Funding the news through sports betting? Seriously?

The other day I had a conversation with a guy who’s in touch with some people who are proposing to fund newspapers by allowing them to host online sports betting. (I.e. giving them a monopoly on sports betting.)

The consensus is that the 10% dropoff in subscriptions this year and 20% drop in ad revenue are the harbingers of doom for the newspaper industry. Daniel Gross objects here. Megan McArdle repeats the conventional wisdom here. I think Megan’s story makes more sense.

Specifically, I don’t think the idea of funding the news by allowing news organizations to host online gambling makes much sense because of the diagnosis Clay Shirky presents here:

The institutions harrying newspapers — Monster and Match and Craigslist— all have the logic that if you want to list a job or sell a bike, you don’t go to the place that’s printing news from Antananarivo and the crossword puzzle. You go to the place that’s good for listing jobs and selling bikes. And so if you had a good idea for a business, you wouldn’t launch it in order to give the profits to the newsroom. You’d launch it in order to give the profits to the shareholders.

Basically, the logic of the internet disaggregates this kind of stuff. The idea of funding newsrooms through online sports betting is the kind of arbitrary coupling that the internet tends to uncouple. If you had a company whose revenue came entirely from sports betting and it had to make some decisions about how much of that revenue to spend on news reporting, the chances are it would constantly cut the amount it spent on reporting and increase the amount it spent on advertising its betting services, or take it as profit, or whatever. Under the old newspaper model, people bought the paper to read the stories, and got the ads on the side. But people who want to do online betting don’t come to a site to read about Iran or the mayoral race and then do some sports betting on the side. They come to the site to bet on sports. Trying to couple that to newsgathering doesn’t make any sense and isn’t going to work.