A piece exploring the black hole in digital funding models for newspapers, first published on First Drafts, June 2010

I wrote a piece about the importance of the culture of apps in Prospect this month, concluding that people are still willing to spend money on a host of media products, so long as they perceive these as sufficiently valuable—for which read unique, in the sense of not being able to get the same kind of experience for less or for free elsewhere. In the case of apps, Apple has been very good at creating this perceived value, fostering a sense of fun, intimacy, convenience, exclusivity, status, and all sorts of other positive nouns in its users.

This doesn’t, however, mean that I think consumers are a bunch of idiots. And it certainly doesn’t mean that making an app version of something is a ticket to the wonderful world of Apple-like profits and glamour. Most apps don’t make money, for the simple reason that consumers are pretty selective about what they spend their time and money on. And even fewer apps make serious money, of the kind that might—for instance—substitute for the revenues a traditional newspaper needs to survive.

Hence my depression at an advert in the Times today for the (by all accounts very nice) iPad edition of the paper. This edition will appear “automatically on your iPad every morning,” the blurb boasts, and will allow you to “see each page in turn” on the screen. You can “navigate quickly through our sections, via the illustrated pop-up menu,” meaning that “no story is more than a couple of taps or flicks away.” Best of all, “articles are embedded with beautiful picture galleries or stunning interactive graphics or dynamic video.” Yours for a mere £9.99 per 28 days.

Now, some people are going to buy this app. It is both convenient and rather lovely to browse, if you own an iPad. There is, however, a central flaw. Everything it does is already available online, for free. Beyond the pleasures of the hardware and of good design, nothing is unique or new about the experience on offer.

So, while some people will choose to pay for editorial expertise, for convenience, for tradition, for good writing and so on, most won’t. And—here’s my crucial point—not nearly enough people will choose to pay for digital newspapers, ever, for this to be seriously contemplated as a business model. Not if the costly structures of journalism as we know it are to be funded in a wholly digital future.

This problem is a chasm that no-one has remotely bridged: the yawning divide between what it costs to create and operate a newspaper, even in digital form, and what the various revenue streams open to digital papers can cumulatively bring in (paid-for apps, advertising, sponsorship, premium-access clubs, digital marketplaces, subscriptions).

The websites don’t add up—neither the Times’s (rather nice) new premium site, nor the Guardian‘s (depressingly underwhelming) online fanclub for their loyal readers. And apps don’t fundamentally change this equation—because the few apps that do make serious money offer services that people either find really fun (games & entertainment), really useful (work and lifestyle tools) or simply essential as extensions of digital services they don’t want to live without (Facebook, Amazon). Most newspaper content as we know it is neither fun, useful nor essential enough to justify a financial outlay when something very like it can be had at any time for free.

Some people will continue to pay for papers, both physically and digitally—and niches are likely to remain more vigorous (niches can be quite big, too: the Economist or FT count). But most paywalls and news apps are likely just to be elegant ways for publishers to keep their heads buried in the sand a little longer.