Google Economist Explains Why You Won't Pay For Online News

Google economist Hal Varian gave a primer on the economists of news last night to a standing-room-only audience at Berkeley's Graduate School of Journalism. A lot of what he talked about has been said before: He showed slides of declining newspaper circulation and charts showing the tiny, 5-percent sliver that online advertising revenue represents in the total newspaper revenue pie.

But the statistics were even grimmer  than you might be expecting : Overall newspaper circulation has  been in decline since 1990, “well before the Internet,” Varian noted, while newspaper circulation crossed against the nation's population has been declining since 1960;  and circulation per household has been dropping since — wait for it — 1945. You can't blame the Web for that.

Like many other media experts, Varian said he was skeptical that readers would or should be willing to pay for news online. (As of last week, the New York Times is banking you will.) But he provided a novel explanation for why, exactly, people won't spend money on an online product that they were willing to buy in hard copy.

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