Monday, January 11, 2010

Good news and bad news for newspapers

One report out today gives some good but ironic news to my former profession while another study affirms doubts that online news will ever be a profitable venture for newspapers. The good news is contained in a Pew Research Center study that finds that nearly all of the substantive, original news on the Web comes from the "old media." That's right, it's newspapers (and to a lesser extent, television and radio) that provides in-depth reporting and important updates about what's going on in the world and in the local community. Those "aggregator" sites run by Google, the Huffington Post and others are basing most of their information on what has been reported by newspapers.

But before I and other newspaper-reading stalwarts shout, "I told ya so!" consider what that means. Advertisers and, to a lesser extent, readers, are fleeing the newspaper Web sites for the newer, trendier, sexier aggregator sites. So while newspapers are doing all the heavy lifting, the "new media" are getting the credit and the profit from online advertising. Newspapers, with less respect than Rodney Dangerfield, can't get credit for the good work they're doing.

If that weren't depressing enough, another post today shows that newspapers that have chosen to charge for their Web content are doing abysmally in building an online readership. What portion of their print readership is willing to spend money to read the news online? According to today's Newsosaur blog, about 2 percent. That is not good news for those news executives who have advocated "pay walls" as the key to making newspapers profitable — or more profitable — again.

As Newsosaur shows, how much the newspaper charges for online content has little impact on how many online subscribers it collects. That might encourage publishers to charge a premium for online content, but the success of "pay wall" sites is a minuscule online subscriber base. Even premium payments won't amount to much if you're only getting 2 percent of the print-reading population. And by cutting off other readers, these publishers are decimating the value of their online advertising by reducing the number of eyeballs falling on those online ads.

Newspapers are in a tough dilemma. They get little respect for the essential news reporting they provide — reporting that is the foundation of a modern representative democracy — and they can't attract enough online readers to make a reasonable profit off their expensively collected news. Aggregators, with little overhead cost and sophisticated ad-targeting software, are eating newspapers' lunch, as well as their breakfast and dinner. Pay walls don't appear to be the answer.

Americans who care about public interest reporting — and all Americans should — might consider a revision of copyright laws that would require payments to originators of information when that news is rewritten, repackaged or redistributed. Without a reliable revenue stream for newspapers, the flow of legitimate, trustworthy news, as the Pew study shows, will dry up.

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