This article originally appeared in the Nov 16, 2009 San Jose Mercury News
by Larry Magid
Most newspapers are declining in circulation, and the Internet is partly to blame. I make part of my living writing for newspapers, but even I am less likely to subscribe to or buy the print edition now that I can get my news for free on my PC and my cell phone.
But now some media moguls are talking about shutting off that free spigot of news and information.
News Corp. boss Rupert Murdoch said in August that he plans to charge for content for all his online newspapers, including The New York Post, the Times of London, the Sun and the Daily Telegraph. The Wall Street Journal, which was purchased by News Corp in 2007, is one of the few newspapers that has long charged for much of its content.
Like a lot of other media companies, News Corp. has been struggling. Fortunately for its stockholders, the company’s TV and movie divisions had a very good quarter ending Sept. 30, but its newspaper and information services business earned only $25 million during the period, compared with $134 million during the same period last year.
Murdoch is far from alone. In late October, the Audit Bureau of Circulation reported that newspaper sales in the six-month period ending Sept. 30 were down by 10.6 percent on weekdays and 7.5 percent on Sundays from the same period the year before.
The Los Angeles Times — where I wrote a tech column in the ’80s and ’90s — fell from 1.1 million readers in 2000 to 657,000 this year. USA Today had a 17.1 percent decline. Even the venerable New York Times suffered a 7.3 percent decline, falling to under 1 million circulation for the first time since the 1980s. How do I know this? I know it because I read it in The New York Times. Well, sort of. I actually read it at nytimes.com, and therein lies a big part of the problem.
Online news is cannibalizing printed copies. In theory that shouldn’t matter because, like the dead trees version, the online edition of newspapers carries advertising. Sure, there’s a subscription or a newsstand fee for the printed edition, but subscription and newsstand sales have never represented the bulk of newspaper revenue. There has been a lot of hope that online advertising would more than make up the slack from lost print revenues. Unfortunately that hasn’t been the case.
The response to the crisis is actually making things worse. To try to compensate for lower ad revenues, newspapers are raising newsstand and home-delivery prices, reducing the number of pages and laying off journalists, which means that those who continue to subscribe are paying more for less.
So it’s no wonder the media moguls like Rupert Murdoch want to put an end to free online access. If they start charging people to read the paper online, they may not only make more revenue from the online side but also may encourage more people to buy the printed paper because the content will no longer be free online.
But it doesn’t strike me that Murdoch’s wishful thinking will turn into increased revenue. With the exception of The Wall Street Journal, I can’t think of any newspaper that has been successful charging for online access.
In 2005, The New York Times tried charging for access to its opinion columns but it was a failed experiment. In 2007, the paper ended its “TimesSelect” service and reverted to free access to the opinion section. Long before Murdoch acquired it, The Wall Street Journal had been able to get away with charging because its financial content is unique. But what works for The Wall Street Journal isn’t going to work for Murdoch’s New York Post readers.
Maybe we need to find another model? I realize there would be a lot of objections to using tax money to finance journalism, but I wonder if we should take a look at the British model that finances the BBC’s TV, radio and online programming with a $237 tax on whatever device you use to watch TV, be it a computer, personal video recorder, mobile phone or TV set. In Britain, according to the British government’s TV licensing Web site, “watching TV without a valid license is a criminal offense.”
I’m quite sure that criminalizing unlicensed Web surfing or TV viewing would be even more unpopular with Americans than mandatory health insurance. But unless media companies can find another way to stay in business, we may very well see some serious proposals along these lines.
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