The price of paid news will change

When a long-awaited victory finally comes, it is worth taking a moment to savour it. This week, my own industry enjoys such a moment as Google at last drops its bias towards news on the Internet needing to be free.

Google's decision to end "first click free", its decade-old policy that news publishers have to give away some stories in order to appear high in its search rankings, is only one step in itself.

But Google (and Facebook, in a token manner) are edging towards something bigger - actively supporting paid-for news and information rather than treating it as a category error.

The destructive syllogism that open meant free - that in order to be true to the fluid nature of the Internet, publishers had to rely entirely on advertising rather than charging for their content - is fading. Even the idealistic Guardian, faced with Facebook and Alphabet eating all of its digital ads, is passive-aggressively pleading for money.

But having savoured the moment, news publishers would be advised to think ahead. The fact that Internet giants and consumers now concede that there is a price to pay for quality information does not mean that the price will be high. Instead, publishers will face a renewed challenge.

Google's change of tack is a recognition that free has carried a heavy cost for the news ecosystem, and for Google itself. In one way, there is perfect logic to biasing search results to free content - it is irritating to click on a link and encounter a paywall, so its algorithms favour easy access.


Google (and Facebook, in a token manner) are edging towards something bigger - actively supporting paid-for news and information rather than treating it as a category error. PHOTO: REUTERS

Ease is not the only consumer good, though. News can be good or bad - well researched or dashed off for the most clicks. Having set the incentives in favour of cheap and quickly made, Google and Facebook have unleashed a flood of dubious content, from the sensational to the outright fake.

Facebook is now tarnished by Russia's use of fake news to distort elections, while Google faces the problem of the Web itself degrading, which makes search less useful. Not all free news is of low quality - some is just the opposite - but platforms have their own reputations to protect.

They can provide quite a lot of help to premium publishers. Facebook is making only a modest start, offering to start promoting subscriptions when users have read 10 free stories, but Google is going much further. As well as dropping first click free, it is promising to support subscriptions in various ways.

One is using its transaction and payments technology to fill subscriptions, which will be a relief to anyone who has struggled with some publishers' outdated and arcane systems. Another is to pool its data analysis with that of publishers, enabling them to identify and target potential subscribers.

This could be very useful but it raises big questions about how payment for news will evolve. They are particularly sharp for the publishers that pioneered subscriptions, such as Dow Jones, the New York Times, and the FT.

The destructive syllogism that open meant free - that in order to be true to the fluid nature of the Internet, publishers had to rely entirely on advertising rather than charging for their content - is fading... Google's change of tack is a recognition that free has carried a heavy cost for the news ecosystem, and for Google itself.

The first question concerns barriers to entry. Small publishers, lacking the marketing and data analytics resources of bigger ones, have been at a disadvantage in building paid businesses. That is one reason why so many have instead stuck with ad-funded news.

If Google or others provide technology and data analysis fairly cheaply, they will level the playing field. It will become easier for an array of niche publishers to find their markets amid the clutter. So far, there have been few subscription entrants similar to The Information, a technology news publisher founded by a former Wall Street Journal reporter. This may change.

The second question is what happens to the industry's price structure. So far, there have in effect been two prices for news - free or expensive. Readers can stick with ad-funded free news or pay for one or two subscriptions giving them unfettered access to premium publications such as this one. It is a curiously binary consumer choice.

Other media markets do not work like that. Take cable and satellite television: Viewers pay their cable providers for bundles of networks, and sometimes extra for premium sports and film channels such as HBO. Paying individually for each channel would cost too much and be too complicated.

As platforms such as Google start to mediate paid news, it is easy to imagine them becoming bundlers. It is also easy to imagine consumers wanting such a service. A technology executive in California, instead of one subscription to one publication, might take a bundle - some access to the New York Times, some to The Information, some to a local news publication.

It is possible to imagine bundling helping everyone, but premium news publishers shudder when they mention it. Some of them - perhaps Mr Jeff Bezos, founder of Amazon and owner of the Washington Post - may accept less to reach more readers. Others fear that it would not cover the costs of deeply researched news. "It would be very hard to make it pay," says one.

The consumer tends to get what she wants in the end. Publishers of paid news should savour their victory this week. Soon enough, the market will unleash another fight.

FINANCIAL TIMES

A version of this article appeared in the print edition of The Straits Times on October 06, 2017, with the headline 'The price of paid news will change'. Print Edition | Subscribe