It’s funny how I keep getting to Matt Yglesias’s left. A few days ago, he speculated about whether local news might revive on the web by pursuing a paywall strategy:
Local news outlets face competition, of course. But outside of the biggest cities, it’s competition from other kinds of news outlets, not competition from other people covering the same stories. Someone might prefer to read about sports or watch an old episode of The Sopranos or check out some contrarian arguments on Slate rather than read coverage of the local town council race. But if someone does want to read coverage of the town council race, he’s likely to find that there aren’t dozens of different websites covering it. That’s the kind of terrain where “pay me money or you don’t get to read” becomes a very promising business model. Now, perhaps it’s doomed anyway. If people don’t care about local news (which would be a shame) then covering local news will be a terrible business. But it seems to me that people do care about local news. And in the local news domain, the fundamentals are good for a pay-to-play business model over the long term.
Basically, what Yglesias is saying is that local news providers have an effective monopoly, and so can charge well above the marginal cost for their product. But that doesn’t mean demand is high enough to support the product. Local newspapers were devastated well before the bigger papers started to go under. The exceptions have been mostly extremely small papers that can monopolize extremely local advertisers. So the only way that local news, which has been devastated in the world of print, recovers on the web is if either people are willing to pay more for a website than they were for a paper, which strikes me as unlikely; or if local advertisers are willing to pay more for web ads than they would be in a local paper, which strikes me as unlikely; or if the costs of production and distribution for an on-line news service are so much lower that the business is viable at a lower revenue run-rate. Which is actually possible, particularly if you imagine a franchise model where much of the work is done centrally and cloned and all that the local news people are doing is filing copy. But it still sounds really dicey to me.
It makes much more sense to me to imagine local news being bundled with some other products that people are willing to pay for, rather than being sold separately. So, assuming we think local news is a public service – and I think Yglesias and I do both think that – then why not mandate precisely that? Require that last-mile internet service providers provide local news in their service area. This is precisely what we do with broadcast television – in exchange for the right to public spectrum, the networks have to broadcast news. Why wouldn’t a similar regulation make sense in the age of the internet, requiring regulated local monopolies – which is what last-mile providers are – to spend a tiny fraction of gross revenue on a local news service?