Ben Smith, The New York Times’ new media columnist, published his debut column last night. It was about The Times itself, and whether it’s become so large and influential that it could now be considered a monopoly.
There’s merit to the question, and it’s one that’s particularly relevant to me as the founder of a subscriber-supported digital news startup. But while The Times may have the market cornered on paid subscriptions, I don’t believe it’s becoming a monopoly. It’s made everyone aware that quality journalism is worth paying for, and it should be celebrated for figuring out a smart business model—but it’s a model that can be replicated with patient capital, a great product and strong brand identity.
To be considered a monopoly, you need high barriers to entry, as well as control of the supply and distribution of what you’re selling.
On barriers to entry:
The cost of entry for journalism, particularly on the technology side, is now extremely low. New publications are spinning out every day, with open source content management systems and relatively cheap hosting, email providers and customer-relationship tools.
On pricing and the ability of a monopoly to undercut others, The Times’ heavily discounted pricing offers haven’t had any impact on our pricing strategy at The Logic. Compare that with Amazon’s infamous undercutting of pricing on diapers, which drove competitors out of business or made them attractive acquisition targets. If anything, The Times has helped increase readers’ willingness to pay for news. A rising tide lifts all boats.
On control of supply:
I think the issue of supply dominance has more to do with the vanishing of local general-interest publications than with The Times’ aggression. It’s not as though the paper is acquiring a lot of other publishers. It’s helpful to look at things through a Canadian-market lens, which can also apply in local U.S. markets like Chicago or Denver. The Times has never broken out its Canadian subscriber numbers, but anecdotes from executives over the years suggest over 100,000 have paid for digital access. That’s more than for any Canadian publication, outside of The Globe and Mail. And yet, much of the publication’s coverage of this country is still geared toward editors in Manhattan. That leaves an opportunity for Canadian journalism outlets to flourish. If The Times were to truly decentralize into the regional markets it covers, then perhaps it could control supply. But for right now, that doesn’t seem to be the case.
On distribution:
He who controls the rails controls the market. It’s hard to argue The Times has a stranglehold on distribution, given the existence of the internet and the online dominance of Google and Facebook. Put another way: if the paper were to shut down tomorrow, would competing publishers have any difficulty getting their product to market?
The collapse of local and general-interest news is often framed as a revenue challenge. But in fact, it’s a legacy cost-structure challenge.
Regional and general-interest publications still generate lots of revenue, just not enough to sustain the cost of printing, distribution, pensions, labour, debt and interest obligations. Publications that are able to reduce their costs and keep their debt low while maintaining their quality and reach are still seeing success. Think of The Boston Globe and the Star Tribune in Minnesota.
There’s no doubt The Times dominates the news cycle—that I’m even writing this in response to one of its columns speaks to the power of its journalism. But there’s still plenty of room for others to flourish.
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