Way back in the olden thymes, American newspapers made the decision to give away their content on-line. It never made a lot of sense, as circulation had been falling for a long time and there was no model for monetizing on-line content, other than porn. It was a classic example of people getting caught up in a fad, without thinking through the consequences. The result has been decades of steep revenue declines, bankruptcies and layoffs at major broadsheets. Warren Buffet thinks all but three newspapers are doomed.
The funny thing about what has happened to newspapers and the news media in general, is they still don’t seem to understand what has happened to them. Maybe in the business offices they see the reality of their situation, but the people in the media, like reporters and editors, seem clueless. It’s as if they believe some sort of bad juju is the cause of the trouble in their business. You see that in this post by Megan McArdle on the growing number of news sites that are adopting a subscription model for their sites.
For more than a century, magazines and newspapers were what’s known as a “two-sided market”: We sold subscriptions to you, our readers, and once you’d subscribed, we sold your eyeballs to our advertisers. That was necessary because, unbeknownst to you, your subscription dollars often didn’t even cover the cost of printing and delivering the physical pieces of paper. They rarely covered much, if any, of the cost of actually reporting and writing the stories printed on those pages. And you’d probably be astonished at how expensive it is to report a single, relatively simple story.
But that was okay, because we controlled a valuable pipeline to reader eyeballs — a pipeline advertisers wanted to fill with information about their products. You guys got your journalism on the cheap, and advertisers got the opportunity to tell you about the fantastic incentive package available to qualified buyers on the brand-new 1985 Chevy Impala.
Then the Internet came along, and suddenly, we didn’t own the only pipeline anymore. Anyone can throw up a Web page. And over the past 20 years, anyone did — far more than could support actual advertiser demand.
This is exactly backward. Sure, there was a period when the local paper often had a monopoly on news in their distribution area. Once radio and TV got better at delivering news, circulations declined. The reality is the newspaper was a delivery vehicle for employment ads, classifieds and circulars. The news was “free” because people were willing to pay a small fee for the ads, oddly enough. Sure, some portion of the readership would pay for the news, but nowhere near the majority of the subscriber base.
At the moment, in concession to your feelings on the subject, most paywalls are relatively porous. (Yes, we know about the tricks you use to subvert them.) But as more and more publications move behind paywalls, you should probably expect that to change. The less we have to worry about competition from free sites, the more those paywalls will tighten. (To be clear, this reflects my opinion based on analysis of industry-wide economics, not any knowledge of employer business strategy, current or former.)
And that will be a sad thing, because the old open Internet was a marvelous gift to readers, a vast cornucopia of great writing upon which we’ve been gorging for the past two decades. But there’s a limit to how long one can keep handing out gifts without some reciprocity. At the end of the day, however much information wants to be free, writers still want to get paid.
The amusing thing about this post is the writer carries on like media people were doing us a huge favor by providing “free news” on-line. Now the proles have to suck it up and pay the toll so the chattering skulls can continue in the lifestyle they have become so accustomed. The reality is going to much different. As it stand, the only news site to make a pay model work has been the Wall Street Journal. No one really knows if a subscriber model will even work, much less keep the army of chattering skulls in six figure salaries.
The sinister part of the post is “the less we have to worry about competition from free sites, the more those paywalls will tighten.” That’s their dream. If they can starve everyone else of revenue, then they will whither away. At that point the desperate public will rush to pay the establishment propaganda organs for the right to be lectured. These people are so ridiculously entitled, there is no doubt they believe this is possible. The fact is, if Megan McArdle gets hit by a bus tomorrow, more people will be worried about the bus.
The way to look at the news “business” is as something other than a business. For a long time, elite propaganda was financed by a monopoly of the delivery of small ads. Then a group of rich guys figured out how to take that business away. Cable news is facing the same problem. They got to tax every cable home a buck a month to finance government class propaganda. Now cord cutting is killing off that model. What’s about to happen is the rich people will have to pay for their own propaganda, by subsidizing these news sites.
What that means is far fewer chattering skulls living six figure lives. If Megan McArdle had to earn her keep like the various YouTube stars or alt-right figures, she would be taking in borders and doing laundry for the neighbors, in addition to her weekly column. But, none of these people can see what’s coming, because they believe their own BS. They really do think they are a priestly class that gives a greedy public the truth they demand. Tucker Carlson was right about these people. They are stupid rich kids. Deluded ones too.
This post has already been linked to 3555 times!