Wednesday, April 21, 2010

Free advice on how to charge for content

This column originally was published in the April edition of Editor & Publisher Magazine and is being reprinted with permission. To subscribe to the magazine so you can see the full array of industry coverage when it first appears in print, click here.

The California Newspaper Publishers Association recently invited me to drive down the coast on a Saturday to give a free lecture on how to charge for news on the web.

Despite the amusing irony of the request, I declined, because, like the publishers who want to sell their content, I think people should be compensated for their work. You are reading this, for example, because I was paid to write it.

But my non-appearance may be more instructive than anything I could have said, because it illustrates the precise challenge that publishers will face in attempting to reverse 1½ decades of not charging for their online content. And it is this:

As long as some plausible source is willing to dispense news and information for free – as I am sure will be the case at the convention I won’t be attending – it is going to be awfully hard for a publisher to charge for substantially the same thing.

This goes double, or triple, if the information is commoditized, as a great deal of newspaper fare happens to be. With so many sources of free information available online, newspapers simply can’t hope to charge for international, national, state and entertainment news. The same goes for sports scores and stock quotes.

The only way most publishers can charge for online content is by investing in the creation of premium products and services that readers can’t find anywhere else. So far, I haven’t seen much evidence of that.

Instead, most publishers feverishly are parsing the supposed merits of any number of pay schemes. For the record, the leading ones are:

:: Newsday-style pay wall. This requires site visitors to pay to read anything more than the first few lines of an article. The Long Island daily recently admitted it sold only 35 subscriptions at a $5 a week, but is happy with the program because the site is given away freely as a retention incentive to subscribers of its print product and the cable service owned by its parent, CableVision. This idea is known to be successful only if the publisher also owns the dominant cable system on an island.

:: Arkansas Democrat-Gazette model. Unlike most publishers, the D-G never put its content on the web for free. To see the website, you either have to subscribe to the print product or buy an online subscription. This has worked well in a comparatively isolated market with limited competition, where a foresighted publisher set the right expectations with readers. This plan will be hard to execute in places where readers have enjoyed 15 years of free content. It will be even harder to execute in competitive markets.

:: New York Times-style metering. This system allows visitors a certain number of free views of a site before she is confronted with a demand to subscribe. While this has worked well for mission-critical business news in the Financial Times and might work for the mission-critical national news in the NYT, the utility of the system remains to be proven at a general-interest paper. It is also worth noting that certain competitors (including a major publication in the nation’s capital owned by a highly profitable test-prep service) are believed to be eager for NYT to turn on the meter so they can promote the fact that their stuff is still free.

:: iTunes-style micropayments. This has been great for Apple and somewhat palliative for the struggling music industry, but it hasn’t been tried at any newspaper. Publishers should note that even the recording industry group charged with chasing music pirates admits that 10 songs are stolen for every one that is purchased. My guess is they are low-balling the number.

:: Miami Herald-style tip jars. Two months after the paper feebly asked readers for voluntary online donations to defray the costs of gathering news, the paper sheepishly canned the idea. Enough said.

Pick a system, any system. Or make up your own. It won’t matter what pay model publishers choose, unless they produce unique and compelling content, tools or applications that readers can’t find anywhere else.

And they will have to learn how to market them better, too. The NYT, for example, has a terrific iPhone app that lets me read everything that is going into the next day’s paper before I go to bed at night. It looks good, works well and is easy to use. And it is free. Why?

Instead of grappling with such tactical distractions as what type of pay wall to erect, publishers need to think strategically about how they are going migrate from operating increasingly indefensible, geographically defined monopolies to being serious players in an unruly and relentlessly competitive global market where no one – especially them – gets to be in charge.

I hope the person who got my spot on the California panel mentioned this.

(c) 2010, Editor & Publisher Magazine

6 Comments:

Blogger Steve Yelvington said...

It wasn't a lecture. It was a panel discussion. I was on it, along with Steve Outing, Walter Hussmann and David Bessen. You can't make a lot of points in a panel setting, but I did get five minutes up front, which I used to show some charts and graphs demonstrating that if you view paid content as a revenue opportunity, you're going to be terribly disappointed. The size of the opportunity is both quantifiable and painfully small.

6:36 AM  
Blogger edward allen said...

The New York Times magazine piece on Mike Allen shows the future to the news industry:
http://www.nytimes.com/2010/04/25/magazine/25allen-t.html?hp=&pagewanted=all
You have to have original content that people want to read. It doesn't matter if its a paywall, or a subscription sold through an app, people won't buy if the content isn't interesting or wanted.
As far as revenues are concerned, yes they will certainly be
small compared to the sort of revenues the local monopolies once produced. But again read that story on Politico. From tiny acorns do mighty oaks grow.

7:21 AM  
Blogger Bill Bennett said...

My conclusion from the paid content debate - which has been running for a year this time around - is you can only charge highly for specialised material.

For metro newspapers this would be local sport and, what? Possibly highly localised in-depth news? I can't think of anything else.

11:01 PM  
Blogger eds said...

The public will be more than happy to pay for newspapers' online content provided it's valuable enough.

Oops.

How to charge for online content is misguided. Instead, consider it as a canary in a coal mine. The real problem is that Tweety is dead. Maybe we should take notice of that first.

8:54 AM  
OpenID dscott8186 said...

There is a way to charge for "extra" content. Let's say a news article was interesting to the reader and they wanted more detail on the subject or the all the scraps left on the editor's floor that didn't make it into the article. For a nominal fee of say $1 or less, the reader could have access to all the research done by the writer for that article. The people who might be interested in paying for this "extra" information would be business people making investments and possibly politically active types or advocacy groups.

The extra information I'm talking about will have to be something that is not readily available on the internet or in some organized format usable by the reader, like text interviews with sources that helped prepare the article.

8:42 AM  
Blogger professor s said...

@BillBennett -- Good luck with charging for local sports coverage, now that ESPN.com has launched five city-specific sites, with more to come. And when AOL's Patch.com finishes its roll-out, good luck charging for local news, too.

8:46 AM  

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