Why iTunes is not a workable model for the newspaper business

(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.

26 Responses to “Why iTunes is not a workable model for the newspaper business”

  1. Toon me het geld; wat u erover op sites vond» RethinkingMedia Says:

    [...] Augmented Reality Issue Turns Old Media New, Kind Of Geld verdienen met augmented reality? Why iTunes is not a workable model for the newspaper business ,,iTunes relies on several unusual characteristics for its success, characteristics that are not [...]

  2. Clay Shirky: Let a thousand flowers bloom to replace newspapers; don’t build a paywall around a public good » Nieman Journalism Lab Says:

    [...] journalism in a world of declining newspapers. Even for those of us familiar with his ideas, he brought in a few new wrinkles, which have already been the subject of commentary around the [...]

  3. Les paywalls n’ont aucune chance. Explication n°876 | Owni.fr Says:

    [...] Plus ça rate, plus on a de chances que ça marche. Des archives payantes aux abonnements au pay-as-you-read, le manque d’imagination des managers de presse en ligne est frappant. Tout le monde cherche à copier iTunes, alors même qu’un article n’a pas grand chose à voir avec un morceau. [...]

  4. Newspapers and Google News | Screenzine Says:

    [...] Clay Shirky, who wrote the influential piece Newspapers and the Unthinkable, doesn’t believe an iTunes could work for newspapers. But actually there is already an iTunes for newspapers. It’s [...]

  5. Revolutions in the media economy (1) – the context of crisis | David Campbell -- Photography, Multimedia, Politics Says:

    [...] news stories might be a better approach than a comprehensive pay wall then — aside from questioning the idea there can be an ‘iTunes for news’ — we should ask if this is a good scenario: would journalists like their proprietors to judge [...]

  6. Why is Clay Shirky singing the wrong tune? « clikserv.com Says:

    [...] his blog, Prof. Shirky claims that micropayments would not work for newspapers, similar to the iTunes-music [...]

  7. The Digital Wing » Blog Archive » Five ways paid content can work Says:

    [...] – forget charging for breaking news or news headlines. The audience simply won’t value it enough to pay when they can find another site that will [...]

  8. Should news site charge for ad-free experience | Save the Media Says:

    [...] remember the main complaint about the iTunes idea when it first surfaced a while back was that a news story isn’t something people want to read again and again the way they might replay their favorite song. I think Jackie’s point is that it could work [...]

  9. Newspaper Dons Collude to Charge for Content » Mocha Bianca - Even Better Than the Real Thing Says:

    [...] as Clay Shirky points out, news­pa­pers can’t estab­lish a monop­oly on the news, even if every sin­gle one of them acts in [...]

  10. Newspapers Still Determined to Charge for Online Content « Metaholic Musings Says:

    [...] as Clay Shirky points out, newspapers can’t establish a monopoly on the news, even if every single one of them acts in [...]

  11. Why is Clay Shirky singing the wrong tune? « Save Our Newspapers Says:

    [...] his blog, Prof. Shirky claims that micropayments would not work for newspapers, similar to the iTunes-music [...]

  12. Newspapers Still Colluding to Charge for Content Says:

    [...] as Clay Shirky points out, newspapers can’t establish a monopoly on the news, even if every single one of them acts in [...]

  13. TheTradingReport » Blog Archive » links for 2009-05-09 Says:

    [...] Clay Shirky: Why iTunes is not a workable model for the newspaper business [...]

  14. links for 2009-05-09 | Bailout and Financial Crisis News Says:

    [...] Clay Shirky: Why iTunes is not a workable model for the newspaper business [...]

  15. | 互联网的那点事... Says:

    [...] 【本文原载:Clay Shirky 个人博客  作者:Clay Shirky ,原文在此】 [...]

  16. Random thoughts on Marketing & News Says:

    Why iTunes is not a workable model for the newspaper business…

    Bài viết này khá hay, paste lại đây ko lại đánh rơi mất. 3 điểm chính mà iTunes không thể trở thành một mô hình dập khuôn cho báo chí là các điểm sau :

    Nhạc thì được nghe đi nghe lại nhiều lần cò…

  17. The State Of The ‘Papers - She Loves Tofu Says:

    [...] business models, a great triplet from Clay Shirky: Newspapers and Thinking the Unthinkable Why iTunes is not a workable model for the newspaper business Why Small Payments Won’t Save Publishers European Newspapers Find Creative Ways to Thrive in the [...]

  18. Two views on the future of newspapers « Free Culture News Says:

    [...] Why iTunes is not a workable model for the news business, by Clay Shirky [...]

  19. ThickCulture » Web, Print, & the Singularity of Media Says:

    [...] of old models struggling to deal with new ones.  (Here’s an example by Shirky on why newspapers cannot adopt a iTunes-like model).  I see one of the key challenges as culture, in that (North)American culture is one of what I [...]

  20. Hello world! - Joss Test Says:

    [...] Clay Shirky « Why iTunes is not a workable model for the newspaper business [...]

  21. Newspapers and Thinking the Unthinkable... Says:

    [...] fellow before today, but he does some excellent work. Two more very good pieces from his blog: Why iTunes is not a workable model for the newspaper business Why Small Payments Won’t Save Publishers __________________ Guinness makes you drop [...]

  22. iPod video downloads Says:

    napster ipod…

    Any other related posts? Thanks….

  23. Can Steve Jobs save us all? Says:

    [...] it simply won’t work. Clay Shirky, an NYU telecommunications professor and avid blogger, saysthere’s no way iTunes can save newspapers. He lists three main reasons why it won’t [...]

  24. Thoughts from the “Practices in Online Journalism” roundtable « Web Publishist Says:

    [...] heard about the iTunes model for news and we know it’s mostly rubbish. But that’s not what Matteo is referring to. He’s [...]

  25. Question of the day: Beatles and iTunes « MW Music Review Blog Says:

    [...] you say if The Beatles will be out on iTunes be a good or bad thing? Would it revolutionize the downloading in today’s music?  I read that true Beatles fans are complaining that ever [...]

  26. Follow-Up: “No More Free Content” « WiredPen Says:

    [...] Why iTunes Is Not A Workable Model For The Newspaper Business [...]

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