(Note: This is more backstory than post. I’m putting this here so I can refer to it later, because I’m tired of reconstituting these arguments one conversation at a time.)
As the internet destroys the local advertising monopoly previously enjoyed by newspapers, newspaper people are talking about radically altering their current digital business models. One idea getting a lot of attention is that that iTunes Music Store points to a generalizable model for selling digital content. You can find endless examples of this belief by googling ‘iTunes newspapers’; as a reference, take David Lazurus’s piece iTunes proves newspapers can and should charge for online access, whose title neatly encapsulates the idea.
This belief is wrong, because iTunes relies on several unusual characteristics for its success, characteristics that are not general, and are in particular not applicable to news.
The first characteristic concerns music itself: people like to hear the same song more than once. There are dozens of songs you’d be happy to hear hundreds of times and hundreds of songs you’d be happy to hear dozens of times, but there are not many newspaper articles you’d read twice. This in turn means that music operates outside the classic intellectual property valuation problem: if I let you read something I write, and then try to charge you for it, I will fail, even if you liked it, because you don’t want to read it again. If I let you listen to a song I recorded, and then try to charge you for it, I may succeed, especially if you liked it, because you do want to listen to it again.
This desire to hear the same song more than once helps keep music from being interchangeable, or fungible, as Nick Carr points out. If I want to hear Weezer’s El Scorcho, then I’m not in the mood to accept substitutes.
The second characteristic is about music licensing. In particular, the two most obvious business models other than pay-per-track have been voided. Most forms of superdistribution have been rendered illegal, starting with Judge Patel’s 2001 injunction against Napster. The next year, the US Register of Copyrights instituted fee-per-user-per-song on music streamed over the internet, killing broadcast radio’s “play songs, run ads, pay ASCAP” arrangement as an option for internet distribution. With these two models rendered illegal, the labels have been able to insist on fee-per-song fees free of competition from alternatives.
Third, most popular music, and especially the back catalog, is owned by just four companies — Sony, EMI, Universal, and Warner. Like the major airlines, the business models and pricing of these companies move in synch. (This is not the same as formal collusion; with so few firms and their interests so similar, they can align their interests without acting in concert.) Because the music they control is not fungible, because they prefer to charge direct user fees, and because the alternative models have been limited or forbidden by legal or regulatory means, they have significant control of the music market as a whole.
People who want to hold iTunes up as a generalizable success often do some hand-waving about other competitive models from indie sites like eMusic, but the reality of the online music world is both simpler and more limited that this hand-waving would suggest: Mainstream music is tied to fee-per-track. iTunes Music Store competes with other fee-per-track services like Amazon, but faces little significant competition from other kinds of services.
Put another way, experimental business models exist, but aren’t being applied to popular music, and popular music isn’t being made available via experimental business models. eMusic has less than half the catalog iTunes has, and much of it from independent labels (partly from preference, partly because the four major labels won’t contract with them.) Fans of the iTunes model are right to point out that people use it because they find it more convenient, but they overlook the legal and regulatory hurdles put in place precisely to make other models less convenient (especially for law-abiding citizens.)
The resulting debate around IP law and the music business has principally focused on legitimacy, with “Thieves destroying legitimate businesses!” and “Luddites stifling innovation!” representing the poles of the conversation. In the context of business models for journalism, however, the question of legitimacy is irrelevant. Whether you like or loathe the major music labels, they are in a situation where they can sharply restrict distribution models they don’t like. Whatever you think of that in normative terms, it doesn’t describe any strategy available to newspapers, because, unlike iTunes, news can’t escape competition for alternate models of distribution.
Newspapers, even if every single one of them acted in collusion, cannot establish a monopoly on news. The main source of value for newspapers is reporting on events in the real world, and since those events can’t be copyrighted, and can be reported on by radio stations and television programs and non-profits and webloggers and twitterers and and and, news online will always be a competitive business in a way music is not.