Another week, another debate on how to monetize the Internet.
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In one corner are the head-in-the-clouds types who would like to charge Internet readers for access to news and media sites. These people wander through life like small children, only bothering to look around when their ice cream supply runs out.
In the other corner is a productive class of innovators who resist online fees and micro-charging, instead opting for free. They’re using the Internet to change the world.
These two characterizations gloss over arguments for either side, sure. But even with mounds of research, the overwhelming conclusion is never in favour of charging readers.
Paid content is a myth – an idea strongly stated this week by the blog WiredPen. It goes like this: In the last 50 years of news media, readers have never paid for the content of what they read. Advertising has always been the money-maker in media.
Subscription fees (like newsstand prices) are for, well, subscriptions – delivering the news to your door or corner paper box. They also go to putting ink to paper and other production costs. The pocket change it costs per issue or the monthly cost of home delivery of a newspaper or magazine does not pay for journalists’ salaries or to keep the lights on in the newsroom.
In 2000, when newspaper readership was substantially more robust, subscriptions supplied only about 20 per cent of newspaper revenue. Newsprint alone made up somewhere between 15 and 30 per cent of operating costs, WiredPen notes.
In short, the $1 or whatever it costs to buy a daily newspaper is not keeping the paper afloat, but merely paying for production. Real revenue comes from advertising.
This means the current crisis is not for readers to solve, but for those in advertising.
The same applies to the Internet: content should be subsidized by online adverts. To suggest anything else – as David Carr in the New York Times did – is stupefyingly misguided.
Models for profitable sites exist.
The New York Times website, for instance, is one of the most popular in the world. It yields a reported $200 million per year from advertising, which should cover way more than 20 per cent of the paper’s operations.
And local sites can be even more profitable. Websites are a beautiful way to cover niche markets, where directed and local advertising thrives.
But revisiting the Internet business model has not been a priority for the pay-to-play crowd, who’ve just recently awoken to these realities. The reason they’ve started suggesting charging consumers is because they’re in a revenue-starved panic and begrudging those of us who read media online.
So here’s a message so loud they’ll be able to hear it from up in the clouds: come up with a better idea already!
joshuae@nowtoronto.com
