Book Age Business Models

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I want to continue my examination of the death of the Book Age by looking at the newspaper business model; specifically how unsuited it is for the Information Age. This old business model is killing the newspaper industry. But it also goes beyond that. Newspaper business models are one of the primary victims of the Information Age changes we're seeing, but they aren't the only ones. But, we'll get to that later.

Also, we won't be discussing media bias and the corrosive effects it has on the newspaper business model. Or by extension, the damage that media bias has on society as a whole, and its ability to make informed choices. Now will we discuss why the search for profits has led media down the road towards biasing their coverage to confirm the priors of whatever audience they've decided to target. Those are both large and complex problems, but they go beyond the specifics of what I want to address here. Though I should note that the problem of media bias is, in many ways, the outgrowth of the business model's failure.

The Book Age Newspaper Model

The traditional newspaper model was pretty simple. First, charge your readers a subscription to get the paper delivered. That delivery might be to individual homes, or newsstands and bookstores. Second, run a network of dispensing machines in high-traffic areas like restaurants, transit stations, and so forth. Finally, sell advertising to print in the paper.

pexels-brotin-biswas-518543This wasn't a bad model up to the end of the 20th century, for many reasons. Newspapers had a limited reach and limited area of distribution. There were some outliers, like the Wall Street Journal, which were large and profitable enough to build printing and distribution centers around the country. But, by and large, newspaper distribution was local. There was limited competition in each locality, which meant that all other things being even, you could expect a fairly large subscriber base. Since there was usually competition with at least one other local paper in subscription and retail (newsstand and vending machine) pricing, subscriptions were subsidized by advertising.

This worked pretty well for quite a long time, up until the 1950s when some new pressures began to make themselves felt. Migration to the cities accelerated. Smaller town papers felt the pressure as subscribers started leaving more rural areas. Many reached a point where it became increasingly difficult to sustain a paper in their area.

Similarly, large city papers began to have to expand distribution to the city's outer environs, a problem complicated by increasing traffic as automobile sales exploded faster than the transit infrastructure. These pressures alone drove many newspapers out of business. For instance, afternoon paper delivery in larger cities like Los Angeles with its increasingly awful traffic, became practically impossible. Some papers simply couldn't afford to build printing and distribution centers in the suburbs to expand their reach.

Then, of course, in the 1980s, came cable news, where you could watch the news at your convenience, making newspapers less relevant.

Ultimately, this led to large-scale consolidation among the remaining major papers. Houston, for example, was left with a single daily paper, the Houston Chronicle, just as the LA Times became the sole major paper in Los Angeles. For these papers, things were still pretty good, though usually not great. The death of their competition left them with hugely reduced competition, and indeed, in many cases, provided them with new customers as their competitors left the business entirely. At least, for a time anyway. Because the Internet changed all that.

The Rise of the Internet...and Unrealistic Expectations

It's difficult to overstate how quickly everyone jumped onto the internet in the late 1990s and early 2000s. If you were a business, you simply had to have a website. Everyone was rushing to put content on the web, lest they got left behind by competitors. There was only one problem: The technology for monetizing web content lagged far behind the technology for posting content. Sure, you could get the content out there, but you essentially had to offer it for free. It only took a couple of years for online subscription technology to catch up, but, by then, it was largely too late.

There was already a general acceptance among potential customers that Internet content, by its very nature, was free. This left newspapers with a problem. Yes, they could sell advertising banners with their content. But they could not, in general, force people to buy subscriptions to it. When reliable subscriptions and payment technologies came along a few years was too late. The New York Times put their paper behind a paywall in 2005 or so, but the cat was already out of the bag.

The value proposition for a newspaper in the Book Age was this: You want news. We provide it in your town. It's either us or the guys at the Daily Herald down the street. Choose. Now.

But in the age of the Internet it wasn't a limited choice between a couple of local papers. Where the paper was published was largely irrelevant. Customers could now choose to view content from any major newspaper. Even worse, the broadcast and cable news services had news websites, which were largely both supported and subsidized by their broadcast revenues and thus were free to the public. And, on top of that, regular people were simply excerpting parts of news stories and commenting on the via blogs, personal websites, and after 2008, on social media.

The average person no longer needed a subscription for newspapers, or newspaper websites, when the news was generally freely available. And even if they did want a subscription, they didn't want a subscription for a single paper, and still don't. They want to consume news at their convenience and see interesting news and commentary from, well, everywhere.

But, wait! It gets worse! Because a savvy internet user can, in many cases, just skip past the newspaper website paywalls. You can simply hit F12 on your keyboard to open up the developer console, then just turn off JavaScript on a page. Hey, presto, the Washington Post's paywall block no longer works!

And, finally, there's one more tiny little problem. It's named "AdBlock". Websites became so hungry for advertising revenue that they started shoving massive numbers of ads from online ad consortiums onto their web pages. Which people hated for several reasons, including slow loading times, and, of course, privacy concerns with ad tracking. To solve that problem, ad-blocking browser extensions went from merely a good idea to being mandatory. Customers want the content and don't want it delivered with tons and tons of ads.

The subscription+advertising model just doesn't work online well anymore and it's about to get worse because Ad blocking technology is now being built right into the browser as a standard. Newspapers need a new business model to more effectively monetize their online content. Fortunately, there's something they can do now.

"Brave" New World

The Brave browser is a port of Google Chrome that strips away much of Chrome's bloat while building in ad blocking and privacy protection. Indeed, it's only one of several new Browsers that are specifically tailored toward privacy.

But Brave has something else: The Brave Attention Token, or BAT. BAT is a cryptocurrency that uses a blockchain to--with your explicit consent--identify you, show you specific ads, and pay you a micropayment when you view them. At the end of each month, Brave transfers a BAT or two to your account. Brave also enables you to "tip" content providers with BAT micropayments--or macro payments, if you want.

And there, I think, lies the seed of an online business model for newspapers, and, indeed, content providers in general.

Rather than trying to charge a monthly or yearly subscription, the blockchain enables us to collect micropayments from each person who views content. This goes far beyond newspapers, by the way. Think about video subscription services like Amazon Prime Video, Netflix, Paramount+, and so forth. There's a limited number of subscriptions people can afford, but nearly every streaming service has something that people want to see.

Similarly, There are still a lot of news organizations--though not as many as there used to be--all of whom have something that a large number of people might want to see or read.

A microtransaction system like Brave's BAT might be just the answer. Instead of charging for a subscription, users who go to a web page or view a video can be tagged with the blockchain identity and charged a microtransaction for viewing the content. For example, one BAT is currently $0.19. So a newspaper could charge each viewer, say, 0.1 BAT to read an article, or a streaming service could charge 10 BAT to watch a movie.

You'd be free to watch or read anything you wanted from a media company, would never have to worry about buying and tracking subscriptions, worry about whether there are ads that need to be blocked, and the companies themselves could put their content in front of many more people--not just some limited subscriber base--and collect a nominal payment for all of them via a blockchain-based currency.

Of course, that will require you to give up the idea that everything on the Internet should be free, just as it requires the companies themselves to give up on the idea of routine, regular revenue from subscriptions.

But it's something we could do very quickly. If we wanted to. And we'll probably need to do it, or something like it anyway, whether we want to or not. Because the Book Age media business models that everyone's lived with for the last 150 years or so probably won't survive.

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