‘Free’ as a business model and how it might apply to newspapers

Techdirt has an interesting post this morning on Getting People to Pay for Investigative Reporting Directly. The idea, as reported more fully in the New York Times is that people club together to commission a piece on investigative reporting and pay in advance. Spot.us in San Francisco is offering just this service raising money to write a piece on whether California can meet it’s ethanol demand and to fact check political ads. Once the piece has been written it is up to the commissioning group to decide what to do with it – most likely give it to the newspapers to publish for free to promote their issue, or maybe sell it to one newspaper as an exclusive.

Assuming issues of bias can be worked around then this will be a good example of how business models are evolving to deal with the economics of free in the newspaper world.

Historically the news industry has sold us a bundle which comprised investigative reporting, basic facts (election results, weather etc.), re-hashed PR, ads, and a physical format. The internet has unravelled the bundle and is forcing the individual components to be priced correctly – hence the separation of payment for investigative journalism from content.

In a separate post Techdirt gives offers this framework for the unbundling that is being driven by the internet and economics of free across many industries:

  1. Redefine the market based on the benefits
  2. Break the benefits down into scarce and infinite components.
  3. Set the infinite components free, syndicate them, make them easy to get — all to increase the value of the scarce components
  4. Charge for the scarce components that are tied to infinite components

In the case of news, the scarce components are the investigative journalism and the physical format. The rest – including the content itself – is infinite (in the sense of zero marginal cost to reproduce) and will therefore tend to free over time.

What I like about the spot.us experiment is that it shows the trend towards free doesn’t have to undermine the good things about newspapers, it just means the value chains will need to be recast. Or it will if it is successful. I hope it is.

Incidentally the other interesting thing about spot.us are that it is a market based mass collaboration project. I think we will see more of these.

  • TD’s framework is a nice by numbers run through. It’s fun to apply it to things like news media, music, film/TV, etc.

    I think there’s a continuum from scarce to infinite, so at some point you have to draw a line and say everything on the left is free and everything on the right is increasingly valuable. I would think this line depends on your funding situation, the ease of adoption of your product, etc.

  • TD’s framework is a nice by numbers run through. It’s fun to apply it to things like news media, music, film/TV, etc.

    I think there’s a continuum from scarce to infinite, so at some point you have to draw a line and say everything on the left is free and everything on the right is increasingly valuable. I would think this line depends on your funding situation, the ease of adoption of your product, etc.

  • Excellent post.

  • Excellent post.

  • Excellent post indeed.

    I’m David Cohn – the director of spot.us. We are still in the early stages and won’t be ready until the fall, but wanted to thank you for interest in what we are doing. It certainly will be interesting to explore how we can pay for quality content with the model of “community funded reporting.”

    After we launch in full in the fall – we will find out more. IT certainly is an issue that needs to be explored and figured out.

    Onward!!!!

  • Excellent post indeed.

    I’m David Cohn – the director of spot.us. We are still in the early stages and won’t be ready until the fall, but wanted to thank you for interest in what we are doing. It certainly will be interesting to explore how we can pay for quality content with the model of “community funded reporting.”

    After we launch in full in the fall – we will find out more. IT certainly is an issue that needs to be explored and figured out.

    Onward!!!!

  • It might pay but journalism it ain’t. For starters, I assume there must be at least a handful of bright-eyed hopefuls who think the whole business of gathering news a bit glamorous. Their perception of journalism is based largely on Sex and the City, Evelyn Waugh novels and The Daily Planet in Superman. They think the job will be one big free canapé, full of press passes and attractive people shouting “Scoop!” into phones and going to parties at the weekends with Stephen Fry. It would seem unfairly harsh to speculate that for the vast majority of journalists, most days are spent ringing people back to leave messages for people to ring you back because they rang you back and you were in the loo, and being surrounded by people who look mainly like Ian Hislop. So I won’t. The biggest question this sort of ‘investigative’ journalism raises (by the way isn’t all journalism investigative) is people are in danger of being influenced by the person paying the most amount of money. In other words, we lose that vital independence that news reporting brings. Great blog by the way, Nic.

  • It might pay but journalism it ain’t. For starters, I assume there must be at least a handful of bright-eyed hopefuls who think the whole business of gathering news a bit glamorous. Their perception of journalism is based largely on Sex and the City, Evelyn Waugh novels and The Daily Planet in Superman. They think the job will be one big free canapé, full of press passes and attractive people shouting “Scoop!” into phones and going to parties at the weekends with Stephen Fry. It would seem unfairly harsh to speculate that for the vast majority of journalists, most days are spent ringing people back to leave messages for people to ring you back because they rang you back and you were in the loo, and being surrounded by people who look mainly like Ian Hislop. So I won’t. The biggest question this sort of ‘investigative’ journalism raises (by the way isn’t all journalism investigative) is people are in danger of being influenced by the person paying the most amount of money. In other words, we lose that vital independence that news reporting brings. Great blog by the way, Nic.

  • nic

    Richard – I agree the independence issue is not straightforward, but remember there has always been a paymaster. Furthermore, I hope, maybe naively, that if a group of investigative journalists can create a reputation for integrity then their work will have more impact and be worth more to the people who are paying for it – although admittedly this relies on the assumption that the people commissioning the work are after the truth rather than simply pursuing an agenda.

  • nic

    Richard – I agree the independence issue is not straightforward, but remember there has always been a paymaster. Furthermore, I hope, maybe naively, that if a group of investigative journalists can create a reputation for integrity then their work will have more impact and be worth more to the people who are paying for it – although admittedly this relies on the assumption that the people commissioning the work are after the truth rather than simply pursuing an agenda.

  • Yes – I want to echo the last comment: There is no such thing as clean money. We’ve all heard the horror story of a publisher who killed a story because it would threaten advertising.

    The idea for spot.us is that if the group of funders is diverse enough – then the journalist is not beholden to any one of them. Take our recently funded SF Election Truthiness Campaign: wiki.spot.us/election

    It was funded by 73 different people. I’m sure some of those people have their political bias’ – but because it was a diverse group the reporter was literally commissioned by the public – and is responsible only to report in as straightforward a manner as possible.

    As for journalism being an unglamorous job. That might be true. Guess what – it’s a job. All jobs can suck at times. Spot.Us isn’t trying to turn journalism into a day at the park. We imagine that most of the pitches are going to come from recently laid-off journalists. These people know exactly how unglamorous journalism can be.

  • Yes – I want to echo the last comment: There is no such thing as clean money. We’ve all heard the horror story of a publisher who killed a story because it would threaten advertising.

    The idea for spot.us is that if the group of funders is diverse enough – then the journalist is not beholden to any one of them. Take our recently funded SF Election Truthiness Campaign: wiki.spot.us/election

    It was funded by 73 different people. I’m sure some of those people have their political bias’ – but because it was a diverse group the reporter was literally commissioned by the public – and is responsible only to report in as straightforward a manner as possible.

    As for journalism being an unglamorous job. That might be true. Guess what – it’s a job. All jobs can suck at times. Spot.Us isn’t trying to turn journalism into a day at the park. We imagine that most of the pitches are going to come from recently laid-off journalists. These people know exactly how unglamorous journalism can be.

  • Richard – my six year old daughter is wandering around a Devon farmhouse at the mo taking hundreds of photos with a DSLR including rather a nice shot of my foot. Is it photography? I don’t really care to be honest. It’s how it is. It’s up to an entrepreneuer or a VC or (gosh) a corporation to find new ways to unlock the revenue from this new reality.

  • Richard – my six year old daughter is wandering around a Devon farmhouse at the mo taking hundreds of photos with a DSLR including rather a nice shot of my foot. Is it photography? I don’t really care to be honest. It’s how it is. It’s up to an entrepreneuer or a VC or (gosh) a corporation to find new ways to unlock the revenue from this new reality.

  • sorry David – I should have made it clear that I spent the grewater part of my working life on UK national newspapers. I was being ironic is saying the majority of people view journalism as glamorous, when (most times) it isn’t.

  • sorry David – I should have made it clear that I spent the grewater part of my working life on UK national newspapers. I was being ironic is saying the majority of people view journalism as glamorous, when (most times) it isn’t.

  • Pingback: Citizen Lame: debating the future of a diseased branch - Bringing Nothing To The Party: Official Blog Of A New Media Whore()

  • “Assuming issues of bias can be worked around then this will be a good example of how business models are evolving to deal with the economics of free in the newspaper world.”

    Big ask – given the evidence of the past where this is dominated by special interest groups, I’m dubious that this will change much.

    The issue with Mike’s hypothesis on Techdirt is he doesn’t work through the implication of re-setting the overall market size if the infinite good is set to zero.

  • “Assuming issues of bias can be worked around then this will be a good example of how business models are evolving to deal with the economics of free in the newspaper world.”

    Big ask – given the evidence of the past where this is dominated by special interest groups, I’m dubious that this will change much.

    The issue with Mike’s hypothesis on Techdirt is he doesn’t work through the implication of re-setting the overall market size if the infinite good is set to zero.

  • nic

    Hi Alan – tks for the comments. As I’ve written before in the context of music the implication of free may well be that the overall market is smaller. That doesn’t mean it isn’t going to happen though.

  • nic

    Hi Alan – tks for the comments. As I’ve written before in the context of music the implication of free may well be that the overall market is smaller. That doesn’t mean it isn’t going to happen though.