The new year brings some radical new experiments in online media. First up is The Daily, a publication created by Rupert Murdoch’s News Corp. that’s set to launch this month. You won’t be able to read The Daily on a plain old Web browser. It will exist only as an app on the iPad (and, presumably, later on other tablets as well)—and you’ll have to pay $1 a week for a subscription.
That last bit is the important part. The real significance of The Daily is that Murdoch and his team are saying something that others in the world of online news are also starting to realize: the business model that everyone has pursued for the past 15 years (put everything online, free, and then try to sell ads next to the stories) doesn’t work. The Web may be a great medium for telling stories, but so far it’s been a terrible one for making money.
So Murdoch has come up with a simple solution: lock up the stuff inside an app and charge people to get at it.
This isn’t a terribly new concept. There’s a reason that circuses take place inside a tent rather than out in an open field. Yet for 15 years the way we’ve done news online is akin to the circus letting anyone inside at no cost, and trying to make money by selling ad space on the back of the chairs.
That model was never a good one, and it only became worse as content started flooding online. Suddenly there was a surplus of ad space, which drove ad rates downward. In response, publishers did exactly the wrong thing: they cranked out even more content, hoping that by having additional space to sell, they could make up for falling rates. A child could tell you this was a stupid idea.
The real issue is scarcity. On the Web there is none. Murdoch is attempting to create scarcity, using the app model that Steve Jobs of Apple has created.
Across town, another Manhattan-based new-media operation is taking a different approach to creating scarcity. Gawker Media, perhaps the leading independent new-media company, is embracing a business concept that copies television’s advertising model. Instead of selling space, Gawker will attempt to sell time.
For example: on days when Apple makes product announcements, millions tune in to Gawker’s tech site, Gizmodo, to follow “live blog” coverage. Gawker might invite advertisers to compete for exclusive advertising rights to Gizmodo during those 90-minute events. Instead of competing against other publishers for ads, Gawker CEO Nick Denton wants advertisers to compete for what he’s got.
In both the Murdoch and Denton approaches, the vital thing is the content itself. Their strategies will work only if their sites deliver compelling, unique material, stuff you can’t find anywhere else. That too is a bold idea, as up to now the goal has been to get content as cheaply as possible, either by persuading people to write articles for little or no pay or by aggregating stuff that’s been published elsewhere. As a result, the news business has been engaged in a race to the bottom, churning out more and more garbage and then wondering why our industry is collapsing.
Will Murdoch’s and Denton’s schemes succeed? That remains to be seen, but I for one will be rooting for them.