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Originally Posted by gastan
To say, as bookwerm does, that subscribers pay for producing articles and content and pay reporters salaries is stretching the truth a bit, IMO. At best subscribers pay for paper stock and distribution costs...
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Incorrect.
If your analysis was even remotely correct, newspapers would flourish during the transition to an online model. As paper circulation fell, paper costs would also fall (or they'd charge more), more readers would go online, and business would be through the roof. The reality does not remotely resemble this rosy scenario.
Online revenues (which, at this point, are almost exclusively ad revenues) are only around 10% of the industry's total revenues. So even at this stage, 90% of newspaper's revenues are print subscriptions and print advertising; however, it is highly unlikely that 90% of the paper's costs are
just print-related. That's a fantasy of people who think they are paying for a physical object, when the reality is that it's the labor -- journalists, photographers, editors, proofreaders, layout, designers, ad sales, marketing etc -- is a huge chunk of the costs.
Newspapers also used to make good revenues from classifieds, job listings and real estate -- all of which have largely migrated online, and often to other companies (e.g. Craigslist, Hotjobs etc). That's all gone and highly unlikely to return.
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Originally Posted by gastan
Since there will be no paper or distribution costs with a digital edition I cannot see any moral reason to charge for a digital edition.
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Online subscriptions are actually fairly lucrative. For example, in 2008 the Wall Street Journal was the 5th largest online news site with 5.4 unique visitors per month, and generated $60 million in revenues. If they eliminated the paywall, they would have needed to have over 20 million unique visitors -- which seems unlikely, given that the largest newspaper site at that time was the NY Times, with 17m unique visitors per month (and aggregators like Yahoo were hitting 35m or so).
Also, there is absolutely no reason, moral or otherwise, why price needs to be linked to cost -- or more accurately, your misperceptions of costs. E.g. If I want to charge $100,000 for a painting that only cost me $5,000 in materials and labor (e.g. assistants), and someone is willing to pay that price, there's nothing immoral about that transaction. And it doesn't matter if this is one individual or a corporation; barring deception or abuse of a monopolistic position, the "right" price is "what the market will bear."
In fact, one could suggest that the public have been a bunch of moochers who have taken advantage of free news for a decade or so, while newspapers struggle to figure out how to function in an online world. Someone is paying for the articles you read, so why not pull your own weight for a change, ya freeloader?
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Originally Posted by gaston
They will still be garnering advert revenue but not incurring any delivery costs.
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Unfortunately, online ad revenues are miniscule (again, about 10% of total revenues). This revenue source also collapsed in 2009 by 30%, by the way.
And while web is definitely cheaper than paper, it's nowhere near free. You need servers capable of handling millions of requests per hour, power and staff for those servers, a small army of web designers, lots of security, and most will need to maintain tons of data for file archives.
In short, newspapers simply cannot survive off of online ad revenues alone. This is why the industry is hemorrhaging -- and I suspect will turn more and more towards paywalls in order to survive.
On a side note, I notice that people tend to adore the idea of online ads subsidizing their newspapers, but many utterly detest the idea that book publishers would sell books for free but load them with ads. I don't think any specific individual is contradicting their positions, but public opinion certainly seems to be in conflict on this point. Hmmmm.