SYNDICATED COLUMN: Future Imperfect, Part II


This is the second of a three-part series about the media.

Blind Newsman Gums Internet Dog

Last week, I discussed the blind faith that is leading media executives to invest heavily in online ventures at the expense of print. This week: will the Internet ever be profitable?

Americans are optimistic to a fault. Overthrow Saddam, we thought–yeah, that “we” includes a lot of liberals–and whatever came next would be better. I was skeptical. You couldn’t ask for a worse government than the Taliban, yet what followed them in Afghanistan–anarchy, chaos, rape, genocide–was even worse. Which is what happened in Iraq.

Optimism is for suckers. Entropy rules the universe. In the absence of a powerful positive force to counterbalance it, things usually get worse.

Media executives are like the neocons, in their blind faith that a brighter future will inevitably emerge from the rubble of the crumbling edifice of print media. Sometimes the old order just goes away. Sometimes there is no new one.

U.S. newspapers report that quarterly revenues are up 21 percent for online, and down 9 percent for print. At first glance, it looks like new media is picking up the slack from dying old media. But total print revenue was $10.1 billion. Online totaled $0.8 billion. As a percent of overall newspaper industry revenues, online is up a smidgen over 1 percent. There’s more Internet money coming in, but not nearly enough.

At The New York Times, which analysts point to as one of the most Web-savvy old media outfits, 13 million people read NYTimes.com every day. Only 1 million read the dead trees version. But print readers–7 percent of their customers–continue to generate 92 percent of the company’s revenue.

The old order is in trouble. And the Thrilling! Shiny! New! Internet can’t take its place. Online evangelists are tearing down the ancien régime without planning for the occupation phase. And they’re inflating another Dot-Com Bubble.
If the future of media looks like the Web does now, things are about to degenerate from grim to grisly. Media outlets are firing professional journalists, replacing them with random bloggers. Musicians with sizeable audiences are collecting insulting pittances for downloads of their albums. Some creators are soldiering on, working for free or for pennies. But they won’t do it forever.

Venture capitalists are investing in “consolidators,” websites like the Drudge Report and Huffington Post that link to columns and articles written by unpaid bloggers and professionals who’ve managed to hold on to their jobs. Creative people who actually make the product they sell, meanwhile, are receiving squat.

It’s inevitable that, sooner rather than later, these intellectual property vampires will suck creators dry. Professionals with mortgages and car payments will flee for greener pastures, replaced by hacks and rank amateurs happy to work for “exposure.” We’re already seeing the effect as journalism increasingly suffers deprofessionalization; 16-year-old bloggers with mad HTML skillz are demanding, and often receiving, equal access to readers.

Last week, I wrote about the content-is-dead mantra. The principle that intellectual property has value, and that those who create it ought to be paid, is in mortal danger. But people are willing to pay for content on the Internet. It just has to be easy.

Would you pay for Mapquest? I’d pay a quarter or a dollar for reliable directions from the airport to my hotel in a new city. Sometimes, while researching this column, I encounter a link to an archived newspaper article that I could use, but it charges a $2 or $3 download fee. The cost isn’t the problem–it’s a miniscule, and in my case tax deductible, expense to make my work better. But I don’t bother. I don’t pay for Mapquest, either.

I don’t care about the money. I just can’t stand filling out all those fields.

Each website requires you to enter personal data–your name, address, credit card number, expiration date, that stupid security code next to the signature on your card, and the billing address (as opposed to the shipping address). Frequently, website interfaces are buggy; make a mistake and you have to start all over again. I’ll suffer through the ordeal if it’s a site, like Amazon or Expedia, that I’ll use repeatedly. But an archived article? Ain’t worth my time to figure out how to get them my two bucks.

There is a solution to the online payment problem, says Simson Garfinkel, a fellow at the Harvard University Center for Research on Computation and Society and the author of “Database Nation: The Death of Privacy in the 21st Century.” (Disclosure: We’re friends.)

“If content is appropriately priced, of an appropriately high quality, and easy to access, people will pay for it,” asserts Garfinkel. “What is required is a system that is easy to use and licensing terms that are not onerous.”

A universal single-click payment system won’t work, he says, because it would be vulnerable to hackers. We could overlay a national ID card or credit card system over the existing Internet. One of several competing micropayment systems may become dominant, creating a market-based solution. You’d register your debit or credit card info at one place. Then, when you wanted to download a song or read an electronic book or order shoes, you’d go to the vendor’s website and click one button: “Buy.”

Amazon sort of does this. After you’ve registered, you can buy a book by clicking one button. Just like that, it’s on its way. We need something similar for vendors we’ve never dealt with before.

The solution will almost certainly have to be technology-based. And it will require us to give up the illusion of privacy. The government doesn’t–and can’t–know every time you access the Internet. But they do know enough, enough of the time, to separate the Usenet Bible study group members from the kiddie porn fans (OK, so those are sometimes the same folks, but you get the point).

Newspaper editors and publishers could reverse their decline by agreeing, en masse, to charge a substantial fee for their online editions–at least as much as for print. But I wouldn’t hold my breath. Avoidance of long-term thinking is what’s gotten the news biz where it is today.

In the long run, despite their suicidal tendencies, I suspect newspapers will survive, and even thrive, after the current shakeout. When radio was introduced in the 1930s, many analysts predicted the death of the record industry. Instead, radio promotion increased record sales. When television became popular in the 1950s, people said radio was doomed. The radio business is bigger than ever. The Internet was supposed to kill TV.

The newspaper business will change. Three major trends ensure that. They will also make it bigger than ever.

Next Week: The bright (sic!) future of newspapers.

COPYRIGHT 2007 TED RALL

11 Comments.

  • i would have paid $1 to find out if Simson Garfinkel is a real name. but hey, google is free, coo coo ca choo!

  • Micropayments are the way to do it, but the Big Banks make waaaay too much money with the current system to ever let it really happen.

    Paypal is the kind of market-born solution to small payments you talked about. Many on-line retailers are allowing Paypal as well as major credit cards. But even still, a single click is way too much work for some people.

    Another thing you are missing: people do not value mainstream dead-tree reporting that much. They'd rather pay nothing to a blogger and they feel they're receiving a better value than paying $5 for a Ted Rall column. To get $5/column/reader, the article has to deliver $5 worth of content which the vast majority of newspapers don't. They don't even deliver the $1.50 they claim to.

    Another thing: newspapers made most of their money from classified ads and advertising. Craigslist and its imitators are ripping the bottom out of the classified ad business.

    So given all this, what can a newspaper do? How about this:

    1. Articles should be DIRT cheap

    I might buy a dead-tree newspaper, but only read less than 20 articles. So I paid $1 for 20 articles, or about 5 cents an article.

    Drop the pricing down to 1 cent an article. A million readers (quite typical for a Reuters or AP article on-line) paying 1 cent. $10,000 in one day for one article. To the individual reader, he might accumulate 30 to 50 cents worth of traffic he paid for a day (or a week for the less curious). To the supplier, lots of easy money. To me, the news consumer, a tiny charge on my credit card that's a lot less than the finance charges.

    2. Produce content that's worth the money. Most newspapers simply re-print Reuters and AP articles. Maybe it's time to switch to directly purchasing our news from news gathering agencies?

    Also, some writers are worth their weight in gold. E.g., Robert Fisk, the Knight-Ridder Washington office, and Ted Rall (shameless pandering here). They alone could generate a revenue stream with a gated version of their columns. I know Fisk's newspaper charges several dollars for one Fisk column, and I've paid the money just to read his stuff.

    For example, let's say you get 20,000 readers, and we'll assume only 10% of them would shell out bucks to read you. So for 2000 readers, how much do you think you should be paid for one column? Divide that by 2000 readers and you've got your price. If you're adventurous, you could try a lower price to entice more readers to pay .

    3. On-line Advertising DOES pay

    There are bloggers now turning a profit by using Google's AdSense to provide ads on their website which pays for a page view and pays for a click-through. The NY Times could make its entire front page free and probably make a pretty penny if they put their front page out for auction. Right now, I count 3 tiny ads and 1 rather significant ad on their front page website. For the amount of traffic the NY Times generates, if they had advertisers bid on that space, just how much money do you think they could make a day, hmmm?

  • Right Ted. Sure. Whatever.

    By your logic (and it's not new by the way) a typical day of web activity would cost me about $100.00, on top of what I pay for my connection in the first place. Even if it were feasible, you'd be in the same position you're in today Rall: vying for the disposable income of Joe User. When everything from maps to articles are going to cost $1, how many people are going to spend it on one of your articles/cartoons? I'd bet on the maps.

    Face it Ted. You're in the same position that millions of US factory workers have faced in the last 20 years. As their jobs went overseas to lower paid, lower skilled workers, their reactions followed a typical set of stages:

    Stage 1: Denial: "They'll never send MY job overseas, I'm too important".

    Stage 2: Fear. "They'll won't send my job overseas, will they? I sure hope not".

    Stage 3: Outrage. "I can't believe they sent my job overseas! How dare they! I'm an American after all!".

    Stage 4: Bargaining. "My job's gone, but I'll get another one if I work hard and keep at it."

    Stage 5: Acceptance. "My job's gone for good. That 'WalMart greeter' job looks pretty good, though."

    Judging from your comments Ted, I'd say you're in between Stages 3 and 4 at this point. It may take a while longer for you to complete Stage 5, but you will.

  • Ha! I love your comics Ted, but you're losing it a little. I can't wait for the day the journalists all lose their jobs and get replaced by unpaid armies of semi-literate average joes who operate some futuristic combination of slashdot and google news.

    The professional journalists of today, with the collective backbone of a sedated slug, have about as much value to me as telemarketers. They won't be missed. And neither would TV if it died, but like you say, noone's afraid that it will.

    The internet isn't the future, it's the present.

    Keep on bloggin
    -xx

  • Google News? Who will write those articles?

  • The problem is, Mr. Rall, that Amazon holds a patent on their one-click software, and they are litigious about it. On the books since 1997, it could be seven more years before their protections expire. Give it a google, or your web search of choice.

    While something like an Open ID, what several blogger sites use, is ideal for online shopping in this sense, you'll have to convince Amazon to give it up first.

  • The open market extreme that is the current internet means that the creators with the best stories will attract their own attention. Jon Rosenberg, the creator of the webcomic "Goats", makes his money from collections, and selling related merchandise… just like George Lucas or any smart entertainment company does. He tried "micropayments" on a dare a couple of years ago, and the experiment lost him money.

    One can even compare his work to yours, insofar as it is politically charged: the main story of "Goats" may be just a mad struggle of the unlikable vs. the less likable, but his merchandise includes shirts and bumper stickers that read "Republicans for Voldemort". Maybe it's not bringing the raw truth back from Afghanistan, (maybe that's for Afghanis to witness and post), but it keeps Jon's family fed while keeping solidarity alive.

    There will still be culture financed by big bankrolls, as there has been for centuries, and things like editorial review will become curatorial, much as maintaining chamber orchestras are. But micropayments have already failed. No one wants to take the time, or lose the privacy, necessary to make paying a literal two cents worth it to get one thing in a sea of free. So may the best comics–and bloggers–win.

    Right now, on topwebcomics.com, the highest-rated webcomic is one about zombies having taken over the Earth, and the vampires that must protect the last surviving humans so they can live off their blood.

    Enjoy your humanity, Ted. The rest of us zombies ain't taking any shit from anyone.

  • Web news is a gigantic subsidy by print news. The only reason articles appear everyday on the web is because people still pay for "old media" print editions, which in turn pay Editors and reporters who post things online for free.

    I love reading different news sources on the web for free, but most webheads seem to think it gets there through magic. It's an unsustainable system.

  • I think what's going on with print media and it's relation to the internet is similar to what's happening to nearly all areas of American society. At least in corollary fashion.

    Fact is we don't make anything here anymore. It's mumbo-jumbo, voodoo economics at it's finest and its trickled it's evil way down into every facet of our economy and productivity.

    News media and entertainment are two prime examples of this, because it's easy to see and easier for the Avergage Joe to understand.
    We hear the decline in music because there's no financial incentive for an artist to make a good album, nor for the record companies to produce them.
    We see the same cookie cutter movies jammed down our throats, because creativity is never seen as profitable from the jackals on high.
    Our brains suffer from the lack of a decent 4th estate, because ranting and raving your opinions about to and fro is easier than covering hard news. You don't need a professional to feign anger about something, an amatuer does that just fine. So much wonderful profit, starting at the top.
    These are different manifestations of the same illness. The money starts at the peak and is expected to find it's way to the bottom. Who care's that we dont manufacture products, materials or intellectual properties here anymore? We borrow against our debt and fund new ventures, cheap labor already included. Surely this cycle will go on forever, if you believe bubbles can be infinite.
    Countries flood our markets with their currency, buying our goods against the devalued dollar (goods made in China by the way) and we expect the corporate rake to provide for all the little folk at the bottom (i.e. everyone else).

    This relates specifically to what Ted was saying, in that the news media has no desire to make good news anymore. They long ago recognized that advertising dollars is what drove the business and have since rolled up their news divisions with their entertainment departments. Why should they pay a professional, when so many would do it for nothing? They see their bottomlines shrinking from traditional sources, so they change the business model. And the first thing to go when models change is employee salaries, in anything.
    Will this be successful for them? Maybe… probably, in the short term anyways. For our country? Definitely not.
    Hope you like contaminated FEMA trailers, eating mercury laden fish, reading ignorant news stories by 3rd rate college students, while your kids play with toys made of lead.
    Yee haw! Here's to keeping your head in the sand… The center will not hold people, I promise you.

  • I wonder: If you added up how many lies were told by your average state-sponsored media outlet versus our media, who would win/lose?

    If journalists were government employees, we would not have to worry about lies and irrelevant news because profitability would be out of the equation. A panel of experts would pour over the following factors:
    1) the amount of people who read you
    2) the amount of errors you commit
    3) the amount of lies you tell

    and your pay would depend upon a weighted average wherein 2 and 3 carry twice the weight of 1.

  • Benjamin Melançon
    December 6, 2007 2:09 PM

    Simson L. Garfinkel is real, and as soon as someone smarter than me (but, fortunately, who need not be as smart as Simson) will port his SBook address book to GNU-Linux I can say goodbye to the Mac world.

    I'll pay a bounty for that, to bring another group that isn't compensated fairly, free software developers.

    I still say that dropping the vast governmental apparatus used to turn ideas into property (patents, trademark, copyright, trade secrets and all the laws and courts and police and military that back them up) and replacing it with ways of rewarding scientists, programmers, and cartoonists directly for their contributions to society.

    The more decentralized and open the system the better, but the point is the current "intellectual property" regime isn't free or free of government interference, and figuring out how to reward directly — rather than protecting the business models of middlemen — could almost certainly be done with greater efficiency, less wasted transaction costs, than the status quo.

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