With major news publications across the world cutting back on their print distribution cycles as the popularity of internet news continues to rise, is it viable for large publications to create a strong business model that has fully adapted to the internet age?  Current “free news” models may be economically enticing for the consumer, but entangling alliances with advertisers are dangerous to the press’s spirit of intellectual independence.  However, recent developments in consumer technology may be big journalism’s big opportunity to restructure how it sells news—but the question remains if consumers will be willing to pay the price.

The Death of Print

Today’s customers are accustomed to viewing online journalism through their web browser—whether it be on their desktop, laptop, or even their mobile phones.  Online publications have been trying to find an opportunity to transform this conventional distribution scheme.  As opposed to being purely reliant upon advertisers for their revenue, news organizations hope to return to the days when they earned most of their revenue directly from the consumer.

News agencies like the Wall Street Journal have attempted to adopt a “pay wall” model with relative success.  Internet pay walls allow users to only view a limited amount of a company’s content for free, while limiting the rest of the content to paid subscribers.

Search engines have entered the news industry foray as well.  News Corp. owner Rupert Murdoch and Microsoft have reportedly been negotiating for Bing to have exclusive access for indexing the Wall Street Journal’s content.  This deal would benefit both parties. Microsoft would be able to gain a larger user base by holding the exclusive content, while the Wall Street Journal can offer its content for free once again.

Big journalism has been experimenting with electronic, subscription-based distribution.  Some major publications have been offering digital versions of their content for a monthly subscription fee on various e-readers.  However, the e-paper screen technology, while superior for reading and energy efficiency, is unable to display the color graphics or multimedia content which publications currently offer.  This leads to an experience inferior to both print and browser-based offerings. 

Apple’s recent unveil of its highly anticipated tablet device, the iPad, may help bridge the gap between digital and print media.  While the iPad’s backlit LCD screen may not be as friendly to a reader’s eyes, its advantage is its ability to display advanced multimedia content.  Its magazine-like size allows easy-to-read, large text, while its touch screen interface provides a tactile experience that customers are used to.  This design makes publications eager to use the device as a platform for the “future” of big journalism.  Magazines of the future that were imagined in science-fiction films like Minority Report may soon become a reality.

 
The product will most likely be successful considering Apple’s strong track record for marketing, refining, and mainstreaming technology. However, this most recent product release is unlike anything else on the market.  In the past, Apple has made popular both the MP3 player and digital media distribution with the iPod, and the smartphone with the iPhone.  Now, Apple has positioned the iPad as a unique product, filling in the gap (or perhaps inventing one) between the smart phone and the laptop.

Before the iPad was announced, professional news media companies had shown off their pie-in-the-sky visions of touch-based magazine interfaces.  The concept demos included integrated multimedia, personalized viewing content, and interactive advertising—all of which seem quite feasible with the iPad’s hardware. 

At the product’s keynote unveil, The New York Times demonstrated work-in-progress software for an iPad newspaper interface. But the question remains if the consumer will judge the product to be worth the price tag—both for the iPad technology, which begins at a price-point of $499, and the content itself.  For the past decade, customers have become accustomed to receiving high-quality reporting for free.  And with so many news-outlets competing for readership, publishers would require considerable market power in order to be able to charge users at all.

[Sports Illustrated YouTube video at http://www.youtube.com/watch?v=ntyXvLnxyXk]

In the age of the internet, large news publications have been unable to maintain the profits they received in the days of print-media.   The problem is not a drop in demand for high quality journalism. In fact, the incredible irony of journalism’s current business weaknesses is that the demand for news consumption is higher than it has ever been.   But current internet business models have been unable to figure out how to make money from its audience ravenous for content.

Historic Transitions in Journalism Technology

The New York Times pointed out that big-journalism’s serious faux-pas was “giving away” its content.   Publishers anticipated that advertising revenue could be used as the company’s sole source of income, while readers could enjoy the articles for free—a win-win situation.  TIME magazine’s cofounder was skeptical of this advertiser-driven revenue scheme, labeling it as a “morally abhorrent” and “economically self defeating” formula.  But what other choice did the news industry have?  Internet culture expects information to be free.

When the revenue power is in the hands of the audience (as it was traditionally so), the content provider becomes accountable to solely to the reader’s interests.  When this power is handed over to advertisers, the content is written to appeal to them as opposed to the actual readers .  Instead of competing for readers, publishers instead are competing for page-views, creating an uncomfortable love-triangle relationship between reader, advertiser, and publisher.  Today, advertisers have severely cut back on what they used to be spending online.  The rise in competition has hurt the possibility of highly profitable online-only publications.

In fact, history has shown that financially independent, audience-driven journalism is more likely to produce fair and balanced reporting.  While the internet has been a hugely important force in shaping the realm of news-media, technological transformations in paper production has arguably brought an even greater revolution. 

Up until the 1870’s, newspapers were produced on expensive, linen-like material.  The high costs of newspaper production had forced newspaper producers to heavily rely upon funding from political parties, thus bringing a significant bias to its reporting.  These affiliations were by no means secretive—papers would clearly represent their mission statements as advancing a certain political cause. 

Based upon economic incentive, the newspaper had more to gain by accepting political subsidies. Because most people only had the income and leisure to purchase and read one newspaper, they were limited to only one political standpoint. Thus, journalism was unable to offer diverse viewpoints to its readers. 

Once the invention and production of cheaper wood pulp-based paper had become popular, newspapers were able to depend solely upon their audience’s purchase power.  This incentivized a tradition of balanced reporting for a wider audience.

How Journalism Can Change

If journalism is to hand financial power back to the reader, it has two possible paths—the adoption of a “micro-transaction” system or subscription fees for digital content . 

For the past few years, publishers have been attempting to create a strong micro-payment model.  However, this would bring fundamental changes to how news is read.  Information and news begin to be sold as “articles” instead of “issues.”  This transformation is analogous to how online music distribution has revolutionized the way we listen to music.  Because of the MP3 player and the popularity of digital music distribution services, we now think of music in terms of individual songs as opposed to albums. 

The greatest obstacle to the success of the micro-payment model is the need for a middleman to ease the transaction between the content provider and reader.  Even if an article only costs a nickel, customers will be more reluctant to pay for their news if the transaction is not fast and simple.  With thousands of accounts ready to digitally swipe through the iTunes system, Apple seems to be a strong candidate for this position. 

On the other hand, a subscription-based model will be better poised to offer exclusive, consumer-customized content.  As the Sports Illustrated concept demonstrated, subscribed members may be able to have a more custom-tailored news experience.  Additionally, the commitment of subscription helps the reader to form both a financial and emotional connection to the news provider, strengthening its market power.

The greatest obstacle that both of these models face, however, is lack of defined property rights for news and information.  Unlike traditional economic objects, no one can “own” a news story.  Thus, publications get very little return for the huge amounts of resources needed to produce high quality news stories. 

It becomes impossible for publications to prevent the news that they work so hard to discover to be replicated at a lower cost by competitors, especially independent blogs.  Perhaps this will force news organizations to focus on doing more than discovering news, instead concentrating on delivering unique editorial and/or multimedia content.

Another solution would be to encourage a sense of duty on the consumers’ behalf.  In order to stop news from simply becoming a “commodity,” a moral impetus could encourage its audience to pay for its news.  Like the RIAA and MPAA have done for the music and film industry, the news industry may need to rally together to campaign for recognition of its creative and financial investments.

Conclusion

While the future of journalism may be unclear, the world continues to observe the interplay between technological change and consumer expectations.  Innovations in technology constantly manipulate the market field, to which major publications must adapt if they wish to remain relevant.  Big journalism may currently be entrenched in a difficult situation, but as long as there is a demand for quality reporting, a provider will exist.

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