I’m pretty new to the economics area, so please do go easy!
Like most people in class, I too picked up on the demand, supply and price elasticity from Chapter 2 of Media Economics: Applying Economics to New and Traditional Media by Hoskins, Colin, McFadyen, Stuart, & Finn, Adam.
In a blog entry, Terry L Heaton said: Restricting content is exactly the opposite of what we should be doing, for it's foolish to assume a limited capacity for information in a Post-modern world and arrogant to assume our content commands more attention than anybody else's. The law of supply and demand online is a paradox, and owning a bigger share of the supply is a more likely path to profit.
So clearly, paying for online content or for that matter, certain online news content did not work. If an online media bastion like the New York Times decided to make Times Select free, they obviously got one of the concepts wrong. A year ago, as in my blog entry, I would have vehemently disagreed. But current trends have forced me to change my opinion, So the established point here is that nobody wants to pay for anything online. Point duly noted and taken.
But the point remains: how is an online news site to make any money? Industry pundits have already started writing eulogies to newspapers in the US, so how is a newspaper to survive if it’s losing subscriptions and advertising revenue? Newspapers like the Austin American Statesman have tried hiking the price of their newspaper. But if this will work for them is still too premature to figure out.
Another scenario that has had even less success is trying to get consumer to buy subscriptions for all content online.
So there is a fall in demand when online content needs to be paid for. And although there is a lot of research and development in the area of online advertising and news media, the reality, however, is that we don't know much about how to really leverage online advertising, and we have a lot to learn.
Online publications, just like traditional media, have to develop a business model. In terms of advertising, the goal could be simple that online Web sites have to attract as many users who are the target audience to advertisers as possible. And once that system is in place, then we reach digital utopia.
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