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I'm not sure Felix Salmon quite gets this right:
There's an old saying that you'll never understand newspaper economics until you understand why newspaper vending machines are designed so that you can take as many papers as you like for your quarter. Newspapers are, first and last, devices for delivering ads to readers. It's the ads which account for all the profits, not the cash coming from subscribers or people who buy their paper at the newsstand. Yes, news itself is free, nowadays. But it always has been. What we've been paying for all these years was never news, it was papers.The implication of this is that if we stop paying for the paper, we can afford the news. But that's probably not true either. The paper is pricey, but profitable. It allows for an echo of the monopoly profits that newspapers used to enjoy, when there was really nowhere else for Macy's to place a weekend sale advertisement. The problem with newspapers is that the business model never made sense. Paying for independent reporting by packaging it with real estate listings and department store ads was always a dodgy enterprise. But if the model never made sense, at least it worked. Now, however, it neither makes sense nor works. Generally speaking, when that happens to an industry, then industry dies off, or radically shrinks, or applies to Congress for a bailout. News, however, is in a strange limbo: We think it something akin to a public good, necessary even if it's not profitable. But because it occupies an oversight role, we don't think it appropriate to publically subsidize (even though you could subsidize it in a variety of non-political ways). So it will probably become the province of rich people and foundations. The Kaiser Family Foundation, for instance, is pumping millions into a news venture that is supposed to provide the health care reporting that is increasingly getting cut from the newspapers. It's a smart model: Kaiser pays for the reporting and then shares the content. It recognizes that others have the distribution networks and simply need the product. But if that sort of model becomes the norm, also easy to see how it could be misused by less reputable outlets that begin building content to push a particular agenda. But there's no going back. The problem for the newspapers is that even as they die off, most consumers are in fact in a better position. There may be fewer outlets today, but I have access to a lot more news products than I did 10 years ago. So do most people. If the Baltimore Sun cuts much of its staff, but the people in Baltimore now have the LA Times and the New York Times and the Huffington Post, they have more news, not less. There will be no push to save journalism because only journalists believe it to be dying.
