From the Roundtable: Intellectual property has its price

The Columbia Daily Tribune’s recent announcement that it will start charging people to read articles on its website has generated a tempest in the online community.
Long anticipated, this Internet paywall will be watched closely from afar as well as right here at MU’s School of Journalism, the Reynolds Journalism Institute and by the newspaper’s print and electronic competitors. At stake is the future of the traditional printed newspaper and other media outlets from broadcast radio, television and the networks to satellite, cable and wireline telephony.
I remember the days of panic when the original Internet boom was in full swing about a dozen years ago. Media outlets were fearful of being left behind, and the operative phrase was, “You’ve got to have an Internet strategy.” This was a heady time for consultants and vendors of hardware, software, connectivity and realms that were invented as we went along.
With too much careless leaping before looking, the newspaper industry failed to anticipate how the transfer of intellectual property (information and advertising) from a manufactured print product to electronic distribution via the Internet would come to threaten its very existence.
Every media outlet right now is poised at the crossroads of survival because of the Internet. Rarely considered in the recent local dust-up about charging for Internet-delivered content are issues ripe for re-examination. They include consumer motivation, sales and distribution mechanisms, advertising and marketing.
Columbia is obviously a very competitive mass-media environment, with an overarching number of entities scrapping for pieces of a relatively inelastic marketing pie. Financial information is typically guarded because most of the players are private, closely held companies. Sometimes we get a delicious morsel.
Twenty four years ago, the Tribune Publishing Co. opened its financial door a little when it applied to the Boone County Industrial Development Authority for bonds totaling $4.6 million to finance a new printing plant.
The June 8, 1986, article revealed that the newspaper’s 1985 operating revenue in rounded numbers was $5 million in 1985 = $10.1 million today and yielded a net income of $150,000 in 1985 = $305,000 today representing an operating margin of 2.96 percent. The article went on to discuss Columbia’s highly competitive media environment and cited the Tribune’s above-industry-average expenditure for its core intellectual properties — its local news and sports departments.
What’s the situation today? Market-wide developments during the past 25 years have included substantial retail developments, including the Columbia Mall, a trio of Walmart supercenters and numerous big-box stores. Although there have been heady advances in total retail sales and sales tax receipts, the monetary benefit to many media concerns has been rather marginal.
The dark side of this growth is that it really represents the consolidation of retail activity that has actually reduced the number of viable clients media outlets can depend on for support.
Newspapers must ache these days when they look over their lists of lost clients. Although the largest retailers furnish colorful pre-print inserts representing a reliable revenue stream, newspaper proprietors might fear that an outside party will come along to consolidate these circulars in a bundle and toss them independently. Other areas of lost retail activity include automotive (local car and truck dealers do relatively little newspaper advertising), hundreds of businesses in various malls and shopping centers and enterprises the big-box emporiums have either marginalized or put out of business all together. And where have all the furniture stores gone?
There’s also the decline in revenue from classified advertising to consider.
When newspapers went online, they expected advertisers to fill websites as readily as they had contracted for acres of display ads in the regular print edition and the inserts they supplied more recently. When most of us bought a computer for our entry to the Internet, we equated it to buying a radio and TV set, where advertising seen or heard funded the operation. Conditioned to paying for telephone, cable or satellite service, we easily rationalized paying the Internet service provider’s monthly fee when that came along.
Now newspapers want to charge a fee to view their intellectual property online via the Internet when they’ve been foolishly giving it away for years! Although the Tribune should not have put its precious intellectual property online for free to begin with, that’s in their past. Now they must catch up to capture lost revenue. In the highly competitive local media marketplace, it’s going to be a struggle.
Hungry competitors are already lining up. Sleepers in the lot could be the area’s three commercial television stations. Maybe new players will appear. For the Tribune, this bold step could transfer a chunk of the newspaper’s sustenance from advertisers to its subscribers. If anything close to 20,000 subscribe to the Internet product at $96 per year, the grand total, $1.92 million in newfound money, would be a nice fillip of support and something each and every one of us on both sides of the media wall should pay close attention to.