Paying for News on the Internet

Since the internet has become ubiquitous, traditional sources of information, such as newspapers, magazines and encyclopedias, have been plagued with declining readership and thus declining advertising revenue, while costs, as always, have trended upwards. As papers have cut back resources, fallen prey to takeovers and gone out of business in increasing numbers, there has been a lot of hand-wringing about exactly how all those freeloading internet readers can be made to pay for the costly content newspapers provide, and rightly so. As the internet has opened a new and unprecedented universe of choices for readers of news and opinion, the mechanism for extracting some sort of compensation for this privilege has been seriously compromised. The conventional business model for newspapers and magazines has consisted of two revenue flows, one much larger than the other, to generate the financial wherewithal to continue publication. The first, and most obvious, has been the subscription fee or per-paper price at the newsstand. This has been , traditionally, a nominal charge that hardly has paid for the costs of distribution, but avoids the impression that the paper is "free", and thus of some diminished intrinsic value. The nominal cost is, far more importantly, a way of proving that so many thousands of readers are, in fact, reading the paper. The second, and are more significant source of revenue is, of course, from advertisers. Given the proven number of readers (which are also audited for verification), and lore about the "page-views" of certain sizes of ads and their positions throughout the paper, newspapers and advertisers have worked out mutually-satisfying schedules of prices for a whole raft of add sizes and display options. The first translation of newsprint to internet distribution followed more or less the same model. Some papers, with captive audiences with the means to pay, such as the Wall Street Journal, charge a subscriber's fee for more than first-page access, and, needless to say, others have tried to follow suit, usually with dismal results. Advertisements are presented, as in print, surrounding the news "content". However, the payment model for ads on the internet, instead of being based on page-views by a known number of print subscribers, is based, not surprisingly, on "click-throughs", i.e. the number of user clicks to go to the advertiser's site. Notice that this is a higher standard than for print ads; it is almost equivalent to counting the number of readers who stop and write down the telephone number in a print ad, say, if this were possible, as the clicks demand more attention than simply being on the same page as a print ad. Given the level of ways to audit web traffic, it would certainly be possible to monitor the actual time readers spend in proximity to web adds, and this is certainly being done for research on advertising on the web. However, I would hazard that there is a hidden disincentive to do so, because, almost certainly, ad rates are based on an over-optimistic view of the reader's attention, and more precise research would probably shake the foundations of current print ad pricing to the detrement of publishers. What makes me think this? The fact that click-throughs have produced dissapointing results, on the one hand, and, that ads of all kinds are abhorrent, an opinion that I think is widely shared. If there is some truth to the last paragraph's assertions, the problems with newspaper publishing on the web have not produced new problems so much as revealed the deeply incorrect notions that rationalise advertising pricing altogether. The difference that the internet provides, as cable and satillite TV provides over network TV, is a diversity of offerings and a freedom of choice for reader/viewers, which heretofore have been captive audiences. A dilute audience, whose attention is spread over many outlets, simply cannot generate the same revenue stream that a concentrated or captive audience can, without increasing the per-view prices into a stratospheric region that advertisers and their customers refuse to pay. This is another example of the poverty-in-riches paradox that has visited many beneficiaries/victims of various applications of technology. Another example can be found in video technology: Video equipment, costing perhaps $3,000 is capable of producing shows that would require a $1M of equipment 20 years ago. Can it be said that video productions, either in quality or quantity, have increased in approximately the same proportion? No. Instead, we have a whole new type of video on YouTube and similar sites, which defies comparison to network television productions, but would be utterly impossible without ongoing changes in multiple technologies. The lesson seems to be that new technologies have forever changed the old models, and the institutions that grew up in the regimes of previous technologies. That the news must be researched and written is a given, and, despite recent discouraging demographics, I think it is also a given that there will always be an important population of readers of news, too. The link between democracy and a free press need not be debated: Each depends on the other. Given these momentous stakes, isn't it time to look beyond traditional means of privately paying for the news, to means that tap deeply into public sources of revenue, and whether such sources can be, for once, removed from political manipulation. I think the hazards of finding a solution to funding news in this direction are much better, at the moment and into the foreseeable future, than continuing to depend on faulty and delusional rationalizations to pay for it with advertising revenue.