There's a new reality series sweeping the newspaper industry as it tries to cash in on the Web. It's called -- wait for it -- So You Think You Can Charge?
I went over the delusional notion at News Corp. (NYSE: NWS) Monday, where CEO Rupert Murdoch thinks his company can build a successful business model by selling mainstream news in cyberspace.
An article in Monday's Los Angeles Times just happens to prove my point, detailing the challenges in the pornography industry in this Web-pervasive world.
What's that? You thought the Internet was a feeding frenzy for commercial ribaldry? Well, it may have been that way at first, but that was before the free video-sharing sites took over. These days, hobbyist exhibitionists strip before their webcams. Mom-and-pop cavorters are launching cottage industries from their dens.
It's getting difficult for the producers to compete with those who titillate for little more than ego-boosting in return. When it comes to corporate overhead, it's hard for a fully staffed newsroom to compete.
"It's the free stuff that's killing us, and that's not going away," one porn producer says after seeing his business cut in half over the past three years.
"We always said that once the Internet took off, we'd be OK," adds the co-chairman of another company. "It never crossed our minds that we'd be competing with people who just give it away for free."
You don't need to lean on the anecdotal. Playboy (NYSE: PLA), Rick's Cabaret (Nasdaq: RICK), and New Frontier Media (Nasdaq: NOOF) -- all public companies with ties to adult entertainment -- are trading in the single digits.
Now, you don't hear those companies suggesting that charging more is the key to success. A move like that would only further cut their fan base, propping up the traffic for freebie competitors.
The newspaper industry needs to realize that, even if publishers will rightfully argue that their content is typically superior and that there is value behind vetted reading.
Print giants may be feeling pretty empowered these days. New York Times (NYSE: NYT) has more than doubled off its lows. USA Today parent Gannett (NYSE: GCI) has more than quadrupled.
So? The same can't be said for their circulations or their online and offline ad revenue. Just because newspapers are black and white and read all over doesn't mean that their circumstances are any different than those of a blue industry.
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