Most news, print included, is free

That old tired meme – If everyone wants to read their news online, why don’t we charge for it? – is the Old Faithful of seemingly good ideas that aren’t. You can practically set your watch by the frequency that someone (often a print-centric newspaper employee) will throw down the idea as a fresh perspective on The Revenue Problem.

Which is a long way of saying that this post is at least partly a response to this post by Gus Sentementes of The Baltimore Sun:

Right now, we hear lots of anecdotes of people giving up the print edition and just consuming the news online, where it is free.

But we all know nothing is ever free. Harvesting the news costs a lot of money, though the promise of an Internet-only news site means a publisher doesn’t have to worry about operating a costly printing press and buying pricey paper and ink by the ton.
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So would you pay for an online subscription to get a little better coverage and more distinctive, original reporting? Or would you be happy with the free information that leaves you still hungry for more at the end of the day?

Before asking whether people will pay for online news, consider this question:

What do people pay currently for printed news from their local paper? 75 cents an issue? A couple bucks a week?

The real answer: nothing.

The newsstand or subscription price doesn’t pay for the reporters or the editors. It pays for the printing and distribution of the paper (or at least, partially pays for it).

But the articles? They’re free. Whether you’re reading an article in the paper or online, it’s being “paid for” by advertising, not by the reader.

That’s why the decline in advertising in the US newspaper industry is a much more urgent problem than the modest declines in circulation. As ad dollars shrink, the ability of newspaper companies to create their product on a daily basis becomes much more difficult.

If a newspaper company were to truly charge what the paper is worth – that is, cost of reporting, editing and production plus a fair markup – most newspapers would have to charge many dollars per issue. That would cut into readership and, ultimately, drive down advertising revenues as fewer readers led to lower ad rates. The advertiser-subsidy allows for the paper to cover its costs and make a profit.

The same realities carry to online, but are magnified by the astounding volume of competing content available from uncountable sources. Any local or regional paper that charges for all content will make a fraction of what it can make as an ad-supported model. Why? Because once you put up a pay wall, fewer readers will visit and fewer readers mean diminished ad sales. You’d have to charge $1,000 or more a year per reader to even begin to make up for the lost advertising income.

So how does the Wall Street Journal succeed with their paid model? Here’s what I believe: They’re a highly-specialized, national product and many of the subscriptions are reimbursed or direct-billed business expenses. If a local or regional paper could replicate the WSJ experience, surely some would be doing so by now. The few experiments in this area have been less than successful, usually by small-market papers that are trying to protect print circulation.

Is the online model perfect? Hardly. Right now, online revenue needs to grow faster if it’s going to support the kinds of newsrooms that can properly cover a metro area. One of the questions news professionals should be asking isn’t “Can we charge for what we’re already doing?” but rather, “What can we create that people will gladly pay for?” What kind of valuable information can 200- or 300-person newsrooms dig up and synthesize that’s both compelling and exclusive? A hybrid model, where most basic news is free but certain types of information – or tools for managing that information – have cost associated with them, seems an inevitability.

Until then, I believe putting up a pay-wall between the public and local news would effectively kill the online revenue stream that newspapers across the country need to be able to count on.