Both of those extremes are easy to monetize... Now that I think about it, I'm not sure how financially stable Gawker and TechCrunch are.
But my point is:
Popular rags are cheap to produce and can live off ads.
Intelligent content, on the other hand, can find paying cosumers.
I think the problem with the NY Times and others like them, is that it's hard to find a sustainable business model for the middle ground that they are on.
-EDIT-
Yet a third way is a non profit news paper like The Irish Times, funded by a grant I believe.
I hear the Seattle PI is going into chapter 11, if I was stinking rich, I'd turn it into a non-profit.
There's no restriction in non-profits that they can't make money and pay people ridiculous wages. I mean IIRC Oxfam in the UK paid like £400,000 (probably near $800,000 at the time) for a marketing firm to do an advert. It's just the company doesn't get taxed, so long as all the 'surplus' goes back into improving the business, however all their workers can still earn an income and will still pay income taxes.
I mean imagine how many people would buy a newspaper subscription if you got a tax receipt from it!
Oh yeah. You want to get rich. Not "well off" but rich.
Question answered.
The people who start and run newspapers are NOT the same kind of people who want to be reporter when they grow up. One of the fun aspects of the whole "save the newspaper" conversation is that the loudest people in it, the reporters and editors who appear to be at the center of it, are in fact marginal players in the game and quite possibly have little idea what they're talking about.
How many editorials and op-eds do we see from the people who run the ad sales teams? From publishers? Very, very, very few. What does a beat reporter know about saving their newspaper? How many business reporters have actually ever run or started their own business?
You can't get a tax receipt for "services received".
Is there something about newspapers that makes the non-profit model not work as well as it does for broadcast?
When your looking at NYT or Facebook you are interested in their content when you using Google your looking for something. Put another way, how effective would advertising be when inserted in the middle of a phone conversation?
You are probably right to an extent- but a lot of times people are browsing FB to waste time. If they are looking at the profile of some girl they like, and an ad shows up for the new album of one of the bands she likes- could that not potentially be an effective ad? (This could be a friend, who has a birthday coming up, and FB could suggest presents based on your friends preferences). I really think that FB just needs to adapt their ads better. I hope they get it figured out and prove everyone that thinks they aren't worth 15 billion wrong!
It could be middle ground in terms of penmanship, but neither TC nor Economist can be a daily news source. Daily, with general relevance. Different function IMHO.
Why do I need the middle ground?
Granted, Economist is probably closer to NYT, in terms of scope, but I still don't see how NYT sits between the two as the optional "middle ground."
I think your over applying the extent of Silicon Valley's effect on the thinking of managers around the world. I don't want to go on about the underlying truth. But basically whatever newspapers were making money from, they can't make money from it an more. Not as much anyway.
Papers get competition from blogs & Facebooks & whatever. People's taste & such is changing, but that's not the centre of gravity. Classifieds are no longer in print. Newspaper ads sell for less. That's it. it's not that complicated. Think of newspapers as grain farmers. The price of grain has dropped. We can speculate why (it's got something to do with online media). We can complain that those going out of business made the truly great grain & all our pasta will taste like crap from now on. But that's all fluff.
Papers sell ads. They are no longer as valueble.
I'm in agreement with you about the piece in general, but this specific point isn't silly. Newspapers readers haven't ever paid for the content: the advertising has always paid for that. If readers were footing the bill for the content generation, a copy would cost $10. It's this fact that also allows freesheets to prosper, when the reader pays for nothing at all.
I'm surprised at you rejecting that. It's usually the uninformed who think readers pay for the content.
http://onthemedia.org/transcripts/2009/02/06/03
Moreover, the NY Times' most recent 8-K shows that 30% of quarterly revenues were from subscriptions (subscriptions were up by nearly 4% from the previous year, by the way). That's $234 million in revenue in the fourth quarter alone:
http://google.brand.edgar-online.com/displayfilinginfo.aspx?...
For what it's worth, it's also easy to disprove the notion that people won't pay for content on the web. The New York Times was making upwards of $10M/year with its Times Select subscription service when it closed in 2007, and that was just for archives and editorials (not news content):
http://www.paidcontent.org/entry/419-new-york-times-to-close...
(Aside: How many dot-coms do you know of that are generating over $10 million a year in ad revenue?)
Now, I suppose you could argue that since these numbers aren't higher that subscriptions never paid for content, but I dispute that notion. Subscriptions were traditionally a significant source of revenue for newspapers, whereas the author of the editorial wants you to believe that they were trivial revenue streams, and that it's impossible to get people to pay for content in the New Media world. In fact, if you look at the numbers, it's pretty clear that the Times is suffering mainly from declining advertising revenues -- which if anything, is a great indication that they should be charging for content.
That's why I said that the editorial writer's point was silly. He didn't do even basic research to back up his assertions.
That said, even at their 1960s best I think it still stands that US readers "don't pay for content". They paid for less than half of operating costs by your figures, and this in what we now think of as a newspaper gilded age where competition was substantially less.
Now you may say that operating costs can be lower today, and would be vastly lower if the dead trees were out of the picture, and you'd be correct -- but it's still not a rosy picture for journalism if it has to depend on selling its wares directly to the public, instead of selling the public to advertisers.
It calls for a complete culture shift on both sides: journalism has in the past been subsidised so heavily by advertising that readers have never had to bear the expense of its creation.
That's the real problem, which the author doesn't really get across. It's not that people won't pay for online content at all, it's that they won't pay enough -- they won't pay enough to meet the costs of creating it, and they certainly won't pay enough to meet the current profits that persuaded investors to back newspapers. Yet without their regional monopolies, the media groups can't make enough from advertising to cover the shortfall.
That's why the talk is now all about alternative business models. It's just difficult to think of a plausible one, because by its very nature journalism burns up cash. It's somewhat similar to venture funding, in that you pay reporters and photographers good money, and often they come up with nothing and only occasionally hit the jackpot. To get investors to take those sorts of risks with cash, there has to be a good return. And for the sums that we're talking about here, the opportunity cost of sinking it into journalism can be very high indeed.
The difference is that the newspaper industry is quite evidently dying a slow death, because people aren't reading paper - at least at the same levels that they used to. (I read paper all the time to be honest, but less than my parents did - I don't have a weekly subscription - and more than my gen y colleagues do.) You can't ignore this fact.
The former problem is probably inevitable, but is at least a surmountable challenge with better technology; the latter is a symptom of unsustainable business practices in the technology industry that will eventually have to resolve. We (tech companies) can't keep selling content at a loss, and hoping to make it up in volume.
1) The Bricks Are the Problem: "In theory, a reader who stops paying for the physical paper but continues to read the content online is doing the publisher a favor."
Mmhm. They said this about store-based retail, too. "Stores can operate more efficiently on the web, and will take over because they don't need the bricks and mortar!" What happened? Well, for starters, we found out that people like to shop in stores. We also found out that logistics, customer service and returns are always significant fixed costs, and the absence of bricks and mortar doesn't necessarily make them cheaper.
2) Race to the Bottom: "every English-language newspaper is in direct competition with every other. Millions of Americans get their news online from The Guardian, which is published in London. This competition, and not some kind of petulance or laziness or addled philosophy, is what keeps readers from shelling out for news."
...and last I checked, the Guardian has the same problems as everyone else in the business. I guess the Utopian ideal here is that every newspaper on the planet gives their content away for free, until they all simultaneously combust in a cloud of bankruptcy lawyers and rainbows.
More seriously: the end-game here is not a world where we have the journalism quality of the New York Times, the Washington Post, and the San Francisco Chronicle, only online and free. The end-game is Gawker and TechCrunch. Sound like a fair trade?
3) Everything Is Different Now, Man: "And the harsh truth is that the typical American newspaper is an anachronism. It is an artifact from a time when chopping down trees was essential to telling the news"
This is not "harsh truth" -- this is 95% wishful thinking, 5% fact. The 5% fact is that there is another way to access media, that has both benefits and drawbacks. The other 95% is that the Silicon Valley, VC-for-everyone corporate culture has infected media, and given it a business model as unsustainable and wasteful as a midnight candy bar delivery from Kozmo.com.
People still like to consume media on paper. It doesn't require electricity, can be done without the aid of a machine, and can be archived easily, by anyone. Granted, the type of content served by traditional media is shifting, but that doesn't mean that newspapers and magazines don't have a future in the Brave New World of digital media.
More importantly, the internet hasn't made it free to produce good content. We all like to dance around this critical fact, pretending that if we just spend enough money on viral loops and news aggregators, we'll be able to reproduce our current media offerings. But we conveniently neglect to notice that many of the interesting articles we read on Digg or news.google are produced by reporters who are being paid by the old media. When it dies, so does the content that powers whizzy web-2.0 social media.