A bludgeon for Blodgett

Are newspapers irreconcilably screwed as Internet economy analyst Henry Blodgett says.

London-based strategic analyst Seamus McCauley says no, but he doesn't see happy days for lots of them either.

Blodgett's argument and the argument of many others is that we're overflowing with news and this gives news creators no pricing power. And even in the reduced costs world of producing content digitally, the costs of producing news will be higher than what newspapers can command. Thus, no business model.

McCauley says, however, walk Blodgett forecast backwards and it unwinds -- to a degree.

If Blodgett is right, McCauley argues, then news won't be a scare commodity because most of the players will have exited.

What prospects then for the handful of high-quality producers of journalism who survive to ring in this future? Far greater pricing power. More money. Perhaps online profitability for their far scarcer news content.

McCauley makes another prescience point:

Third, a point I will return to again and again, newspapers' core value is not their content but their validation. Sure it's expensive to create content. In the long run this probably doesn't really matter. There's plenty of content. The value that newspapers add to the picture is verifying which of it is true.

I tend to believe that unlike the New York Times, locally focused newspapers do have scarcity on their side and do have a trump card in hand in validating news. Most, however, are still devoting far too many resources toward regurgitating commodity news. And even in the best of scenarios, the business model is difficult -- even after the transition to a new, lower cost model.

Is Blodgett right? Wall Street tends to think so or at least is hedging its bets. Even with McCauley's analysis, there will be a winnowing of content providers. And for rest? Without some creative leadership and some changes that will result in vastly different newspapers, yes, the ones left are screwed, too.

(via a Techmeme Twitter)

Tags: newspapers | economics