Remember the Little Red Hen? She's the one in the folk tale who asks the other barnyard animals if they will help her cut the wheat, grind it into flour and bake the bread. They refuse. But when the warm bread emerges from the oven, they are eager to help the hen eat it.
Now let's suppose the story continues, with the Little Red Hen opening a roadside stand to sell her bread. Instead of merely eating it themselves, the cow, the pig and the dog each take some of her loaves and open competing roadside stands. Vying for sales, they undercut her price and each others'. Because the Little Red Hen bore all the costs to produce the bread, and the other animals bore none, she can't afford to match their prices, and they drive her out of business.
Current law compels one business in the U.S. to play the role of the Little Red Hen -- the daily news business. Unexpected side effects of the federal copyright law have combined with the unique qualities of the Internet and inevitable laws of economics to threaten the survival of any firm that originates daily written news reports online.
San Francisco's only daily newspaper has the largest circulation on the West Coast after the Los Angeles Times, and the 12th-largest readership in the nation. Three years ago, its online edition was fifth among newspaper websites with more than 5 million unique visitors each month. Yet the Chronicle, after 144 years of publishing, almost closed a few months ago because it was losing enormous sums.
Other long-standing daily newspapers, like this one, have sought bankruptcy protection. Some have closed, and most have had to lay off scores of journalists. When newspapers shrink, readers leave, and when readers leave, so do advertisers.
Bloggers and "new media" publishers say newspapers don't know how to adapt. Yet today's newspapers have been adapting for more than 100 years, surviving the Depression, shortages during two world wars and cutthroat rivalries with crosstown papers. They've held their own against new technologies as they came along, including radio and broadcast and cable television.
Today, newspaper websites attract millions of readers, so why can't newspapers successfully compete online? After all, they still originate most of the nation's news. Part of the reason is that online ad rates don't begin to match print ad rates.
