It's Not Just the Internet

It's Not Just the Internet

It's Not Just the Internet

Policy made plain.
May 11 2001 3:00 AM

It's Not Just the Internet

Almost no one pays for content in any medium. 

The first great cliché of the Internet, carbon-dated back to the mid-1990s, was "information wants to be free." The notion, purged of poetry, was that no one should have to pay for "content"—words and pictures and stuff like that—and, in the friction-free world of cyberspace, no one would have to.

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Today, following last year's Great Internet Disillusion, people no longer care what information wants. Information can go inform itself, because information providers want to get paid. Investors are suddenly asking for some plausible theory of how and when a Web site might be expected to make money. And meanwhile, the two most popular answers to those questions—a) advertising; and b) don't bother us about that now, can't you see we're busy?—are met with increasingly impolite skepticism. "You're fired" is how many skeptics now analyze the situation.

The reigning notion today is that the laws of economics are not, after all, suspended in cyberspace like the laws of gravity in outer space. Content needs to be paid for on the Web just as in any other medium. And it probably has to be paid for the same way most other things are paid for: by the people who use it. We tried charging the customers at Slate. It didn't work. Future experiments may be more successful, and we at Slate encourage others to jump in. We'll watch. But meanwhile, let's look again at this notion that in every medium except the Internet people pay for the content they consume. It's not really true.

Television is the most obvious case. A few weeks ago a producer from Nightline contacted Slate while researching a possible show on the crisis of content on the Internet. He wanted to know how on earth we could ever be a going business if we gave away our content for free. I asked how many people pay to watch Nightline. Answer: none. People pay for their cable or satellite hookup, and they pay for content on HBO, but Nightline and other broadcast programs thrive without a penny directly from viewers. There are plenty of differences, of course, and the ability of Web sites to support themselves on advertising is unproved. But Nightline itself disproves the notion that giving away content is inherently suicidal.

Now, consider newspapers. Customers do pay, but they're not really paying for the news: They're paying for the paper. Newsprint (which is the paper, not the ink) currently costs around $600 per metric ton. That's about 27 cents a pound. A weekday edition of the Washington Post weighs about a pound and costs 25 cents. Not every paper is as weighty as the Post. But a recent article in Presstime, the house organ of the American Association of Newspapers, reported that a typical newspaper gets about 22 percent of its revenues from readers, while spending 12 percent on paper and ink, 6 percent on running the presses, and 13 percent on delivery and distribution.

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That's every penny the newspaper gets from its readers plus another 9 percent of its revenue going to expenses that virtually disappear on the Web. Giving up that revenue in exchange for losing those expenses looks like a great way to make money. Once again, no one has managed to make that deal yet (though the Wall Street Journal Web edition is reportedly close). But distributing the news for free on the Internet does not seem inherently more absurd than chopping down trees, hauling huge rolls of newsprint across continents, running vast presses, and dispatching a fleet of trucks at the crack of dawn in order to get 25 cents for the same words and pictures on 27 cents' worth of paper.

Finally, look at magazines. And forget about the cost of paper: The money that magazine subscribers pay often doesn't even cover the cost of persuading them to subscribe. A glossy monthly will happily send out $20 of junk mail—sometimes far more—to find one subscriber who will pay $12 or $15 for a year's subscription. Why? Partly in the hope that she or he will renew again and again until these costs (plus the cost of actually producing and sending the magazine) are covered. But for many magazines—including profitable ones—the average subscriber never pays back the cost of finding, signing, and keeping him or her. The magazines need these subscribers in order to sell advertising.

Most leading print magazines would happily send you their product for free if they had any way of knowing (and proving to advertisers) that you read it. Advertisers figure, reasonably, that folks who pay for a magazine are more likely to read it, and maybe see their ad, than those who don't. So magazines make you pay, even if it costs them more than they get from you.

This madcap logic doesn't apply on the Internet, where advertisers only pay for ads that have definitely appeared in front of someone's "eyeballs." They can even know exactly how many people have clicked on their ads. So far, advertisers have been insufficiently grateful for this advantage. But whether they ultimately come around or not, there will never be a need on the Internet to make you pay just to prove that you're willing.

So maybe the Internet's first great cliché had it exactly backward: Information has been free all along. It's the Internet that wants to enslave it.