The web has changed the economics of news, but there still ain’t no such thing as a free lunch.

That the web has changed the economics of the news business is undoubtedly true. Among other things, it has produced an army of gurus who know everything about how the web has changed the economics of news (although very few of those, curiously, have yet found a way of profiting from those changes). The gurus are fond of pointing out all the obvious things the dumb managers of news businesses – people whose job it is actually to make money out of the news business – have missed. Paul Bradshaw, “apparently the UK’s 4th most visible person online”, according to his profile on OJB, for which he writes (oops, sorry, blogs) is the latest to offer his unsolicited advice.

Bradshaw makes some valid, if unoriginal, points. But he is wide off the mark when he asserts that “the web – and now mobile – technology has reduced the cost of newsgathering, production and distribution to almost nil”. It may have reduced the cost of distributing content. But newsgathering remains the major cost of any news organisation (unless you regard a blogger who sits behind a computer all day a news organisation, and the content he/she produces as news). Where does Bradshaw think 90% of the news he “consumes” every day comes from?

A far more perceptive take comes from the letters page of The Economist, which ran its own, rather bleak, prognostication on the newspaper business last week. Albert Kirsch writes:

SIR – There is a fundamental difference between new and old media that your briefing about the internet’s impact on the future of the news business only touched on (“Tossed by a gale”, May 16th). Newspapers differ from other news sources in one very significant respect: they actually employ journalists to report. They provide budgets for these people to travel to the areas where news events are happening, conduct interviews there, ferret out documents relevant to the story, and so forth. Yahoo! does not have bureaus in Washington, London or Tokyo, and whatever appears on Yahoo! News is a digest of what someone in its office has read in a real newspaper or downloaded from some other, similar, online source.

This is also true of all other internet news “sources” and blogs. They are in fact secondary sources, either repeating what real journalists have dug up or putting their own spin and comment on it.

A desk with a computer terminal is a poor observation post from which to see the world. In the absence of newspapers, who will fund reporters’ travels? Who will interview the people making the news? Who will dig out the information? I don’t see any online news outfit spending the money to do anything like that. The news will always be with us, but its quality will be immeasurably poorer without newspapers.

The mistake that many news business gurus make is to equate news gathering with news distribution, and consequently “news” with “print”. But as I have argued before, a newspaper is more than just a pile of newsprint with ink on it. It is an organisation that gathers and distributes news via various channels, including the printed word. Much of the news we read on the internet is generated by newspapers, and the majority of people who say they get their news from the internet in fact still get it from newspapers (and other traditional news organisations), via the internet.

And, contrary to the fond imaginings of many gurus, news is not free on the internet, even though internet users don’t pay for it. Somebody pays for it: newspaper readers, cable television subscribers, and advertisers, who, in effect, subsidise internet news users. Obviously, that is a business model that cannot endure. If it were to be perpetuated, the only financially viable news organisations of the future will be news agencies, which have always charged for news no matter how it is distributed, and will continue to do so.

That is the conundrum that those dumb news executives have to solve, and, frankly, I don’t think Bradshaw brings them one inch closer to the solution

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11 Responses to The web has changed the economics of news, but there still ain’t no such thing as a free lunch.

  1. paulbradshaw says:

    Thanks – you’re right: it is an unoriginal series of points. We should know this stuff off by heart now, but clearly it needs restating given some of the statements that are being made at the moment (such as the API idea of making news valuable by charging for it – charging for something doesn’t make it valuable).

    Where do I think 90% of the news I consume every day comes from? To quote some figures from Nick Davies’ study into churnalism: “80% of the stories in Britain’s quality press were not original and only 12% of stories were generated by reporters.”

    I am happy for news organisations to experiment with paywalls and micropayments if it funds great, original journalism. If it is to pay for journalists to process press releases, staged events and fake surveys and reports like they did before in the context of different economic pressures (fill limited space, limited competition, monopoly on distribution) – but which is extremely cheap to do online – well, that ain’t going to work.

    • Robert says:

      Thanks for the comment Paul.
      Charging for something doesn’t make it valuable. Neither does giving something away make it worthless.
      News agencies such as AP and Reuters have always charged for news, and continue to do so in the new media era. Why shouldn’t other news producers do the same? Some, like the FT for example, already do and run a financially viable business doing it.
      The churn figure from Nick Davies’ book is moot. Depends on what you mean by “generated by reporters”. Whoever “generates” the news, someone stil has to sit down at a computer and type in the words (or produce the video or make the recording or whatever).
      I agree that paywalls and micropayments may not be the answer, but what is? Certainly not online news the way it is being produced and presented at present. Fact is, if all newspapers go out of business today, there will be virtually no news, online or othwerwise.
      Cheers.

      • paulbradshaw says:

        AP and Reuters have been able to charge for news because the buyers were able to profit from it in different ways. AP and Reuters are in trouble because news orgs are likely to stop paying their fees as they cut costs and focus on unique content – and they know this: both are exploring very different business models.
        And the FT provides financially valuable information where timeliness is crucial; most news orgs don’t have that sort of content.
        If all newspapers went out of business? That’s a moot point for me too, but if they did, there would still be news. Most of the news I get about my local area is not from newspapers either first or second hand. Most of the news about my industry is not from newspapers first or second hand.
        I’m not saying it would be great journalism – or that newspapers disappearing would be a Good Thing. Just that we shouldn’t think we are the only game in town.
        I also didn’t say paywalls weren’t the answer – in fact, I would very much like to see more experimentation in that field, for reasons I’ll blog about later. My point was simply: here are a range of ways that the economics of news have changed.
        I work with news executives on ideas around business models, and, within this context, they are able to come up with some pretty good ideas. I am also involved in an investigative journalism startup that is looking at other business models (not involving advertising or paywalls). No one has the answers – only ideas. I’m just trying to push the debate along.

  2. Robert says:

    Fair enough, I also like debate (as you may have realised :).
    I agree with most of what you say – the old is broken, and the new hasn’t been invented yet. So ideas are welcome. And it is true that news won’t disappear with news organisations such as newspapers – but what worries me is the nature that news. It is not a question of good or bad journalism – the question is what the fragmentation and localisation of audiences will do to social cohesion.

  3. […] UPDATE: Robert Brand takes me to task on this one in the comments but also on his blog, where I have responded in more detail. […]

  4. Martin Belam says:

    “Fact is, if all newspapers go out of business today, there will be virtually no news, online or othwerwise.”

    As I always like to say, there must have been people who lamented when the monks stopped writing the Anglo-Saxon Chronicle, and people who argued that this new-fangled local printing would never replace the immediacy of the town crier. But there was still news then, and there will still be news in ten years time, and twenty years time and fifty years time, whether today’s newspaper businesses survive or not.

  5. Robert says:

    Martin, I don’t think you understand my point about the difference between the newspaper as an organisation that gathers news, and as a pile of paper with ink on it. I am saying: without organisations that gather news (and spend lots of money doing that) most of what we regard as news today would not be produced, and society would be the poorer for it.

  6. Martin Belam says:

    “most of what we regard as news today would not be produced”

    I’d argue that a lot of what we regard as news today need not necessarily be produced though. Take music as an area, for example. I know far more about the bands I’m interested in these days by following their websites and the fan sites dedicated to them which are produced for free, than I do by waiting for a major “news” organisation to regurgitate at great expense the band’s label-produced carefully controlled electronic press kit into a ‘feature’.

  7. Soilman says:

    “most of what we regard as news today would not be produced”

    … and good riddance to it. At UK national newspaper level, the so-called ‘news’ has been getting crummier and crummier for years. It’s little more than a mish-mash of rewritten stories from local news agencies, small-town papers, news wire feeds, press releases and sub-standard celebrity gossip combined with ‘special reports’ from fat, PR- and lobby-fed correspondents dutifully recycling identikit spin and bilge in return for passes, free flights and drinkies.

    We may have become accustomed to this as ‘news’, but we categorically do not need it. We categorically do not need the newspapers peddling it. In fact, we’ll all be better off without them.

    What we probably DO need, however, are the lower-rank news providers – those luckless gumshoe hacks in Moron-under-Marsh who do the footslogging, phone-pounding work to bring the ultra-local, real news that’s so shamelessly raided and aggregated by the nationals (who have the cheek to reprove Google for aggregating it in turn).

    But then, we won’t lose that anyway… because local hacks and news diggers have been happy (or if not happy, at least willing) to provide it for less than a living wage for years and years.

  8. […] UPDATE: Robert Brand takes me to task on this one in the comments but also on his blog, where I have responded in more detail. […]

  9. […] UPDATE: Robert Brand takes me to task on this one in the comments but also on his blog, where I have responded in more detail. […]

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