The end of advertising as a cash cow?

James Fallows has been discussing the death of newspapers and today posted a piece by reader Hal on saying what was really at issue was the death of advertisement.  Essentially he argues that the internet has to proved amenable to advertising with the exception of Google’s tiny ads.  Hal ties that in to the ability to skip television ads and argues that the outlook is poor for the industry as a whole.   He name checks radio but I don’t think there’s that much evidence there, although digital radio might make it all the easier to just jump around to avoid ads and I do hear more solid music blocks these days.

I suspect that this is at least partially overblown, I’d like some revenue and profitability figures to say for sure.  However, assuming it is happening, this means we’re losing a major model for providing public goods.  Specifically, if you can’t make much (Newspapers) or (any) money off subscribers to your product, make the money selling access to your subscribers.  Newspapers probably weren’t a public good until the internet, but I think once some papers put their content online news collectively became a public good.  I think this would have happened even if the papers stayed offline, although it might have been slower.

I don’t buy the idea that newspapers are suffering under their old model because they’ve cut back on hard news and investigative reporting.  Another Fallows reader along with Ezra Klein has repeatedly made the point that the good coverage is typically a beneficial inefficiency under the traditional model.  This is why I, like Yglesias, oppose a monopoly exemption for newspapers, it’s not the classic profit model we’re trying to save, it’s the inefficiencies.  Non-profit status instead attempts to directly pay for the social good via donors who would get tax deductions.  This is where reprinting the arguments of both sides without fact checking or otherwise adding value will cost news sources money, why would people want to pay for that?  Of course sponsorship will be encouraging for more partisan news as people certainly are willing to pay for news that supports their biases.

For those wanting to stay in the profit sphere, I can’t find the source on this, but I’d read an interesting article on how the Wall Street Journal does it.  You don’t charge for breaking news or big stories.  Instead you charge for niche products of interest to few customers.  Your big news will get you the wide viewership and each of that population probably has niches they’re willing to pay dearly to get access to.

Comments

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