Can paid, authoritative content survive as an online business model?
Gordon Crovitz, who writes The Wall Street Journal's "Information Age" opinion column, had an excellent op-ed on Monday which asked "can Britannica rule the web?" or rather, can the formerly-print encyclopedia survive online?
Crovitz's answer, and I agree, is yes.
As the Internet rose, so did a widespread -- and understandable -- fear that the cheap access to information would drive quality producers out of business. More precisely for economists, the near-zero falling price for "loose information" would lead customers to pick it over newspapers, magazines, and other forms of paid content, which represent a relatively close substitute good.
The Internet has wiped out a great deal of the print competition, as revenues from advertising sales (particularly classifieds) and subscriptions plummet. I wouldn't be surprised to see a few more headlines of once-significant papers closing, particularly at the state or regional level -- that's where, it is my understanding, that the market is contracting most.
The online environment has not been entirely favorable to the traditional media when they make the move, either. Online ad revenues are not replacing what they used to make in print, and subscriptions are a challenge. The entire profession of journalism remains on edge about a broader social loss from less attention and investigation creating more corruption in government. Others worry about the debasement of culture as, say, Newsweek makes way for TMZ.com, and PBS for YouTube.
I think this end-of-high-content argument is wrong, and that recent evolution of the Internet is proving my point. First, The New York Times, after adopting a paywall, is lowering their monthly free-article count to 10 from 20 -- and The Wall Street Journal and Financial Times have similar paywall arrangements. The Atlantic and National Affairs are thriving. New sites, too, like Byliner, The Atavist, and The Millions, show that the Internet is not going to kill off high content. Instead of being a free-rider on more profitable content -- think the Autos section in weekend newspapers -- high-end journalism and writing is managing to find its customers and make a market online.
The key, it seems, will be in making high content less and less a close substitute for, say, Google News. If the market is sufficiently distinct, and the added value of such content is evident, then I don't think we have to worry.