The shrinking newsholes: Online edition

Torontoist – the only Canadian franchise of the Gothamist network of city blogs – is closing down.  This is bad news for all sorts of reasons. While I didn’t think the city or the blog was always as well-served by its editors as it deserved to be, Torontoist had some excellent writers, especially on arts coverage.  They gave me some very nice play, once upon a time, and I believe I even got a free beer out of it, to boot. Torontoist also connected the city to a larger, but still nicely exclusive network of city blogs that gave Toronto — I mean this sincerely — some world class cachet. The istaverse remains a lovely aspirational brand. 

But now Torontoist is closing down, Gawker has closed Valleywag and trying to sell Consumerist — this is a becoming a serious problem. Content is supposed to be king, but no one is willing to pay for it. No one wants newspapers or magazines anymore, and online traffic is turning out to be pretty much unmonetizable. What is going on?

The short answer is that a decade or so ago the media industry in North America signed a suicide pact. They collectively decided that all of this expensive, branded content that was being generated was, quite literally, not woth the paper it was printed on, and it should be just given away online. What’s the difference between an investigative piece from Gatehouse, a Hitchens column from Vanity Fair, and local news brief from the Podunk Times? Three clicks. 

There was a short window, a few years ago,  when there might have been a reasonable hope that the underlying business model of print — 2/3 ads sold in context plus 1/3 subscription fees — could be replaced by 100% online ads, but that is obviously not going to work. Some of the smartest media minds in the world have crunched the numbers every which way, and they simply do not add up.  

To be clear: This is not a lament for the decline of print. Nor am I worried about trying to save Big Media dinosaurs from the encroachment of the more nimble and energetic digital media. The problem is that no one is making money, not print, not online, not new media, not social networking sites. No one. In virtually every case, the business model, such as it is, amounts to a whole lot of people praying for some magic widget or killer app that will conjure old-time revenues out of clicks. It isn’t going to happen. 

The only solution I see is a return to some sort of subscription model. Except it won’t work if it is up to individual papers or magazine or sites, because what I’m calling a suicide pact is at root a collective action problem. No single media outlet is going to go to a fee-for-content model because the temptation for other outlets to try to steal their traffic by staying free is too great. The tragedy of the media commons is real, and the only way out is a binding collective solution. I see it is involving something like a content tax levied at the ISP level that will be paid into a common fund and distributed by a group of oversight bodies, similar to the way payments get distributed from radio. 

Yes, content is king. That is why it must be funded through royalties.

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