Future of news and business

John Naughton's talking sense about economics, news and the Web today in the Observer:
Things have got so bad that Rupert Murdoch has tasked a team with finding a way of charging for News Corp content. This is the "make the bastards pay" school of thought. Another group of fantasists speculate about ways of extorting money from Google, which they portray as a parasitic feeder on their hallowed produce. And recently a few desperadoes have made the pilgrimage to Capitol Hill seeking legislative assistance and/or federal bailouts for newspapers

It's difficult to keep one's head when all about one people are losing theirs, but let us have a go. First of all, some historical perspective might help. When broadcast radio arrived in the US in the 1920s, nobody could figure out a business model for it. How could one generate revenue from something that could be listened to by anyone for free? Dozens of companies were founded to exploit the new medium, and most of them folded. The problem was solved by a detergent manufacturer named Procter & Gamble, which came up with the idea of sponsoring dramatic serials: the soap opera - and the mass market - was born.

The moral is simple: eventually someone will figure out a business model that works for online news. But it may take some time, and lots of outfits will fall by the wayside in the meantime. That's capitalism for you.

Volume and diversity: the future's bright for news online


  1. Legacy media is so butthurt because of the dang interwebz.

    I must also apologize, as an Australian, for the global pathogen that is Murdoch.

  2. Want to get a FREE Nintendo Wii, XBox 360, PS3, iPhone & More?

    1. Sign up to *************.net

    2. Then complete a free sponsor offer, I recommend Discovery Card, King and Seattle coffee if you’re from the USA, or LOVEFiLM or HSBC if you’re from the UK.

    3. Then get some friends to do the same.


    Moderator note: We didn’t have the heart to take away the piñata that commenters (look down) were bashing with such gusto.


    I deeply appreciate the melodious beauty of your posting; I do believe that I am smitten with the poetic beauty of what you had to say.

    Sure, your commentary has nothing to do with the story presented; at the same time, my heart goes aflutter with the brilliantly clever use of a lower case ‘i’ in the midst of “LOVEFiLM.”

    I can only hope and pray that more individuals can one day achieve the breath-taking heights of literary prowess that you elicit with your hyperbole: not so many people in this world are so skilled with the pen that they dare to type out “free” in all capital letters – a strong claim indeed, and one that I won’t soon forget due to the sublime use of that greedy human foible we all possess and love.

    In closing, HANNAHPOWELL52, I can only meekly and humbly request that you change your username to “HannahPowell,” because there is only 1 like you.

  4. Ha! I thought HANNAHPOWELL52’s comment was a parody of a successful internet business models. Then I saw what his, her, its last blog post was about.

  5. The last paragraph of this post is perhaps the best summary explanation of Capitalism I’ve seen ever.

    As for regulations to ‘save’ the news biz, see regulations to save the railroad biz. How’s that workin’ out for ya?

  6. Whew! The free market will take care of everything. Thank god.

    Just like it’s figuring out how to stop global warming all by itself. Just like it’s figuring out how to cure malaria all by itself. Just like it figured out how to value risky mortgages all by itself.

    Yes, we could let the market sort itself out. But are we sure we’ll like the results? We could end up with a very fragmented news world.

    * sources of news for the elites, to allow them to protect their privileges.

    * sources for lowest common denominator, mass market news, full of celebrity gossip, pro-business, pro-corporate, and easily accessible.

    * sources for true independent journalism, mostly toiling away in underpaid obscurity and virtually ignored by the mainstream media.

    In short, a situation not unlike what we have today. It’s a broken system, where the entities that need to be watched are paying the watchers. I think it makes absolute sense to treat news gathering as a public service that warrants public dollars.

    Not public control, mind you. Government needs as much watching as the corporate world does. I would favor a system where every person was given, say, $50 to direct towards news outlets of their choice. There would be qualifications on who could receive the money, but they would be loose enough to allow for a variety of viewpoints and activities.

  7. If Murdoch thinks Google is a “parasitic feeder,” maybe he should use his billions to hire a couple of coders who know how to write a robots.txt file.

  8. I’m looking forward to what develops from the arrival of multiple outlets. If it’s something to reduce Murdoch’s stranglehold on the news, then it can only be a good thing.

  9. Thanks for posting this #7. Totally agree with you. Or provisionally agree with you anyway.

    At the very least we need significant public attention on this, not laisser-faire libertarianism. Most of the best in news reporting today has resulted in dedicated work from journalists and advocates for a free media.


    If I had a Banhammer,
    I’d ban you in the morning,
    I’d ban you in the evening,
    All over this land..

    ♫ La La La ♫

  11. #7 darth_schmoo … I think it makes absolute sense to treat news gathering as a public service that warrants public dollars.

    You mean like the BBC?


    Agreed with the current postmodernist state of news, like Williams S. Burroughs is spewing bits and pieces out of Interzone. Being a paranoid futurist, I can only see the double edged sword in which the wealthy elitists control the content. However, given the alternative, is centralized government anything more than a group of wealthy elitists who would also control the flow of information? The idea of a “stimulus” to individuals to support their news habit is interesting but doesn’t past experience teach us that when you give the feds or anyone else in a position of high power an inch, they tend to take a mile?

  13. The days of wireless communication, mostly from satellites and living off the land in country villages is upon us now that the unregulated vulture capitalists have ravaged our lives, raped our life’s savings, sold our jobs out to Asia and throw us aside by huge capital shifts of monies we earned, to the Shanghai stock market. We, the under and unemployed of America can hardly afford newsprint! We all get our information from radio, TV and computer sites – We no longer demand the destruction of forests, pounding of printing presses, deadlines, and news-folk working night-shift to get out the morning Blab, nor can we afford it! A delightful thing has happened however, we can turn to different sites for differing slants on the same stories, and are forced now to think and chose, and judge and evaluate, and not blindly accept the Corporate view of the newsprint articles, and what is more, we get to talk back, and even be ridiculed by our peers on any given point! Much better than towing the “Company Line”

  14. HannahPowell52, you’ve been banned, but I’m letting your comment live, given the affection other commenters have shown for it.

  15. Sorry John Naughton, but your “simple” moral is completely and utterly wrong. I heard this argument in 1995, and 2000, and 2005, and eventually people are going to have to accept the fact that there is no business model coming.

    The web isn’t in its infancy. As a widespread medium, it’s getting close to its second decade. Both radio and television news were profitable long before this point, and that’s even ignoring that information and ideas spread many orders of magnitude faster in this era.

    Real news requires the time of committed, skilled people. This time can either be donated (and thus be of wildly varying quality and consistency) or it can be paid for. Advertising can no longer pay for it, for the same reasons the printing press left little work for professional scribes. That leaves individuals paying for the news they want, and that’s something that the larger populace has *never done*. They’ve always, at best, paid nominal fees for subscriptions to advertising-supported publications.

    So where does that leave us? Pretty much back where we started. News as we’ve grown to know it in this country is only about a century old. While journalists are routinely bashed on all sides for not being objective, I take that as proof that they actually are being objective. But human nature doesn’t want that.

    They want news slanted to feed their biases produced with all the quality they are willing to personally pay for, which is nothing. And that’s exactly what they are going to get.

  16. As a former journalist who is a substitute teacher and freelances for $25 an article at the paper who used to employ me, I have spent way too much time ruminating on this subject.

    So let me repost a previous response I put on the interwebs to a guy despairing at the idea of the newspapers getting a bailout.

    Ryan O’Hara posted – what I’m assuming – a letter to the editor railing about Rosa Brooks April 9 column in the L.A. Times about the merits of a government bailout of newspapers. I don’t think that is the right solution, or even practical (the bailouts have been focused on industries that if they failed immediately would drop the country immediately into a significant depression and unlike banks and car companies, newspapers although teetering on the brink like many other industries don’t qualify)

    But I digress, I wanted to share some of my opinions on the state of journalism and newspapers and yes even this one.


    Some of the ideas posited are interesting, and none require just writing a check to the newspapers from taxpayers. I particularly find the tax credit for newspaper subscriptions to be elegant.

    All of the bailout concepts aside, the truth is that newspapers are in trouble. Its the combined result of owners who consolidated papers by buying them with huge loans in expectations of continued huge profit margins, and whose solution was to fire people who create the news, thereby undermining the product.

    And also the result of a larger issue that the “paper” part of a newspaper is quickly becoming antique. Newspapers flourished because they found the fastest and cheapest way to deliver the news to a mass audience (remember your black fingers and thin paper). Well that doesn’t work anymore, its becoming too expensive and cumbersome, so everything surrounding printing the news on reams of planet destroying paper and driving it around to our houses and throwing it under our cars just doesn’t compare to getting the news online.

    But a “newspaper” has this huge paper albatross to wear. Unfortunately the newspaper is often the best and established way to gather the news in communities. I’d like to say as long as we have seperate communities we will have a news dispensing service in each one, but the quality provided can vary greatly depending on how much an infrastructure can be saved to hire and pay news gatherers and reporters a living wage to provide a service.

    For all of those complaining about the quality of news (nationally, statewide or locally) and have an opinion on whether it is going up or down, should take into account how many people get laid off day after day after day. If you were unaware of this, go to http://www.journalismjobs.com and do two things. 1. read the headlines and articles of industry news on the front page, and 2. click on the view all jobs and see how many new opportunities there are on a website that posts jobs all over the country. I submit there is a direct correlation between how many people are paid to produce the news in your newspaper and the quality of information you get. And Yuma is no exception.

    Those that are still at your favorite news organizations are doing an admirable job, but without exception there are less then there were a year ago and much less then five or 10 years ago. And we have a vested interest in how well informed the public is, and I’d like to ask those who might care what they think can be done about it.

  17. You ask me, more papers are gonna go the way Hussman suggests:


    –that is, they and the AP will stop distributing stories to aggregators. Which is all to the good.

    Our present understanding of the internet may be a blip. Cloud computing is scalable, cheap–and it offers more control over what gets distributed. Why buy a $2000 computer to run a game natively when you can buy a $100 one and run it on the cloud? Why release your product with no control over who gets it and what they do with it, when you can put it on the cloud and make sure it’s always licensed?

    Business models start to make sense once companies get control of their intellectual properties back–which will happen if/when we move to the cloud.

  18. I’m afraid it’s not Google killing the news sites. It’s the Internet itself. The Internet made it possible for anybody who wants to to publish cheaply and get read by a world-wide audience, and in the process killed the mere reporting of news as a paying job.

    Why should I go to a news site to read a reprint of a press release from a company when I can go to that company’s own Web site and read the original press release? Why should I read a news report of the latest scientific breakthrough when I can go to the scientist’s own site and read his own paper on it? Why should I read the news reports of a disaster when I can go to the Twitter feeds and Livejournals of people who’re actually there and read their first-hand reports, or go to the web sites of the emergency-services agencies in the area and read their updates on the situation? And in all of those cases, those first-hand sources aren’t in the business of reporting news. They don’t particularly care whether they get paid for generating their content, they’ve got other reasons of their own for wanting that content visible. And, as in so many things, the Internet’s making it harder and harder for those middlemen whose business model is to get between the source of something and the eventual consumer and charge for transferring that something from the source to the destination.

    Now, news sites aren’t doomed. But to survive they’re going to have to do something more than just report the news. They’re going to have to start pulling together many sources of different information, analyzing all of it and putting together the pieces that it isn’t immediately obvious fit together. Of course, that’s going to be kind of hard seeing as they’ve spent the last decade or so wiping all traces of that out of their organizations because investigative journalism of any quality doesn’t produce the Holy ROI.

  19. Todd Knarr- how does your analysis that newspapers are doing something wrong in the way they report the news square with the fact that more people read news produced by newspapers than ever before, and the number been rising for years?

    Newspapers have a revenue problem, they do not have a readership problem.

  20. @inkstain: Well, the papers I’m familiar with where I live are having a readership problem. Subscriptions to the print edition are down and continuing to decline. Subscriptions to the Web edition… never really caught on at all. When faced with something as simple as just a no-cost registration before they’re allowed to read, users simply abandon the site and go somewhere else that carries the same story without the hurdle.

    And I notice more and more that, among the people I know, they get a lot of their news from other people they know or direct from sources. I see more co-workers looking at the NASA sites for news of the Hubble mission, for instance, than I see watching CNN’s coverage of it. When we had the last round of wildfires here in San Diego, my main source for what was happening wasn’t the newspaper (whose information was usually at least 24 hours old) or the TV news, it was a Google Maps map set up by the emergency services people that had burn areas updated almost in real-time.

  21. I think if you saw the actual readership (paper subscription and web hits) for your local papers, you’d be shocked.

  22. @teufeldortsch – The Cloud is magic, IP-enforcing pixie dust. Got it.

    @theamazingyeah – Mostly agreed. It’s dangerous to put the government in charge of news collection, just as dangerous as putting the same power in the hands of our corporate masters.

    I think the news biz is in the middle of a market failure. People don’t generally pay for news because they get substantially similar free content elsewhere. Advertising isn’t covering the bills either.

    We can ride this train to the end of the tracks, hoping that the blogosphere comes up with a way to get enough people paid for their work, or that filtering/aggregation can add enough value to the work of unpaid/underpaid amateurs. We could also see it as the government’s role to fix the market failure, by making sure existing businesses get the money to continue.

    The first plan risks leaving us with no effective journalism outlets. The second risks stifling tremendous innovations that may emerge, by putting dinosaurs on life support.

    My solution is certainly going to create its own problems.

  23. Public funding of broadcasting works out pretty well in Australia; you get solid investigative journalism that hammmers the government far more than American libertarianism would predict is possible. Believe it or not, a modest wage + the knowledge that one has a chance to serve the public = a workplace whose members try very hard to do the right thing. It also makes for a news service that caters to marginal voices far more than its competitors. I don’t know if this will prove a workable funding model for the news in America, but what I am sure of is that Americans have such contempt for their public services that they usually believe govenments can’t do anything
    well anywhere. And they should know that, in a great many countries, that is simply not true.

    Its a bit like health care; every other developed nation has some version of universal coverage, but American debates about it still treat the government-pays option as a radical totalitarian nightmare that could not possivbly work. As if its a dangerous possibility, rather than a widely successful (and far, far cheaper) practice. America once inspired; now it could do with looking to others for inspiration.

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