Paid content web sites: Misguided boycott calls from proponents of “free” and ad-based-revenue models

A couple of days ago, the Financial Times reported that News Corp might strike a deal with Microsoft and de-index its news websites from Google.  I’m in the news business myself (as a programmer-journalist with two #1 paid iPhone (news) apps) and I’m also an avid consumer (who has a daily subscription to two (printed) newspapers and reads several news websites). From that perspective, I think that this is an interesting business plan, but that it will inconvenience some search-engine users.

I’m not sure how effectively the proposed plan will help News Corp’s goal of creating a “market place for digital journalism”. However, some of the reactions to this news were over the top. As an example, there was a call to boycott Bing and News Corp (I found out about it through a retweet that went to more than a 100,000 people). Several others have been critical of the plan and suggested that News Corp’s move goes against the “share with each other” culture of the internet and that News Corp is trying to control the flow of news and that it is wrong for News Corp and Microsoft to negotiate a pact that restricts access to news.

While the marginal costs of distributing news over the internet to an individual user are low (and somewhat close to zero), the costs of setting up and running a news organization are not zero (especially if you’re going to investigate corruption in Washington or report on atrocities in Congo or the war in Afghanisthan). So it seems fair to stipulate that journalists and publishers should be compensated for their work and that producers aren’t required to provide “free” services to consumers.

Then the question becomes one of how the news industry should make money online. Many critics would say that the news should be available “free” to consumers and that a third party (“advertisers”) should pay the producers. I think this is a good business model for many news websites. As an example, one of our company‘s proposed product plans is to build a mobile-news platform that newspapers can use to publish their news on the iPhone (and other mobile devices). The free-with-ads model will be best suited for most newspapers who wish to use our platform.

However, the critics are wrong in asserting that free-with-ads should be the only revenue model for news publishers. From a business standpoint, Christoper Kimball (in a recent op-ed ) made the case for a 100% subscriber-financed model by pointing to the demise of Gourmet and the success of Cook’s. It is perfectly legitimate for news publishers to offer services with a paywall through a website. It is equally legitimate for a news publisher to choose one particular search engine as their search-distribution-channel  and get payments through that distribution channel.  

Critics can still make the argument that (because of the abundance of news content) a NewsCorp/Bing partnership will harm News Corp by reducing its page-views and its ad-revenues. However, News Corp is obviously better placed to decide whether or not increased revenues from the Bing partnership outweigh the impact of reduced ad revenues. They can also consider whether or not a paid-website (getting money directly from users) is better than both the free-with-ads model and the exclusive-search-engine model. Attempting to coerce news organizations into adopting a ad-based revenue model by calling for a boycott isn’t right.

Critics can also question how effective the “de-indexing” will be and whether search engines will find other ways to link to this content (e.g. though a third party website that links to individual WSJ news items).

Critics can make the argument that a Bing/NewsCorp partnership may set a precendent and that other news organizations may also close their content to some search engines. I’m sympathetic to this argument and believe that news consumers will be inconvenienced by not having a single index or search engine for the web. However, I also recognize that there is no such thing as a free lunch and I would rather have quality newspapers survive than have a single web index without quality newspapers. If critics believe in the abundance of content and see news as a commodity, they shouldn’t really be concerned about the inability to find some of this content through a search engine.

There are far more serious issues around search engines and around search news organizations. As an example, major search engines (Google, Bing. Yahoo etc.) have all agreed to obey the Chinese government and censor search results on a wide range of topics ranging from Tibet to Tiannamen Square. A few years ago, they all defended it on the grounds that obeying the Chinese government was the only way for them to operate in China and that operating in China was more important than principles against censoring news. Very few people hold the search engines to account on the censoring. A few months ago, the Washington Post got into trouble over its plan to sell access to its journalists and to administration officials for $25K-$250K. Ironically, a health-care lobbyist felt that it was incorrect for the Washington Post to sell access to its “Health-care reporting and editorial staff members” and reported it to other media outlets. Shortly thereafter, Marcus Brauchli (executive editor at the Post) released a memo stating that their news-division was unaware of the dinner “flyer” and that the language in the Post’s flyer precluded their participation because “Our independence from advertisers or sponsors is inviolable”. Ultimately, the Washington Post had to cancel that particular dinner, but questions around conflict-of-interests exist for many news organizations.

There are real issues around ethics that we need to watch for in search engines and in news organizations. Search-engine exclusivity isn’t in the same league as those issues. I recognize that this is an unpopular position, but I’ll say that that it is a legitimate business plan for news organizations (though I’m not sure how effective it will be). The news industry and its consumers will be better off if we focus on real,critical issues and not on issuing calls to boycott news organizations because of revenue-plans around search-engine exclusivity.

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