Insomniactive

There are at least two reasons why this week’s hot media starutp, Journalism Online (a placeholder name if there ever was one), will be a raving success. First, the companys’ three founders have forgotten more about the media business than most of us will ever learn in a lifetime of trying. Let’s just say that if those three guys suddenly materialized in our firm’s lobby, I’d cancel some meetings and break out the Diet Cokes.

Secondly, ask anyone who thinks about this stuff for most of his or her day (e.g. Jarvis, Blodget, Shafer, Potts) and he or she will tell you that JO will never work. Potts was even so indecorous to call it “a dinosaur’s dream.” I literally couldn’t find a single pundit who gives the fledgling enterprise a chance. Rarely does the accumulated wisdom around an idea become sufficiently unanimous to be deemed “conventional” with such head-snapping speed.

All of which means, of course, that Journalism Online will change the media world, stuff the free content genie’s fat ass back in the bottle where it belongs, and make the three founders rich as doges (that would make Hindrey a double-doge) . Wisdom this conventional is almost always that wrong. Blodget should know better from his own experience: during the dot-com bubble, he was unanimously derided for his call that the price of Amazon.com stock would go to bazillion. Of course, it promptly went to a bazillion and a half.

I, of course, am neither smart nor confident enough to dodge the conventional wisdom. So I’ll just pile on instead. And of course, as the heap of conventional wisdom increaseth, likewise does JO’s chance of success. So I’m actually doing them a favor by gassing on about why I don’t think it will work. I’m sure the “thank you’s” will roll in not long after I hit “post.”

Here’s at least part of my conventional wisdom reasoning.

Raising price when a business is dying never works. At least, as I’ve written before, I can’t come up with a historical example when it has. Sure, micropayments apologists will say, “well, they’re not really raising prices, because the same content costs something offline.” But that’s diversionary. Apples to apples, pixel for pixel, this is the largest possible price increase in percentage terms: infinity! It would be enough to make Josh “Penny Gap” Koppelman cry out in horror. That alone should be sufficient to doom the idea to failure, and so I should probably stop here. But of course, I won’t.

A cartel of failing businesses will likely be a failed cartel. We all learned about cartels in Mircoeconomics 101, and about the Prisoner’s Dilemma phenomenon which dooms most of them to failure. As everyone knows unless they are so uncool they didn’t watch The Wire, it’s bad news when the whole posse is in lockup and even one of your homies is weak. As a result, it’s tough to name a more than a handful of cartels that managed long-term success. DeBeers, but that was more of a vertical integration play. Investment banks, which can retaliate against cheaters by locking them out of underwriting syndicates. Labor unions, which can retaliate with cement shoes. The music industry, after a fashion and for a long time. OPEC to a significant degree.

But imagine trying to form OPEC from scratch today, only instead of dealing with medium-nutburger petrocracies, you were forced into biz with seriously failed states such as Burkina Faso, Somalia, and Chad. Being glared at by Steve Brill might not be as bad as clearing customs at Ouagadoudou International, but still. Every man for himself would be the default plan regardless of public cluckings, as is highlighted in this amusing exchange between Mort Zuckerman and Walter (“iTunes for News”) Isaacson on the Charlie Rose show. And back to my The Wire fixation: having resident “muscle” in the form of David Boise’s law firm is certainly a feature in favor of an orderly cartel. But, yo: all da muscle in the worl’ don’t mean nuttin’ if ya ain’t got the produck, dig?

Content may want to be free, or it may want to be expensive. But it definitely wants to be shared. As Shafer notes in Slate

What’s to prevent such Web enterprises as the Huffington Post, Nick Denton’s Gawker enterprise, or some startup (Shafer and Manjoo?) from purchasing the most expensive all-tiers pass from Journalism Online and rewriting or otherwise encapsulating the best and most noteworthy walled-in articles in real time—and then selling ads against it? This is essentially what Henry R. Luce and Britton Hadden started doing in 1923 as they rewrote newspapers on a weekly basis for Time magazine. It is what the Week continues to do today.

While you can copyright a news story, you can’t copyright the news itself. In fact, under the fair-use provisions of the Copyright Act, reproducing portions of copyrighted work for the purposes of criticism, comment, news reporting, teaching, scholarship, and research are all considered “fair use.” It’s hard to imagine the New York Times waging a successful legal battle against the condensation of its top news stories as long as the condensers go about their work artfully. Such a news digest could give its distillations of Times stories extra legal protection by enveloping them in criticism, making them available to teachers, and adding a wee bit of their own reporting.

I know I’m paraphrasing (or perhaps fully ripping off) somebody else here, but the sentiment is worth repeating. If a 13-year-old with a broadband connection can destroy your business not because she hates your product, but because she loves it, maybe it’s time to find a new line of work.

Of course the flip side of this is that JO could impose a toll for sharing that it deemed high enough to discourage knockoffs but not too punitive to personal forwarding (although one source has Brill proposing a nickel for each forward). Tactically, I can’t close my eyes and see how this works without seriously gumming up the user experience. But more importantly, what does that mean if I’m a subscriber and I want to put a link in my blog to an article I read under the terms of my subscripton agreement? Do I pay everytime someone clicks on it? Do I want to write for a publication which discourages people from linking to my article? And if I’m a reader and I have 30 people on a distribution list (e.g. Why JO Won’t Work), you can bet that I’ll begin to put real thought into how to go around this publisher. And almost certainly, another publisher will be waiting open-armed with something less-than-identical but more-than-sufficiently-similar (see Jarvis’s funny take on going around paywalls to find news about JO). Or gray market aggregators will focus on the content most likely to be shared. Or most likely, both.

How do I know what I’m buying? Let’s say I buy a JOPass that allows me access to my favorite news sources for a year. What happens when one such source decides to “experiment” with its pay wall, and decides access to my favorite sports columnist is now free? Do I get some sort of refund? Same question goes for the advertisers, only in reverse. How on God’s earth does all this actually get administered without both sides saying, “screw it, I liked the old way better?”

None of this means I want JO to fail. Sure, the press release could have been a little less manacing, but hey, this is not a dress rehearsal. And if JO does work, it will mean that citizens really do value news content and-I say this in all seriousness-that would be a terrific sign for the persistence of our retail democracy. And finally, this I know better than most: nothing is worse than touting an idea as the next Brill Cream to friends, colleagues and investors, only to have it fall silently on to the “transaction details not disclosed” heap o’ shame a few months down the line.

Fortunately for JO founders, such a fate is unlikely to befall them. So many of us think JO is a bad idea that it will almost certainly succeed. Conventional wisdom is funny that way.