SmoothSpan Blog

The newspaper industry has had a disasterous downturn, largely due to the web.  Not surprisingly, many don’t want to take it laying down.  WSJ publisher Les Hinton recently called Google a “digital vampire.”  He suggests that if newspapers had never offered their content free on the web, there would be no problems.  He goes on and on with odd language about the “charitable view” of how this all got started, as though somehow everyone but the newspapers was to blame.  He vows that it isn’t too late to reverse the trend. 

Barry Diller echoes a similar theme when he talks about the days of the free Internet being numbered.  Just like Hinton, Diller says things got slapped up for free out of fear of being left behind not out of any conscious strategy.  And then Google outfoxed everyone and stole the value from this free content.  Woe is us!

Hogwash.

Hinton, Diller, & Co. would only be right if the real value of newspapers and the other media was in the content, and that said content was scarce and controlled almost entirely by them.   Do you believe that these Old School media have the monopoly on the content?  Do they even produce the best content you read these days? 

I don’t think so.  There is no monopoly on the content.  For a newspaper, much of it is just regurgitated newswire without significant editorial or journalistic effort or even much value added from good writing.  Sure, the AP is on this same bandwagon about how the Internet stole their gravy train, and is vowing to change that too.  But it’s too late.  Twitter is leading the front lines in terms of serving as the “AP” of the new age.  We saw that recently with all the activity in Iran.  We saw it again with the passing of Michael Jackson. 

Local news seems like an important niche for the papers, but aggregating local news on the Internet is also not a problem, as the AC example shows.  Delivering restaurant reviews is just a Yelp away.  The Internet understands hyper-local content even better than any newspaper, radio station, or TV station could.

If you follow the stock market, you’ve seen multiple articles get published immediately after a company releases results that purport to explain what happened and that make no sense at all.  That’s because what happens is there are bureaus of bright eyed and bushy tailed young writers who crank those stories out en masse as soon as they see the press release.  These are not insightful reports.  The human bots from the third world.  That’s no value added and I stopped looking at them ages ago, preferring to read what the blogosphere or twittersphere has to say about the news.  There at least you have a shot at finding real people with real insights doing the commenting.

Let me give another related example.  I love live music.  If you live in an area where it is readily available, and you like music, you probably love it too.  No second generation recording can compare to good first generation sound.  But I often feel bad for the musicians.  I’ve heard countless renditions of very famous pieces.  My tastes trend towards rock, so I’ve heard lots of people playing Jimmi Hendrix or Eric Clapton, for example.  They sound just as good or better than the recordings.  Yet they are working for tips and clearly can’t make a living from it.  I’m not saying they’re literally as good as Hendrix or Clapton, and they didn’t write the songs (though even that isn’t always true), but you must know what I’m talking about.  There is more talent available than the market is able to pay through traditional distribution and record labels.  So these incredibly talented folks are playing clubs, restaurants, and other low buck venues for tips just for the sheer joy and passion of it all.

Doesn’t that remind you of all the bloggers and other Internet content creators who are every bit as insightful, and just as good a writers as 99.99% of what you read in the newspapers?

What the web has done very very successfully is provided distribution for these people.  First, they are able to produce and deliver their content on the web.  Second, companies like Google deliver traffic to that content.  The Social Web has taken traffic delivery to a whole other level.  And, as that whole extended community riffs back and forth with each other, the conversation gets even better.  There is the potential to participate. 

None of that exists for newspapers.  Once upon a time they uniquely owned distribution.  Because of that, they controlled the purse strings.  Hinton and Diller think they can just reassert control of distribution and the problem goes away.  Just quit making their stuff available for free and the world will desperately pound at their big bronze doors, begging to be let back in.  Will you be there pounding?  I know I won’t.  These guys already tried this approach, and it didn’t work.  How can they have forgotten?  They didn’t give away all their content.  WSJ and NY Times had for years insisted on charging for it.  That only helped people find their way to other sources.

The remaining conventional scarcities that exist are of a limited nature:

–  So far, mobile has not fully caught up.  Yes, I can get a lot from my iPhone, but I’m talking about FM Radio and Satellite (Sirius/XM) Radio.   That continues to be a form of limited distribution until the Internet can seamlessly stream to mobile devices without dropping out.

–  Stardom.  Properties like American Idol are all about Stardom.  Stardom is scarce, and the profusion of content on the Internet makes it even harder to stand out.  This is why the Satellite Radio people pay so much for a Howard Stern.  There are other guys just as funny (watch some of the stuff on YouTube if you doubt it), but he is the star.  In a way, this is a branding issue.  You can only keep so many star names in your head, and when you hear one is doing something, you want to go see.  But it is more than that.  People want stars to worship.  And as American Idol shows, they love having a roll in annointing those stars.  But this is also a short lived scarcity.  The Internet is fully capable of delivering the American Idol experience in spades.  We’ve already seen contests on Twitter to see who can get the most followers that amounts to stardom.  Moreover, the stars want to own the value and cut out the middle man.  And many of them are content that they can do it on their own.

–  The experience.  Some just like the feel of a newspaper in their hands.  I’ve moved on.  I always liked the WSJ’s front page news digest, which is just like what I get on the Internet, so it wasn’t unique.  I suspect the group that loves the newspaper for the experience is an aging demographic, and therefore it won’t last.  Susan Scrupski put me on to an interesting article that suggests half the people that don’t have Internet don’t even want it.  I’d hate to be trying to build a media empire around such people.

The best advice I can give to Hinton and Diller is to invest in talent and stardom.  Lock that up.  Find scarcities.  Avoid commodities.  Add real value.  Because if you don’t, people are just going to ignore you.  I am afraid that you’d better also get used to the idea that your franchises are never going to be as big as they once were.  Those days are over.  Use the time you have left to figure out what the new scarcities of the Internet might be and how to get a stranglehold on them.  As for Google, forget about it.  They own that one.  You can’t touch them.