What newspapers can learn from Netflix

Sometimes I think you can make e-reading news out of just about anything. Ken Doctor, author of the book Newsonomics, has taken a look at the recent Netflix price hike in an article on the Nieman Journalism Lab blog, and compares Netflix’s attempts to shift customers to digital streaming and away from costly physical media to newspapers’ attempts to move customers on-line and away from costly print media. (Mathew Ingram also has a piece analyzing Doctor’s analysis on GigaOm.)

Doctor’s piece is long and involved, going into detail on Netflix CEO Reed Hastings’s strategy. It also discusses newspaper publishers’ own strategy, which has to date involved gradually increasing the price of hard-copy newspapers and, more recently, starting to charge for content on-line. However, the process of moving print media on-line is complicated by the other part of newspapers’ business model, which is advertising. Print advertising is still considerably more lucrative than the on-line version (and advertising accounts for 70% of newspaper revenues worldwide), and publishers are going to have a hard time making up the difference in revenue from mere subscription fees.

2 Comments on What newspapers can learn from Netflix

  1. Alexander Inglis // July 29, 2011 at 10:20 am //

    Newspapers already have enough challenges without trying emulate Netflix which — as a business model — is still highly risky, unproven and, frankly, headed for a serious downturn on its current path. Yes, Netflix stock price is appealing to those who bought it 6 mths, 1 yr, 2 yrs ago. But if you look at the actual results: costs are soaring, revenue per subscriber is collapsing, and they need to continue to invest heavily to succeed. It’s a big bet which currently holds out little assurance of medium term (1 or 2 yrs out) delight. It may be too harsh to say “Netflix has peaked” but its worth considering. Management does have its hands full to deliver upon expectations.

  2. Karen Lofstrom // July 29, 2011 at 5:44 pm //

    I’ll say it again: it might be worthy trying out a model in which people READ the news for free, or for a very small fee, but must subscribe in order to COMMENT. Comments moderated so that discussions would be attractive. Moderation would be easier because charging for commenting privileges would likely get rid of the worst trolls. If someone paid to comment but was consistently abusive, I’d suggest something like the Duelling Modems section on the old GEnie. Flames were moved to Duelling Modems, where kibitzers rated them (Olympic style, one through ten) for inventive language and offensiveness.

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