Wednesday, August 19, 2009

Why aren’t we paying for news?

First of three parts. Part two. Part three.

With their backs against the wall, 2009 was going to be the year that newspaper publishers finally got together to charge for the interactive content they have been giving away for free for more than a decade.

Nearly two-thirds of the way into the year, however, there has been far more talk than action.

Apart from determined-sounding utterances from certain notable publishers and new pay walls erected this summer in Harlingen, TX, and Schenectady, NY, the industry has made essentially no progress in figuring out how to effectively monetize the formidable web traffic that represents its strongest asset as print franchises wane.

As discussed in the next installment of this three-part series, there may be far less than meets the eye in last week’s assertion from Journalism Online that it has recruited hundreds of still-to-be-identified newspapers to put pay walls on their sites.

There are two reasons you are not paying for content at newspapers other than the Wall Street Journal, the Arkansas Democrat-Gazette and a few others:

:: Publishers can’t figure out how to charge for content without throttling their web traffic and the online advertising that comes along with it.

:: Individual publishers are afraid to move unilaterally to begin charging for content but also unable to coalesce as a group around a common philosophy and platform for doing so. (Antitrust concerns, while a convenient excuse, actually are not an issue, as there are many ways publishers can act in concert without unlawfully colluding.)

Working for the better part of this year to promote an industry-owned solution to monetize the interactive traffic generated by newspapers, I have gained rare insight into how newspaper and magazine publishers are struggling to solve this intellectually, emotionally and commercially challenging problem at the same time they are facing a host of other, equally daunting intellectual, emotional and commercial challenges.

Readers should understand that I have a professional and economic interest in ViewPass, a system designed to capture the full value of a publisher’s interactive audience by maximizing advertising yield and charging for content when it is appropriate to do so.

At this writing, it is far from clear that newspapers will band together to fund the technology and marketing infrastructure necessary to create ViewPass, which would optimize the revenues and profits that publishers could achieve from the 3.5 billion page views they collectively drive each month.

In their enlightened self-interest (and, candidly, mine), they would be well advised to do so.

But the reason publishers may not act on ViewPass – or any of several alterative solutions – is that they are so worried about being wrong that they can’t decide on whether, or how, to charge for the valuable content that it costs them a fortune to produce.

Although a number of publishers have said from time to time that they want to charge for access to their web and mobile content, few have taken concrete steps to do so. Instead, they are waiting for someone else to go first – and evidently hoping, as my business partner Ridgely Evers says, that “a miracle will occur.”

Miracles, however, appear to be in short supply.

Next: Why publishers are afraid to charge

18 Comments:

Blogger Matt said...

I'm the Web Development Director for thehour.com which was behind a pay wall until just this past December. It's a small market daily paper and I've felt it was a great win to get the company out from behind the subscriber wall.

Traffic has nearly doubled and in fact we only lost half of the subscriptions since many were still willing to see the print replica edition which we still charge for.

But I think it's impossible to embrace the new economics of the web that will require "partnerships" with the community in order to stay afloat and to simultaneously require that those partners pay to access the stories that they helped to create.

Mark my words. That won't work.

8:00 AM  
Anonymous Anonymous said...

I might consider paying for content...if it were delivered in a more user-friendly format than the free web sites do it. No flash, no cookies, no ads, no unwanted video and sounds, no stuff jumping up and down and getting in my way. Just the news, nice and readable. But nobody wants to admit this is the problem. You just expect us to pay money on top of all that interference and garbage, and you can't understand why there are no takers.

The solution from my perspective will come when I can afford a Kindle.

9:40 AM  
Anonymous Anonymous said...

Freedom Communications also put the Lima, Ohio, newspaper's Web site, www.limaohio.com, behind a pay wall last Monday.
Once thing you'll notice in this is the first paper to do something gets a lot of splash. The followers, on the other hand, go through the process unnoticed.
That might be a good thing, as most of these smaller papers forced into this kind of thing are fighting a PR battle at home and don't need the national spotlight too.

11:10 AM  
Blogger Big News Day said...

I was a pay wall fan and am now thinking we are not doing enough to promote our sites as places advertisers should be or places they can niche market with effect. I'm still not convinced pay walls won't work but there is a culture established that would be hard to break. Still a great deal of the local content people crave can't be found anywhere besides newspaper sites. I also wonder if you have fewer paid customers versus a pile of free guests that isn't actually a better arrangement, financially. It's at least a way to take some revenue off the web, which beats what is happening now. So if you have 3 million page views a day and they don't bring you a dime you get nothing. If you have 30 page views bringing a dime you have $3. What's a better deal for the people paying to gather and process local news and photos? Is that a bad question?
I think we need to do multiple things including showing advertisers the value of our sites in terms of who we are getting to the site and why they should be there and then maybe some kind of premium content or elite division, first class pass or such that allows expanded function. I also think we need to continue all social media efforts and stretch to be where our audience is -- before they get there. So much of market share is in how you market. As much as people like to chatter on comment sections, I think some might even pay an annual fee to do that. Even a small fee like a .99 cents a year. That sort of thing is what I think might work in terms of new revenue sources for newspaper sites. Again you have to focus or limit what you charge for to the stuff they can't get someplace else for free. :)
Just ideas, I'm sure many have been tried before, but let's not quit yet.

12:01 PM  
Blogger Big News Day said...

I was a pay wall fan and am now thinking we are not doing enough to promote our sites as places advertisers should be or places they can niche market with effect. I'm still not convinced pay walls won't work but there is a culture established that would be hard to break. Still a great deal of the local content people crave can't be found anywhere besides newspaper sites. I also wonder if you have fewer paid customers versus a pile of free guests that isn't actually a better arrangement, financially. It's at least a way to take some revenue off the web, which beats what is happening now. So if you have 3 million page views a day and they don't bring you a dime you get nothing. If you have 30 page views bringing a dime you have $3. What's a better deal for the people paying to gather and process local news and photos? Is that a bad question?
I think we need to do both things show advertisers the value of our sites in terms of who we are getting to the site and why they should be there and then maybe some kind of premium content or elite division, first class pass or such that allows expanded function. As much as people like to chatter on comment sections, I think they would pay an annual fee to do that. Even a small fee. That sort of thing is what I think might become revenue sources, granted small ones, for newspaper sites.
Just ideas, I'm sure many have been tried before.

12:03 PM  
Blogger Bradley J. Fikes said...

You overlooked a third reason Web paywalls haven't become more widespread: The quality of newspapers has deteriorated along with the mass firings of journalists.

Why should people pay more for a degraded product, especially when equal or better information will still be free?

2:36 PM  
Blogger Paul said...

The Financial Times, an international financial newspaper, just released some info on their "successful" subscription system. With just under 500,000 print subscribers they have nearly 120,000 people who are also willing to pa $300/year for an online subscription. That nets them $35 million annually. For them a paywall actually appears to work.

The big question for newspapers producing general content is whether they can expect 100,000 people to pay that kind of money just for access to them online. If they don't find such an audience in the relative near term (for many that would be less than 12 months) they may be out of business. Many local papers may have news that is exclusive to them. The bigger general circs may have a brand that attracts such numbers of subscribers. The metros caught in the middle likely have little that is unique or compelling enough to attract the number of subscribers needed to off-set the online advertising revenue that would be lost.

4:51 PM  
Anonymous chuckl said...

Bradley is right. It's ironic that newspapers want people to pay for content online precisely when they're not producing a publication worth paying for. I've been watching the Chronicle shrink to nothing as they lay off reporters and editors and becomes increasingly irrelevant. Thinking anyone will pay for such a poor product is ludicrous, and I think that at some level, they realize that.

6:33 PM  
Anonymous Danny Sullivan said...

There's no reason why paywalls can't work. I think publishers just are afraid to try and aren't creative in their thinking. It's a "put everything back or nothing attitude," from what I've seen. Selectively put stuff behind, coupled with other benefits. I think there's also an attitude of trying to make everyone pay. Bottom line, you get 1% or 2% of visitors to pay, that's still a valuable source of revenue for many sites to supplement advertising.

6:37 PM  
Blogger Gary said...

Even if *some* newspapers charge for online content, unless *all* of them do, the few who give freebies will discourage anyone from paying any amount for anything! Why would the masses pay for a great lunch if there's a shabby but free lunch? They wouldn't.

7:02 PM  
Anonymous Anonymous said...

It seems that most publishers are considering, and in many cases forcing the issue of pay-walls because they are falling back to "what they know." Since website advertising isn't paying to keep the lights on, that's all they know how to do.

The real solution is to a) offer solutions OTHER than banner advertising, and b) TRAIN OR REPLACE INEFFECTIVE ADVERTISING STAFFS THAT CANNOT OR WILL NOT SELL the value of the digital audience.

These points have been repeated over and over and over again, and yet no action is ever taken to repair this incredibly weak point in the industry. This IS the Achilles heal of the newspaper business today.

Because of this, papers have developed an imbalance where the web crews are keeping pace with the changes in the Internet world, but the ad folks are not.

It seems that the solution for many papers is becoming, rather than fix the weak part, to dismantle or equalize the strong part.

This will spell disaster for many papers in the not too distant future.

Good luck - glad I got out of the industry when I did.

7:11 PM  
Blogger Harold Cabezas said...

Sorry, Alan, but there is still time to say you made an egregious typo on your title-in actuality you meant to write, "Why would we pay for news?"

I am with Matt. News is like air-it is all around us. It is true that there are certain specialized industries/hobbies where pay-for-information make sense-but those are few in my opinion...and if the economy continues to stagnate, people/corporations will be less open to paying subscription fees.

Nonetheless, I wish you the best and will follow your progress through your blog.

Even though I disagree with your position, thanks for bringing up the conversation.

7:22 PM  
Blogger Brad said...

Why does everybody ignore a very obvious source of income? States (at least California) require legal ads be published in newsPAPERS. Why not ask state governments to allow legal ads to be published in local online news media? This would be a good transition income source while newspapers struggle to adapt to the Internet.

9:47 PM  
Blogger OnceFromThe Building said...

I pay for an online subscription to our local paper, the Sacramento Bee.
This is done primarily to bypass all the online ads and pop-ups they over-saturate their freebie online paper with.
However, the Activepaper system they use is kludgy and poorly designed.
But, the biggest problem I find is that until tablet PCs or viewers become more user-friend or vastly improve their UI, reading a paper online is a PITA.
Newspapers have an innate ability to allow the reader to view a complete page or stories that said reader can pick and choose from.
Using a mouse or trackpad to move around the page to selet stories turns a relaxing morning read into a chore.
So, I feel one of the limiting factors remains one of technology.

9:03 AM  
Anonymous Anonymous said...

I was a subscriber of PC Magazine for 20+ years. As long as they delivered content in PRINT on PAPER, which I could take with me to bed or the bathroom...

I am TIRED of glancing of these actively radiating electromagnetic waves rectangular screens. I am willing to pay for PAPER to read material that is longer than 2-3 sentences.

I am not willing to pay for reading ANY material that is displayed on CRT, LCD or LED screens. Period.

6:12 AM  
Anonymous olivcim said...

I found out by chance your very sound and straighforward blog and I would like to thank you. I subscribed and since then, I really enjoy your relevant views. You raise issues that are also rife in France, particularly on the payment issue vs free content! I am writing a book about journalism and I quoted you! Thanks for this awesome blog !

12:25 AM  
Blogger Mr Max said...

What most people don't realize, is that the 50 cents your paying for the paper is the delivery method.

I doubt most newspapers circulation revenues cover the cost of printing and distributing the news. The advertising has always payed the way.

Readers now pay their ISP for the delivery of the content.

8:49 AM  
Blogger D said...

Good question.

I've contemplated a couple of ideas:

http://oughtthoughts.blogspot.com/2010/02/can-web-save-newspapers.html

http://oughtthoughts.blogspot.com/2009/03/medium-shouldnt-have-become-message.html

10:11 AM  

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