The City Herald

Newspaper publishers face a dilemma. If one newspaper unilaterally charges for content, readers might migrate to those that remain free. The Huffington Post really kicked-off when The New York Times began charging for content, eventually forcing the Times to retreat. If, on the other hand, publishers form a cartel and agree to put up pay-walls simultaneously, the proportion of readers prepared to pay for a single publisher’s content will fall. A study by media consultancy Oliver and Ohlbaum found that 26 per cent of Guardian readers are prepared to pay £2 a month for access to online content. The figure falls to 16 per cent if all newspapers charged. The Economist thinks it comes down to the promiscuity problem: the culture of getting news from many different outlets has become so strong that it is difficult to just change overnight.

The study busts the myth that aggregators like Google News are fuelling the culture of “content kleptomania”. It turns out that only 10 per cent of readers rely on aggregators to point them to news sources.

I think that the BBC is a bigger part of the problem than The Economist cares to admit. The Daily Telegraph has the highest circulation of all the British dailies. Yet its readers spend twice as much time on news.bbc.co.uk as they do on telegraph.co.uk. The Telegraph and BBC News never competed across the print medium. Now they compete directly with each other for online readers. The BBC does have several unfair advantages. It is not an enterprise. Funding is guaranteed by the British public. It has only one bottom line – public interest, whereas newspaper publishers have to juggle two – public interest and shareholder value.

Any agreement between publishers on future business models must involve the BBC. It is fanciful to imagine that the print and online markets are identical. They are not. Print news in Britain is dominated by ex-Fleet Street publishers. Their online position is weak. From here on there are two ways to proceed.

Newspaper publishers can lobby the government and the British public until they succeed in getting the former to slash the BBC News budget. A weaker BBC will make the marketplace fairer for all online publishers, but at the cost of a public outcry and diminished democracy.

The second, more desirable, option is to have the BBC come to an agreement with its online competitors: The BBC would concentrate on reporting, and newspaper publishers on journalism. The market for reporting is dominated by wire services so if the BBC chooses to compete solely in this market, it would hardly be a threat to the news agencies. Reuters, for instance, derives only five per cent of its from services provided to non-corporate clients. At the same time, the arrangement would provide an invaluable service to the British public. Newspaper publishers would be free to resume their historical focus on investigate journalism, ensuring survival for themselves and, ultimately, for democracy.