Newspapers May Be Dead, But the News Business Isn’t
Newspapers may be dying, but the news business is not. The paper part of the business—the physical newspaper itself—is doomed. It no longer makes any sense to print and distribute the printed packets of articles we call “newspapers” to individuals. Not when you can transmit electronic copies of every article on demand virtually anywhere in the world cheaply and instantaneously. But as long as people are still interested in the news—and they will always be interested in the news—there will be money in journalism.
Google has been accused—and with some justification—of killing the news business. Rupert Murdoch, whose News Corporation properties include Fox News, The Wall Street Journal, and the London Times, has in particular accused Google of stealing his company’s content. But the truth is that while Google does make money directing people to News content, the limited previews of articles Google offers hardly constitute stealing. And while Murdoch has threatened to block Google from indexing his content—something Google has made very easy to do—he has yet to go through with his threats. After all, as Google often points out, its search engine and news aggregators drive traffic to news sites that might otherwise have gone elsewhere. Nevertheless, as I wrote when Murdoch made those threats, he does have a point. Readers who navigate to a website from a search engine spend less time there than regular readers and therefore generate less ad revenue. And the truth is that any way you look at it, search engines like Google are capturing a large share of the revenue that once went to newspaper publishers.
It’s not actually Google’s fault. It’s certainly not as if Google isn’t providing an incredibly valuable service by making it possible people to find content on the Internet. The problem is that precisely the things that make the Internet itself so valuable also make the news industry’s traditional business model obsolete. And the Internet is just part of a larger, longer-term trend. The rise of radio, broadcast and cable television, and cell phones has marginalized newspapers, so that they are no longer the central clearinghouses of information they once were. In a recent cover piece in The Atlantic on Google—which is well worth reading in its entirety—James Fallows writes that
The company’s chief economist, Hal Varian, likes to point out that perhaps the most important measure of the newspaper industry’s viability—the number of subscriptions per household—has headed straight down, not just since Google’s founding in the late 1990s but ever since World War II. In 1947, each 100 U.S. households bought an average of about 140 newspapers daily. Now they buy fewer than 50, and the number has fallen nonstop through those years. If Google had never been invented, changes in commuting patterns, the coming of 24-hour TV news and online information sites that make a newspaper’s information stale before it appears, the general busyness of life, and many other factors would have created major problems for newspapers. Moreover, “Google” is shorthand for an array of other Internet-based pressures on the news business, notably the draining of classified ads to the likes of Craigslist and eBay.
Where once we had to get most of our information from a couple of local papers, we now have an incredible variety of sources to choose from. Newspapers have been squeezed by the the proliferation of media to the point where they can no longer survive in their old form. The Internet actually still accounts for just a fraction of the drop in newspaper revenue. But that fraction is only going to grow now that the Internet itself has become the global clearinghouse of information that local newspapers once were on a local scale.
If the bundle of printed features that has been sold on newsstands or delivered to your door is increasingly obsolete, the basic demand for what goes into newspapers hasn’t changed. The demand for news itself certainly hasn’t changed, even though the market has become more competitive. The problem is that in their effort to cling to their traditional business model, newspaper publishers are finding it increasingly difficult to make money off the news. But as they struggle to find a new model, news publishers may find they have an unlikely ally. That’s because, as I’ll explain in another post, the same thing that makes Google such a threat to newspapers also makes it uniquely positioned to create a new and ultimately better marketplace for the news.