When I was in graduate school in 1985, my economics class was honored with a visit by Tony Hoffman, a noted financial analyst. Hoffman’s key premise was that the real value of USA Today wasn’t the daily circulation, it was the archival value of the daily graphs that the paper features: “How many pounds of ice cream are sold every year,” etc.
At that time, there was a sense that newspapers had a core value as strategic information companies. Knight Ridder still had Dialog, and things appeared to be moving fast into the computer age. And newspapers weren’t alone. It was a time when it was fashionable for the CEOs of United Airlines and CitiBank and even the mayors of major cities, to re-define their organizations as information companies.
Today, we have few illusions that newspapers do much more than provide throw away, consumer-oriented news, wrapped around advertising (or that airlines fly planes, and banks handle banking). Sure, some newspapers, especially The New York Times, make secondary revenues on their archives from databases serving the academic, library and legal communities. But newspaper content rarely gets repurposed into more strategic and high end products.
For that, newspapers sit on one of the lower rungs of the information industry, just above Yellow Pages, the TV Nets, Val-Pak coupons and The Entertainment Book At the recent SIIA conference in New York, it was instructive to me to see a panelist basically dismiss India’s information infrastructure by noting that newspapers provide almost all of it.
True or not, the comment certainly got me thinking: why shouldn’t newspapers aspire to a bigger piece of the $285 billion information industry. Theoretically, they could:
•Integrate news, governmental and financial databases
•Sell tiered subscription services
•Develop and sell vertical products
With their Websites especially, they actually do some of this. But should they do more?
Focus on Archives
The archives question is closest at hand. Hope is fading that local media companies could count on pay-per-view online sales from the archives, and even charge for magazine-like online verticals for sports, travel and dining derived from such archives.
Up to now, a big part of the problem has been economics. Vendors like Proquest and Newstex take 40-60 percent off the top, forcing per article pricing in the $2.95 range. That’s a lot for an old restaurant review.
The premium content problem isn’t restricted to local media firms either. Due to the glut of free materials on the Web, “People only pay for health and wealth, and due to Yahoo! and other services, “ they pay less and less for wealth” says Patrick Spain, founder of Hoovers Online and now CEO of High Beam Research, a subscription-based service that charges about $99 a year..…”and they pay less and less for wealth.“
Spain says that people will pay, however, for convenient access to everything they need, including local newspaper archives, and a set of tools to help find, save and share content. Knight Ridder’s 30 papers and The Washington Post (since 1987) are available on HighBeam. “I do believe that there is a huge opportunity to enable local online commerce,” he says. “But newspapers have always been free. That’s their role.”