We have become acclimatised to a world of free news. Just look around any tube carriage and there will be half-a-dozen Metros lying around. But if you are too busy being squashed against the door to grab a copy you can always go online later on.
Earlier in the year US investor Warren Buffet argued that traditional news media needed a rethink. It is no longer the only place where people find out information; the production cost of e-news is almost zero compared to physical mediums and, free online papers are simply giving away their product.
All good points but his final insight certainly resonates. In the long run, how can it make commercial sense to give away the same product you are trying to sell? Lend a man your rod and he might try his hand at fishing. Give a man a bucket of fish each week and he'll stop buying them from the market.
Many of the larger newspapers already enforce paywalls and the New York Times has just announced that it will soon reduce free access to 10 articles per month. Now not everyone agrees with the pay-per-view model, and sure there is room for innovation and different charging mechanisms. However, the crux of the matter is still the same, pure advertising-based revenue is not sustainable. Value needs to be recovered directly from the readership.
So newspapers need to be brave. But the quality providers can also afford to be confident. Confident that behind their free homepage is a product that is worth paying for.
Don't you believe traditional media need to evolve into online and consolidation cannot be avoided in order to benefit from scale economies?
ReplyDeleteAt the same time, like the music industry, are profit margins bound to decline?