[LINK] Shirky on Newspapers, Paywalls, and Core Users

[Roger Clarke]

At 10:34 +1100 6/1/12, Jan Whitaker wrote:
>>http://www.shirky.com/weblog/2012/01/newspapers-paywalls-and-core-users/
>Why doesn't the online information provision services (news, essays,
>etc.) work under the same model that has spawned these?

My take on it is this:

-   traditional publishers have high costs associated with:
     (a)  labour-intensive information gathering, checking, writing,
          editing, and sub-editing.  [This has been reduced in recent
          years, with 700 positions gone, but at considerable cost to
          quality and far more 'mere reprinting', of both stories
          from other outlets and media releases from 'reliable' sources]
     (b)  printing processes
     (c)  distribution processes across a great many outlets
     (d)  accounting for, and collecting money, from a great many sources
          through a great many channels

-   online-only publishers nominally face only (a), no (b), very low (c),
     and either no (d) or very low (d) - fewer sources, few channels.
     Their set-up costs are not enormous and are spread thinly over volume.
     Many use virtual organisation practices rather than big offices

-   traditional publishers that become online publishers as well face
     much higher set-up costs that online-only publishers, because they
     have to interface with long-established processes and formats,
     and have to handle high volume

-   traditional publishers that become online publishers inevitably
     cannibalise their own revenue, because the norm for online content
     has always been 'free as in beer' and few traditional publishers
     have been successful in imposing payways.  (The big exceptions are
     WSJ, The Economist, FT, Nature?)

-   the proportion of total ad revenue that goes to formal publishers
     is much lower online than it was in print.  That's because of all
     the micro-businesses and prosumers that were fleet of foot and got
     in early.  (Tom may have some figures to offer on that aspect).
     If the normal sequence occurs, industry consolidation will occur
     as the industry matures;  but 'news-e-papers' have to survive long
     enough and strong enough to be the ones doing the takeovers when
     that time finally arrives

-   the proportion of ad revenue that reaches publishers in online
     contexts appears to be much smaller than was the case with the
     print media.  One reason is Google's monopoly power being used
     to dictate very large margins, and internal capture of all of the
     economies that have been available in the all-electronic context

The above is off the top of the head, not based on any formal analysis.

But some years back I did an analysis of costs for journal publishers:

Clarke R. (2007)  'The Cost-Profiles of Alternative Approaches to 
Journal-Publishing'  First Monday 12, 12 (December 2007), at 
http://www.uic.edu/htbin/cgiwrap/bin/ojs/index.php/fm/article/view/2048/1906, 
PrePrint at http://www.rogerclarke.com/EC/JP-CP.html plus Appendices


-- 
Roger Clarke                                 http://www.rogerclarke.com/
			            
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Visiting Professor in the Faculty of Law               University of NSW
Visiting Professor in Computer Science    Australian National University