Mon 11 May 2009 (16:25)
The new future of the journalism industry
Posted by smalrus under day-to-day
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Murdoch challenges Amazon’s model as newspapers trial Kindle – FT.com, 7 May 2009
WSJ plans micro-fees for online articles – FT.com, 11 May 2009
I’ve tweeted about this subject a couple times (though the Twitter wordpress plugin has been nonfunctional). But after reading today’s article about the WSJ charging micro-payments for its articles, I was struck by a connection to the article on Rupert Murdoch’s (whose News Corp owns the WSJ) objection to inclusion of the Journal in the Amazon Kindle DX’s new business model for the newspaper industry.
The fact is, Mr. Murdoch has stumbled upon a genius business model for journalism. However, he did not stumble upon an original business model; that model was pioneered by Apple’s Steve Jobs (though in the annals of history, I’m sure he wasn’t the first). In 2003, Mr. Jobs was able to take a dying industry — the music industry — and revitalize its fortunes in the face of widespread piracy. Apple set up the iTunes Music Store (iMS) which, as we know, charged listeners $0.99 per song or an average of $9.99 per album.
Thus, the price of music became affordable to listeners, who often turned to pirated MP3s or failed to purchase music at all. The model “unpackaged” the album, allowing listeners to purchase reasonably priced single tracks, or entire albums at a cheaper cost, which acknowledged that digital consumption should be cheaper than physical consumption. As the RIAA started to crack down on music piracy, iMS seemed to be received as a reasonable outlet for music consumption. Additionally, songs on iMS were coded in a closed-architecture fashion, allowing limited CD burns, and music syncing solely with the Apple iPod.
Now, having surpassed 6bn songs downloaded (and expanded to 2m+ movies and 200+ TV shows) and a restructuring of the business model to allow for DRM-free tracks for higher price, iMS has proven one of the more viable business models of the information age. The music industry is still struggling, but likely not for the same reasons as mentioned at the start of the last paragraph.
Granted, the journalism industry has some drastic differences from the music industry — not the least, the fact that it has typically been heavily subsidized by advertising revenues. But Mr. Murdoch’s designs to provide quality journalism at reasonable cost in the face of declining advertising revenues is as innovative as Mr. Jobs’s payment structure. By unbundling the newspaper, News Corp takes micropayments from “occasional users who might not pay more than $100 a year for a WSJ.com subscription.”
Purists will complain (as do music afficianados, with respect to the decline of the physical album). However the tradeoff is a complete obliteration of the newspaper industry — already triggered by the current recession. The fact is, the Information Age has commoditized quality journalism in much the same way as has been done with the music industry. As Nicholas Carr discusses in The Big Switch, content unbundling due to technology has had sweeping effect on consumption of all media. Business knows the model has met its destruction; it is finally proffering new solutions.
Where the WSJ will differ is in its willingness to lend its content to the closed-architecture system offered by the Kindle. As Apple has negotiated deals with the various record labels, Amazon is negotiating deals with publishing companies for content rights with certain subscription discounts. Mr. Murdoch seems to be banking on the initial cost-prohibitiveness of the Kindle DX. But by opting out of the Amazon system, he also fosters a greater sense of competition in establishing both the premier pricing and distribution models for the next era of journalism.
Which model will prevail the test of time? The fight has just begun…
