Want To Know Why Newspapers Are Going Out Of Business? Because Adding Value Never Seems To Be An Option

from the massive-failure-in-action dept

Lots of folks in the newspaper business say that Howard Owens is a guy who really gets the online news business -- and recognizes the challenges and opportunities. I don't know much about him, but I hear such good things from people who I trust, that I have to admit that I'm perplexed by Owens' recent post where he defends GateHouse Media's lawsuit against the NY Times. As you may recall, GateHouse sued the NY Times for effectively aggregating local stories from GateHouse sites and putting them on its own page. These stories all included links back to the original, and didn't include the entire content, but did include the headline and the lede -- which most people (outside of newspaper people) consider to be perfectly reasonable fair use. The NY Times eventually settled in a way that seemed bad for everyone. Owens worked at GateHouse (and was quiet about the lawsuit at the time). He left soon after, and there was some talk that it may have been because he disagreed with the lawsuit -- but that appears to not be the case.

Instead, he has written this lengthy defense of the lawsuit. But rather than vindicate GateHouse, it seems to represent a lot of what's wrong in the online newspaper business these days. When someone who "gets it" like Howard Owens does, and then declares that "I don't know what more we could have done" after describing the various legal threats Gatehouse tossed up against the NY Times, it makes me shake my head.

What more could you have done? You could have competed more effectively. Owens complains about "substitute home pages," where the Boston.com was trying to take away GateHouse's readers. There's a pretty straightforward response to that: if that's all it takes to take away your community, you've failed your community. If the entire value of your site was in providing the headlines and ledes, and someone else copying those headlines and leads causes you to lose the community, you haven't been providing enough value to that community, and you deserve to lose it. Newspapers have neglected their biggest asset, their own communities, for way too long, and this is another example of that. If GateHouse provided a better service where the value went beyond the headline and the lede, there wouldn't be concerns about how such "copying" would take away from GateHouse.

As we've pointed out repeatedly, there are a bunch of sites out there that copy all our content. Not just the headlines and the ledes, but all of the content. Some are pure spam sites. Some are aggregation sites. Some are trying (and failing) to prove the point that we'd get upset if someone copied our stuff. But, that's not what happens -- because this site has much more than just the content. It has the community. It has the Insight Community, where we actually help the community make money. Some of our community members made five figures in 2008. What newspaper has done that for their community? Our community has great ongoing discussions all the time. These other sites can't replicate that. All they can do is end up sending us more traffic.

So, I'm sorry, but the idea that GateHouse Media couldn't do anything else is ridiculous. It's a sign of all that's wrong with online newspapers today. They don't look at all of the amazing things they can do. They just throw up their hands and wonder what they can do, beyond charging people or suing.

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You Don't Beat Pirates By Doing Something More Annoying

from the you-need-to-add-value dept

Earlier this summer, a musician named Indiana Gregg made the mistake of demanding The Pirate Bay stop allowing people to find her music. The Pirate Bay responds publicly to such letters and doesn't take down the torrent links, so it tends to not do anything good to send such a letter. Gregg made things worse by arguing with the folks at The Pirate Bay, showing little command for the subject matter. Later, she wrote a long, rambling post for TorrentFreak warning people that "the police were coming" to the "wild west" of the internet, and basically dismissing out of hand any new business model that turns any kind of "piracy" into an advantage, claiming that its the users, not the musicians, who need to change how they deal with music.

You can certainly understand where she's coming from, as a musician who's traditional business model is under threat. However, contrary to the opinion of some, it's the consumers who eventually determine how a market works -- and treating consumers as criminals tends to backfire in a big way -- especially when other artists are figuring out ways to create business models that work without treating fans as criminals.

The good news is that Gregg seems to be willing to try out new ideas. Her and her producer (who's also her husband) are apparently planning to launch an ad supported music site that will allow musicians to upload their music and receive a cut of any advertising revenue associated with each stream or download. The details aren't entirely clear, but I don't think this plan is going to work all that well. While it is good that she's trying out new models that end up being free to the end user, ad-supported revenue models are going to be tough -- and it seems a bit extreme to claim, as Gregg has, that this is a way to "beat piracy."

Ad-supported websites are already having enough trouble making enough money to survive online, so Gregg's going to quickly discover that the ad money won't flow as quickly as she expects. Is she going to claim that the police are coming after the folks using ad-blockers as well? Also, given the convenience of other sites where music is available, expecting them to go to a different site to get their music may not be very convincing. The problem with an ad-supported music site is that it doesn't add any value to the end user. Trent Reznor's business model worked by providing more value to the end-user. Jill Sobule's business model worked by providing more value to the end-user. Gregg's solution doesn't add more value to the end user, and for that reason is going to have a difficult time succeeding, let alone "beating" piracy.

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Now There's A Concept: Newspapers Should Add Value To The News

from the why-hasn't-anyone-else-thought-that-one-up dept

It's certainly been rather painful watching newspapers struggle to adapt to the internet age. While there's more demand for news today than ever before, many news organizations are still struggling with the fact that their old way of doing business has gone away. Romenesko points us to a useful, if somewhat obvious quote on what newspapers need to do from the chief marketing officer of Northwestern's Kellog School of Management: "The majority of 'news' customers are past 'what happened' -- they want to know 'how it happened.'" What's scary is the idea that news organizations need to be told this. "News" today is a different beast than it was in the past. The basic facts, people can get anywhere. What they're interested in is being able to dig down and learn more. In other words, they want journalists to actually add value. What a concept.

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Content Industry Could Learn From eBay Seller Turning A Profit With Public Domain Content

from the competing-with-free dept

Last year, Mike made the point that saying you can't compete with free is saying you can't compete, period. Every business makes a profit by adding value so that customers will be willing to pay above marginal cost for its products. The fact that the marginal cost of content (once it's been created) is zero doesn't change that principle. You can add value to free content just like you can add value to any other product. The New York Times Bits blog nicely illustrates this with a post about the market for public domain content on eBay. Apparently, there are a number of people who make a living by finding obscure, copyright-free content on the Internet, burning it on a DVD or other convenient format, and selling it on eBay. Despite the fact that every one of those customers could have tracked down the video for themselves and watched it on their computers, a lot of people are apparently willing to pay for a DVD version.

This business model actually illustrates two good ways to add value to free content. First is convenience. A lot of people don't have a high-speed Internet connection, don't like watching videos on their computer monitors, or want to be able to take their content with them in a compact format. For those users, a DVD is a much nicer format than a file on their computer's hard drive. DVDs are also a much more convenient format for giving gifts: you can wrap a DVD and put it under the Christmas tree, something that's harder to do with a video on YouTube. Second is filtering and organization. There's way more content out there than any one person could possibly watch. So there's a lot of value in helping people separate the wheat from the chaff. That's a big part of the value we provide here at Techdirt: a lot of the information you'll find on our blog comes from other sites, but we try to highlight only the best and most relevant information, helping our readers to keep up with news in the technology world more easily. By the same token, people who sell public domain content on the Internet create value by filtering and organizing the information so it's easier for others to quickly and easily find what they're looking for.

I won't belabor the implications for traditional content industries. Like it or not, their content is available for free on peer-to-peer sites, and if they want to make a profit they're going to have to find ways to make their content more valuable than what you can get with BitTorrent. Two important principles for doing that are: use formats that convenient and versatile and make sure content is organized in a way that makes it easy for users to find what they're looking for. That means, for example, that you probably shouldn't cripple your products with DRM or sue companies that help people find your content.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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