By King Kaufman: What is it about news and newspapers that makes big financial guys, CEOs and major investors, forget the most basic laws of economics, the kinds of things any kid with a lemonade stand gets implicitly?
In a long New York Times Magazine piece about Philadelphia newspapers, Michael Sokolove, a former reporter for both the Inquirer and the Daily News, profiles Brian Tierney, the leader of the ownership group for the newspapers and their Web site, Philly.com. Sokolove writes:
As soon as possible, he wants to begin charging for online content. As he told me this, he banged a bagel on a conference table, which sounded like a rock as it hit. "You hear that?" This bagel stinks, he said. "It's got the same consistency inside and out, but if you went down to our cafeteria, it costs like $1.25. That's what people pay for stuff like this, so you mean to tell me I can't get them to pay that for online access to all the incredible stuff in The Inquirer and Daily News online? People who say that all this content wants to be free aren't paying talented people to create it."
Gah. Tierney and his co-workers being willing to pay a buck and quarter for that lousy bagel is an illustration of why people won't pay for news online.
Hungry, boss? Why not go here?
Putting aside that he made an unfortunately apt comparison between a stale bagel and his newspapers, Tierney paid a buck and a quarter for that rock-hard bagel because that's what was available in the cafeteria. The cafeteria is selling scarcity, just like newspapers used to do. The lesson here is supply and demand.
The cafeteria knows that when a worker in an office building is hungry between meals, she often just wants to get a quick bite and get back to work. She'll settle for the crap in the cafeteria because she can't afford the time it takes to ride the elevator down to the street, walk to the nearby cafe, buy something and reverse the trip. Time is a cost too.
Tierney paid $1.25 for that bagel because he didn't have what he considered a better option. There are plenty of options for getting news without buying the Philadelphia Inquirer or Daily News or visiting Philly.com.
But here's the really crazy part of his bagel theory: He's arguing that people will pay for quality by pointing out that he was willing to settle for crap!
We journalists love this game, thinking that our golden pearls of information are worth paying for, that people will pony up to get their news from trained, trusted professionals, rather than settling for a warmed-over version from aggregators and bloggers and summarizers and second-rate online startups. The problem is, there's no evidence of this, and it doesn't make any sense given what people do in the actual world.
There is, I am guessing, no free option for bagels around Tierney's office. But let's say there were. Let's say dozens of little stands were giving bagels away all around the office, in the hallways and down by the copier, just everywhere. And one stand, the one with the best bagels, was selling them.
Not many people would pay to get a bagel at that one stand, even though it'd be a better bagel than any of the free ones. It's just a bagel. Good enough is good enough.
The news is a bagel.
In the real, non-hypothetical world, Tierney could have made the effort, paid the price in time as well as money to hit the streets and find a great bagel somewhere. There must be one in Philly. There are plenty of other great food options there too. But all he needed to do was fill a basic need. He was hungry, he got a crappy bagel. Good enough. Back to work.
Let's stipulate that Philly.com offers better quality content than any other source of Philadelphia news. That makes Philly.com the equivalent of that good bagel available somewhere in the neighborhood of Tierney's office. Local Philly blogs, aggregators, TV and radio stations and their Web sites and the like are the equivalent of the cafeteria bagel.
Tierney settled for the easier, cheaper, lower quality version, and he wants us to believe that this somehow proves people will be willing to pay for the harder, more expensive, higher quality version when it comes to news.
So the manager of the cafeteria has a better understanding of economics than the lead investor of the company. But don't worry. As soon as Philly.com starts charging for content, Tierney will learn.