Is Ad-Supported Internet News “Morally Abhorent”?

Feb 6th, 2009 | By | Category: Commentary, Featured Story, The New Media Update

Newsboy, 1910. Philadelphia, PA, by Lewis HineTIME Magazine’s former managing editor, Walter Isaacson, writes in the current issue of Time magazine, that newspapers (and, by extension, newsmagazines, too) are in crisis, even though readership is up significantly.

Huh? Why this disconnect?

“Fewer of these consumers are paying,” he says. “Instead, news organizations are merrily giving away their news.”

Isaacson conjures the ghost of Time magazine co-founder Henry Luce, who considered “morally abhorrent” those freebie news publications that relied on advertising revenue as its sole funding source. Continues Isaacson (channeling the spirit of Luce),

good journalism required that a publication’s primary duty be to its readers, not to its advertisers. In an advertising-only revenue model, the incentive is perverse.

It is also self-defeating, because eventually you will weaken your bond with your readers if you do not feel directly dependent on them for your revenue. “

Isaacson says the business model of publishing news online at no cost to readers (content supported by ads) “doesn’t make sense.”

In the olden golden days of publishing, he explains, publishers had a three-sided revenue base:

  • newsstand purchases,
  • reader subscriptions,
  • and advertising revenues.

The last several years have seen newsstand purchases and subscriptions dwindle. A boom in Internet advertising in recent years seemed initially to make up for the lack. But, as Internet ad revenues declined for news outlets in the last quarter of 2008, that one remaining healthy funding source – advertising – took on an unhealthy pallor.

Isaacson, now CEO of the Aspen Institute, calls for news organizations to return to the “bold, old” business model of “getting paid by users for the services they provide and the journalism they produce.”

This echoes what we saw earlier this week, when the New York Times’ executive editor Bill Keller discussed the Times’ consideration of micropayments, charging for premium online content, and other moneymaking schemes.

However, few news organizations are succeeding with the pay-for-online-access revenue model. Consumers of media (whether it is news or entertainment or anything else) have grown to expect free, unfettered access to content. We time-shift our television watching, gather news from sources around the world, and seek out entertainment, and expect to do this for free.

Certainly, Isaacson and Keller are right in this respect: well-reported, well-researched journalism is valuable. Creators and publishers of that news content need to be rewarded for their labors and expertise.

Is a strictly ad-supported media universe “morally abhorrent”? If this revenue model is abhorrent (or, in a sagging global economy, unworkable), how else do news organizations fund the work they do?

Photo: Lewis W. Hine, 1910, Library of Congress via bobster1985

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5 Responses to “Is Ad-Supported Internet News “Morally Abhorent”?”

  1. Zunenator says:

    Luce is right – news can’t be objective if it has to rely on advertisers – it has to be financially independent of what it covers. .

    Consumer Reports is a good example. They don’t take advertising because they think it would compromise their ability to be unbiased – and they are very well respected as a result.

  2. Rob Greenlee says:

    I believe that we have yet to see an entirely workable business model for them evolve, but I think it could still be coming once the internet really gets local and granular in its reach. I also think that the public media model will be the model that wins – donation and pledge drives is funding great new organizations to day like NPR. The advertising model will keep many other news organizations running, but those will become more entertainment based as that is what drives larger audience numbers. These trends are already happening. Local newspapers need to really focus on providing a branded path to the local information at a much more granular level via the internet. The problem they have is that they have let Craigslist and Google take this advantage away from them and unless they start getting more involved in mobile search and mobile information the local newspapers are doomed to failure as I think they most likely are. Rob Greenlee

  3. I think what keeps people from paying for good news is the ability to do so. Why did iTunes succeed? Because it provided the music easily, quickly and effortlessly.

    Subscribing to premium websites is tricky and most people don’t want to go through the trouble. How about a premium RSS story reader with a small SMALL fee for reading news stories (2 cents a story or less).

    Make it easy for your audience to pay money for your content. And let’s face it, make the content good and give the audience a say in how it happens.

    A lot news organizations could not care less about the input from their audience.

  4. Bill Grady says:

    Most of the big newspapers, (i.e. those with stockholders) are in the advertising business first, and the news business second. Some of the small-town, locally owned newspapers have a good balance between journalism and the bottom line, but the big boys are all about the money. The cries of “save our journalism” from the publishers of the big corporate newspapers are laughable. What they really mean is “save my stock options”.

    Paid newspaper subscriptions have a narrow purpose in the newspaper biz, 1) to cover the partial expense of the convenience of home delivery and 2) supplement the cost of the production and printing of the newspaper. All the rest of the revenue including large profits to their stockholders come from the advertising side. With the Internet, the reader already pays for the distribution when they pay the ISP for their connection, and in my opinion, the remainder of the Internet news service product should also be able to be ad supported just like they did with the print distribution model.

    Here’s where the newspaper owners get all nervous and jerky: That don’t have a model that makes them as much money with the Internet today as they did with the print versions 10 years ago. The small town newspapers have the potential to do the best with paid because it is a “niche”, but many small papers tried the paid model as well and eventually went to the free viewership/ad supported model. Now they want the genie to go back in the bottle?

    When the subject comes up for paying for world, national, and state news…..I can get that for free from the broadcast network and cable news networks. Those are the groups who stand to win a larger online audience if the newspapers start asking for “paid news”.

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