No! to newspaper bailouts

A. Michael Noll is Professor Emeritus of Communications and former dean at the Annenberg School for Communication and Journalism at the University of Southern California. He writes in response to American government: It’s always subsidized commercial media.

There will always be a need for the reporting of current events, but because of the Internet, journalism is undergoing revolutionary change in terms of how news is distributed and accessed. Conventional newspapers are thus in crisis, and there are some who propose a Federal bailout. No way!

Back in the 1980s, a couple of newspapers investigated the prospects for electronic information through a service known as videotex.1 I was involved while working at AT&T with the planning of a trial of videotex jointly conducted by AT&T and Knight-Ridder Newspapers in Florida. AT&T and Knight-Ridder correctly saw the coming of a day when news and information would be accessed and obtained electronically over telecommunication. However, the use of the home TV set for display and the concept of a single large centralized database of information were all wrong – and videotex ultimately failed.2

After the failure of videotex, newspapers became smug and mostly ignored the coming of the Internet. They did not seem to realize that although much of their profits came from classified ads, this was exactly the kind of information that could best be obtained on-line over the Internet. When they finally woke up, it was too late.

Newspapers also seemed unable to determine how to charge for on-line access. Thus many newspapers offer today’s news for free over the Internet, but charge for past articles – thus implying that they place no real value on today’s edition.

Access of music over the Internet – such as the Apple iTunes store and Amazon – proves that consumers are willing to pay, if access is easy and relatively inexpensive. This model is now being extended to books and magazines, using such products as Amazon’s Kindle and Apple’s iPhone. Will on-line journalism soon follow? Will a new breed of electronic on-line journalism evolve? Will conventional newspapers on paper disappear?

The response of many newspapers to Internet competition has been to fire journalists, reduce the size of the paper, and increase prices. At this rate, they will ultimately be printing one paper at a price of a few $100,000.

Technology is one factor that shapes the future, shaped by the needs of consumers and what makes good economic sense. Old industries evolve, and some which are unable to adapt, die. But Federal bailouts of dying industries only delay the inevitable and impede progress.

1 “A Bell System View of Videotex,” (with Dennis J. Sullivan, Jr.), Telecommunications Policy, Vol. 6, No. 3 (September 1982), pp. 237-241 and “Teletext and Videotex in North America: Service and System Implications,” Telecommunications Policy, Vol. 4, No. 1 (March 1980), pp. 17-24.

2 “Videotex: Anatomy of a Failure,” Information & Management, Vol. 9, No. 2 (September 1985), pp. 99-109.