Israel Hayom's winning business model

Can a free newspaper have a business model? The individuals behind the draft legislation to shut down Israel Hayom -- clearly a measure that is designed to silence others -- have asked this question rhetorically on more than one occasion, and not without reason. How could some company just print free newspapers and distribute them to the public day after day? Does it make any economic sense, considering the prohibitive costs of running a newsroom and a broadcasting studio? Well, the answer is: you bet!

Take Channel 10 and Channel 2 for example, as well as Israel's biggest news websites. These television channels and websites do not charge any kind of fee from the user. So it appears that it is possible to consume news without paying for it. In some of the cases, it is likely profitable as well.

The conventional wisdom is that Channel 2 is a profitable business. We have no way of telling just how much of a profit it makes because the companies in charge of its programming keep their financial records sealed. On the other side of the spectrum there is Channel 10, which is apparently not as successful, considering the fact that every few years its officials lobby the Knesset and the government for a bailout as part of another debt restructuring agreement.

Yedioth Ahronoth's online portal, Ynet, is free. In fact, online news portals are wide and varied, and their content is usually free. Both in Israel and beyond. But that is only half the story. Have you ever Googled anything? Have you ever used Facebook, Instagram or Twitter? These free platforms attest to the fact that the public enjoys unfettered access to large swaths of the web -- an unimaginable proportion -- without having to spend so much as a nickel.

So none of these internet giants have a business model, right? They can't, because they offer free content around the clock, right? Well, the truth is that they do have an ad-based business model. Facebook, Google and Twitter saw their user bases expand as a function of their growing popularity and their increased utility. The more interesting they became the more people signed up or visited and as a result ad revenue picked up. You can also find free operating systems. Those who have the necessary know-how and willpower can easily obtain the Android operating system and run it on tablets and smartphones.

Sure, Israel Hayom stands out, but not necessarily because of its business model. Israel Hayom has refused to become another mouthpiece for the Left. A large segment of the population that had been silenced on a daily basis was finally given a voice when this paper launched. This publication boasts a plurality of opinions; it provides the readers a variety of choices, and by doing so it has hurt Yedioth Ahronoth's balance sheet.

The campaign to shut down Israel Hayom is just part of a cynical battle waged by Yedioth against us. Why cynical? Because its own business model depends of freebies, including local news outlets. Several years ago, it launched a free publication called 24 Minutes that was handed out to commuters traveling by train (it has since been replaced by a freebie edition of the daily paper). So apparently distributing freebies is just fine so long as they are meant to serve Yedioth; only then are they morally justified.

The MKs who have rallied behind Yedioth as it tried to shut down this paper are singularly focused on restoring the lost hegemony of Arnon (Noni) Mozes, the publisher of Yedioth Ahronoth. Having lost the battle for the hearts and minds of Israeli readers, they resorted to silencing their competitors. The very same officials who appointed themselves the champions of democracy apparently have no misgivings about this move.

A free newspaper can be a viable enterprise. Both in Israel and beyond. There are many countries around the world where newspapers are distributed free of charge. And by the way, being sold for money doesn't guarantee longevity. Just look at Maariv, which was a failure even before Israel Hayom entered the Israeli media landscape. Its readership declined because Israelis did not want to buy it. This resulted in a gradual drop in ad revenue. There are other examples of newspapers that were shut down over the years because they were in financial dire straits, both in Israel and abroad.

Israel Hayom became the most widely read newspaper in Israel in part because it is offered for free, but that is not the main reason. It has become the leader of the pack because of you, our readers, who kept reading our publication. If this paper were not worth its salt -- say, like Yedioth's 24 Minutes -- we wouldn't be here today. We would have vanished.

Commuters have a variety of options. They can read news portals on their mobile devices, they can listen to the radio. Reading Israel Hayom is only one of the many things they can do on their way to work. But Israel Hayom did not appear out of thin air. Although it is free, it is funded by the ad-buyers. The same with Channel 2, which relies on commercials. This is also the case with Google's search engine and even its news portal Google News.

So essentially what we have is competition. We are fighting over the right to provide you, the readers, with news. Some businesses are willing to pay for this platform but unfortunately the Knesset has too many lawmakers who disregard the very idea of competition; they do not like the idea of letting people make their own choices. Those people are responsible for the creeping Bolshevism that has resulted in more and more civil liberties being denied. First they wanted to control what people think and micromanage their daily lives. Then they imposed restrictions on how you manage your finances and bank accounts. Now they want to regulate what news you can consume.

By the way, Facebook, which is essentially a news portal that informs you of what your friends are doing, is also vying for your attention. At any given moment, you can choose whether you want to read the paper, turn on television or listen to the radio. Facebook is also free, and if you go to its home page you will notice that its founder, Mark Zuckerberg, has pledged to keep it that way: "It's free and always will be," he promised. Of course, here in Israel, Yedioth Ahronoth and its proxies in the Knesset get to decide what freedom is. Alas, in Israel freedom comes with an asterisk, and it is important to read the fine print.

The Knesset thinks Israel Hayom is too powerful. As if Israel Hayom readers pick up a copy because they have a gun to their heads. But history has shown that aggressive legislation backfires. Back in the day, the predominant Mapai party introduced the Israel Broadcasting Authority annual fee. This fee produced an obsolete and bloated public broadcasting apparatus that has gradually lost its appeal. But the tax notices still arrive at the our mailboxes every year.

The new anti-Israel Hayom bill, which will essentially impose a mandatory fee on news consumption, would only restore Yedioth Ahronoth's monopolistic status. Moreover, it would violate the Concentration Law that prohibits corporations from holding an excessive market share. The bill is nothing more than political manhandling under the guise of legislation.

Shame on them for trying to impose a "Yedioth tax" on the public.

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