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News Content on the Internet: Will There Always Be a Free Lunch?

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The contours of the global media market have undeniably changed. There is too much evidence to deny it. Print journalism is on its way out to take its place with the one-horse shay "as if it had been to the mill and ground." Online news and comment is in.

In America, the venerable Christian Science Monitor now publishes its weekday editions online with a weekly print version claimed to have "unique" content. Seattle's Post Intelligencer recently closed its printing presses in favor of an exclusively online edition. The two jointly operated Detroit dailies, the Free Press and the News, just ended home deliveries on Mondays, Tuesdays, Wednesdays and Saturdays and directed doorstep readers to their respective Web sites. Globally, but for a few South American and Asian markets, newspapers continue to cut back or close. In England, just this month, owners slated nine local newspapers for closure, and South Africa's oldest independent paper, Grocott's Mail, has closed its pressroom.

Web journalism has become the order of the day. Soon, gone will be the tactile experience of the daily newspaper. Web based editions of five daily newspapers, the New York Times, the Wall Street Journal, the Washington Post, USA Today and the Financial Times are offered on Amazon's Kindle at heavy discounts off the newsstand price, and others will likely soon follow suit.

The reason for all this, as everyone knows, is economic. Paid circulation for print is down just as advertising revenue is down. This may be because the downturn has caused many advertisers to slash budgets, but it is in large measure because of a loss of readership to the Internet. In addition, no one knows how effective print advertising really is. A classified want ad in a small community newspaper may produce the desired responses, but the ad will cost more in print than a free posting on craigslist. What is undeniable is that large national bread-and-butter advertising is better targeted on the Net. As John Wanamaker, father of the department store and of modern advertising famously said, "Half the money I spend on advertising is wasted; the trouble is I don't know which half." Wanamaker's statement may not apply to click-and-pay business models on the Internet where the effectiveness of the advertising dollar is much more predictable and ads are much more sharply targeted to customers according to geographic location, buying propensities or affluence.

There are other factors. We now live in a world where most people are accustomed to getting their information from a screen. Modern consumers of news don't do tactile. News is reported on the Web in real time. Video coverage of the U.S. Air plane that ditched in the Hudson River last winter went out on the Net in streaming video. The New York Times may publish "All the News That's Fit to Print," but events often overtake the print edition before it hits the news kiosk. Most important, access to most news content on the Internet is free. Even pirated pay-for-content news or commentary, such as an article in the Wall Street Journal, quickly finds its way to some free portal or blog under some extravagant interpretation of the "fair use" doctrine. People just won't pay for what they can get free of charge.

So where are we headed? New York Daily News publisher Mort Zuckerman, who offers a free Web edition of his tabloid paper that reportedly could lose $70 million this year, wants to charge readers for access to the Website, as the Wall Street Journal does. Paradoxically, Rupert Murdoch, who owns both the Journal and the London Times, forces readers to pay for access to the Journal but not the Times. His marketing reasons are unclear. Zuckerman argues that free access undercuts newsstand sales, and he is undoubtedly right. But how can publishers shift from a business model offering free content to a pay-per-view model such as we have on cable television? The genie is out of the bottle.

Moreover, net advertising revenue may be insufficient to pay for the kind of quality content being offered on the Internet. Media mogul John Malone, chairman of Liberty Media Corp. which owns, among other things, cable channels and DirecTV, says that the public doesn't like advertising very much anyway, and that additional revenue sources are necessary to carry the day for premium content.

What may be foreshadowed is what happened with cable television. There used to be a law that cable television content could not be offered for a fee. Then that was changed, and the providers cleverly blended the connection charge with additional charges for content. If you want premium channels, you pay more, don't you? Is this for connection or for content? Don't kid yourself. As you pay for more channels, some of the additional revenue is paid to those that produce the content. Then there is pay-per-view, where you have the option of paying even more for content uninterrupted by commercial announcement.

Everyone pays some sort of ISP provider for Internet access, and Internet access is the thing that absolutely everyone must have. Watch that space. Gradually, the cost of Internet access could be upped to pay media organizations which offer free content. Then, following the pay-per-view model, the New York Times could offer free news content, but charge viewers for access to the blathering of high priced columnists like Tom Friedman or Maureen Dowd. It might be called "pay-for- punditry." Indeed, they and other papers might sell the rights to an aggregator who offers the best of the best from all newspapers and periodicals for a fee. What they then must do to prevent bloggers from buying the access and then immediately posting the column on a free Website is a question better left for another day. One thing is certain. The daily newspaper is rapidly going the way of the "one-horse shay."

(Originally Posted on the World Policy blog on July 21, 2009)
James D. Zirin, a New York lawyer, is co-host of the cable television talkshow "Digital Age."