More Morning Mumblings: Unit Economics of Content and Non-Profit Journalism

The same technology that is destroying the economics of content—and particularly of news–also brings unprecedented and nearly unlimited possibilities to informing society.  Every day, the gap between what is possible and what is commercially viable grows wider.  Picture two curves forever diverging beyond the horizon. 

As far as I know, this is sui generis.  Think about it:  Moore’s law does not drive the list price of the newest Pentium processor toward zero, nor do advances in solar technology make electricity free.  This unique state of affairs provides  the textbook construct for philanthropy:  non-profit journalism both defends against a threat and capitalizes on an opportunity.   

At the threat end of the spectrum lies the public good argument:  that a la national defense, market mechanisms alone will not produce the minimum threshhold of public interest journalism that society requires.   And the opportunity is that every day, the art of the possible in any given topic area, arcane as it may be (e.g. campaign finance in New Jersey) grows richer.  But as content floods the zone, the potential for monetizing this content becomes yet more remote.  It’s not surprising that when it comes to such information, society as a whole has a “much longer tail” than does any individual.  Welcome, philanthropists.

The root problem faced by newspapers is neither declining circulation nor spiraling ad revenue.  The real bugaboo of the newspaper biz is  unbundling.  Even though the article has always been the fundamental unit of news, the paper—the whole package (or at least the section)—has forever been the fundamental unit of profit.  Papers are profitable because it’s hard to get to the article about the football game without at least tripping over an ad for a new Chrysler.  (Well, a new Toyota).  Now that the article is available outside the package (and 80% of the time, without even being mediated by a home page),  the fundamental unit of profit has become the article.   This must be true, as Google has so decreed it–and before Congress, no less, through the mouth of Marissa Mayer:

Changing the basic unit of content consumption is a challenge, but also an opportunity. Treating the arrticle as the atomic unit of consumption online has several powerful consequences. When producing an article for online news, the publisher must assume that a reader may be viewing this article on its own, independent of the rest of the publication. To make an article effective in a standalone setting requires providing sufficient context for first-time readers, while clearly calling out the latest information for those following a story over time. It also requires a different approach to monetization: each individual article should be self-sustaining.

Thanks, Marissa.  We’ll get back to you on that cold fusion stuff, too. 

Yikes.    What she’s really saying is that the atomic unit of profit–not consumption–is the article.  She’s also saying, correctly I think, that  the same technology which turns articles into just so many lemonade stands makes yet more granular the fundamental unit of news.  In an unbundled world, the basic unit of news  now the topic, or even the fact. 

You get the picture:  as the unit of news chases the unit of profit upstream, monetization becomes ever more impossible.  Only a handful of articles work or will ever work as standalone p&l’s.  But by how many orders of magnitude does that problem expand you’re trying to monetize a topic?  Or a fact?

Again, I say:  welcome, philanthropists.

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One Response to More Morning Mumblings: Unit Economics of Content and Non-Profit Journalism

  1. Cederash says:

    Добавил в закладки. Теперь буду почаще читать!

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