The Supply Problem

[This week’s Communications column for the Vanuatu Independent. This is a re-working of the ideas expressed in this post, applied specifically to Vanuatu’s newspaper publishers.]

(As this column was going to press, the news broke that Rupert Murdoch had decided to move all of his newspapers behind a pay wall. I’d like to thank him for his sense of timing.)

I write for both of our national newspapers, and love nothing more than flipping through their pages over a good cup of coffee. But I still get the vast majority of the commentary, analysis and hard news I read in a day from my computer.

Publishing a newspaper in Vanuatu has always been more a labour of love than anything else. The number of readers and advertisers is decidedly limited, so the amount of cash available to this critical part of the public dialogue is limited, too.

That puts constraints on the depth of detail that can go into important news stories. It also limits the amount of editorial oversight, fact-checking and analysis that can be brought to bear. Nonetheless, our local rags do manage to muddle through and, generally speaking, they do a pretty commendable job of keeping us abreast of important issues. All the journalists I know are keenly aware of their role in ensuring that the public is as informed and engaged as they can be about the important issues of the day.

Despite all their effort and devotion, they reach only a fraction of the people to whom their news is relevant. The task of delivering newspapers outside of Vila, Santo and a few airports is prohibitively difficult. The Internet can change that, but in so doing, it could also bring about the demise of our local media.

Elsewhere in the world, newspaper publishers are facing a cash crisis as their readers flock to the Web for their news, analysis and commentary. You see, newspapers derive most of their income by selling advertising, and advertising rates on the Web are trivially small compared to what a publisher can charge for a spread in their paper edition. Online news services need to reach an online readership that’s orders of magnitude larger than their print audience just to stay afloat.

But when you compete on the global stage, you’re lined up against hundreds, even thousands of competitors, all of them just as accessible as you.

For most news publishers, the numbers just don’t add up. They can’t earn enough online to supplement their losses as the number of print subscribers drops.

Some media magnates, among them News Corp’s Rupert Murdoch, have aimed their ire at Google and other content aggregation services. By making news content available anywhere, any time, at no cost, Murdoch claimed that Google was ‘stealing’ from publishers.

This kind of extreme rhetoric was rightly mocked, but the frustration felt by traditional publishers is understandable. In a recent Forbes article, the Wall Street Journal’s Managing Editor Robert Thomson said, “Google devalues everything it touches….”

Writing in his blog, author Nicholas Carr puts it this way:

“When it comes to Google and other aggregators, newspapers face a sort of prisoners’ dilemma. If one of them escapes, their competitors will pick up the traffic they lose. But if all of them stay, none of them will ever get enough traffic to make sufficient money.”

But, he writes, “[t]he fundamental problem facing the news business today does not lie in Google’s search engine. It lies in the structure of the news business itself.

This is exactly right. The digitisation of publishing and distribution militates strongly in favour of bytes over atoms. While holding a newspaper in one’s hands is not without a certain appeal, the desire for specific information, delivered quickly and at low cost, trumps the old approach most of the time.

Carr thinks the problem is supply, and he’s right, as far as that goes. But he’s dreaming if he thinks there’s any practical way to arbitrarily limit supply in an Internet economy defined by ubiquity and ease of access. The problem is mechanical in nature: Bytes are infinitely replicable and transportable. Reducing the number of bytes that get transmitted – well, that runs counter to the very design of the Internet.

The bytes that compose a news story are so cheap that it hardly bears mentioning; trying to limit them is folly. The content they supply, on the other hand, is a different story.

Most of Carr’s arguments are predicated on the all-too-long-lived idea that one can make money by attracting an audience, holding it and throwing advertising at it. That model simply doesn’t work online. Many traditional modes of advertising (breaking up a story with advertisements, for example) are treated as a nuisance by online readers, so they either use software to block the ads, or they move on to other, less intrusive sites.

In the print newspaper industry, a publisher can charge a hefty price for an ad because the readers are pretty much guaranteed to live in a particular area, compose part of a relatively well-understood demographic, and most importantly, are paying attention. None of these are guaranteed on the Web.

In the online world, it’s simply not possible to monopolise your audience’s attention the way you can with a newspaper.

Vanuatu’s two major publishers can do a great deal to increase their audience by going online, but if they rely solely on advertising revenue, they’re facing a losing proposition.

That said, they do have one thing going for them: The content they produce is in desperately short supply; it’s downright unique in some cases. But, while it’s of interest to a larger population than they’re currently reaching, the total number is still too low to make a buck off online ads.

Vanuatu’s publishers need to consider how to leverage their specialised content in a very big, very noisy online world.

Doing so requires a re-evaluation of the inherent value of the publication. How unique, in other words, is too unique to be commercially viable? For most large urban newspapers in the developed world, the answer is clear enough – local stories of national and international interest, coupled with localised, specialised services for their particular urban area. For smaller pubs like the Independent, this question is problematical, to say the least.

Answering this question will do a lot to define the tone, content and detail in their reporting and commentary in the future. They can’t, in short, afford to be small-town papers with small-town standards any more.

There is still a role for the coffee-time aggregator of content from other sources. Introducing one’s audience to a focused distillation of a vastly larger information pool is a useful service, one that Google can never adequately provide. Blogs do it well, but there’s still a place for a dead tree version, provided that ‘interestingness’ is carefully measured.

Nick Carr and others need to take note: The Internet operates in an economy of plenitude and nothing is ever going to change that. Finding a place in it will be an uncomfortable and sometimes disappointing exercise for many – but not all – print publications.

The solution, if they choose to recognise it, is not to stand like Canute among the waves and order back the tide. The secret is to find news, analysis and insight that is in short supply, and to add it to the flood. This is something that our local publishers a uniquely positioned to do.

Making it pay will be a challenge. It may be that they’ll simply have to rely on the kindness of strangers, asking for donations in much the same way a busker relies on passing strangers to show their appreciation by tossing a few coins into a hat. It may be that they’ll be able to leverage their geographically unique clientele by charging more for ad space on their pages.

In any case, the next few years will present our local publishers with challenges that could make or break their business.