Sin or sense?

Oh, no, the “original sin” meme of newspapers not charging for content is rising again. Sigh.

Dick Tofel, general manager of Pro Publica and former assistant publisher and assistant managing editor of The Wall Street Journal, is a very smart and reasonable man and he has written a smart and reasonable Kindle Single (enabling him to charge as a matter of metaphor) about “why newspapers gave away the future.” But his case is not exactly what it appears, for this is more of a history than a reverse-Reagan (that is, “Mr. Gorbachev, build this wall!”). Tofel writes (his emphasis):

[T]o say that a monumental mistake was made in 1995-1996 is not a prescription for business models in 2012. Consumers have been accustomed to a cornucopia of free content for nearly a generation now. And the newspaper industry is, in many places, a shadow of what it was in 1995…. This has been a meditation on one of those hinge points in history, not an exercise in nostalgia or a call to somehow repeal the past.

In the end, he is asking us to value journalism for the future. On that, we agree. But on history, not so much.

After setting out a well-written review of newspapers’ entry onto the net, Tofel argues (my emphasis) that “it must follow that the decision to give away newspaper content was a mistake, that an alternative future in which nearly all newspapers sought to charge for content on the web, just as they had charged for it in print and on the online proprietary services, would quite likely have produced a happier outcome.”

I could argue that newspapers were doomed to lose their monopolies and thus their pricing power over both content and advertising and that continuing to execute a business model based on controlling a scarcity would lose to those able to exploit the economics of abundance created by the net — read: Google. But I won’t argue that now because this has been argued so much before.

I could argue that all newspapers pricing in concert would have been antitrust and that it would have taken only one to ruin the game. But I needn’t argue that because that’s just what happened (I lived through the industry’s disastrous attempt at conspiratorial collusion, the New Century Network).

I will argue in a piece in the Guardian on Monday that it might also prove to be a mistake to see ourselves in the content business when others use content, including our content, as a tool to generate signals about people so they can extract much greater value out of that knowledge — read: Facebook. But I’ll save that argument for next week.

Instead what interests me about Tofel’s thesis is his cultural contention that newspapers fell victim to West Coast vs. East Coast thinking — a variant of the SOPA/PIPA worldview of Northern California vs. Southern California. Read: Silicon Valley vs. Hollywood; Silicon Valley vs. Sixth Avenue; technology vs. intellectual property; platform vs. content.

I hear this argument in other, more emotional and less reasonable terms often. I hear it when my ilk and I are accused of being internet utopians or technological trimphalists. I hear it even back to arguments over Gutenberg and technological determinism.

There was indeed a meeting of the Future of News conspirators only a week ago. But at any such gathering, I never hear anyone predicting or even longing for a utopia. I never hear them say that the outcome of this change is certain, only that change itself is certain. The real difference I hear is between those who welcome the change and fret over it, those who see opportunity and those who see destruction. Read: the disruptors vs. the disrupted.

“[T]he insecure management teams of the newspaper companies chose to follow the supremely confident leaders of technology in making some of the key strategic choices posed by the rise of the web,” Tofel writes (my emphasis). There he is blaming the technology cult for leading the newspaper institutions astray. Oh, he gives much blame to the institutions’ proprietors, especially for killing their own efforts at innovation and collaboration.

But he’s really blaming the newspapers for answering the siren call of the geeks. “Simply put, the notion that ‘information wants to be free’ had become Hip [his capitalization], and the idea that readers should pay for content online as they long had in print had become Square. Publishers, never the most self-confident bunch even in the most stable of times [ed: oh, how I disagree with that, having rarely witnessed such hubris as I witnessed among newspaper executives], desperately sought to be regarded as Hip as the new technologies roared across the landscape of their business, threatening to upend everything.”

In the end, Tofel reduces the economics of the net to the level of a fad. There’s where we fundamentally disagree. He tries to impose the industrial economics of scarcity and print and local monopolies upon the net’s economics of abundance and bits and openness. That’s what didn’t compute.

Oh, yes, we can debate the hypothetical of what would have happened if…. We can debate whether The New York Times pay meter works — but please first define “works” for me, as the company is still shrinking. Once I agree that I want the Times plan to work and tell you that I subscribe to the paper, then we can debate whether the walls will work or are working elsewhere. But none of that leads to a sustainable business strategy for news in a new reality. I believe we are in a new reality and that old models and old rules need not apply.

Tofel ends by imploring us: “In short, this time we need to do better” for journalism. He has done very well for journalism, helping to found Pro Publica, which is doing great work both in investigative reporting and in new models of collaborative reporting. Except it’s not economically sustainable. That is, it’s not a business. It has to beg for charity. Though that charity is well-deserved, there’s only so much foundation money to go around and that, I think we’d agree, is not how journalism will survive or prosper in the future.

This is why I started the Tow-Knight Center for Entrepreneurial Journalism, to help students and entrepreneurs find new and sustainable models. I’ll have you know that just yesterday, I had a meeting with an entrepreneur about charging for content and I’m about to commission a study on best practices in paid and free newsletters to help. I’m not opposed to charging for content. I just don’t think it’s the solution that got away.

I also am not sure that concentrating on the past is where we are going to find those solutions. Oh, yes, there are lessons there (that’s why I’ve gone farther back and become obsessed with Gutenberg and his disruption). But the risk — the siren’s seduction of the recent past — is that we’ll still think we can maintain the old ways in a time of disruption. I think we have to be willing to throw out old assumptions so we see new opportunities.

And that’s what I think the newspaper industry failed to do because it still thinks its job is to make and sell content when I think its job should be to serve and enable their communities — read: Facebook and Google, which were able to find new value in content.

I do recommend reading Tofel’s essay (it’s only $1.99) as, again, it is well-written and researched and smart and reasonable. But then I also urge you to take the assumptions made by the industry and reflected in it and question them.

  • I’ll grant Tofel that charging for online newspaper content from Day 1 would have likely slowed the exodus from print subscriptions, thus temporarily improving the business prospects of newspapers. But such a move may, however, have hastened the winds of change that are starting to blow now.

    More and more entrepreneurs are creating bootstrapped local news websites and discovering that you can survive and even thrive when you’re of, for and by the community; when you keep your costs low and your enthusiasm high; and when you offer cost-effective advertising solutions and friendly customer service to fellow local business owners. There are maybe 100-200 of us now, but our numbers are growing because the opportunity is there and the decline of newspapers is making that opportunity even more attractive as time goes on. We would love nothing more than for all local newspapers to go behind a paywall — it would drive even more readers and advertiser dollars to us.

    The bottom line is that creative destruction is happening. The newspaper business model, as Jeff says, is clearly outmoded in the 21st century. But the good news is that new business models are emerging, and they’re producing good, sustainable journalism in the towns, cities, and counties where an entrepreneur has decided to give it a go.

    It’s time for the creative business thinkers of the journalism world to stop banging their collective heads against walls trying in vain to think of ways to sustain a few $100 million/yr operations. They should instead focus their energies on ways to assist the creation of lots of $100,000/yr operations.

  • We’ve seen this same story play out not just in journalism, but in music, movies, telephonic (and other) forms of communication. Is there any way in which the production of “journalism” is unique? I’m not confident I could think of any. This whole “trust” think is pretty nebulous. I may trust the Wall Street Journal one week, and not so much the next. That shift might be from a change in ownership, a change in distribution methods, or even a single article (my change in attitude may or may not be justified by the facts).

    While each of us as “producers” be it as an entrepreneur or employee may have to struggle with the need to support ourselves that new technologies present, few can argue the benefits that come to us as “consumers”.

    I think the largest problem we face is that the benefits of technology have not been further extended to the other “cartelled” aspects in our lives such as law, medicine, education and government, to name just a few. If those of us that view ourselves as displaced by technology (true or not) didn’t have to live in a world of resources successfully controlled by people who don’t actually own them (“information wants to be free”) then we would have a bit less anxiety about where the next paycheck comes from or how big it is. Not none, but less. We can save the issue of cartels for food clothing and energy for another age.

    Disintermediation if it is a disease, is one we should all hope spreads more quickly, not more slowly. Like pay equity around the world, it’s only painful until everyone has it.

  • to help students and entrepreneurs find new and sustainable models.

    The “On the Media” jingle immediately popped into my head, and now it won’t leave…

    I just heard an interesting discussion on the Planet Money podcast about what makes Apple’s app store market work as a business model – people already have all their payment info uploaded so they just need to click a button to pay. I wonder if something similar could work for news – maybe you get to read the first few paragraphs for free and then click a button to pay a penny or nickel for the rest.

  • Ric

    “Tofel ends by imploring us: “In short, this time we need to do better” for journalism.” … in that aim, I fully support him. But where does “doing better for journalism” mean supporting the obsolete business model of the newspapers that have traditionally employed them?
    I’m convinced we need good journalism more than ever, but we don’t need newspapers for it anymore.

  • Andy Freeman

    People will pay for good, valuable, and unique contents. They’ll probably pay for valuable and unique or good and unique.

    However, they won’t pay for good and valuable content that isn’t unique.

    Content that is merely good doesn’t have a chance.

    And no, “unique” doesn’t mean “written by my writers”, let alone rewritten – their mothers might care but no one else will.

    No one will pay for rewritten press releases.

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  • Earl Mardle

    What Tofel, and even Jeff, misses is that Newspaper content has ALWAYS been free.

    With a cover cost of about $1.60 a day for a copy of my local paper of record, I would bet that I am barely covering the cost of cutting down the trees and processing them into the chip-wrapper plus delivery to my door.

    Let’s be charitable and say it costs a buck and that leaves 0.60 for the content. Even subtracting the egregious amount of advertising that I am paying to have delivered to my eyeballs, there are still many hundreds of column inches of actual news at pretty much indefinable cost. Its long been the case, the news is the bait so its free, the product is the readership and the real customer is the advertiser, simple.

    The real problem for the papers is that we have been forced to pay for the network to be rebuilt every day to deliver a pile of stuff we didn’t actually read. That was a very profitable model for a long time and empires have been built on it, OF COURSE they are screaming when those empires are being dismantled, nothing new in that either.

    But its always been the case, the incumbents never see what’s coming until well after the barbarians are inside the gates and everything they, and incidentally we, say about it is essentially hot air. Its not GOING to happen, it has already happened and we are just watching the process play out.

  • Richard Watkins

    Jeff — Have you seen this really clever video about the death of newspapers and how it’s a story that feels eerily familiar? It’s a very smart and funny analysis. Take a look: Richard

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