In the age of the internet, news is flourishing. Newspapers are not.

Here’s the stark reality for newspapers — most of them have not successfully made the transition from their paper businesses to digital ones. And here’s the stark reality for news — it’s easier than ever for people to read high quality journalism. What caused this disparity?

While I won’t pretend to offer any novel solutions, it’s worth examining both how the newspaper industry reached its current nadir, and why the future of news is incredibly promising.

The Moat of Pre-Internet Newspapers

Growing up, most Americans didn’t have much choice in how they got their news. To stay in the know about local happenings, your choices were The ____ Gazette or ____ Daily.

Breaking news from last night? It’s the fastest way to see it in the morning. Looking for a new job? The classifieds were right up your alley. Want to know how your baseball team did? Turn to the sports section. Want to have your ideas heard? Submit an op-ed. Sure, particularly savvy readers could subscribe to The New York Times, but for the majority of people, that wasn’t interesting enough to shell out the extra money for.

For newspaper companies, this model had a lot of inherent advantages.

• Newspapers didn’t just contain news — all the additional trappings of comics, sports scores, and community announcements meant more sources of content. In many cases, this translated to multiple sources of revenue, like collecting money for posting classified listings.
• The cost of starting a newspaper was often prohibitively expensive. Printing presses and office space require a substantial injection of capital, so most newspapers had few competitors. The end result was a scarcity of competition.
• They had a small but captive audience. They were all but guaranteed high quality, lengthy reader attention. News on TV and radio had chipped away at this share, but those weren’t a perfect substitute for the written word.

As a local newspaper business, this was great. Even though the overall number of readers to compete for was low, there was no easy way for new competitors to enter the market. The prohibitively expensive upfront costs and niche local user base meant that most newspapers were well protected. And since newspapers weren’t just news outlets, all of the additional trappings gave them diversified revenue streams to rely on.

The Internet Unbundles Newspapers

There are only two ways to make money in business: One is to bundle; the other is unbundle. -Jim Barksdale

Today, there are fewer and fewer people relying on their local newspapers for non-news functions. Nearly all of them have been replaced by internet services.

Craigslist replaced newspaper classifieds.

An old acquaintance got married? Facebook will let you know. (Repeat for obituaries, high school sports, baby births, etc.)

Yahoo has a section devoted to just to the comic strips you used to see in your local paper — and some you previously couldn’t.

Many of the revenue streams for newspapers have been unbundled by internet services, leaving newspapers in the lurch for their transition to digital formats.

The Internet Reduces Content Creation Costs

More importantly, though, these services are competing not against single newspapers, but all content publishers online. Put another way, the potential audience for The ____ Gazette is effectively infinite — there’s no geographical limit to which readers they can reach. But every other publication can also reach this audience. It’s not exclusive access, and the New York Times has the exact potential access to internet audiences as a blogger.

Compounding this effect is how easy it is now to publish content. Not only is it easier to write a virtual page (see: Wordpress, Blogger, Medium, Tumblr, etc.), but there are no paper restrictions on how many pieces can be published in a day. There’s no printing press to buy. There’s no limitations on writing to fit a 12" story. The internet has completely obviated the physical limitations of newspaper, which previously made it difficult to create and distribute content to a wide audience. The friction it previously took to generate one edition of a newspaper doesn’t exist online, and this means there’s more content than ever for readers to choose from.

The Internet Favors High Quality Content

For any given internet user, this is amazing. It has never been easier to access and read high quality content, and this is reflected in how users now discover content. Google searches for a topic will show a selection of the most relevant news results. Twitter users can easily surface interesting articles to their followers. Facebook users share and like their way to the highest quality content in their News Feed. With the huge amount of content now available through the internet, readers live in an unprecedented era of access to high quality news and content.

In fact, the issue readers in the internet age face is not how to find more content. There’s already too many breaking stories and editorials and listicles in the internet universe. The challenge is how readers can find the most relevant, most engaging content for their own tastes.

Ben Evans explains this concept succinctly:

I sometimes tease my Xoogler colleagues by suggesting that if PageRank Really Worked, SEM wouldn’t exist — if the links were always the right answer then no-one would click on search advertising. (Larry Page is fond of asking challenging questions, but that might be one step too far.) Until then, though some companies can make it entirely through organic search or Facebook virality, most cannot. (Indeed, very often the mere fact that you’ve made these channels work for acquisition means they stop working, since your link advantage gets arbitraged away by imitators or Facebook decides you’re taking just a little too much of the newsfeed.) For the rest of us, that means marketing. In effect, by removing all other constraints, the internet makes advertising more important than ever.

Some digital news outlets have this concept as part of their organizational DNA. Vox, for example, has an extensive strategy on how they publish their content to Facebook. Consider BuzzFeed, which outputs organic content as proof to advertisers that they know how to make content go viral.

It’s important to note, however, that simply being viral or SEO-savvy isn’t enough — publications need to generate high quality content. While most people wouldn’t count listicles as high-brow, quality, like beauty, is in the eye of the beholder. The traditional newspaper audience is no longer captive to the scarce amount of words that were delivered by print on a daily cadence. Readers are demanding and able to access the best news coverage on the internet, whenever they want.

Content Economics for the Internet

Ultimately, the fears and challenges for traditional newspapers making their way on the internet lead to two questions:

1. How can a newspaper compete with the high quality content that all readers have access to now?
2. How can a newspaper make sure their content is found and consumed?

The ultimate fate of news organizations who can’t compete effectively on these fronts is irrelevance on the internet, which is even more worrisome if advertising is their main source of income. The internet has flattened all of the moats of print publishing, and all else being equal, higher quality news wins the battle for a user’s attention every time. So what happens to average content? Can it still survive in the digital age?

There’s a certain exasperation for newspapers having to compete in an arena with which they’re woefully unfamiliar. While the current state of digital publishing is all but a dream for the readers, it’s nothing short of a nightmare for traditional news organizations. They can no control the scarcity of content to readers, and that forces them to compete on quality.

In case you’re interested, I blab on about things under @jmszhao.