Traditional News and the Link Economy

First it was The New York Times. Then The Baltimore Sun. Now The Washington Post has followed suit, requiring online readers to buy a subscription.

Traditional news organizations say these paywalls are critical to making money amid competition from news “aggregators” that freely collect and post content from a variety of sources. But Bill Rand, assistant professor of marketing and director of Center for Complexity and Business, says such efforts are questionable and misguided.

Aggregators, through their hyperlinks to stories, are supporting traditional media by increasing access and exposure, according to the study with co-authors Chrysanthos Dellarocas (Boston University) and Zsolt Katona (University of California at Berkeley).

They recommend that the old guard of media–especially daily newspapers that previously thrived through regional monopolies–embrace the trend, specialize their content, and link to one another. “Envision The Washington Post as more explicitly specializing in government and political coverage and linking readers to Los Angeles Times’ arts and entertainment news," Rand says.

News outlets that function as both attractive landing sites and savvy aggregators can make the digital news ecosystem more robust and attractive to consumers. The strategy would follow that of such newer, innovative content creators as The Huffington Post and Politico.

But Rand concedes transforming such a networking-based theory to practice is not simple because “it’s counterintuitive to the competitive nature of the traditional news industry.” Nonetheless, he also urges against taxing aggregator sites, an approach recently taken by Germany. (Its new law targets links displaying more than “single words or very small text excerpts”). Doing so would hamper innovation “by essentially transferring money from sources delivering high-volume traffic to online content, to companies with some stake in older forms of publishing.”

Moreover, Google—a lightning rod for tax lobbying despite paying for content access and not selling advertising space on its news search engine— has a vested interest in keeping regional newspapers viable because their content fuels the Google News product.

"The Internet ultimately has provided access to quality, low-costing or free news and increased the medium's appeal,” Rand says. "To paraphrase a former Google executive: 'The Internet has revolutionized many businesses, from Craigslist and eBay, to travel services that have figured out how to monetize their enterprises. Newspapers can do so as well.’”