After reading my “No More Free Content” post, a colleague observed (in an email) that information consumers “pay” for content with both attention (”monetized and sold to advertisers”) and “direct payment to content producers.” [Note: there is no direct payment for broadcast TV, radio and alternative papers like The Seattle Weekly or The Stranger.]
This colleague believes that the challenge facing newspapers is not a “paid vs. free” issue. Instead, the challenge is the ratio of “monetized” attention to direct reader payment.
Attention (monetized or otherwise) is finite, limited. For example, if I only have 40 minutes or so for “TV,” if I choose to watch DoctorWho, then I can’t watch Lost. (I know it’s an hour-long show; we have a DVR and skip commercials. Also, see opportunity cost.)
In the information space, there are more options for the reader/viewer today than there was a year ago, much less 10 years ago. Newspapers — accustomed to a monopolistic position in the market — now face growing competition for attention. That means that their content needs to be more relevant, not less. But they are cutting back newsrooms and reducing the size of the printed paper, a classic “save yourself into profit” mindset.
The article and commentary that set off my soapbox dealt with “direct payment.”
The implication that I responded to was this: before the Internet, readers paid for content (with dollars). My argument about the ‘direct payment’ (newspaper subscription) as a solution is that it doesn’t cover the cost of printing and distribution. Thus, advertising has historically paid the freight for the newsroom.
Today, however (1) there are fewer national retail accounts to buy ads and (2) advertisers have more alternative methods of reaching those eyeballs. Plus, readers don’t want to pay for mass market information. Yes, some readers will pay for financial information (or their company will) like the online Wall Street Journal. Yes, some will pay to read Consumer Reports online, but they paid for Consumer Reports the magazine — it does not carry advertising. Both are specialized publications, not everyday daily newspapers.
Turning to monetization (advertising).
In the pre-digital age, newspapers had a monopoly on a geographic market of eyeballs. These fees are paid based on overall subscribers/readers; there is no way to know which or how many subscribers/readers actually see the ad on C4, for example. So we could argue that the C4 advertiser is subsidizing content running on B2. Or even C2. That’s because the “newspaper” is a bundled product: news, comics, ads, recipes, editorials, book reviews, movie reviews, travel stories, weather, sports scores, photos, TV listings. It is the rare reader who is interested in everything in the daily paper, but the advertising paradigm rests on assuming that she is interested in everything.
John Wannamker said it best: “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
Today’s challenge with monetized attention (advertising) is that online advertisers don’t have to subsidize content if they have a click-through contract. In the online space, advertisers now know which half is working. With the great unbundling of content that is the online news site, this advertising subsidy has gone the way of the dodo bird (to use an old cliche).
There are other, substantive issues related to the demise of the newspaper’s business model. Nothing I have written on this topic should be construed to minimize the need for public service journalism, the kind of watchdog reporting needed to sustain a healthy democracy. As Clay Shirky noted on Friday:
No one experiment is going to replace what we are now losing with the demise of news on paper, but over time, the collection of new experiments that do work might give us the reporting we need.
We can hope.