

People Never Paid For News, They Paid for Distribution . . .  - aresant
http://www.huffingtonpost.com/mark-mclaughlin/audiences-dont-pay-for-co_b_508985.html

======
fnid2
I've heard this many times before, but it is largely irrelevant. Consumers
_believe_ they are paying for the content. They pay $30 a year and get 12
issues. It's like saying the shopper doesn't pay for the lettuce, she's paying
for the transportation of the lettuce. All the costs and all the revenue
ultimately go on the same side of the line -- either you are profitable or you
aren't.

Which makes me wonder if the HuffPost is profitable. I think they aren't:

    
    
      "While traffic is surging at the HuffPo," Hippeau told 
      an audience at the OMMA conference earlier this week that
      rates for CPM-based advertising are nearing "zero."   
    

[http://www.beet.tv/2009/09/huffington-post-ceo-revenue-
must-...](http://www.beet.tv/2009/09/huffington-post-ceo-revenue-must-match-
sites-traffic.html?no_prefetch=1) The HuffPo is not immune to the problems
facing the industry and they don't _also_ distribute via print. How are _they_
going to survive.

I wonder how all of a sudden, the HuffPost, which is living on a $25 Million
investment is the expert on how to be a profitable online distributor and
_creator_ of content. They are struggling too and thumbing their nose at the
traditional establishments. Before I take their side, I'd like to see some
evidence that they know what they are talking about. I'm not sure they do and
I'm not sure they will outlive the nytimes who trounces them in the online
content space.

The NYTimes gets online more than any other publication I have seen and they
seem to understand the web as a delivery mechanism _way_ more than the
huffpost.

~~~
tcdent
You haven't taken the analogy far enough. The shopper isn't paying for lettuce
because it's lettuce, they're paying for it because of the nutrients it
provides. Just as I don't pay $30 a year for the shipping costs of the
subscription, I (at least I believe) pay for the information it contains.

The disconnect here is the use of a traditionally free (as in beer) medium as
a replacement for the use of a real, valuable commodity.

~~~
qaexl
Others here might have heard this many times before, but this is first time
I've heard of it. It clears up a lot of confusion I'd have in thinking about
this. I think one of the commenters is right in that people _believe_ they are
paying for a content. I think what's going on is a sort of a leaky abstraction
-- what consumers believe they are paying for (content) is different from what
how they actually _act_. Or put in another way, the features (the content)
differs from the benefits (the distribution).

I don't think the follow-up conclusion -- that this represents an opportunity
to get consumers to pay for content -- is the way to go forward. It sounds
almost apologetic. Sunk cost fallacy.

I'm mulling over extrapolations of this, applied to SAAS, cloud computing, and
fremium web apps. I'm thinking of the telco's resistance to being relegated to
what they actually are -- a dumb pipe -- and using lobbying pressure. I'm
thinking of how much I'm sold on Steam (mainly because, I don't have to keep
track of all those CDs/DVDs anymore). I'm thinking of Kevin Kelly's idea on
the "Technium". Like many models, there are limits to this one, but right now,
it seems the possibilities are wide open.

------
robgwin
Great insights except for: "...digital technologies may actually be the
opportunity to get the consumer to pay for content when they were never
willing to do so before". Or as Homer Simpson put it, "After years of failed
get-rich-quick schemes, here's a scheme that'll really get me rich. And
quick!"

------
petewailes
What people paid for was for the businesses to pay for their own costs and
make enough of a profit to keep going. What people got in return was content.

However, why they paid was because their was no good, free alternative. When
people are offered a product that very closely replicates their current
experience, but at a largely reduced price point, they switch.

Case in point 1 - the good replacement: digital downloading of music. People
are willing to download from iTunes because the cost is less than that of a
CD, and they don't listen to music on CD players anymore. As such, it reduces
cost to them, both in terms of financial cost and in terms of time expenditure
(don't have to go to the store, and don't have to rip it to their computer).

The problem here is that you need something that people are still willing to
pay for. Which means something they think they'll use more than once. That's
why people still buy books and periodicals. Because they're building librarys,
not reading something for one-time consumption.

Case in point 2: Linux. Linux does not yet closely enough replicate the
experience of Windows for people to be able to switch. "Where's the exe file
for me to click to install something?" "Why isn't their a download button on
Apple for iTunes on Linux?" "What does compile from source mean?" "Why can't
it install the driver automatically?"

The problem here is that it's very hard to make Windows again without getting
your ass sued off, and it's even harder to do it for free. Also the myth that
anyone anywhere can fix a problem found in the codebase is a myth. Most people
can't (lack of knowhow), and there's no guarentee that their fix wouldn't
break something for other users, or that it'd be safe and not introduce
security issues.

Case in point 3: real estate. The housing market collapsed because people were
given access to morgages they couldn't repay, by people who couldn't afford to
take the hit if they didn't. Of course if you offer people more money, for the
same or lower levels of repayment they're going to take it. In this case, it
was perceived immediate value, against long term reward that brought the
problem, but the underlying mental process is much the same.

The problem is, how do you differentiate yourself in a market, where you can
only offer a sensible product that matches the needs of your consumer, when
every competitor can match you exactly? That's where market research and
common sense need to come in, to find better ways of meeting your consumers
needs, and balancing what the consumer desires against what you can offer as a
responsible business.

Takeaways:

* Consumers pay for the value they perceive their getting

* Businesses set the prices based on the maximum ROI they can get based on their marketing efficacy

* Everyone trys to find ways to cut costs whilst maintaining the ROI, to attract more customers or increase ROI whilst maintaining price points

~~~
bad_user
> _What people paid for was for the businesses to pay for their own costs and
> make enough of a profit to keep going_

Huh? What are you talking about?

People don't pay for online publishing because it mostly sucks, and you can
get the same quality from shitty blogs. If anything, people stopped paying
only because they now feel they've got screwed multiple times over.

For instance ... I'm paying for my cable TV and for my newspaper, not to
mention a national tax for public radio ... and yet commercials are being
shoved down my throat constantly, not to mention the mediocre content being
offered.

True journalism is dead ... mass-media intentionally focused on quick-sells
like scandals, shock and awe campaigns or celebs news (like Paris Hilton's
latest fart).

They've also trained their customers to look for such subjects ... because
frivolous subjects are cheaper to write and easier to find.

Now who's to blame that they've got themselves into a corner because a wet-
behind-the-ears teenager with a shitty blog can deliver the same poor quality?
It's also too late to change course because the average attention span of a
reader has only gotten worse and now people can't stand reading thoughtful
articles.

It sure sucks to be them.

~~~
petewailes
Regarding the quote you referenced, that's just a fact of business. What
consumers pay for is the cost and profit margins of the company in question.
What they receive in exchange is content.

So you're saying that you honestly, in your heart of hearts believe that the
BBC, Times Online, Telegraph, and Guardian have the same quality of journalism
as a bad blog?

I find that hard to believe. I think if that's really your stance, you're more
likely reciting the platitudes of the day.

Now there are publications that focus on things like that, and that should
die. For instance, the Sun, Daily Mail and so on. The sooner they die off the
better. But that doesn't mean that there's not still good journalism out
there. It's just a smaller ratio of the total content in the public domain, as
the amount of really bad stuff has swelled.

Think of the beer market if you'd like another example. There's a shitload of
really crap "beer" out there. On the other hand, there's a smaller number of
really good beers. However, you have to ignore the stuff that's appealing to
the lowest common denominator (the Sun and Daily Mail and crappy blogs) to be
able to find the real gems (the BBC etc...)

------
shafqat
What people actually pay for (content or distribution) is largely irrelevant
(IMO). The news business was only about connecting advertisers with an
audience. As soon as advertisers found a better (and more measurable) way to
connect with their target audience, they simply moved on.

~~~
weego
Absolutely correct. Drilling it down to the logical nth degree you are
effectively paying to be part of a defined marketing demographic that can then
be sold to advertisers. The reality of course is there is a more symbiotic
relationship going on as if people did not percieve value then the circulation
would drop off.

Glossy magazines like Wallpaper are the most stark example of this where it's
often a case of flicking through 4 pages of watches before getting to the next
article about italian leather day bags, but news media run on the same model.

------
hkuo
Isn't it interesting that while we're always debating "ad-supported" vs "paid
content", magazine publishers were getting away with murder by getting both
for decades???

Advertisers are paying us loads of cash! And guess what? People are paying us
to see them too!

