Why People Won't Pay for Online News the Way They Pay for HBO

Cable Offered Consumers a Better Product; What Are Newspapers Offering?

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In The New York Times last Sunday, Frank Rich became the latest to argue that cable- and satellite-TV subscriptions should give hope to the newspaper industry, which has decided during this steep ad downturn that it wants to charge for some content it puts online.

Nat Ives
Nat Ives Credit: Greg Palmer
"It's all a matter of priorities," Mr. Rich wrote. "Not long ago, we laughed at the idea of pay TV. Free television was considered an inalienable American right (as long as it was paid for by advertisers). Then cable and satellite became the national standard."

And he was certainly only the latest, following the former newspaper analyst Lauren Rich Fine, now research director at ContentNext Media; former Wall Street Journal publisher L. Gordon Crovitz, who's now co-founded a company to advise newspapers about charging online; Chicago Tribune columnist Eric Zorn; and a recent report from the Project for Excellence in Journalism. "News-industry executives have not seriously tested this enough to know if it could work, but these fees provide half the revenue in cable," the report said.

The newspaper executives testifying before Congress lately have suggested, not incidentally, an exemption from antitrust laws so their companies could openly discuss matters like banding together behind a collective pay wall on the web.

Here's why cable and satellite subscriptions aren't a good model for newspapers.

In the first place, cable and TV offered something better than broadcast TV -- much better. Their packages included perfect reception; many more channels, some with no commercials, mostly unavailable any other way; and types of programming you couldn't get otherwise, i.e., shows with "adult" language and situations. In the second place, cable and satellite were optional products people could buy to enhance their programming.

Newspapers will be banding together, on the other hand, to take back certain content people already view on the web free. And for what? International news, sports coverage, city-council meetings already attended by bloggers? That's not necessarily comparable to "The Sopranos," live out-of-town sports, recently released movies and, well, nudity. Sorry to say.

Also keep in mind that cable companies are already freaked out by the possibility that too many people will drop their cable and satellite subscriptions -- because they can watch many shows free on an apparently disruptive medium called "the internet." That's why Time Warner CEO Jeff Bewkes is out pushing "TV Everywhere," a rear-guard action to try to import cable subscriptions to the web.

Cable's got a shot at making that work. Newspapers, unfortunately, are still looking for the hit they can charge for.

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