Wednesday, February 16, 2011

iTunes subscriptions won’t stop free news

While the new iTunes subscription service for publishers may inspire more efforts than ever to charge for content, it won’t put a dent in the overwhelming consumption of free news on the Internet.

The Apple subscription service unveiled yesterday intends to do for publishers of newspapers, magazines and other media what iTunes did for music: Create an attractive, convenient, one-click environment for buying all manner of digital media.

But the service is not going to throttle the flow of free news on the web any better than iTunes has stopped the torrential consumption of pirated music.

The truth is that no one knows exactly how much music is stolen over the Internet. However, the International Federation of the Phonographic Industry, a content cop for the music industry, said in 2009 that no less than 95% of the music consumed on the web is ripped off.

Since then, the quaintly named trade organization has become a bit more circumspect, saying piracy trends “vary markedly” by country. Nevertheless, its 2011 annual report stated:

Despite the surge by more than 1000% in the digital music market from 2004 to 2010 to an estimated value of US$4.6 billion, global recorded music revenues declined by 31% over the same period. The two figures powerfully illustrate how, in the face of piracy, even the most progressive strategy of licensing hundreds of digital music services has been unable to prevent the steady decline in the over-all legitimate music market.

As difficult as it has been for the music industry to stop piracy, it will be even harder to stop free news, which has been flowing liberally since the Net came into popular use in the mid-1990s. Here’s why:

:: Unlike a one-of-a-kind recording by a particular artist, news is a commodity that is neither unique nor proprietary. There is no singular and un-emulatable rendition of any international, national, financial, entertainment or other type of news story. Anyone with an iPhone can take a picture, shoot a video or write a story for the world to see. Because no one owns any news event, no one can own an account of it.

:: News loses its exclusivity the moment it is reported. The legal principle of fair use makes it possible for anyone to reference and/or excerpt a reasonable portion of a news article. Although copyright laws make it a crime to copy and distribute intellectual property in its entirety without authorization, the laws so far have done nothing to stop the wholesale trafficking in illegal music. With news harder to protect than an original recording, how can any publisher hope to do better that the recording industry?

:: Information will find its away around any obstacle. The Internet is a highly redundant, self-healing network that originally was designed to assure the flow of information would not interrupted in the event any node in the system were destroyed in a nuclear attack. As sturdy as the network is, the individuals who use it are even tougher. Publishers in an open society like ours can never hope to thwart those who are intent on liberating their content.

:: The biggest reason most content will remain free is that there is no universal desire among news producers to charge for it. Except for some individual artists and few renegade record labels, almost everyone in the music business has been and remains committed to stamping out music piracy. This decidedly is not the case when it comes to news. Thousands of great and small news sites are explicitly organized to give away content for free to build page views on which they can sell advertising. As but one example, a major component of the inflated $315 million value of Huffington Post is its skill at building a growing audience by aggregating content from other websites.

The best a publisher can hope to do with iTunes or any other system is to capture payments from the relatively small number of individuals who are too busy, too oblivious or too ethical to pay for content instead of scrounging it for free.

This is not to say newspapers and other publishers don’t deserve to be compensated for the investment they make in reporting the news. But the reality that publishers have to accept is that the marketplace is bigger than they are.

5 Comments:

Blogger The End Zone said...

Yes, but it will help stop stealing local news content.
AP and Reuters....not so much.

12:57 PM  
Blogger John Arthur said...

Yes, tons of music is ripped off. But it doesn't matter as much now that the music industry has a way of gaining some payment from its material. The same can be true of print publishers. All they need is enough money to keep the doors open. Revenue from print and added revenue from online should be enough to support these companies. Talking about the millions who access free content misses the point.

5:35 PM  
Blogger JuliusHack said...

It's always uncomfortable to cite the International Federation of the Phonographic Industry; it's an industry organization representing recording manufacturers, and doesn't differentiate between music and the media on which it's recorded.

The digital revolution separated the businesses of making and selling CDs and the creation of music; much of the income lost annually to music piracy represents the loss of profits from the sales of CDs, although it's impossible to know by how much if you listen to the IFPI annual report.

The major recording industry players bought up the recording studios in the late 1980s and 1990s because music plus CDs was a very profitable business model. After Napster, that model could no longer be sustained.

Yet the IFPI is doing everything it can to identify music and the media on which it is recorded as one product, and cites only one figure (now apparently $4.6-billion) as losses.

I'd like to know what the losses would look like if you separated out the music from the media.

News, of course, is not tied to a single medium, and its fate is therefore not comparable to the music industry.

7:07 PM  
Blogger Stephen said...

Call me crazy... but hasn't there ALWAYS been free news? Those metro papers? Village Voice? Weekly Independants?

7:12 AM  
Blogger Stephen said...

Oh... yeah... for all the dummies who love the idea that paywalls won't work. Check out this article-

http://www.nma.co.uk/news/paywall-titles-see-double-digit-audience-growth-in-january/3023681.article

Aggregators from yahoo and google lost ground slightly, while the Times of London (PAYWALL!!!) gained readers. Why... because free sucks. It has always sucked, even thirty years ago when it was weekly independents or those crappy Metro newspapers. That garbage was always for your ditzy blonde secretary Tammy, Brandy etc. Well, now she's on facebook or cnn. BUT!!! where do YOU go for news? You know- Wash Po, NYT, WSJ, FT. Well... you're gonna pay now. And yes, you're gonna pay.

5:40 PM  

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