7/11/20

Journalists beating their heads against a wall: The problem of consumption, value and willingness to pay


Many news organizations and journalists still harbor beliefs that customers will be willing to make micropayments for individual articles or that paywalls or payments from digital platforms will solve their financial challenges.

These beliefs are based on the perception that the results of their labor are so valuable people will want it and pay for it.  They ignore that most households make no direct payments for news of any kind in every country of the world, whether print, broadcast, or digital.

The beliefs that people will pay are driven more by desire than evidence and confuses economic value with attention value and social value.

When journalist’s stories are measured on performance, it can be done in several ways depending upon what definition of value is used. These include the amount of consumption (readership, viewership, clicks, etc.), what consumers will pay for a story, or how much social/political influence the story produces. The value of stories, whatever the measure, will vary from low to high.

Measuring a story about Katy Perry’s latest photo tweet may generate high consumption but low willingness to pay and low social/political influence. If a news organization has a business model based on driving traffic for advertising delivery this may suit those purposes, but it does not support a business model based on consumer payments or a desire to produce meaningful journalism.

A story about city councilors benefiting from the city contracts may generate higher economic value and willingness to pay from some people and high social/political value but low consumption overall. If the business model is based on consumer payments or an approach to produce meaningful journalism, this type of story may be helpful but cannot be expected to produce large amounts of revenue because consumption is low.

Welcome the problematic world of news organizations today.

Newspapers try to solve the problem by providing a daily bundle of 50 to 100 stories, most of which they do not produce and don't generate great consumption, economic value, or social/political value. This is done in hopes of gaining sufficient reader revenue to survive when that revenue is combined with a small amount of advertising income.  News broadcasters get around the direct consumer payment problem by relying on income from advertising, bundled cable fees, or license fees to survive. Digital news providers are struggling to find workable business models and using multiple types of business models and form of revenue. Many are struggling even to make nonprofit news operations sustainable. Only a few digital news providers, less than 2 to 3 in most nations, can make paywalls or pay-per-article strategies work effectively. These are usually national news organizations or financial news organizations.

If the objectives of journalism are to be successfully pursued, relying on news consumers to provide sufficient direct revenue to support news organizations is futile. Other forms of funding and structures of new organizations will be required.

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