Why can you charge for a physical newspaper?

Here’s a question: why do people pay for a physical paper, when they refuse to pay for the same content online?

It’s because the internet has become known as the cheap publishing platform. And it is a cheap publishing platform. But that doesn’t mean that the cost of content production has changed.

This is a problem that will plague publishing as it goes forward.

In the physical world, people accept that in order to receive a physical good, they need to pony up the cash. In reality, the marginal cost of printing one more paper and putting in on your doorstep has to be insignificant. It can’t cost that much more to deliver a paper paper than it does to host the servers and pay the techs to deliver the content online.*

But the newspapers can’t defray those online costs because people expect web sites to be presented for free. That’s what they’re used to. That’s the model that’s been established.

I think those subscription fees are a much more important part of the newspaper model than they seem. And if not, they will become so once papers start moving entirely online, because the online advertising opportunities just aren’t the same as the ones in traditional publishing. (“Not yet,” an optimist would say).

So the trick, going forward, will be offering something online that consumers feel right paying for. If they don’t feel like paying for it is fair, then they won’t do it.

At the moment, I don’t know what that will be. But I imagine that something like that is going to have to happen, and unfortunately it probably can’t be “pay to remove the ads,” because the advertising revenue is important too.

It might work if you get the right balance of an audience that pays the subscription fee vs. the audience that puts up with the ads. But it’s probably not a good idea to rely on that in your business plan.

Should papers offer print-only content? No. People will not buy the print products anymore. That’s the whole problem here.

Should you wall the content off? No. Times Select is proof enough: not only will people not pay, but the content will be effectively cut off from the (important) criticism and discussion of the blogosphere. Columnitsts will be mad because their audience will be tiny.

Should you offer downloadable content to subscribers? High quality PDFs and HD video clips? Software demos? Maybe. I’m sure there are sites that are already doing this. But then people will download the content and re-upload it for others to get for free. We’re back to the honor system, which as we all know, works so well online.

What would you pay for online? Would you pay for a digital good, or would you only pay for a physical good? Would a donation system work, kind of like Radiohead’s latest album?

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* Disclaimer: I have no numbers to back this up. I’m also well aware that this argument only works at scale. If we’re talking a couple hundred or a couple thousand people, it’s WAY cheaper online. I just mean that if I ordered the New York Times tomorrow, I think it would show up as about a .00000000001 cent expense on their ledger.