The economics of newspapers in two charts
James Fallows posted a slideshow compiled by Hal Varian, Google's chief economist, on the economics of newspapers. The first chart breaks down where newspapers get their money, and how they spend it:
And here's a breakdown of ad revenue:
Those online ads aren't worth much, I fear. That's not to say they're worth nothing, or won't be worth a bit more in the future. But it's hard to see them really closing the gap. We're going to need to find another way. And Google has already started thinking about it.
"People inside the press still wage bitter, first-principles debates about whether, in theory, customers will ever be willing to pay for online news, and therefore whether 'paywalls' for online news can ever succeed," writes Fallows. "But at Google, I could hardly interest anyone in the question. The reaction was: Of course people will end up paying in some form -- why even talk about it? The important questions involved the details of how they would pay, and for what kind of news."
I'd like to see some solid numbers on what people would have to pay to support news production if advertising revenue dropped by half before I get too sold on this idea. But I do think the resistance to paying for news is a bit silly. In Wonkbook, I link to a lot of Wall Street Journal content. A few days ago, a reader e-mailed to ask how he was supposed to read those articles -- they were behind a paywall! I almost felt bad telling him the answer.
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