David Lazarus apparently hasn’t gotten the message:
I’ve said it many times, but it’s worth repeating: Newspaper readers don’t pay for content. They never have. They pay for delivery. They won’t pay for newspaper content online because they’re already paying for delivery via their computer and their broadband fees.
I can’t see many newspaper.com managers who are growing significant revenue now with free content putting all of that at risk to experiment with a questionable pay model.
BTW: I think it displays the depth of Mr. Lazarus’s cluelessness about our industry that he apparently doesn’t even know who Dan Gillmor is.
There was “citizen journalist” Dan Gillmor letting me know that I got everything “almost precisely wrong” and that I sound “pathetically whiny.”
Previous posts:
- It’s hard to conclude that TimesSelect is a success
- News has always been free, and always will be
- Readers have never paid for newspaper content
UPDATE: William Hartnett has an excellent take on Lazarus and his unwillingness to address the substantive criticism of his position by industry experts and instead dismiss his critics as opinionated bloggers.
Amazingly, Lazarus does not link back to any of the “heated reaction” in the blogosphere.
Perhaps there’s good reason. If he had, for instance, linked to “citizen journalist” Gillmor, he might have undone his assertion that all of the online reaction was fact-free whining.
Gillmor, who even starts off by tipping his hat to Lazarus (“normally an excellent columnist”), spends much of his time addressing the lack of precision in Lazarus’ column, including this:
Lazarus also points out that newspapers would violate antitrust law if they did something like this (or started charging for their content) in concert — demanding royalties. Then he suggests an exemption from antitrust law, but observes that this is “no less problematical, not least because of the symbiotic relationship between politicians and the press — you don’t want special treatment for a business that spends much of its time covering the very people who’d grant such a boon.â€
He’s apparently forgotten that the industry already enjoys the odious Joint Operating Agreements law that lets two “competing†papers combine business operations in a city, creating a monopoly. His own paper was the beneficiary of such a deal until fairly recently.
Thanks for the comment, Tim.
I decided not to get into the issue of him cherry picking quotes and who to quote. There’s been many thoughtful responses to his original column. He didn’t respond to or acknowledge criticism that undercut his argument.
Actually, Dan Gillmor is known for his work on citizen journalism.
Todd, that’s one of those things that’s hard to argue. As soon as you say, “Dan’s more than a citizen journalist” it sounds like you’re dismissing citizen journalism. But to make the only reference to Dan as “citizen journalist” does mislead readers as to his expertise in the field.
If newspaper readers don’t pay for content, then why would they continue to subscribe to newspapers in niche categories? (ref: Link)
http://themediaage.com/?p=30
Kyle, my only comment would be, read my other posts. I think I address that issue. I think the answer is pretty obvious, really.
Regardless, I think it’s pretty obvious that David Lazarus knows who Dan Gillmor is — just as Gillmor is familiar with David Lazarus. IMHO, I think it’s clueless to assume otherwise.
A newspaper cost structure is ~20% distribution and ~15% printing, and consumers pay subscription fees to cover the cost of distribution and printing. Online distribution should dramatically reduce 35% of newspaper cost so therefore it can be freely given away online. The “free weekly†model has been around for years.
Let’s put newspaper content in perspective
The same logic would work for gasoline… Imagine if I said consumers don’t pay for gasoline, they pay for its distribution. It costs ~20% to refine crude and ~10% to distribute gasoline. If everyone could get a gasoline pipeline to their car, would you still say consumers don’t pay for gasoline? Gasoline makes my car work. News content makes my head work. Now, if someone else came along and siphoned off that gasoline and gave it to me for free (but made me watch advertisements) would that be fair? Does that mean that “I don’t pay for gasoline?â€
Attribution of revenue and cost structure is arbitrary; the real problem is the attitude
It doesn’t matter how you attribute parts of the cost structure to parts of the revenue structure. The issue isn’t with distribution costs, the issue is that news creators are bearing the weight of the cost structure (distribution AND people AND management etc) and others are benefitting from that content. People may be forced to pay for content as long as they think that content should be completely free and open for the entire world to redistribute and monetize.
It is an “entitlement attitude†problem and will force newspapers into the RIAA and MPAA mindset unless the attitude changes. I’m not arguing for a subscription model online, but I think the attitude will create unwanted actions from the newspaper industry.
http://themediaage.com/?p=32
Kyle, that’s a good argument.
What I’m saying is we’ve trained subscribers for a hundred years or so that their subscription fees pay for delivery. I used to do subscription sales (in college) and that’s exactly what we told subscribers.
We’re not going to change that mindset.
Besides, there is too much money to be made online from giving it away. And, the fundamental nature of a networked economy would be violated to charge for it.
Somebody who knows both men IM’d me yesterday and said Lazarus was just taking a shot at Gillmor.
If that is true, that’s even worse — to use your column is mislead readers about a person’s credentials in order to facilitate a personal grudge.
Kyle, there are a couple of things I don’t get about your post (which I re-read on your own blog).
1) You say about gasoline — what if somebody else came along and siphoned off the gas and gave it away for free as long as you watched the advertising. My question: Who is siphoning off newspaper content? We give it away our selves. I don’t think your analogy quite works.
2) It doesn’t address the fact that online, consumers pay for distribution, not publishers.
3) There is non-physical way to get gas from the refinery to the pump, so it makes it hard to overlay this analogy with digital distribution.
4) Counter to my own argument, somewhat is that there are tangible goods that people buy and also pay distribution costs — anything you can buy on Amazon for example. The issue here is though, consumers picking highly targeted, individual interest items, whereas a newspaper web site is an untargetted general interest item. To target it and charge for it, right now, I don’t think the cost structure scales.
5) I don’t get “as they think that content should be completely free and open for the entire world to redistribute and monetize” since that’s not happening.
Who is redistributing newspaper content? Not bloggers. They merely pull quotes and combine with other sources and their own expertise to create commentary. Very few of them make money at it. That’s not redistributing and monetizing. Google doesn’t monetize its News site, though news results that show up in organic search run AdWords, those results are merely links and headlines that lead to more traffic for news sites.
In fact, online news has benefited tremendously from the rise of bloggers. Bloggers send traffic to news sites. The bigger the news organization, the bigger the benefit. One of the challenges of smaller news organizations is to create a network of community bloggers in order to benefit from the same effect. That’s been a goal of mine that I’ve been working on for years.
I just don’t know anybody who is redistributing and monetizing newspaper content on any scale, any scale that would matter.
6) I don’t get “will force newspapers into the RIAA and MPAA mindset unless the attitude changes”
This just doesn’t make any sense to me.
Of course, you’re talking to the guy who slapped Creative Commons on all his company’s newspaper web sites.
Howard,
It isn’t the perfect analogy and you make a good point that newspapers are giving it away. That is what is weird about this whole thing. There is expressed interest in licensing content (http://themediaage.com/?p=17). Content licensing is focused at aggregators and ISPs.
Anyway, I think the best way to solve the problem is to prove to newspaper companies that they can make money online. Cash is king. Send me an email, maybe we can set up a brief chat about monetization strategies (kyle@themediaage.com).
Kyle, newspaper companies know they can make money online. And it’s not by charging for content.
The big questions come — as I’ve written about before — about the speed of brining online revenue into the pipeline quick enough to off set print loses, and what happens if the print product ceases to be viable before online generates revenue sufficient to support newsroom costs.
But there’s lots of ways to make money online.
What do people pay for? Convenience, expertise or exclusivity. A few random analogies:
Many people give away their cooking, but many people still pay for cooking. Some make minimum wage by selling their cooking (convenience) and a few make a high salary (expertise and exclusivity.)
There’s a lot of free radio and television programming, but many people pay a monthly bill for TV shows (convenience with a better signal, expertise with better programming, exclusivity with programming rights.)
Can newspapers sell convenience, expertise or exclusivity? The Wall Street Journal sells expertise and exclusivity.
Look at how Major League Baseball has worked hard over the years to stop giving away its product and turn it into a monthly bill.