If viral marketing can rely on cheap distribution of PDFs, and the printed version offers stuff that is simply unavailable in the PDF... maybe they would have a business model. But to make the PDF exactly the same as the printed book, then charge the same amount... it doesn't seem to make sense. In any case, D&D fans tend to be technically savvy so there will always be digital distribution, authorized or unauthorized. Better to come up with a business model that leverages this tendency instead of fighting uphill against it. M:TG cards put Wizards on the map: scarcity and added value were the cornerstones of that whole business model. Without turning D&D into a collectibles game, surely they can take a page out of their own history and add value to materials that people are willing to purchase -- while still offering the viral "word-of-mouth" benefits of a freely distributed digital medium.

Actually, as an advertiser in the 1980s and 1990s I was shocked at how poorly I was treated. Granted I was placing very small 1/8th page display ads but getting to resolutions to my problems from anyone at the big media company was distressing. I have been on the other side too (as an editor at a newspaper) so I believe that it is just OVERALL poor management that has put the newspapers where they are today. Besides, the advertisers are best served if the newspapers deliver a happy, engaged readership -- so annoying any of your "customers" (real, intended, or imagined) is just not smart business.

I am still laughing as I type up a response. I was going to get all articulate and give a few more examples of this same kind of attitude in other traditional media companies -- but this quote, and your illustration of how it highlights the really broken thinking behind it -- well, it was just brilliant. Thank you.

The Internet has done more for freedom in society than any other single force.

Newspapers are indeed the only people employing reporters currently. Although journalism will not die, newspapers certainly will if they continue to willfully avert their eyes from the writing on the wall. We don't know what the outcome of this upheaval will be. But I'm pretty sure blaming Google and calling Schmidt names isn't a way to resolve it. I will once again point to Clay Shirky's article on the subject: http://www.shirky.com/weblog/2009/03/newspapers-and-thinking-the-unthinkable/

I can't see your sarcasm or irony flag, but I'll respond as if you truly meant it.

"Ultimately" is the key word that seems to be in contention. As you point out, you need to sell readers to advertisers. Therefore, annoying your readers and driving them away (which the newspaper business is doing with aplomb these days), will hit your advertiser-based business model pretty hard in the end.

I will absolutely agree that asking the news media to think of readers is usually meaningless, but that's because many don't seem to get who they "ultimately" serve.

Conversely, Google in its early days passed on clearly lucrative opportunities to ensure that their end users were better served. Here's a quote from "The Search" by John Batelle: "...one deal with DoubleClick... would probably net the company millions... But DoubleClick's ads were often gaudy and irrelevant. They represented everything Page and Brin thought was wrong with the Internet."

I'm sure things are changing, as they do whenever a company grows to the size of Google. But Eric Schmidt's words sure sound brash enough to be from an upstart.

OK, I will grant that circulation currently does pay some of the cost of producing a newspaper. To be a little ruthless though (perhaps killing the hog or at least lopping off its legs): reams of newsprint and a huge printing press are definitely not going to be needed in the future. Digital copying and distribution have a very very low cost. Value associated with content -- Consumers Reports is an excellent example -- remains even when the distribution medium is 100 percent digital. Consumers Reports can still command a pretty reasonable online subscription fee.

However, I continue to assert that newspapers are bleeding money primarily because advertisers are putting their money elsewhere. Craigslist replaces classifieds; Google replaces much of the targeted advertising. Lamenting that journalism will die without being propped up by an unsustainable business model is counterproductive. Anyone who cares about journalism (and you'd think the newspapers themselves would be leading the charge) should be experimenting and forging ahead with innovative new business models. Micropayments, subscriptions, and even banner advertising have been experimented with in recent years. The success with them has been underwhelming to mixed.

Clickthrough rates are much more measurable than CPM (cost per thousand -- the old eyeballs estimation); today advertisers on the Web know exactly what they're getting for their money. Imagine if newspapers had been the pioneers in search and clickstream analysis like Google, Overture, and others ended up being? Maybe we would not be having this debate.

I really don't think I'm missing the point. I said scarce goods "like the artist's time". The reporting is indeed a scarce resource. However, payment for that effort doesn't necessarily need to come from the copying and distribution side of the business model. In fact, my assertion is that, with zero marginal cost for copying and distributing, that part of the creative process doesn't make sense as a means of recouping the cost of reporting.

I mentioned patronage only to illustrate that the current business model is not the only possible one.

Two points:

1. Newspapers, despite their name, have for years not been primarily about reporting "hard" news -- painstakingly gathered from "reporters on the ground". They are about building community and engaging the reader for advertising purposes. (Note how lifestyle, entertainment, reviews, editorial, and even classifieds far outweigh the news sections of most newspapers.)
2. Like radio, the consumers of the content in newspapers don't really pay the bills. Subscriptions fees were primarily designed as a way to measure engaged readers. The newspaper can tell their advertisers that they have X number of readers engaged enough to pay for the content. With the Web, metrics can be done far more accurately... and the content providers can tell the advertisers exactly how many people visited a specific article.

Given these two historical points -- as well as the tendency towards zero marginal cost for reproduction and distribution of digital content, I personally don't think micropayments make sense.

Economics has some fundamental principle that can't be "wished away" or deemed untrue because we view them as "unfair". What happens when something that was once scarce and difficult to produce (content printed on paper, music pressed onto vinyl or CDs) becomes abundant and cheap (digitally copied)? The inevitable change in this basic economic truth means that content producers (creative types) will come up with a different business model.
Prior to mass media, creative people had patrons to sponsor their work. That was a different business model.
There are scarce goods associated with the creative process... like the artist's time. But in the future once an item is created, the copying and distribution is NOT a place where the artist will get revenue. And sadly the companies in the copying and distibution businesses will be like the buggy whip manufacturers of yesteryear.

I believe you're both right: it is a downward spiral. Cost cutting begets poor local news coverage, which begets fewer engaged readers, which begets fewer advertising dollars, which begets more cost cutting. It is pretty much a chicken and egg thing.

Google struggled to come up with a business model too. Now that their revenue is through the roof, people point to them and say: "Well that's obvious." Bold experimentation or visionary stubbornness is needed to latch onto a business model that WILL work in the Internet age. True, the Internet didn't creep up on them overnight, but a sea change can stretch on for years. Clay Shirky's article on this point makes sense to me: http://www.shirky.com/weblog/2009/03/newspapers-and-thinking-the-unthinkable/

I'm gonna need you to go ahead and send Mike Judge some money. Oh, and if you could go ahead and move your desk to the back, that'd be great.

Oh yeah! Thank goodness someone noticed how wide this thread is opening the nerd kimono. Hehehe.