Can Apple Save the Publishing Industry?

9 February 2009 by Matthew Gertner - Category: Rants and Ruminations

I’ve read the Economist religiously for over 15 years. For many of those years I bought a copy every week at the newsstand, and I’ve subscribed for the past couple of years. A few weeks ago, I let my subscription lapse. The reason is a web service-cum-iPhone application called Instapaper. Dragging their bookmarklet into your browser’s bookmark bar adds a button labeled “Read Later”. Click this button on any webpage, and it is added to your reading list. Sync to the iPhone app, and the article is available for reading on your mobile phone.

This approach has two particularly appealing aspects. First of all, the articles are formatted for easy reading on a small screen. Images, sidebars and the like are stripped off, leaving the raw text in a nice big font. Secondly, the text is stored on Instapaper’s server and downloaded to your phone when you sync. This means that you don’t need a live net connection to access it, nor do you have to put up with MobileSafari’s slow loading times and inadequate caching behavior. The latter is particularly irksome because I don’t always read an article in its entirety in one sitting. With Instapaper, my reading list is accessible at the click of a button, and when I select an item that I was already reading, it pops up immediately in exactly the spot where I left off.

I did a bit of hacking on a very basic Firefox extension called Instabutton that adds a toolbar button (rather than a bookmarklet) with the “Read Later” functionality described above. So now I have a context menu item in Firefox called “Instapaper” that I can select for any link on a webpage. When the Economist comes out on Friday, I go to their website and load up the table of contents of the new issue. With a click, select, click, select, I cruise through the articles picking the ones that catch my eye. The whole process takes a few minutes. The Economist erudite prose sits alongside various other publications and blogs in my Instapaper reading list, meaning that I have access to a broad range of material whenever I have my iPhone with me. Which is always.

With all the morbid commentary about the imminent death of the publishing industry, my first reaction was to see this as further proof that traditional newspapers and magazines are doomed. The few remaining advantages that print has to offer — convenience and portability — are vanishing with the advent of portable reading devices (something I predicted five years ago). Now that I can get my weekly Economist fix in my pocket for free, why would I waste my money on dead trees?

My second reaction was to see this as a huge business opportunity for publishers and for enterprising software developers looking to attach combine an Instapaper-like app with an iTunes-like payment model. This is particularly easy to imagine in the specific case of Apple and the iPhone. Naturally publishers would have to restrict free access to their content in some way, but assuming they do, wouldn’t readers be willing to pay a fee for the great user experience I now enjoy, in the same way they’ve shelled out billions for songs on iTunes thanks to the full service convenience of Apple’s service?

Not according to Clay Shirky they won’t. In a post entitled “Why Small Payments Won’t Save Publishers“, he argues that publishers will not be able to save themselves by charging for their content. (And he helpfully links to a number of articles in the mainstream press that outline ideas very similar to my own, if only to debunk them.) Clay’s post did not convince me that the charging for textual content is a non-starter, however. Quite the contrary, the piece struck me as ideal fodder for a merciless fisking.

As background for his argument, Clay first contends that the term “micropayment” is misplaced in describing a putative paid content system, citing an upper limit for payments that are truly micro that I suppose he extracted from somewhere in the nether regions of his anatomy. Well, who cares? Whether we choose to call them micropayments or floozlebeezies has no material impact on the potential merits of such a system.

His second piece of background is that small payments won’t fly because users don’t want them:

The other key piece of background isn’t about small payments themselves, but about the conversation. Such systems solve no problem the user has, and offer no service we want. As a result, conversations about small payments take place entirely among content providers, never involving us, the people who will ostensibly be funding these transactions.

The implication is that paid content can only succeed if it is actively sought by us, the “users”. Perhaps I’m missing something, but in this context I don’t see any difference between paying for content and paying for anything else. Carmakers charge for cars because they need revenues to pay for capital, labor and to provide value to their shareholders. Car buyers aren’t clamoring to pay for vehicles, in fact I’m quite sure that few indeed would say no to a free SUV or Prius. Publishers have costs and shareholders as well, and it is quite natural that they would like to charge for their wares whether their customers want to pay for them or not.

As far as the analogy to successful paid content systems like iTunes is concerned, Clay rejects it by claiming that these systems have thrived only because they rely on “closed systems” that give consumers no other choice than to pay for a particular good (ringtones, online avatars or whatever). Regarding iTunes, he states that:

Apple’s ITMS (iTunes Music Store) is perhaps the most interesting example. People are not paying for music on ITMS because we have decided that fee-per-track is the model we prefer, but because there is no market in which commercial alternatives can be explored. Everything from Napster to online radio has been crippled or killed by fiat; small payments survive in the absence of a market for other legal options.

Potentially convincing if it were true, but the evidence suggest that it isn’t. Rhapsody, for example, is an all-you-can-eat music subscription service that has some passionate adherents. In iTunes I can choose from dozens of free online radio stations offering music. If iTunes has succeeded with a pay-per-download model, this isn’t due to lack of competition. It is because listeners consider the product and user experience to be superior to alternatives.

The meat of Clay’s argument comes in the last few paragraphs:

Meanwhile, back in the real world, the media business is being turned upside down by our new freedoms and our new roles. We’re not just readers anymore, or listeners or viewers. We’re not customers and we’re certainly not consumers. We’re users. We don’t consume content, we use it, and mostly what we use it for is to support our conversations with one another, because we’re media outlets now too. When I am talking about some event that just happened, whether it’s an earthquake or a basketball game, whether the conversation is in email or Facebook or Twitter, I want to link to what I’m talking about, and I want my friends to be able to read it easily, and to share it with their friends.

In other words, articles hidden behind a paywall will fail to attract readers because we can’t link to them or share them with our friends. Searchability and linkability are certainly important, and publications that charge for articles currently tend to address this by offering the first few paragraphs of an article for free so that it can be linked to and crawled by search engines. But still, the point is valid. If heaping servings of free content are only a google away, getting people to pay for your content is going to be a daunting challenge.

One thing I don’t like about this line of reasoning is that it implies that all content is basically created equal. Any plan to charge for articles rests on the inherent assumption that that content has a particular appeal that can’t be satisfied elsewhere for free. If that isn’t true, then Clay is absolutely right, and no payment system for textual content will ever make it off the ground. It beggars belief, however, that readers will abandon well-written, well-researched journalism and commentary written by professionals for amateur blog posts rather than pony up cash for the former. The reason print media is now struggling is primarily due to competition from the very same publications’ free websites, not from the amateur blogosphere. Otherwise, why are folks willing to pay for the latest Bruce Springsteen or Madonna album when there is plenty of free amateur music from wannabe rockstars available online?

Successful implementation of a payment system for online articles will be tricky. Proponents will have to get a lot of things right, just as numerous music services came and went until iTunes found the right balance of inobtrusive (and now non-existent) DRM, convenience of purchasing and smooth integration with portable listening devices. It will also require that a critical mass of content comes on board (another point I made a few years back). Publishers will start by dipping their toe into the waters of paid content, but when the proverbial tipping point is reached, and finding quality content for free is no longer trivially easy, they will dive in en masse.

It won’t be easy, and it will take a while to get right. Considering the surprising success of the iPhone as a reading device, coupled with its unique track record of confecting the right user experience and its existing content distribution and payment systems, Apple is a leading contender to be the first to market with a viable offering. Amazon, who is making headway in this market already with the Kindle, is another strong candidate. (Maybe I should mention that I own shares in both these companies, but then I only bought them because I believe them to be so well-situated to take advantage of ongoing shift to paid digital media.)

Rather than being a lost cause, payment for online articles has an air of inevitability. Clay underlines this point himself when he states, quite correctly, that “if small payment systems won’t save existing publishers in their current form, there might not be a way to save existing publishers in their current form.” Can you imagine a world without the well-crafted prose of the Economist or New York Times, without the type of informed journalism that depends on the deployment of trained professionals across the globe? I certainly can’t. And this alone is sufficient reason to believe that, one way or the other, we’ll be paying for much of what we read online at some point in the not so distant future.

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  • Clay Shirky

    It beggars belief, however, that readers will abandon well-written, well-researched journalism and commentary written by professionals for amateur blog posts rather than pony up cash for the former.

    How do you explain Wikipedia vs. Britannica then? Isn’t that exactly what happened? If your argument is form personal disbelief, it may just be that you have beliefs that don’t adequately predict user behavior.

    Can you imagine a world without the well-crafted prose of the Economist or New York Times, without the type of informed journalism that depends on the deployment of trained professionals across the globe?

    I can’t imagine a world where reporters aren’t rewarded for reporting. I can certainly imagine a world where the current publishers are no longer the ones doing the rewarding.

    This “can you imagine” line suggests again that you don’t have any working examples to fall back on, and are adopting the Bril/Isaacson Hail Mary play of “But you’d miss us if we went out of business!” Only the market will decide that, and I can’t see much good news for small payments in the current market.

  • Brad Heintz

    You say that: “It beggars belief, however, that readers will abandon well-written, well-researched journalism and commentary written by professionals for amateur blog posts rather than pony up cash for the former.”

    Even when there’s cost on both sides of the equation, it’s not clear to me that quality enters into most user’s decisions. I see at least 20 times more people reading the New York Post than the New York Times on any given day, despite the fact that the Post is all about partisan hackery and celebrity drama. And would you guess that The Economist or People Magazine has more subscribers? Which would you describe as higher quality?

    The forces that you describe at work here, such as the desire for a quality reading experience, are real but small (in comparison to the forces of baser human nature) and I don’t see them bringing a micropayments or paid content model anywhere near a tipping point for a majority of publications, high-quality or otherwise.

  • Steve Safran

    There are certainly well-crafted arguments on both sides of this timely subject. The problem I see here is that news isn’t music.

    Forget the “news is more important” matter for a moment. Look simply at logistics. Apple only needed to get four major labels onboard to change the industry. Supposing you had an “iTunes of Music” (let’s tie in today’s Kindle announcement and say that Amazon powered it). You’d need every TV station and newspaper in the country to agree to participate. Won’t happen. But even if it did, then you’d have – what – people buying by the story? Surely that would have ethical implications for the Capital J Journalists. (I have a hit story! It went platinum!)

    I don’t see how the meme does anything other than gives us a diversion from the issue of finding new ways of supporting ourselves. There is a sad thinning going on here, but the audience simply doesn’t see the content the way we do.

    It’s a good argument. But news isn’t music. Yes, I want to hear Springsteen sing Springsteen. But when you have the same copy proliferating across every site, if I can get Springsteen in 10 other places, I’ll go there.

    We can debate the relative importance of news and music – but the number of news products we had to begin with was driven by ad money and not necessarily audience demand.

  • Matthew Gertner


    How do you explain Wikipedia vs. Britannica then? Isn’t that exactly what happened?

    Creating an encyclopedia and writing journalism are not equivalent. Wikipedia is in large part the product of aggregating and summarizing existing information sources (although there are some primary sources as well, of course). Good journalism requires a continuous stream of cash to fund boots on the ground around the world.

    If your argument is form personal disbelief, it may just be that you have beliefs that don’t adequately predict user behavior.

    I think I produced quite a few arguments and examples that are based on more than personal disbelief. At the same time, neither of us is producing any real empirical evidence for our point of view. Correctly predicting the future relies in large part on having the right intuitions about people’s behavior. Only time will tell for sure, but for what it’s worth I was ranting on about how people would be paying a per-track fee for music long before iTunes, and I have a warm glow of self-satisfaction about getting that one right.

    I can’t imagine a world where reporters aren’t rewarded for reporting. I can certainly imagine a world where the current publishers are no longer the ones doing the rewarding.

    Whether current publishers are reaping the benefits or not, the rewards have to come from somewhere. If they don’t come from people paying for content, what do you envision?

    This “can you imagine” line suggests again that you don’t have any working examples to fall back on, and are adopting the Bril/Isaacson Hail Mary play of “But you’d miss us if we went out of business!” Only the market will decide that, and I can’t see much good news for small payments in the current market.

    We obviously won’t have evidence that people will pay a la carte for online text until we have that evidence. But your argument that all efforts so far have failed so all future efforts will fail as well isn’t any more convincing. People fail many times in most ambitious efforts before someone gets it right.

    Looking again at the music industry, I can’t tell you how many times I heard from intelligent industry observers that no one would ever pay for music online. They continued to insist that this was the case until people started paying. This is certainly a “working example”, and the arguments you used to discredit it didn’t ring true to me.

  • deeharvey

    I can imagine a world where reporters don’t get paid for reporting. It’s already the case that a lot of reporters, who are ostensibly paid for reporting, spend their time trawling through press releases and wire articles.

    Of course Clay, you said “rewarded” rather than “paid”, but the only reward I can think of that will motivate people to put in the work required to become good reporter is money. People can’t afford to spend the majority of their time doing something that doesn’t help them pay the rent and buy food.

  • Matthew Gertner


    Two things:

    1) Yes, People magazine has higher circulation than the Economist, but the latter still does pretty well (1.3 million/week). In the same vein, people still pay for HBO to see great shows like the Sopranos, the Wire and Dexter even though they are plenty of schlocky reality shows on basic cable.

    2) People magazine is a quality publication on its own terms. It has professional writers and photographers, access to the big stars, etc. Just because it isn’t as high brow as the Economist, that doesn’t mean that people will be happy to read any old crap if we ask them to pay for the good stuff.

  • Matthew Gertner


    Fair point about the structure of the music industry vs. publishing. That’s probably one of the reasons why they are taking longer to make the shift to paid online content. But the idea that there are ethical consequences to paying by the story isn’t entirely convincing. Journalists compete today for fame, Pulitzers and better, higher paying positions.

    And sure, the shift online may result in a culling of the herd for publishers. But that doesn’t mean that the whole industry is going to come crumbling down.

  • Steve Safran

    Matthew – agreed that the whole industry isn’t going to come crashing down. If anything, I think we’re going to see a strengthening. Is that bad?

    I don’t think anyone has come up with *the* convincing argument yet. That’s what makes this so interesting.

  • Matthew Gertner

    Sure, we’re all just guessing at this point. But it’s fun to go on the record. If you’re right, you can crow about it later. And if you’re not, no one will remember anyway.

  • dean wermer

    Part of your post’s argument stems from the conceit that there is something special about “journalists”, implying that they possess some unique attributes that imbue their writings with special value. If anything, the net revolution has shown that so-called amateurs, with expert knowledge of particular areas, or with more general knowledge and excellent research and writing skills, are just as good at producing valuable content than “professional journalists”. There isn’t a section in the New York Times, for instance, that I could not replicate (with superior content) with just one to three feeds in my RSS feed reader.
    As for competition to iTunes, there are no all-you-can-eat, download at will with no DRM, full catalog, non-streaming options. Rhapsody isn’t such a competitor. The music business could create such a competitor, but hasn’t. The small number of mp3 purchases in relation to the total amount of music currently being consumed is evidence of a mass FAIL, not success.
    Finally, yes I am willing to pay for a car purchase, but I won’t purchase a car in any way the manufacturer sees fit to offer me the car. If I went to a dealer and he offered to sell me a new model for $500 for the wheels, $250/month for the engine, $4,000 for the body per $10K/miles, $600 for the windshield in two easy monthly payments, etc., I, of course, would not buy. The demand side of the equation, including how the consumer wants to pay, is extremely important.

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  • Mike Masnick


    We’ve debated this same issue in the past when it comes to music, and I’m going to disagree with you here as well.

    The basic economics at play suggest it’s unworkable. It’s not because the content is considered a commodity, but because the content itself is infinitely reproduceable. It makes little mental sense for people to pay for it.

    There are tons of other models for compensation, and if a bunch of newspapers go to a micropayment model, it’ll just open the market *wide* for smarter competitors to offer a better product that doesn’t use that model.

    I’m sure some entrepreneurs are greedily drooling over the idea.

  • Matthew Gertner

    As you know, I’m partial to the “small payments” model (I’d be interested to know how you explain the success of iTunes). But okay, do we have any hypotheses about alternatives other than simply giving away everything for free?

  • Craig B.

    Subscription model (subscribe to a single author/journalist, or to a publisher of many): It’s not doing too well, but it won’t be dying out completely.

    Free, Ad-supported model: also not doing too well in this depressed economy, but lots of blogs survive on it.

    In class, I don’t have time to add more.

  • Justin Hughes

    The argument here really hinges on what data constitutes a product vs. a commodity. You’re right, I pay for ITMS because of it’s DRM over my ipod, single song purchasing, and its ease-of-use. But I also am willing to pay for ITMS because it a product — it has a unique set of features that isn’t to be found elsewhere.

    Products inherently form closed markets all by themselves. The price of Armani suits doesn’t drop in response to further competition from Zegna, because Armani has a perceived value of uniqueness all its own. It’s my further assertion that all art is essentially a product, and hence forms a closed market. Hence, (and here’s where I disagree with Clay) I think that Apple’s product would have survived, even without the RIAA locking down the market.**

    That being said, Matt, I disagree with you that Apple’s model can be applied to the newspaper industry — entirely. Most editorial work is a hackneyed commodity. For the most part, I really don’t care whether I get my news from Reuters, a Trib newspaper, or elsewhere. The stuff is like tinfoil — a penny a sheet.

    This, combined with the "planned for" loss of classified ad revenue to companies like Career Builder & (disclaimer: I work for, a Trib owned company), is really what’s killing the industry.

    Now, I think that your argument holds up reasonably well with publications like the Economist that truly provide journalism as an art or product. I would gladly pay for some of the writing that the Economist offers through my phone — the question is, would each article holds up well enough as a product to reconsider purchasing each time? I don’t know. At least with getting a Muse song off of ITMS, I know that I’ve already had a chance to sample the band elsewhere. It might be too great of a hurdle for some, as it would constantly put them back into the deliberation mentality (

    In this instance, and to Clay’s point, I think that the subscription model will still survive; however, it probably (and likely unfortunately for me, a subscriber) won’t be the Economist that will be providing the service. It seems logical to us, who regularly consume media in this new way that a stalwart publication like the Economist would provide this service — but as we’ve seen with disruptive technology before ( it’ll likely be some other newcomer that arrives on the scene that will provide some form of subscription editorial product.

    ** Though, a number of years from now, I think this will change. The production of MP3s is going to turn electronic-music into a commodity. MP3s will become free and publicly accessible, and bands will go back to making their money off of to live performances — where I think the real art-magic happens.

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  • jayackroyd

    I think these discussions have to start with the recognition of a point Michael Kinsley (who has some experience with payment models for internet content) makes today in the NYT.

    Newspaper readers have never paid for the content (words and photos). What they have paid for is the paper that content is printed on. A week of The Washington Post weighs about eight pounds and costs $1.81 for new subscribers, home-delivered. With newsprint (that’s the paper, not the ink) costing around $750 a metric ton, or 34 cents a pound, Post subscribers are getting almost a dollar’s worth of paper free every week — not to mention the ink, the delivery, etc. The Times is more svelte and more expensive. It might even have a viable business model if it could sell the paper with nothing written on it.

    There is no viable model for paying for content when people have never paid for content.

    Now, what might be viable is to charge people for the convenience of doing what you do–load up news stories on your iphone. Charging for that subscription capability might be possible. But for the content alone, there is no model that has worked for anything that is of general public interest.

  • Matthew Gertner

    I really object to arguments along the lines of “people have never paid for content so they never will”. Every new business model finds a way to extract money from customers that has never succeeded before. Otherwise it wouldn’t be new. Since the advent of the internet we’ve seen a lot of things that have never come before, and we’re bound to see a lot more.

    That said, Kinsley makes several valid points. A lot of newspapers are probably going to go bust because they don’t occupy a valuable niche in a world where every paper is instantly available to everyone worldwide (and where they compete with blogs, independent journalists, etc.). My point is simply that for those that do survive, there are some use cases where readers will be willing to make small payments for content (like my Economist example).

  • Guy Mac

    It will work for books but not for news articles.

    Because finding alternatives to the Economist will be easy. Creating a really good novel or song track will always require a lot more skill than summarizing the news or opining about the state of the world.

  • Mike Masnick

    But okay, do we have any hypotheses about alternatives other than simply giving away everything for free?

    Hypothesis A: your premise is wrong. Newspapers aren’t “giving away everything for free.”

    They’re giving away *content* for free, and then using that to grab the *attention* of a community, and then turning around and selling that *attention*.

    The problem is that they’re doing a pisspoor job of actually keeping that communities attention, which makes it a lot more difficult to sell.

  • Matthew Gertner

    Well the big question is whether they will be able to finance their operations just from selling “attention”. Some online publication will, because mostly they just reprint news from the big players (“The Wall Street Journal is reporting…”). But personally I don’t believe that this will be enough to pay for real journalism.

    I’ve been thinking about this some more in light of all the discussion in the past couple of days. There are a few different use cases, and they probably require different business models. When I go to Techmeme and pull up some interesting looking articles in the morning, I’m certainly not going to want to be “nickled-and-dimed” into paying a fee for each one. There needs to be a way for me to get a blanket subscription to a wide range of sites, or most sites will need to get by on “attention”, a few premium offerings or whatever (probably some combination thereof).

    But there are also use cases, like my reading of the Economist (and generally for high-quality, high-budget publications) where I think small payments for articles, with the possibility to buy a full issue or monthly/yearly subscription at a discount is the way to go. Say $.50/article, $1/issue, $5/month or $20/year. I’d go ahead and get a year of my favorite 3-4 publications in this model and buy an article from others now and then if the payment mechanism were seamless enough.

  • Steve Safran

    Matthew – a thoughtful piece (and more history with numbers) is at the Nieman Lab site.

    Don’t know if your spam filter catches posts with URLs, so I’ve put it in the Website field of this entry. Click on my name to go there. Or take out the obvious junk below:

    niemanlab (dot ) org/2009/02/will-paid-content-work-two-cautionary-tales-from-2004/

  • Matthew Gertner

    It’s an interesting read, but it suffers from the same weaknesses as all the other arguments that cite failed experiments in the past as evidence that payments for online articles will never work.

    Nick Carr has posted an excellent counterpoint explaining why this logic doesn’t hold up: Of course, in a world where virtually everyone is free, the few guys who decide to go behind the paywall are going to face a massive reader exodus. But this can’t go on forever, a point that is made increasingly clear by the very woes of the publishing industry that have brought this debate once again to the fore.

    It’s basically a variation of the Tragedy of the Commons. As long as the vast majority publications are available for free online, it’s very hard not to be. Commercial imperatives will eventually kick in, however, at which point the systems that failed in the past will have a much better chance of succeeding.

  • Andreas

    Matthew, as a writer for The Economist AND blogger AND swamped information worker hoping to become more productive, I want to a) throw a tomato at you and b) give you a fist bump.

    The tomato is easily ducked: I feel obliged to throw it because you dropped our subscription.

    The fist bump is for what sounds like a fantastic tip to make myself a more efficient reader, via Instapaper.

    a) Thank You to all of you commenters for using The Economist as THE self-evident example for “well-written”.
    b) Just know that we who are in this particular sausage factory are not the slightest bit glib about this and do not take your verdict for granted….

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  • Matthew Gertner


    Well it’s a darn sight better than throwing a fist at me and giving me a tomato bump.

    I’d gladly pay for the Economist, but not if I am paying for extra paper and inconvenience. Anyway, I’m sure my blog post made it amply clear that I, for one, think we’ll be paying for quality online content soon enough.

  • Robert Kaiser

    This actually is an interesting trend, but I think closed-wall gardens like iTunes are not really the solution to an open world.
    Models like the one from sound pretty interesting to me though, and they seem to work for them pretty well: Primary content (i.e. the longer articles and the weekly summaries, not the the few-line pointer to press releases or something reported by other sources) is subscriber-only for a week and becomes completely free afterwards – and subscribers can generate links to still-hidden content to hand to their friends so those can get access for single articles (but those can be shut down in the case of misuse). People who really like that content are willing to subscribe to get it when it’s hot, and as “nothing is as old as the daily news from yesterday” (old print media saying), the old content is free and searchable, so people see how good the quality of the medium is.

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  • Steven

    How did you hack the instabutton extension so that you could use it in the context menu?

  • Matthew Gertner

    I keep meaning to package and post my version of the extension. I’ll post a new entry on this blog when/if I do so.