There’s no question the traditional newspaper business model is facing profound challenges. The number of those willing to pay for home delivery is shrinking and advertising revenues are shifting as a result of increased options for local advertising… meanwhile costs are going up. Daily metro newspapers simply can’t make enough money to support their old traditions and they didn’t embrace or leverage change to their benefit. Instead they “sold” web advertising as an add on, which diminished the value (plus most newspaper web sites stink). But nothing in the foreseeable future, short of the internet being completely dismantled, is going to enable newspapers to return to their old standard of living.
But try they might.
According to a new survey conducted for the American Press Institute, more than half of newspaper publishers believe readers will pay to access online newspaper content. The results from the first survey are being presented at API’s Newsmedia Economic Action Plan Conference this week.
Newspaper companies including News Corp. and MediaNews Group are among those that have already said they will begin charging for online content. News Corp. chief Rupert Murdoch says the company will charge for all of its news sites, including FoxNews, by the middle of 2010.
One approach favored by many is to erect a pay wall around virtually all stories. Print subscribers are often—but not always—allowed to read articles free of charge. Everybody else must pay, either on a story-by-story basis or on a subscription plan. The Newport Daily News, a small Rhode Island newspaper, recently began charging $345 per year for online access to stories (that’s more than the print version). (Interestingly enough Google is now developing a micropayment platform and pitching newspapers… which seems at odds with what Google CEO, Eric Schmidt told publishers at NAA in April that “consumers won’t pay for most online news”. But based on how I read the proposal from Google, it sounds like they might also get a share of sales, which could explain the approach.)
Another option is to charge for just some content and make other content available free. The best example of this approach, with more than a million online subscribers, is the Wall Street Journal. Roughly half of its articles—generally financial news and business reports—sit behind a pay wall, although they are free if accessed via Google News.
This approach is much harder to emulate than it may appear. Between 2005 and 2007 the New York Times charged a subscription fee to read the paper’s most popular columnists online. It ended the experiment exactly two years ago because it seemed to be cutting traffic to the site and harming advertising revenue. The Los Angeles Times dropped an attempt to charge for arts coverage for the same reason. A newspaper that wants to follow the Journal’s approach must produce copy that is both narrow in its appeal, highly valued and useful.
Paralleling these approaches are two other news content initiatives that could further impact the industry:
First is a content-management approach by Associated Press which includes plans for a system to detect unlicensed use of its content and potentially create new ways for the news cooperative to make more money online. AP will bundle its stories in an “informational wrapper” that will include a built-in beacon to monitor where stories go. This news registry will debut in November and will later expanding to videos and photos. Starting in 2010, newspapers that own the cooperative will be able to put their material into the registry as well.
The second approach, by start up Attributor, called the Fair Syndication Consortium includes Reuters and more than 1,000 publishers. This one looks to be more of direct revenue-generating tactic, but still faces technical and legal hurdles. Rather than trying to merely corral copyright-protected stories, the consortium hopes to take a slice of the ad revenue collected by an unauthorized Web site. However, to do that, it needs the cooperation of the big networks like Google and Yahoo, who so far have reacted coolly to the proposal. If a split can’t be agreed upon, the consortium will demand that the advertising running alongside the copyright-protected material be removed.
The issues are complex. I get that. Newspapers pay their reporters to write stories and then many sites republish those stories and make money via advertising using content someone else paid for. I get the angst. But personally I don’t think the pay for content model is going to restore the news (and particularly the newspaper) industry to its level of previous profitability or even save it. I think it’s short sighted and even misguided thinking. Given the nature of the net, “news” won’t stop because news organizations wall off their content. While I have all the respect in the world for a good, thorough reporter, they no longer have a dominance on reporting and analyzing the events in our world. My concern is that this move will only further marginalize the profession of news reporting with large segments of the population.
The hand wringing is about the art of journalism, but isn’t all of this really about advertising revenue? If you think about it, I mean really think about it, our subscriptions to the paper never really paid for the creation of news. You can’t tell me monthly subscription revenue even came close to paying for the costs associated with producing a paper. As a percentage of revenue, I wonder if subscription costs even cover the cost of paper and the home delivery. In reality, advertising dollars underwrote the cost of journalism and those shrinking dollars are the cause of all the hand-wringing and why newspapers are in a world of hurt.
Not too long ago, we had the publisher of our local paper publicly say in a speech at a function that the paper wasn’t in the journalism business, it was in the ad business. Many were shocked, but I gave him a lot of credit for having the balls to come out and say it. To me it’s innovation newspapers missed and innovation they need. Rather than trying to return to what they were, they need to face what is and get on with it. And there are some very progressive thinkers in the industry with some great ideas for how newspapers can build community on and offline and regain a more progressive, leadership role. But the train on pay for content has left the station and seems unstoppable at this point. I just hope no one in the industry thinks it is a magic bullet.
By no means are the issues or ideas being discussed in the industry simple or unanimous. Opinions are as heated as they are varied. Yet the simple question remains: Will consumers pay for news online? Will you?
I doubt I will. At least for general news. I have too many other choices.
Some very insightful and thought provoking commentary has been written on this subject. If you haven’t followed the subject, here are some posts worth a read:
- Veteran alt-journalist Bill Wyman, in a piece in the web magazine Splice Today (headed by New York Press founder Russ Smith) summarizes the challenges of the newspapers in five easy pieces. His two-part essay, Five Key Reasons Why Newspapers Are Failing (one here and two here) takes aim at claims of civic virtue.
- Chris O’Brien, a business reporter at the San Jose Mercury News, contributing to the MediaShift blog, wrote one of the best explanations I have ever read about the inherent fallacy of the paid-content issue.
- In response to O’Brien’s post, and in further exploring the concept of the so called “original sin” committed by newspapers, Steve Buttry C3 Coach at Gazette Communications in Cedar Rapids, Iowa wrote a thought provoking post that basically summed up why the original sin in the newspaper model was more about failing to innovate rather than about failing to charge for content. I agree with him wholeheartedly.
- In another post from Chris O’Brien, he advocates more of a anecdotal and observational approach to problem solving and innovation rather than a pure numbers approach which can often obscure the important lessons of the way people behave. This struck a chord with me. While I certainly value data and models as part of the analysis and planning process, I have found that anecdotes often provide me better insights into how to creatively solve a problem than numbers do. In his post, he states: ” I don’t believe there’s a magic data set waiting to be assembled that will lead us to the big “Ah-ha!” I don’t think we’re one reader survey away from figuring it all out. We live in an era where people turn to data as a crutch, leaning on it to give themselves a false sense of certainty. The facts don’t lie, right? Except we know that they do. A lot of such data is formed by the biases and frames through which the questions are formulated, asked, and then interpreted. The newspaper business has failed to recognize its own flawed frames. To this day, no matter what you hear from a newspaper executive, they still believe their primary purpose is to get people to read them in print. It’s why newspapers still spend so much money propping up circulation by subsidizing a large number of people through persistent telemarketing.”
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