Newspapers are dying. Walter Isaacson says newspapers must charge for content, but Michael Kinsley says it will not work. In particular, Isaacson likes micropayments, but almost everyone else hates the idea. This blog explains the problem with newspapers better than most. Before everyone gives up on the idea of charging for content, let’s remember that Apple succeeded with music, Amazon’s Kindle looks impressive with books, NetFlix is going strong with DVDs & streaming movies, HBO is still going strong with plain old TV, and the Wall Street Journal and the Financial Times require a subscription. The New York Times had a subscription for some stuff, took it down, but are now rethinking the issue. I believe the solution to building a viable news business is to take a two-pronged approach; nevertheless, there are too many subpar newspapers that should go bankrupt anyway (NYT agrees).
The problem is that no one wants to pay for several independent subscriptions, and there’s a usability issue with micropayments. Online advertising can not support an effective news organization; certainly not a bureau in Baghdad. On the other hand, there are too many journalists and most of them suck. Easily half the journalists out there should find other work. This will reduce costs substantially.
The first step is, counter-intuitively, to increase print subscribers. On the Charlie Rose Show, someone said advertisers are starting to realize that newspaper and television ads are vastly more effective than on-line ads. The major newspapers should print a much slimmer version that delivers high-quality news at a much lower price for home delivery. I don’t mean they should dumb down the news (like all those failed “college” versions of newspapers), but they should edit it to be tighter and more pertinent, i.e. I can skim through it in 1/2 hour. Revenue from online ads are a fraction of print ads, so why threaten your cash cow? Instead, reach more people and earn more money from print ads.
Of course, people want their news electronically. The solution is for the major news companies to join forces and deliver an all-you-can-read subscription model like cable TV or Rhapsody or XM (who pays for radio?!?). This will only work if the NYT, LAT and WaPo do it together (even better with WSJ & FT). They can deliver this through the iPhone, Kindle, and other fairly controlled devices. And they can offer this online in some fairly secure way. At the same time, they must transition their online content to news nuggets, not full-length articles. If they want, they can add micro-payments to give occasional readers the full article, but this is not a real source of revenue. Basically, you pay $10-$15/month to get access to the top news organizations and top blogs, plus your hometown news.
Since the newspapers are already terrified, Google, Yahoo or Microsoft could own this market if they provided enough up-front incentives. Someone will be the “XM of news”. Nothing can prevent people from ripping off your digital content, but people will pay if you make it easy to access (re: iTunes).