Digitalwall: The Web 2.0 Revolution (6) Struggle of the Press Industry

We have been pushed into the era of "disposable content" when the content, once produced, will soon be disposed of.

[+] For-pay e-newspaper in PDF version

In July 2006, two established newspapers in Taiwan, Economic Daily and United Daily Evening News, launch their electronic versions in PDF format following the footsteps of New York Times and Washington Post in the U.S., Oriental Daily News in Hong Kong and People's Daily in China. Online subscription is offered to users at the same rate as hard-copy newspapers.

To publish hard-copy newspapers online in the format of electronic files, which are to be downloaded by paying subscribers, without changing the content and layout, the traditional newspapers must have made painstaking efforts to come up with a brand new process. Yet, it takes ten years of Internet development for the newspaper industry to come up with this step - I am not sure if it comes early or late.

To remain the same layout as that of the hard-copy paper, when displayed on the screen, this e-paper has small fonts and very different text arrangement from the webpages of online news which Internet users have long got used to. The interactive advertising feature it boasts of, an innovative design not seen in hard-copy newspapers, is but something very common for online users.

It has no longer been a problem to read global news online. It has even come to the point that the huge amount of news information has become somewhat troubling. So does this PDF newspaper answer to the demand of readers nowadays? In addition, buyers won't be interested in placing advertisements if the circulation is insignificant - it has nothing to do with the interactivity of advertisements.

I am rather hesitant to make criticism, as in the past decade the Internet revolution has been encroaching on the territory of traditional newspapers. The newspapers have yet to realize that what has been changed is not merely the habits of readers; the most critical and drastic transformation actually takes place in the cost structure of the media industry.

[+] About for-free and for-pay

"A media company can only profit through monopolization." is the best reflection of traditional media industry. A real giant press group not only owns the best people to produce content, but is also capable of controlling the distribution channel. Its greatness is the result of incorporating production and sales capabilities.

To achieve oligopoly and build up a barrier that is difficult for competitors to surmount, it calls for a vast amount of capital. However, the continual decline of storage and bandwidth cost on the Internet has driven the cost of publication to drop lower. The result is that anyone can do publication and distribution online - this is the reason behind the disintegration of traditional media.

The most baffling part is, traditional newspapers are for sale, and approximately half of their revenue is used to cover the distribution cost (to distribute newspapers to all sales spots). So, if newspapers are to be published online directly, considering the saving of distribution cost, it seems reasonable to cut the price to half.

This idea did not work ten years ago, and it can only get more difficult to succeed now. In fact, the press industry never makes money from selling newspapers. The money from selling papers is small and can only cover some overhead expenditure. The real big money comes from advertising business.

So, if a newspaper is given away for free on the street, can it get a very big readership and thus lift its advertising sales? The answer is negative. A free newspaper will have the worst advertising performance, as the quality of readership of a free newspaper is unacceptable to advertising buyers.

[+] Web 2.0 relieves the problem of immediate consumption of online content

I have bought up the concept of "the life cycle of content." The life cycle of a magazine is a month or a week; a newspaper is a day; and a TV program is an hour. To address to the problem of content consumption, media with a shorter content life cycle would require a bigger amount of capital.

In the case of Internet content, a piece of online news is consumed within a minute, which is even faster than a TV program, so how big the capital has to be in order to be able to cope with such kind of real time consumption? This is why historical records show that the Internet media which had claimed to produce original online news content were all gone at the end.

Yet these experiences have taught us some lessons. First, problems brought by the Internet should be taken care of by the Internet world. Since hiring reporters to produce own content can't not meet the demand for Internet content at such consumption rate, what about letting all users participate in content production? This is what is called Web 2.0.

Second, it may have never occurred to the press industry, which regards the content as its lifeblood, that the low production cost and fast consumption rate of the Internet content has pushes us into "the era of disposable content" when the content, once produced, will soon be disposed of.

Once these two points are taken well into account, it then becomes clear if a PDF newspaper is really a big deal. It says that PDF newspapers are good for preserving content, but most people won't pay for preserving consumables. I have attempted to find our if there is any kind of content that will remain constant, will not be consumed and is needed by the public everyday? Ten years have passed, and I haven't found any such things.

[+] The way for traditional media to avoid disintegration

The encyclopedia seems to have the quality of "remaining constant". Yet even for the encyclopedia, it exists and enjoys popularity on the Internet in the form of Wikipedia, which is constantly amended by hundreds of thousands of Internet users who contribute their knowledge.

The root of the Internet revolution is but one thing - the ever declining cost of digital storage and transmission bandwidth. Socially, it is reflected on "the continuously falling cost of interpersonal communication; on the business side", it is "the gradual disintegration of enterprises which used to thrive on their monopoly of capital and information".

Traditional newspapers which used to thrive on their monopoly of information and capital have begun to disintegrate. Yet the dying press has not found out that the cost required to find a group of good reporters or to scoop valuable news is much lower now than before. For the traditional media to avoid their disintegration, this is where to start.

This is somewhat similar to Internet writers who publish their books in the real world after turning famous in the virtual world. For the publishing industry, the popularity of the Internet literature may have caused the public to become less willing to buy books, yet the cost to find a good writer has dropped significantly too during these ten years - it used to take very high risks to discover new writers since there is no way to know whether they will succeed in the market or not.

In fact when the cost of interpersonal communication keeps falling, the cost to find a certain type of people will get much lower than before. This will encourage the emergence of more new business models, among which the most relevant to the press are new types of job advertisements and classifieds. (
2006/10/08 - By Digitalwall.com - Way to
China Internet/Telecom )