Monday, February 23, 2009

Information Wants to be Free... But not Cheap

L. Gordon Crovitz recently wrote in the Wall Street Journal, that "Information Wants to Be Expensive." It's good to see that at least some people remember the rest of the original "Information wants to be free" quote.
He correctly points out that newspapers and other news outlets are struggling with lower ad revenue, and that the dot-coms who mocked subscription-based news sites are now gone.

But I completely disagree with his conclusion the solution is to start charging subscriptions.
You local paper is not the Wall Street Journal. It would be foolish to think they play by the same rules.

I agree that advertising won't save publishers this time. Print ads are paying nothing and online ads are worse.
But he's missing the the point. WHY are news organizations bleeding cash, and why won't advertisers pay?

  • Classified Ads are gone. This cash cow of the local papers died in the 90's and the bloated corpse is still stinking up the business plans. Craig's List owns this business now - deal with it.
  • Commercial advertising is way down on both print and online fronts.
  • Paid circulation is down across the board.

  • Reporters. Bodies cost money. Good reporters cost good money.
  • Printing. Hard goods = hard costs.
  • Delivery. Costs money to deliver the goods.
  • Management. The local papers I've encountered were family operations who were, frankly, lazy managers. The newspaper gig was too easy and they didn't have to work for it.


Mr. Crovitz correctly asses the bulk of local content as "not worth paying for in any medium."
  • The Democratic National Convention credentialed over 15,000 reporters. How does this make sense? The cost must have been incredible. How many original stories can the system afford to produce?
  • Extended new coverage just results in journalists or commentators interviewing other "journalists."
  • Many news organizations have cut senior staff in order keep costs down. The young-and-hungry reporters often fall short.
  • "Fluff" news has to compete with bloggers and enthusiasts who will write for free.

So we're left with a huge glut of low-quality content.
Who would want to sponsor that?
Of course ad revenue is down!

So, my conclusion is the News Industry as a whole is simply too big. They no longer have 2000 "local" news outlets living in isolation. They have one outlet: the interconnected networked feed. People are creating their own "outlets." News organizations are just content producers and they need to realize they are competing with each other and the "citizen journalists" for readers.

Subscriptions aren't the answer. NY Times learned that lesson: Editors hidden behind a subscription wall become less relevant than their freely accessed counterparts.
Very few (maybe no) general news organizations have enough brand loyalty to demand a subscription for online content. (Wall Street Journal and other publications with specific content niches, can, of course, make a case for subscriptions.)

Micropayments won't help either: You won't know you want the content unless you've seen it.

Advertising and sponsorship
are potentially viable, but not with the current number of competing outlets.

So how can local new outlets get paid?
They can't. As long as they think of themselves as outlets.

Flip the model. Make the local reporters all stringers or "bureaus" for consolidated news sources.
Why should they be out trying to sell ads when they could concentrate on reporting and journalism?

OK. That's actually quite depressing.
The days of the town crier are gone.
It appears the age of the "local news outlet" is coming to a close.
Looks like very small, independent, journalism teams are the likely next stage.

Don't get me started on the implications for national news and wire services...

Stewart Brand's Information Wants to Be Free comment:
"Information wants to be free (because of the new ease of copying and reshaping and casual distribution), AND information wants to be expensive (it's the prime economic event in an information age)... and technology is constantly making the tension worse. If you cling blindly to the expensive part of the paradox, you miss all the action going on in the free part. The pressure of the paradox forces information to explore incessantly. Smart marketers and inventors quietly follow-and I might add, so do smart computer security people."

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