How Can The Internet Offer Promise and Lack Profit?

Last February, the Capitol Fax Blog’s Rich Miller and I exchanged our views about what is killing the newspaper industry. Miller suggests that classified advertising—or the decline in classified advertising—has hurt newspapers as those dollars have migrated to online resources such as Craig’s List.

My theory rests in the idea that newspapers are hurting themselves by giving away their content for free. Why subscribe to your local newspaper when the entire thing is available online or through an RSS feed for free?

It was nice to read this article in Media Week, then, where Les Hinton, Chief Executive of News Corporation’s Dow Jones, echoes my theory.

“Let’s face facts. A business model that assumes we can’t charge for the content we produce assumes that our content has no value in the online market.

“In pure economic terms, such a business model has to mean one of two things: Either there is no demand for the content or there are substitute suppliers of that content sufficient to drive the price almost to zero.”

Pointing to WSJ’s more than two million paying subscribers, Hinton stated: “I don’t believe it.”

Instead, he told publishers to “rationalise the lingering inefficiencies” and to “re-conceive our business in a less costly context.”

He concluded: “In the future, good journalism will depend on the ability of a news organisation to attract customers by providing news and information they are willing to pay for.”

Free is a cost that journalism cannot afford.

Here are other articles I have written on this topic:

• New Campaign for Will County Health Department
• April’s 5 Most Read Stories
• Newspaper Revenue Trend Line Reconsidered
• Will Online Ad Revenue Beat Newspapers in 2011?
• Mike Hughes Is Wrong
• Which Big City Will Be First Without a Major Newspaper?
• Is John Callaway Right that Newspapers Are Dead?
• New Television Spot for Appellate Court Judge Mary Schostok
• Joe Birkett Endorses Dan Cronin
• New Television Campaign for Appellate Court Judge Mary Schostok