Saving Local Newspapers as a Lesson for Web 2.0

There is this very interesting critique on the Yahoo! Newspaper Consortium by Terry Heaton. Most people in the tech industry don’t realize just how dire the situation is for newspapers today. While everyone realizes that newspapers are being hurt by the internet, most people don’t see the real magnitude of this because the old media general loathe shining the glaring light of openness on their own.

The article discusses the problems that local papers are facing, and they are legion:
 
Craigslist, eBay, Monster.com and other online commerce sites almost overnight yanked the lucrative profit center known as “classifieds” from the grasp of newspapers. The auto industry discovered that most people no longer use the paper to look for a car, and now the real estate industry is following suit. With big ad categories like these shrinking, newspapers’ ability to manage the bottom line through revenue is severely diminished. Layoffs and deep budget cuts have ensued, and the very existence of the modern-era keepers of the fourth estate is in jeopardy.

It then goes on to discuss the Yahoo! Newspaper Consortium. Heaton thinks that the consortium may provide short term benefit for locals but long the real benefit goes to Yahoo!:

I don’t like it, because I view Yahoo! as a wolf in sheep’s clothing. Internet pureplay companies want LOCAL revenues, because that’s where revenue is growing. Local media companies used to be able to fish in the local pond with little competition, but now there are hundreds of new nets pushing us this way and that. This is the business reality that we all face, broadcast or print.

By marrying themselves to Yahoo!, consortium members are not only accepting these new revenue nets, they’re actually dipping Yahoo!’s into the pond for them and turning up the volume – with respect to Ross Perot – on the sucking sound of its draining. I don’t see how this is good business for local media companies.

Now here is the best quote of the article because it says something fundamental about the current debate going on about Web 2.0 and OpenID in particular:

We simply must accept the reality that being a part of a network isn’t as profitable as running the whole thing. Being a network node is a losing proposition these days, because we’re all networked (what I call “pixels on a page”). The only real value that can be created is to run the network and let the nodes work for you. This is what Yahoo! is doing with the newspapers.

This is exactly why there are so many more OpenID identity providers than there are relying parties.

Of course you won’t find insight this like published as an editorial in any newspaper.

(Mirrored from TalkBMC)