The Online Rant

There has been a lot of talk lately from the old school newspapers about charging for news online. Saying they want to force people to pay for news as they read it.

Newspapers all over the country are struggling to find new revenue streams as the old dead tree based streams are drying up. The truth is that people don’t buy newspapers anymore. In fact, people don’t even read free newspapers anymore. More and more people read all of their news online. And that is hurting the newspaper industry that has been relying on subscriptions and print ads for it’s main revenue streams. If people aren’t buying your newspaper, that revenue stream is gone. And if people aren’t reading your newspaper (even if you give it away), then advertisers aren’t going to buy ads in your newspaper. And there goes the other main revenue stream.

On the online side, revenues are minuscule for most newspapers. Subscription based pay walls simply drive readers to other sites, and Internet ads don’t make up for the lost ads on the paper side. Competition for Internet ads is cutthroat and dominated by big giants like Google and Microsoft. And the traffic levels for many newspaper websites are even lower than their subscription list. So revenue from internet ads is often significantly lower than that of the paper edition. All of that adds up to a major crisis for the news industry.

So far the majority response of the newspaper industry is to claim they need to force the online users to pay subscription prices for access to the news content. The only way that is even remotely possible is if the ENTIRE industry switches to a subscription model. Because if even one newspaper or news source offers news online for free, then the whole model breaks down. And to be realistic, there is no way to ensure that all news sources abide by the agreement to charge for news. Even making it required by law (as some journalists have suggested) wouldn’t work in the online world. After all, laws can only be enforced within the geographical boundaries of the nation that implements them. And the Internet doesn’t follow geographical boundaries.

So the future of newspapers looks pretty bleak. No revenue from the old models, and the only new models they have come up with are simply impractical and doomed to fail. All in all, pretty bad.

That is until I read an article today in the opinion section of the Wall Street Journal. The best quote from the article that really sums up the entire point was the following.

“For years, publishers and editors have asked the wrong question: Will people pay to access my newspaper content on the Web? The right question is: What kind of journalism can my staff produce that is different and valuable enough that people will pay for it online?”
L. Gordon Crovitz

If you ask that question from the start, then all of the other problems go away. Because when you think about it, the problem with online revenues is a competition problem. Instead of competing with a few local newspapers for readers, you are competing with millions of newspapers all over the world. Most of whom are nearly identical to your newspaper. So there is no incentive for people to pay for access to your news over someone else’s news. And there is no particular reason for anyone to read your news website instead of one of your competitors news websites when it’s the same news.

But if your news is different in some way from that of your competitors, then they will read your website instead of other sites. And if your news provides some tangible benefit to the reader beyond simply keeping them informed, then they will be willing to do something to get it. With a tangible benefit you can charge a subscription for access, and people will pay it. And furthermore you can charge higher rates for your online ads because you can guarantee an audience that fits a specific mold.

This isn’t really a new concept. The problems facing newspapers today aren’t really any different than those any industry faces when it has a lot of competition. It’s just that most newspapers have gotten used to an environment where they didn’t really have to compete. And now that the Internet is forcing them to compete, they don’t seem to remember how.

Lately the tech news sites have been filled with rumors about a possible antitrust prosecution against Google. Most of the rumors are based on statements made by Obama’s nominee for antitrust chief, Christine Varney. She has mentioned that Google has acquired a monopoly type of position in the Internet advertising industry and may be a future target of antitrust proceedings.

There is no question that Google has a very large and rather dominant position in the Internet advertising industry. The vast majority of Internet advertising is controlled by Google and that majority is increasing all the time.

But when people look at why it’s so large and why it’s increasing, no one cites dirty tricks or monopolistic practices as reasons. All of the analysts, even those critical of Google, point out that Google simply offers a better value than any of it’s competitors. It’s sheer size does give it the ability to offer more at lower prices, but that doesn’t change the fact that what Google offers is better than what any of it’s competitors offer. Google offers better value to the the customers who are buying the ads, as well the websites hosting the ads. A win for everyone.

So basically the reason Google is so successful is because it is providing a better product than it’s competitors are providing. And because customers have recognized this, Google has become the dominant player in the market.

So when did it become a crime for a company to be too successful? When did it become against the law to gain too much market share by simply being better than anyone else? Where is that invisible line between having a successful law abiding business, and a business that is now too successful and illegal?

Oh, and before anyone says this is a Democrat/liberal vs Republican/conservative thing, I would like to remind you that the Bush administration was making many of the same types of statements about Google. So this isn’t because the Obama administration is anti-business and the Bush administration was pro-business. This is a mindset that affects both parties.

Your business is allowed to be a success as long as it isn’t too big a success. Because if you are too big a success, then aside from any illegal or unfair dealings, your business could be prosecuted.