What stops publishers from charging for news
Fear, in a word, is the reason why publishers are treading so cautiously when it comes to charging for the valuable interactive content they have been giving away for more than a decade. It is a good, healthy fear, too.
Of all the dozens of chief executives, editors, interactive experts and business analysts that I have spoken to this year in connection with the ViewPass project, not a single one believes newspapers can make enough money charging for content to offset the drop in ad revenues that would occur when, not if, page views fell in response to the sudden appearance of a pay wall.
Even Steven Brill of Journalism Online, the foremost advocate for a global pay wall for newspaper content, says he believes no more than 10% of visitors will ante up for access to interactive news.
In announcing last week that the un-named publishers of some 500 publications representing 90 million page views have executed letters of intent to explore the use of his service, Brill suggested that the group could collect up to $900 million in revenues by charging the 10% of willing consumers $100 per year for access to content.
But what, publishers rightfully wonder, will become of the other 90% of website visitors – and the $3.1 billion in advertising revenues the U.S. newspaper industry generated on the web in 2008?
If Brill’s pay wall cut into more than a third of web advertising revenue, then newspapers will have made a disastrous and largely irreversible mistake. (One example of the daunting the math is illustrated in the comment below from Anonymous 9:33 a.m.)
Once newspaper site visitors were turned off by a pay wall, it would be difficult get most of them back – especially when plenty of other sites quickly sprung up to provide free access to coverage cribbed from the paid sites. Want to be the publisher of FreeNYTimes.Com? Too late. The URL already has been grabbed.
Publishers will be pretty defenseless in fending off content poachers, too.
Although the Associated Press is preparing to deploy an elaborate system to track pilfered content, its chief value will be to help build a case to prosecute scofflaws after the fact. The system, which is detailed here by Nieman Journalism Lab, won’t be able to do much about the traffic and ad revenue lost to the AP and its members as lawyers tussle for years over the intricacies of international copyright law and the nuances of the impossibly obtuse fair-use doctrine.
Here’s why publishers are sweating: While Brill argues that newspapers can preserve some 90% of their page views and online advertising after erecting a pay wall, publishers consistently have told me that they fear they could lose 75% or more of their traffic and banner revenue if they started to charge for content.
This may explain why the Los Angeles Times reported last week that such major publishers as Dow Jones, McClatchy and Tribune Co. had not signed with Brill. Although I cannot reveal the details of the confidential discussions I have had with several publishers, I can report a number of other big-name companies have not signed either.
Given the widespread skepticism I have heard from publishers over the likely success of pay walls, why did some of them sign Brill’s non-binding, non-exclusive letter? To ensure access, they said, to whatever secret sauce Brill is cooking up. Thus, Brill’s letters, which appear to be little more than agreements to keep an important conversation going, represent more posterior covering than actual forward momentum.
But the hard fact, as many publishers privately acknowledge, is that there will be no secret sauce.
It is true that publishers could be successful in charging for certain types of content, especially information that helps the purchaser make or save money. But most publishers realize it is preposterous to believe they can charge for national news, stock quotes, entertainment stories, sports scores and all the other widely commoditized information proliferating on the web.
If publishers are blocked for the most part from charging for content in the inherently open and unruly interactive marketplace, then what can they do? Tune in tomorrow for the final installment.
Next: How publishers can make content pay