“Business Class News”

May 5th, 2011

Oliver Reichenstein speculates about a “business class” for online news—a paid-for version where ads are stripped and the page is re-designed for a better reading experience. Users could still use the ad-filled, subpar experience for free.

That’s effectively what reading news on the iPad should offer, but there’s still a problem. News is a commodity. It didn’t used to be; before the web, reading the newspaper or watching network news was the main source for news and nearly everyone did so, and people tended to stick to a single source. It wasn’t that people wouldn’t watch a different channel or read a different newspaper, but many trusted one over the others.

That loyalty doesn’t exist anymore. People read news on the web anywhere they can find it. This means that only a small subset of readers—the dedicated few who really care about news—will pay for a better experience, and they will only do so for certain news organizations they find particularly good. This isn’t a viable business model on its own for the industry, or even a significant number of organizations.

The main issue here is newspapers never derived most of their revenue from subscriptions—they made most of their revenue from advertising, and ad rates on the web are nothing like what they are in print. So now they are trying to push readers to pay for their news—but people are now used to reading news for free and are unlikely to do so.

Perhaps we need new intermediaries, like Flipboard and Instapaper, that can aggregate content from different sources and charge users, then pay the content creators for their work. This takes care of the central issues: one, it gives users access to a multitude of news sources in well-designed user experiences and it creates paying users.

News organizations, and content creators generally, might need to subordinate themselves to survive.