Publishers zero in on charging for online news
Even if charging for online or mobile content is not publicly discussed at the annual meeting of the Newspaper Association of America, participants have confirmed that significant private talks on the subject are taking place among several of the chief executives convened at the Manchester Grand Hyatt Hotel.
The under-the-radar discussions include a sit-down among several CEOs – held quite separately from the convention under the guidance of a lawyer to ensure the talks don’t stray into inappropriate territory – that would be similar to a confab where many of the same leaders discussed the industry’s challenges in January, 2007. Despite the deterioration of the newspaper business in the intervening time, no similar session has been held since then.
In addition to discussing whether and how to charge for the expensively produced content that today is available for free at most newspaper websites, publishers familiar with the agenda for the private session said other topics were:
:: How to recover some of the classified advertising business that has been usurped by Craig’s List and others.
:: Whether to demand payment from aggregators who now freely link to content from their sites.
:: How newspapers might get a greater share of the $10.8 billion in search revenues that represented 46% of all U.S. online advertising revenues in 2008.
Publishers are focusing on charging for at least some of their now-free interactive content because they are desperate for new revenues to replace some of the $11.6 billion in ad sales that have vanished since 2005.
Advertising sales, which produce the vast majority of industry revenues, plunged 16.7% in 2008 to $37.8 billion. That is a 23% drop from the record $49.4 billion in sales achieved by the industry as recently as 2005. The deterioration this year appears to be continuing, if not accelerating, in the scariest economic environment since the 1930s.
Publishers also seem to be recognizing, albeit perhaps belatedly, that further cost-cutting in their newsrooms will degrade the thing that differentiates them the most from all other web competitors: Authoritative and original local content.
At the same time, drastically slumping banner ad rates – they fell by some 50% in the last year – have made it clear that there is no point in generating traffic by giving away free content if you are filling a substantial portion of your online inventory with ads netting as little as $1 per thousand views.
Although publishers may not rush home from San Diego to declare that they are going to start charging for online content, there are few among them who already have not ordered intensive internal studies of the business models and implications associated with implementing a pay strategy.
After comparing notes in San Diego, the executives may come to recognize that the number of publishers willing to charge for at least a portion of their online content is approaching sufficient critical mass that they may be able to pull it off.