monopoly on news dissemination in their markets. Local coverage is their only monopoly, in many cases, but hardly enough to sustain themselves without providing compelling and interactive content beyond their traditional content.

  • http://www.kachingle.com Cynthia Typaldos

    The problem is broader than news and newspapers. Many venture-backed sites don’t have a business model. What’s the business model of the HuffPost when they run out of venture money? What’s the business model of Twitter? Of Facebook?

    Then look at World of Warcraft.

    And Craigsist.

    What Craig Newmark realized very early on, even during the dot.com bubble, was that revenue was going to be scarce. So he kept his company very lean, didn’t take venture money so he wasn’t forced to grow crazily in search for lofty valuations, and now he makes an outstanding profit (estimated by some to $90M a year). That’s not a huge business, but distributed amongst a few founders, it’s fantastic. http://www.avc.com/a_vc/2009/01/when-talking-about-business-models-remember-that-profits-equal-revenues-minus-costs.html

    While I don’t believe in walled subscriptions, I do believe that content has value, and some, even many, people would be willing to pay for it, if they got something in return. But the businesses that can be supported are going to be much smaller than the current ones.

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  • http://www.MediaSlackers.com/blog MediaSlackers

    Matthew – You make some good points. Especially when you discuss the quality of newspapers’ content vs the content of bloggers, however I believe that will change in time.

    My biggest problem (and I have many) with what Isaacson wrote, is that there still has yet to be a mea culpa for all of the wrongs wrought over the last decade. I have yet to hear little more than a half-hearted apology for “getting things wrong” with the lead-up to the invasion of Iraq from any of the mainstream newspapers. It is so much more than just “getting things wrong” and they know it. Content is king and unfortunately, in trying to please their shareholders, most of the content has gone to crap.

  • http://www.mathewingram.com/work Mathew Ingram

    Rudolph: People who pay for CNN, etc. typically do it as part of a bundle of channels, just as people who buy newspapers are looking for all kinds of things — including the comics, horoscope, Sudoku and other things unrelated to news.

    The Web allows them to get all of those other things from somewhere else, so charging people online amounts to charging them for news alone, and it doesn’t work. There is a single exception that proves the rule, and that’s the WSJ. Everyone else who has tried it has failed — or rather, has quickly realized that only a tiny proportion of their potential readership will pay, and even then not very much.

    That said, if newspapers want to try that route, I think we should go ahead and let them — it will quickly become clear that they are chasing rainbows, and the vast majority of their readers will move on to somewhere else.

  • http://www.daylife.com Upendra Shardanand

    Let’s forget about news for a second and ask this question about all web businesses:

    Over the past 15 years, has there emerged any purely online content business, that offers solely their own original content (e.g. has the cost structures of original content creation – not user-gen, not aggregation), that is a big business? In any category? Regardless of how it’s monetized, ads or user-pays?

    If we can think of one, there may be something to learn from that model. If we can’t, hard to imagine news will be the category that cracks that code.

    I’m racking my head to think of one, but can’t offhand.. ideas? Anything in gaming, perhaps?

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  • KP

    News & Information have been a vehicle to sell ads and/or applications such as research databases, financial terminals, etc. long before the Web has been invented. There’s nothing new to that. And maybe it’s not the best time to start to charge for content right now.

    Instead, newspaper publishers should keep on selling ads (don’t forget to develop better ad products!) and create useful applications (based on their content) which they can charge for. The money here is in mobile apps (AppStore, Android) and in b2b products such as sponsoring or white labeling.

    But whatever they’re gonna do, they definitely will have to stop complaining just because people don’t want to pay for pure information anymore — they never did …

  • http://sellingprint.blogspot.com MichaelJ

    I haven’t yet had the chance to read through all the comments, but wanted to add my four cents. The NewYorker has a minimal problem getting people to subscribe to the magazine (for money) and while “giving away” their content for free on the web.

    The New Yorker has earned an audience of readers. Newspapers serve or try to serve everyone. The fact is that readers are a niche market. The mass market are viewers and shoppers.

    Selling news to a mass market in a world of information ubiquity is a silly idea. News noise is the background of our lives. Most of what is disguised as news are either rewritten PR releases or slightly edited wire service stories or echo chamber repeats of the latest buzz.

    And people know it.

    It’s why John Stewart is such a great source of news. And people also know that.

    Until “important” journalists at “important” papers face the fact that newspapers no longer set the agenda for anyone except those in government, they are not going to figure it out.

    But there is no doubt in my mind that teams of journalists will focus on local news, get local advertising, contract to print and distribute their local papers.

    Google was started by two very smart very motivated people. Not by IBM or Apple or Microsoft. Given that the cost of entry is now very close to zero, and given that smart people live both in and outside newspapers, what exactly is the newspapers value add?

    There are some, but sooner rather than later, someone outside the industry is going to get it right. Then finally the terms of “saving the newspapers” will stop sounding like “saving the Auto industry.”

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  • http://paxpac.wordpress.com/author/abhayakara/ Ted Lemon

    Upendra: there are lots of sites that have done that, but by and large they are not large sites. Looking for successful big businesses in a strongly democratizing medium is inevitably going to come up short. Where you see the successes are in things like professional blogs that increase the success of the blogger in other arenas. Ars Technica and their ilk seem to do well enough. Boingboing is a mix of original content and commented links, and they seem to be succeeding.

    The biggest winners are winners that you disqualify by insisting that they produce original content: winners like iTunes, NetFlix, Amazon, O’Reilly.

    I think Netflix is an interesting example, because it’s cannibalized at least one sale from iTunes–mine–and I think that it illustrates the reason why people aren’t making money with micropayments, which is not what Mr Ingram proposes.

    I’m a reasonably well-to-do Internet user, meaning that I’m willing to pay more than the average person for the same object (or so I will claim for the sake of argument). So when iTunes started offering commercial-free TV, I went for it. Most of my TV consumption for quite some time was on the iTunes store.

    However, what I’ve found is $2/episode is too much. I want commercial-free TV, but I’m tired of paying $2/episode. I can’t believe that TV networks are getting $2/episode to rent my eyeballs for an hour, so why do they think that that’s a fair price to charge on iTunes? Don’t answer that – I don’t care.

    My point is that I eventually decided that if I have to pay $2/episode to get commercial-free TV watching, I’ll go back to waiting for the DVD. I get better video quality, and I pay less, because Netflix charges a flat rate per month, and I get all the TV I can really afford to watch for about $20/month.

    This amounts to about $0.25/episiode, plus some opportunity cost and hassle. Which I think proves that if iTunes were cheaper, I’d pay iTunes. I don’t mind paying for content. There’s just a limit to how much I can stomach spending.

    How does this relate to news? I think that money can be made selling news. I agree with one person who pointed out that while one might be willing to spend money on news, one is likely to feel poorly about spending money on poorly-researched me-too news, which is most of what the press has been producing for a very long time. But the idea that someone might pay for news is, I think, valid.

    However, the *primary* way that I use news is to find articles that I think are informative and share them. And the primary way that I find articles to share is through other people who do the same. So if your publication model forbids this, it’s probably not going to work. Because I do in fact treat news differently than I treat TV shows.

  • http://sellingprint.blogspot.com MichaelJ

    Ted,
    Thanks for the great “anthropological” study of the uses of news.

    The problem is not “bad” consumer. The problem is that most of the “news” is not worth paying even one penny for.

    Evan has it right. To be worth something, “news” has to

    * It’s unique and not readily available elsewhere (this rules out most commodity news content)

    * It’s fresh and frequently updated

    * It’s from an authoritative, trusted source in the relevant niche

    * It’s actionable — it enables the reader to make money, save money, further a professional activity or further a personal interest such as health or a hobby.

    For “news” it should be interesting and worth passing around.

    If newspapers produced something worth paying for, people would. If they don’t people won’t.

    It’s like GM,Ford and Chrysler. “Oh if only the consumer would buy our stuff, then life would be good.”

  • http://www.philly.com stu bykofsky

    Say Matt, I may be crotchety and you may not like my analysis, but I get facts straight.
    I never suggested or mentioned micopayments. That was Isaacson. I tossed out the hypothetical subscription sum of $5 a month.
    I never suggested in any way “if it wasn’t for the darn Internet we would all be a lot better off.” I guess that’s what you kids call “satire.” Right, Sonny?
    I did write — and you did not refute — that bloggers can’t replace journalists, and other outlets DO steal our content.
    You then — amazingly — note that Perez Hilton created a million-dollar business and Drudge and HuffPo get more page views than newspapers. (I don’t know if that’s true, in the aggregate), but the point is (sorry to “shout”)
    THEY ARE NOT NEWS SITES.
    Golly geepers, daddyslittlegirl.com does better than HuffPo. So? (I can do “satire,” too.)
    The point was this: If no one’s willing to pay for what newspapers provide — in-print or on-line — they will vanish and the Internet will be a much less informed place.
    Not that it’s so f’n well-informed right now.
    As you proved.
    Regards,
    Unsle Stu
    P.S.: Since I’ve already had a long, happy career, and have my defined pension, I have little personal interest in the ultimate outcome. As an American, I am concerned about newspapers, journalism, objective information and democracy. (Mostly old-fashioned concepts. So sorry.)

  • http://www.philly.com stu bykofsky

    Cx
    That should read
    Uncle Stu

  • http://www.daylife.com Upendra Shardanand

    @Ted: agree with your thoughtful analysis. The question I posed was certainly a bit fixed. It’s not going to be possible for news companies to be focused strictly on original content creation and achieve the scale they are used to, regardless of the monetization model. At a small scale, yes.

    Re: your point in your last paragraph. As Chris Willis says, “Navigation and convenience are the new pipes”, and the companies that offer that best in any category manage to build scale online.

  • http://www.mathewingram.com/work Mathew Ingram

    Thanks for the comment, Stu. As far as I’m concerned, $5 *is* a micro-payment — and yes, the part about us being better off without the internet was meant to be satire.

    As for whether bloggers can replace journalists, I didn’t refute that part of your argument because to my knowledge no one has ever argued that, and I certainly wouldn’t do so. It’s a false dichotomy. Blogs are just tools — anyone can use them, including journalists.

    I didn’t say that Drudge Report and HuffPo are news sites (although the latter has done plenty of breaking-news journalism). I said that they had built large online businesses by aggregating attention and influence, and clearly have lessons to teach when it comes to doing so.

    Do some sites “steal” content from newspapers? Sure they do. But Google — whom you mentioned specifically — does not, at least not according to any useful definition. The reality is that Google does newspapers far more harm than good, and more papers would benefit from thinking the way the New York Times does: open up access to your content, don’t close it off.

  • http://sellingprint.blogspot.com MichaelJ

    Dear Uncle Stu,

    I too am an OCB. as in Old Cranky Bastard. No longer in the game, watching and kibbutzing from the sidelines. So in the true Boomer spirit of “If everyone would only listen to me. . . ”

    You said “The point was this: If no one’s willing to pay for what newspapers provide — in-print or on-line — they will vanish and the Internet will be a much less informed place.”

    To which I respond, newspapers mostly delivered an inferior product since the invention of the mechanical web press. This revisionist bs about how great newspapers are is just make believe.

    Our news is very inferior once you judge against the product that is delivered in the UK, France or Germany.

    I was around during Vietnam War Days. I remember the news reporting then. It was about as dumb as the lead up to the war in Iraq. Nowadays it seems that everyone was against the war. That Walter Cronkite changed the world by showing war footage.

    Please, give me a break. I was with folks who were against the Vietnam War starting in 1965. It was not pretty. I had to read IF Stone, a one person blogger in Print. and had to learn French (ugh) to read LeMonde.

    So. . . .Uncle Stu,as one OCB to another,
    having a vibrant press that functions to inform our citizens and nurture an intelligent, civic public discourse is a really good idea.

    My bet is that it will be invented any day now.

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  • http://www.mathewingram.com/work Mathew Ingram

    @MichaelJ: I’m glad you mentioned I.F. Stone, who I think would almost certainly be blogging if he was still around.

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  • http://brasstacksdesign.com Alan Jacobson

    Permalink: http://www.brasstacksdesign.com/bell_tolls_for_time_too.htm

    Time thinks it knows how to save your newspaper. But its “Modest Proposal” is delivered in a form that is remarkably modest itself – its 56 pages are barely thick enough to shim a coffee table, let alone support an entire industry.

    Time may be girded in gravitas, but its physical presence lacks heft. The pot is calling the kettle black while newspapers and magazines head into the red.

    Newspapers may want to fight back, but against whom? Craig Newmark, the guy who reinvented classifieds, or Al Gore, the guy who invented the Internet?

    A recent commenter on Alan Mutter’s superb blog said, “The problem with media companies is that they don’t know how to build a successful website from scratch. Very few newspaper and local media companies have successfully established new web enterprises that weren’t leveraging their local brands.”

    Mutter calls this failure “profound.”

    “The reason young people don’t gravitate to newspaper websites is that most sites are more newspaper than web: staid, static and largely un-interactive. In other words, 1995-style shovelware won’t cut it.”

    While Mutter delivers answers, Jeff Jarvis asks “What Would Google Do?” Based on Jarvis’ book, it’s safe to assume that Google would not deploy the kind of lackluster sites that Jarvis directed for Newhouse’s newspapers until 2005, where he was president and creative director. Ultimately, it’s these people who are responsible for the failure of newspapers to monetize online, which ultimately is driving the downfall of newspapers.

    Here’s something else Google wouldn’t do: create new sites mired in old thinking. Globalpost, minnpost, voiceofsandiego and stlbeacon will fail because they merely replicate the content and revenue strategies that haven’t worked for newspapers. None of these can generate the cash they need to be sustainable. That’s why they depend upon handouts.

    But consider this:

    Sites like realpeoplerealstuff, videojobshop and tweentribune represent the new breed of news and advertising sites. These sites embody the new fundamentals: niche, youth, usability, UGC, geo- and demographically targeted advertising, stickiness, video, automation, mobile, distributive editing and fun.

    These sites are coming to your town – with or without the local newspaper’s imprimatur. But they’re coming.

    So go ahead. Pick up the current issue of Time. Its slimness speaks volumes.

  • http://sellingprint.blogspot.com MichaelJ

    The real problem is that the “building the right website” ship has already sailed. Hard to admit, but there it is.

    Before airlines, the railroads had a window of opportunity. Once airlines happened, that window closed. Now I notice that railroads are pitching their core business – move lots of big stuff, cheaper than anyone else. But it took 50 years. Lots of people got fired and management time wasted by lobbying Congress for subsidies.

    Same thing here. If newspapers had moved faster, they had a chance. But it was a very dangerous business. Consider AOL and Pets.com. You can’t really blame nice profitable newspaper companies to be risk averse.

    But that was then. This is now. They better figure out how to use the web to identify fans, nurture them until they grow in to tribes. Then invent new stuff – mostly Print products – to sell to the tribes.

  • http://sellingprint.blogspot.com MichaelJ

    Sorry, but I had to get on my little soapbox. . .

    Or go into the education business. Both supplying relevant content for on demand content specific workbooks. Or start schools and get the money that is floating around for education.

    Consider the NY Times (or your good newspaper of choice) Graduate Institute of Journalism. Who wouldn’t want to pay $20 to $30K to go there, if they could get in? I bet you could fill the incoming class within 4 days of announcing it on a website.

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  • http://sellingprint.blogspot.com MichaelJ

    Michael Kinsley has an interesting op ed piece about this issue in today’s NYTimes. I put my own spin on a snippet of it at http://sellingprint.blogspot.com/2009/02/its-paper-stupid.html

    I think he’s got it pretty right.

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  • andrew

    Matthew,
    I’m at at a mid-sized paper in Canada. We have been wondering about something that, on the surface, sounds totally crazy: What if every news operation, small, medium, large, got together and decided to put up pay firewalls at the same time, same day etc? I understand it would be a logistical nightmare (converting sites to flash so they couldn’t be copy and pasted etc.) but as a theory, is it even remotely workable?

  • http://www.mathewingram.com/work Mathew Ingram

    Thanks for the comment, Andrew. That doesn’t just sound crazy on the surface — it sounds crazy all the way through :-)

    I just don’t think that’s going to work, and on top of that I think it’s a head-in-the-sand kind of approach, or an attempt to turn back the clock. That ship has sailed (okay, I’m out of trite analogies now).

  • http://sellingprint.blogspot.com MichaelJ

    Andrew,
    I think a much better approach would be to use the web to identify tribes that are interested in particular kinds of articles or features. Use analytics you will be soon be able to figure out their neighborhoods.

    Then produce versioned newspapers to deliver to those neighborhoods articles about things that you already know people care about.

    Then make the money by selling Local business and no profits (hospitals, day care centers, etc) that are close to those neighborhoods.

    Walling off content on the net is just not possible. There are not enough people who will pay to get through.

  • TroyE

    The internet is a cheap, efficient way to deliver the news. Why hasn’t advertising followed newspapers to the web? That’s what’s holding up this whole transition. Online newspapers wouldn’t need as much advertising because you wouldn’t have any printing or delivery costs.

  • http://sellingprint.blogspot.com MichaelJ

    Tory,

    It’s because the amount you can charge for a web ad is so much less than you can charge for print ad that it doesn’t make enough money to support an outfit, unless the company has a very, very low overhead.

  • TroyE

    It surprises me that newspapers can’t charge as much for online advertising even though newspaper websites have higher readership. Either online advertising is ineffective or advertisers refuse to adopt the technology.

    Michael Ingram’s third paragraph says it all. Advertising always has paid for the news. Advertisers will determine the fate of online newspapers. I would like to hear from advertisers why they aren’t buying online ads. Once they do, this issue is moot. Newspapers then will deliver news – and ads – instantly and effeciently on the web.

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