The storm the newspaper industry is trying to cook up early this week has been in my mind the past couple of days.
Here’s the situation: The print newspapers in the U.S. is really feeling the economic crunch and one by one, print newspapers are shutting down. The thing is, it’s not solely the economic recession’s fault that newspaper publishers are losing money– more and more people are getting their news online for free. What the newspapers are doing now is taking an offensive against aggregators of their content (*cough*Google*cough*) and get what they deserve.
To the papers, it seems obvious: between the economy and the internet, they believe they have some semblance of control on the latter. But Google CEO Eric Schmidt snapped back at the papers and said that the whole industry should adapt to the changing market.
I may sound biased but I’m siding with Google on this one– the whole information & media industry has dramatically transformed that it took one global recession to magnify the sea change. It’s not just newspapers, but it also includes movies, television and radio. What the traditional media needs is a sound business model to be sustainable in a world with an abundance of information.
I still believe that information that we get on the internet is not free– we have to spend on the broadband connection to get the news and we have to pay for the electricity and the computer with which we consume the information. What’s happening is that the papers have found themselves cut-off from the value chain, that is, they are not getting a share of our wallets. Newspapers have gotten their a piece of the action primarily from advertisers. But since the economy took a nosedive, ad revenues have followed suit.
In an ideal world, the newspapers can have a business model similar to cable television or movies– they can charge with either a subscription-based or “pay-per-view” business model. But here’s the rub: what the newspapers are offering are available elsewhere without cost. Quality may not be up to par, but information can be obtained in foreign newspapers, blogs, and even social networks. My theory is that average folks these days are happy with “good enough” quality of information and that the value that the New York Times of the world is bringing or adding to information is no longer that high.
The decline of traditional print media has been followed by a lot of pundits and bloggers alike and the U.S. newspaper industry is now in survival mode. (Time has a great article on how to make newspapers viable again.) They want to convince the consumers that they should pay up. But it may be too late for them to reverse the habit of people who are used to “free” information. So now what?
I think the problem of the papers is the scale of their operations. Simply put, they’re too costly and trying to cover too much. Maybe what we’re going to see in the future is the “specialization” of information sources– papers will cover less and focus on more specific topics, like opinion or business inights, and “outsource” the rest to other newspapers with the domain expertise.
“Information Outsourcing?” Yeah, it sounds crazy. But who knows? It might save the print newspaper business.