Never before has the demise of an industry been so ironically well chronicled as the fall of the newspaper industry, or so says my professor Dan Gillmor, a new media investor, advisor and entrepreneur.
It’s true, and this column reflects the editorial bias that the failure of the news industry is a big deal.
Rupert Murdoch doesn’t think newspapers can survive if e-tablets — think Amazon’s Kindle — fail. If they fail, “newspapers will go out of business. All newspapers,” said Murdoch, who is easily one of the biggest stakeholders in media.
He’s probably right. And this argument doesn’t apply just to newspapers or even just to businesses that produce news.
Unless consumer habits change radically, the future of online content might be free. This is a major threat to basically everyone with a stake in text or video — book publishers, TV producers, pornographers, entertainment companies and universities.
Any business that exists to disseminate information or media, it seems, is at risk. Most of the time, free content doesn’t make enough money on the Internet.
Murdoch believes the future lies in consumers paying something like $15 each month to access news on an e-tablet.
“There is just not enough advertising to go around for all the sites on the Internet,” Murdoch said in the interview.
It’s pretty clear that advertising, particularly in newspapers, has been inflated for decades. It doesn’t come close to covering the cost for news.
As a local example of that, The Arizona Republic has the most-trafficked news Web site in the state, azcentral.com — yet the absolute majority of the Republic’s revenue comes from print products. Most of print media, of course, will likely be gone within a decade or so.
And good journalism doesn’t necessarily translate into a better bottom line. Even after winning the Pulitzer Prize, the pinnacle of journalistic achievement, the East Valley Tribune will shut down this December.
So can subscriptions become the business model? There have been countless failed attempts, tried by CNN, Slate, and others, to get news readers to pay subscriptions. Online, it rarely works, with the exception of niche and highly specialized services.
Locally, The Arizona Guardian, a subscription-based online news site that reports on Arizona politics and government, is actually making money, according to its founders, who I’ve spoken with informally via e-mail and at a conference last week. Of course, The Arizona Guardian is a highly specialized service: it likely counts some of the most well-connected people in Arizona as its readership base, though the site currently isn’t releasing numbers for subscriptions.
Many media companies are looking into online subscriptions. Hulu, the highly successful video-sharing site, recently announced it will move to a fee-based business model some time next year.
According to the editor of The Financial Times, a British business publication, “almost all” news organizations will charge for content within a year.
This could be a great success story: Media companies find a way to radically transform consumer habits with some kind of pay-as-you-go model. For the most part, I have little faith. Consumers have shown over and over again little willingness to pay for news online. iTunes was successful at getting people to pay for music, but there were still 40 billion illegally shared music files in 2008, according to British newspaper The Guardian.
If subscriptions don’t work, nonprofits and public-subsidized news entities will likely fill the void. And if Murdoch is right, if people don’t buy newspapers on the Kindle when they’re free online, it will be the virtual demise of private-sector journalism.
Reach Matt at matt.culbertson@asu.edu.
