The Newspaper Industry and the Prisoner’s Dilemma March 9
The “prisoner’s dilemma” is an analogy in game theory that’s used to describe everything from crowd behavior to stock markets and employee group evaluations. One variation is this: you and an associate are each arrested and interrogated separately. The first to implicate the other will get a light sentence; the other is imprisoned indefinitely. If you implicate each other you both get a moderate sentence. But if you both stay quiet, you’re both let go. It’s about mutual trust and cooperation for a mutually beneficial outcome. If you look hard enough, economists and behavioral anthropologists will tell you, you’ll find it everywhere.
David Carr wrote an article in yesterday’s New York Times about why newspapers find themselves in this very predicament, but with a twist — there’s no way out unless they cooperate. Cooperating in this scenario would probably mean something like a subscription-based paid content model for a network of websites from large daily newspapers. If you pay the fee, you get unfettered access to all participating websites. If you don’t, you get very little (except what others might be willing to repost, a possible copyright issue lurking in the shadows of what has historically been a free and open web). It’s something that the Silicon Alley Insider has been advocating for months.
The challenges to this approach are significant. The cooperation alone that would be needed among rival publications is daunting on its face. And as Carr points out, outdated anti-trust regulation would likely forbid what would be considered collusion. He quotes Philip Meyer, who wrote “The Vanishing Newspaper,” who says: “Technology has destroyed the monopolies that these laws were designed to regulate.” It seems the newspapers must collude to survive, hardly something the anti-trust regulators could have foreseen.
Moreoever, such a partnership among the originators of some of the web’s most timely and highest quality content would alienate Google and the myriad bloggers who depend on a free and open information sharing arrangement to simply do their job. It would effectively create a walled garden of content, contrary to the very core ideals of what the web is about.
But insofar as newspapers are businesses (which I think they shouldn’t be), it’s a no-brainer. They should stop the printing presses and start charging for content tomorrow. It’s that simple. The meeting among the cognac-drinking cigar-smoking publishers that Carr thinks could never happen must happen. Once they agree on a content and revenue sharing model it could revolutionize their industry overnight. It could be done in a weekend.
Don’t get me wrong — this isn’t an ideal, and certainly not a permanent, solution. Just as the web routes around censorship, it will route around subscription based content distribution models. Newspapers will make money but they’ll become less relevant. So if not profit-making businesses, what should newspapers be? I’ve always felt the job of a newspaper would be more appropriate for a non-profit foundation. But that’s another post.
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barmijo Mar 9
Nice post. The viability of newspapers is a serious issue and you bring up a few good points; particularly the outdated nature of the anti-trust restrictions on newspapers.
However, I can’t agree with your premise that newspapers should be non-profit foundations. IMHO there’s really no such thing as a non-profit. It’s an illusion. Non-profits pay as much, or more, attention to their balance sheet as for-profit enterprises. They know exactly who pays their bills and they look out for them, especially in hard economic times like these. With news outlets in particular, this is a prescription for tainted, biased journalism.
Economically, the cost and benefit of news have become disconnected. Newspapers still bear the majority of the cost, but a greater and greater proportion of the benefit (read revenue) is accrued by search engines and aggregators. Worse, the revenue split is hidden from consumers who probably have no idea how their browsing habits profit aggregators at the expense of content creators.
We need a way to open up these transactions so consumers can see who’s paying what for their eyeballs, and how that money is split.
dan leslie Mar 9
Thanks for the reply. I’m not sure why foundation-based newspapers would be any less biased than commercial ones. But once your media starts receiving money that’s filtered in any way through government-based sources or grants you start looking a lot more like China. Kind of antithetical to an independent, free press. It’s a stretch and kind of radical — just something to consider before the machinery of news gathering is completely unwound and severe damage is done.
What those looking at the problem need to understand is that consumers of newspapers have never really paid for content; they’ve paid for the distribution method. If we’re hinging the revenue model of newspapers on advertising, then analog dollars are literally being exchanged for digital pennies. The model just isn’t sustainable unless there is a radical shift to something altogether different.
But if the newspapers die lots of people lose. The newspapers, Google, blogs, the public, democracy: they all lose. Something radically different, even if imperfect, is a preferred outcome.
Frank the Tank Mar 9
As one of the few people under 35 that actually subscribes to 2 newspapers (the Chicago Tribune and Wall Street Journal), I enjoyed your thoughts on saving the medium. The one practical problem for newspapers at this point is that the “free content” dam broke so many years ago that it will be virtually impossible to move back to a paid subscriber model. The New York Times itself, which is one of the few papers where many people allegedly profess a willingness to pay for content, attempted to put its opinion writers on the paid subscriber Times Select platform for a couple of years, which I presume was a failure from a financial perspective (as the Times got rid of it so that its columnists are back in the free world) as well as a influence perspective as those news aggregators and blogs generally won’t link to a paid website. If the New York Times wasn’t able to do it before, I’m not sure why that paper would be able to do it going forward (much less the smaller regional and local papers) when the web world has an ever increasing expectation that content be provided for free. At the same time, even if the newspapers were to collude to all charge for content, they would face competition from free sites such as CNN, MSNBC, and Yahoo! (which already have huge audiences and would likely receive even more traffic is sites like the NYT started charging a fee) such that an attempt to put in a subscription fee would be futile.
The Wall Street Journal, which is the one exception to this rule, has been able to charge for its online content since (1) it’s providing specialized financial news to an audience where WSJ-specific coverage is considered particularly vital (and can’t be substituted by, say, Yahoo! Finance or AP newswires) and (2) that paper has been charging a subscriber fee from day one, so the Internet public has understood from the get go that the WSJ wouldn’t provide free content.
It’s not that I think this is a great development for the news industry in general in terms of quality, but the large metropolitan papers are likely going to have to cut back on their national and international news coverage more and more as web readers now rely on a handful of sources (NYT, WSJ, Washington Post) for that news. Those metro papers are going to have to provide more local content to stay relevant in their respective markets (whether it’s in a physical paper form or purely online).
dan leslie Mar 10
Hi Frank, I enjoyed your comment. Setting the “free content” expectation among readers has certainly had long term consequences, but has also vastly expanded their audience — you have to wonder how successful the NYTimes web operations would have been without the audience they can now command.
It reminds me of how the music industry basically sealed their own demise with encryption-free compact disc standard in the 1980’s. It’s doubtful that DRM would have worked or lasted very long, but it set the expectation of “free to copy” (and thank god). It’s another example of exchanging analog dollars for digital pennies at the expense of an antiquated institution/cartel. But newspapers, however antiquated, provide real value and are worth saving.
Here’s a great post by Albert Wenger on another idea — the future of newspapers as platforms:
http://continuations.com/post/85261329/turning-newspapers-into-platforms
marc Mar 23
Hey Dan - great post - and by the way, great blog (this is my first time commenting, but i’ve been a reader for a while).
i think you’re right on in your last comment about how the music industry has faced (and continues to face) the reality that the value they are providing is decreasing rapidly, and as a result they are going to be re-priced (which is why big record labels are dying and many smaller ones are popping up). i think that the same exact thing, only to a lesser extent, is facing the newspaper industry. they do provide value, but it is decreasing, and the newspaper industry will accordingly be re-priced, downsized, and streamlined. i think the end result will still be a place with great news available to the public (we will always great journalists, just as we will always have great musicians) - but we will not have quite so many “cognac-drinking cigar-smoking publishers”.