NET RESULTS:The relationship between the newspaper industry and the web has been strained ever since the initial dot.com hype evaporated
IT’S NO secret that the newspaper industry’s relationship with the web has been strained ever since the initial dot.com hype evaporated at the beginning of this decade.
Like thousands of well-funded dot.com companies, newspapers around the world thought internet advertising would support the shift from physical product to a virtual one. Remember Pets.com anyone?
The mini-recession of 2002 put paid to that dream. Internet usage around the globe continued to rise steadily, but with almost an inverse relationship to advertising rates. At the same time, Google was going from a cool, relevant search engine to an omnipotent source of information that gives away maps, news and books, to name just a few, for free.
Traditionally when advertising revenues dry up, newspapers are supported by cover sales. Online that means subscriptions but the subscription model, as this paper learned, is extremely hard to justify in a world where Google and many others are dishing up free content. It's no surprise that Rupert Murdoch's plan to charge for online content is beginning with the Wall Street Journalrather than one of his tabloid titles.
Just one example of the tricky relationship. Last month, the Associated Press whipped bloggers and other online commentators into a frenzy when an internal discussion document about reining in unauthorised use of its content online was leaked.
In summary, the news agency was suggesting tightening up its policies so that it could identify people who may be using its content and charge them accordingly.
Bloggers became indignant because this quickly became translated to “AP wants bloggers to buy a content licence if they link to their articles”.
Without wishing to get bogged down in the specifics of the AP case, watching the discussion polarise on the web, the arguments started to sound very familiar. It’s the same one that the music industry and Hollywood have had to deal with in the face of cheap and ubiquitous broadband, which opened a Pandora’s Box of free music and DVDs to anyone with a modicum of technical knowledge.
The industry response has primarily been a legal one rather than a move to adapt their business model to changing consumer demands.
(Aside to the Irish Recorded Music Association – when will you seek an injunction to block Google? Searching for an album or artist name followed by the word “torrent” produces almost exactly the same result as the Pirate Bay website to which you are intent on blocking access).
Newspapers are at the same juncture that music was when Napster revolutionised online file-sharing in the late 1990s. Just as then, many in our industry despair that we will ever be able to charge online readers for the fruits of our labour. The difference with the music industry is we are willingly giving our content away for free.
What has happened in other creative industries, though, is not only encouraging, but should stop newspapers heading down some digital cul-de-sacs.
What largely drives people to online piracy is the lack of a legal alternative. New and innovative music services, ranging from Apple’s iTunes to new kid on the block Spotify, helped worldwide digital music sales grow by 25 per cent to $3.7 billion last year, according to the International Federation of the Phonographic Industry (IFPI). Digital now accounts for a fifth of music sales, up from 15 per cent in 2007 and a tiny 2 per cent in 2004.
The growth has coincided with the availability of services, a fact not lost on local players. When Eircom announced its blocking of the Pirate Bay, it also said it had signed a deal with the major labels to develop “an innovative new music service” which is expected to launch by year end.
The IFPI estimates that 95 per cent of music downloads are illegal. What it doesn’t mention is that the whole music industry business model has changed. Big earners from U2 to Madonna now make their millions from live touring, merchandise and a host of what were once ancillary revenues, rather than by releasing records.
Newspapers are going to have to learn to do the same.
Help came from some unlikely sources in the last couple of weeks. Google, usually painted as the enemy of publishers, is developing a micro-payment system specifically for newspapers and has also introduced an experimental feature called Fast Flip which allows image-rich news pages to be quickly scanned.
Micro-payments – ie payments of under €2 to €3 and possibly as low as a couple of cents – are not currently practical due to the credit card processing charges associated with each transaction.
Many feel consumers will be more willing to make occasional purchases of additional content rather than commit to an annual subscription. Its proposal would see Google becomes a broker for newspaper publishers.
Web users would create a Google account which would then be accepted at numerous different newspaper sites.
The next 15 years may not be glorious ones for the newspaper industry, but they are certainly going to be interesting.