February 16th, 2009
Newspapers face first mover disadvanatge in online pay-for-news
The consensus among newspaper publishers is that they must start charging readers for the news because online ad revenues cannot cover their costs, and their print revenues are going away.
But they face a first mover disadvantage. The first daily newspaper to start charging will merely drive readers to a newspaper that is free.
There is little unique content within any metropolitan daily newspaper. They all use tremendous amounts of wire copy from Associated Press, Reuters, etc.
Unless all newspapers start to charge for their content at the same time, pay-for-news won’t work for any of them. That’s because there’s a last mover advantage. The last newspaper to charge for content will have gathered many of the readers of the other newspapers.
That’s why pay-for-news won’t work.
Newspapers are part of an industry that is being disrupted by the Internet. And the chief characteristic of a disruptive industry is that it disrupts. Even if you can see the disruption ahead, your business, your industry, won’t be able to get out of the way of that disruption.
We saw this with the advent of PC technology. Hundreds of computer companies were disrupted and disappeared. They could see the train wreck ahead, they could see they were on a disruptive path–but they couldn’t get out of the way in time, they couldn’t downsize their way out of it, they became part of the train wreck.
IBM barely made it. It took Lou Gerstner ten years to remake IBM into a computer services company and not a computer company, and get it away from the disruption of PC technology.
Newspaper companies can clearly see the train wreck of their print business model. Most will slam into it. Pay-for-news won’t work, it won’t get them off of the disruptive tracks they are on.
Tom Foremski reports on the business and culture of Silicon Valley at the intersection of technology and media. He also writes at Silicon Valley Watcher. See his full profile and disclosure of his industry affiliations.
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