February 18, 2005
By Steven Pearlstein, Washington Post

It is not lost on those of us who work in newsrooms that more and more readers pay absolutely nothing for the services that we provide.

I'm talking, of course, about the Internet, where scores of Web sites, including our own washingtonpost.com, provide wonderful packages of news and analysis and opinion without charge. And in major cities across the country, companies are now furiously competing to put free tabloids into your hand as you get on the subway or to deliver one to your doorstep. In Washington, that includes the Washington Post Co.'s Express and the Examiner, the second of what billionaire Phil Anschutz hopes will be a national chain of free daily tabloids.

What we're witnessing is nothing less than a wholesale restructuring of the news business -- one that has been evolving slowly for a number of years but is now proceeding at mach speed. Twenty years ago, the business was dominated by morning dailies like The Post that had emerged from earlier newspaper wars to become the dominant papers in their region. On the broadcast side were the three major television networks and their local affiliates. Both newspapers and networks organized themselves to deliver news products designed to appeal to large audiences so that they could sell advertising to high-volume retailers and mass merchandisers.

But by the mid-'80s, those advertisers came under assault, losing market share to specialty stores and niche players that didn't need or want to reach mass markets. That, in turn, spurred the development of specialty media that could deliver at a more efficient cost the targeted audiences those advertisers desired. Newspapers began losing advertisers to city magazines and specialty publications, circulars delivered to selected Zip codes, and help-wanted booklets. Hundreds of new cable channels began to eat away at the market shares of the networks and their affiliates. Finally, the Internet came along and made it possible to take segmentation to a new level, dramatically lowering the cost to customize and distribute news and advertising and making it possible to sever the traditional link between the two.

For better or worse, the one-size-fits-all era is now history. In the future, readers and viewers will be able to get only the news and features they really want at a price they are willing to pay for them.

For those who are satisfied with a quick overview of the news, and easily accessible data on everything from bowling scores to stock prices, they'll find it free in newspapers and Web sites and TV channels supported by advertisers seeking large audiences and low costs per reader for reaching them.

And those who need or want the most comprehensive and sophisticated kind of news products, in print or video, will have to spend a dollar a day or more to get a customized package delivered to their homes or made available through their computers or cable modems. The advertising supporting such higher-end products will be more expensive, and there's likely to be less of it.

There could even be a mid-price product somewhere in between.

It will take years of experimentation, involving companies of all sizes and vintages, for the news media to refine the new models and settle into a sustainable new structure. No doubt great fortunes will be made or lost in the process. But in the end, I suspect, our industry, like most others, will come to be dominated by a handful of national and super-regional news organizations that can offer readers and advertisers a full range of differently priced news products through a variety of media.

Stay tuned.