The newspaper industry remains very much in a state of denial. I'm fascinated by it because I figure there's a lot to be learned from the newspaper industry's experiences and how those lessons might apply to book publishing.
This article in The Wall Street Journal made me cringe when I read it. This excerpt in particular really stood out:
The Inland Cost and Revenue Study shows that newspapers will generate between $500 and $900 in revenue per subscriber per year. But a newspaper's Web site typically generates $5 to $10 per unique visitor per year. It may be that newspaper Web sites as an advertising medium, and free news, just can't generate the revenue to sustain a valued news operation.
Yes, we all know that the subscriber model was a lot more lucrative to the newspapers than the freeloading website visitor model. I'm pretty sure that if someone could have prevented the combustion engine and automobile industries from launching, the horse transportation industry would have remained lucrative as well. That didn't happen though, and like the blacksmiths of many years ago, the newspaper industry needs to acknowledge reality and move on.
This all reminds me of my earlier series of posts on the Changing Revenue Model, specifically item #3 on Margins and New Income Streams. For the newspaper industry, the pre-Internet world was a wonderful one, full of rich margins and high subscriber rates. Those days are over.
Walter Hussman, the author of this WSJ article and publisher of the Arkansas Democrat-Gazette, suggests that newspapers shouldn't be offering all their content for free. He complains that Google and other search engines are profiting off the newspaper content without offering any compensation. While that's undoubtedly true, what options do the newspapers have? If they don't offer their content to Google and others, someone else will. Even if the entire newspaper industry would have locked out the search engines, that would have left the door open for someone else to fill the void.
Over time, bloggers and other so-called amateurs would have constructed a good, solid network of news information, photos, etc., to completely marginalize the newspaper's content. (That could still happen, btw.) It's not playing out that way because the newspapers were at least smart enough to experiment with free access. Mr. Hussman feels that was a mistake. I think that was the only way the newspapers could survive up to now, but they need to do much, much more to continue their survival. Either way, the model where "$500-$900 is generated per paid subscriber" is yesterday's news; it's time to acknowledge that and build a new model that's sustainable for the future.