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Why didn't newspapers try charging for online content? Well, they did ....

Submitted by yelvington on March 9, 2009 - 10:24am

I've heard it thousands of times: "The big mistake newspapers made was not charging for access from the beginning."

But it's not true that newspapers didn't charge for access right from the beginning.

Let's roll back the clock about 15 years. Here are some of the newspapers that were pursuing the paid-access model:

  • Atlanta Journal-Constitution
  • Los Angeles Times
  • Providence Journal
  • Milwaukee Journal Sentinel
  • Newsday
  • Minneapolis Star Tribune
  • Washington Post
  • New Haven Register
  • St. Louis Post-Dispatch
  • Palm Beach Post
  • San Jose Mercury News
  • Chicago Tribune
  • New York Times
  • Detroit Free Press

All told, in 1995, Editor and Publisher reported there were 45 newspapers on paid platforms.

Is that a surprise?

Typically the newspaper would join with a partner that provided publishing technology and commercial services including the paid-access infrastructure and customer support, and additional content.

There were three basic models. AOL partners such as the Mercury News and the New York Times were bundled into the core AOL service at one common rate. Prodigy partners such as the AJC and the Los Angeles Times tacked a $5 monthly newspaper access surcharge onto the basic Prodigy bill. Ziff-Davis (later, AT&T) Interchange partners such as the Washington Post and the Star Tribune marketed their services directly, under their own brands, and bundled Interchange core services as a bonus (sort of a flip of the AOL model).

All of these services were demolished by the free and open model of the Internet shortly after the Mosaic web browser became available and local flat-rate Internet service providers popped up all over the country. It didn't take long -- a matter of months, really.

Many of the newspapers that I named tried to hold onto the paid content model while building Web-facing portals for classified advertising.

The stampede of users away from walled gardens and into the open range of the Internet brought to an end the era of paid online content that began with the invention of Teletext long before Bill Gates and Paul Allen even thought of creating a software company.

By the way, in 1993 you could buy a piece of software for that would assemble a personalized, printable "newspaper" for $80. Another not-so-new idea.

Comments

Hi Steve. Thanks for putting some facts into the paid-content discussion. About your last sentence about the personal, printable newspaper experiment in '93, hasn't the context changed significantly? I wonder if the model might not develop as a way for newspapers to offload their printing and distribution costs to the dwindling numbers of customers who must hold paper in their hands. These would not necessarily be Web savvy folks who want to personalize... I am thinking about more traditional readers. Thoughts?

Hi Steve, I was on the scene at the time, having been in charge of production for the Newsday Direct service on Prodigy. Your historical facts are correct but I do not agree that the experience offers much of an instructive lesson regarding paid content. What got swept away with the arrival of the open internet were the closed and proprietary online services, such as Prodigy and Interchange. Once the free and open internet arrived, with its open standards and open architecture, the proprietary online services could not compete. The only exception was AOL, which managed to reposition itself as a simple entry point to the open internet, and by doing so enjoyed huge growth. The fact that newspapers were involved with any of this was incidental. As you surely recall, most of the newspapers online at the time were simply working to figure out how to extract their content from their mainframe production systems and onto these proprietary online services, and how to work with these new tools. I don't know about you, but at Newsday we did not spend a lot of time thinking about how to create new paid content packages. There would have been no mechanism for charging for them, anyway, on top of the basic charge for the combined Newsday/Prodigy service. Those of us who were around at the time can take some credit for having tried to pioneer some of this stuff -- but from my perspective there are no grand lessons about paid content to be drawn from the experience. The only real lesson was that closed, proprietary architectures don't work when an open architecture is a readily available alternative. Kind regards, Evan

I think it's fair to say the baby was washed away in the flood and never really had a chance to grow up.

But it wasn't just a technology issue -- the stunning growth of the open Internet's user base changed all the economic calculations. Suddenly there was an advertising opportunity that eclipsed anything we could have hoped for with our paid-access sites, where we counted our successes by the hundreds instead of the hundreds of thousands.

In Minneapolis, where I was editor, we had the technical stuff licked and were trying to figure out what kind of content would get people to sign up for a subscription. We had great online forums, community groups publishing their own subsites, and some very rudimentary databases (not much you could do with Interchange's document-centric, flat-database architecture).

And while we were trying to do that, the Twin Cities went from zero to over 120 Internet service providers offering access to the general public. The online audience exploded, but not on our turf.

We put the classifieds on the Web, then a "Digital Daily Digest" with lots of pointers to the paid service. (Interchange could be accessed over the Internet with its proprietary software, and also provided access to the Internet for our subscribers, via Netscape.)

It didn't help. Our business projections required hockey-stick growth curves, and it just wasn't happening. It was clear the paid model wasn't going to work long before AT&T announced it was throwing in the towel on Interchange.

I was asked to speak about Star Tribune Online in Berlin in December 1995, because Europe Online had announced it was going to launch on the Interchange platform as well.

When I arrived in Berlin, I announced we were moving it all to the Web. I followed Neil Budde onstage. Neil demonstrated the Wall Street Journal's proprietary online application -- which he was pronouncing dead, as the WSJ moved to the Web. The Europe Online consortium (Bertelsman and Burda) was falling apart and had pulled out of the Interchange plan, in favor of the Web.

Out of all of us, the one entity that was able to migrate its paid strategy to the Web was the Wall Street Journal. There are a lot of reasons for that, but one that's commonly overlooked is that WSJ had the resources to simultaneously create the necessary publishing system and commercial charging infrastructure -- a huge project. Most of the rest of us were lucky to get beyond cutting and pasting newspaper stories into Navipress.

Thanks for this Steve - maybe we need to get together and offer a Poynter class in online news history. In Internet years, we may be old enough for both a 101 and 102 course! But seriously, it's critically important to know and examine what didn't work so we can try something new and move forward. The tail-chasing out there is really annoying me and I haven't got that much time to waste. People who call themselves journalists should prove it by doing their homework and stop acting like online news was just born! There may well be a new and different way to charge for content, but it won't be found by the folks who forget and repeat history. yours, C-A

I didn't mean to ignore Michele's question. The terrain has shifted, no doubt. But I don't think people who love the newspaper reading experience are going to be happy with a few sheets of printout. And the ones who can't figure out how to use a computer are not going to do much better with a printer, which is one of the most demonic devices ever invented.

Thanks Steve. Your recollections are enjoyable and take me back quite a ways. The Star-Tribune was always one of the pioneers online. At Newsday we tried many of the same kinds of things. It wasn't easy, but it was fun. At Newsday we actually were in discussions with AOL, and wanted to do a deal with them, when the Prodigy deal was imposed from on high by Times Mirror out of LA -- killing our own local initiative. The Prodigy tools were clunky and ran on OS/2, IBM's failed operating system, because IBM was a shareholder in Prodigy. If you would have seen the network of PCs we had to set up on rickety folding tables in the computer room to run that stuff, you would not have believed it. What's interesting about the current conversation regarding paid content is how polarized it is, and how quick both sides seem to be to latch onto anything that will support their argument. On the one hand you have the newspaper people who are going down with the ship and suddenly want to believe that paid content will be their salvation. On the other hand you have the rejectionists who grasp at any evidence to enable them to claim that paid content will not work (or when faced with evidence to the contrary, they try to find a way to explain why the exception proves the rule). I doubt most newspapers retain the ability at this point to create packages of unique content that people will pay for. They've cut too deep. Back in the days of Prodigy and Interchange, newspapers probably had the talent and the resources to do it -- but the payment infrastructure was lacking and more importantly the motivation wasn't there (I remember one Newsday theatre outing when I was overhead talking about online services by Stan Asimov, the long-time editor and executive there; Asimov angrily turned around in his seat and interrupted to assert that online services would never take off -- and one of his roles had been to oversee new technology at the newspaper! I was only around 26 years old at the time, and the curtain was coming up, so I kept my mouth shut.). Not everyone was like Stan Asimov however; witness Jim Bellows, the great newspaper and television editor and producer who died this week, and who built a fantastic editorial team at Prodigy (and later at Excite, where I worked). Development of high-quality original online content was happening at places like Prodigy, and people were paying for it -- until the internet blew it up and, yes, made a lot of it free. Kind regards, Evan

Hi, Steve -- I'm a fellow Georgian, btw, although exiled in Seattle! Found your post via Charlotte-Ann on Twitter when she re-tweeted both of us: http://twitter.com/CharlotteAnne/statuses/1300842211 Here are my thoughts on the "free v paid" debate: http://wiredpen.com/2009/03/08/no-more-free-content/

More seriously ... Here's the real point: Magical thinking is ending, either voluntarily or via Adam Smith's invisible hand. The correct question is not "Should we charge users for news?" The correct question is "What news do users value, and how?" What the WSJ, Bloomberg et al have proven is that people will pay for new that they find of financial value; fantasy sports stat sites have proven people will pay for useful hobby info. Etc. What users have shown in droves is that they won't pay for what YOU want to write, whether that be a thumb sucker on the meaning of the Cowboys releasing TO or a 47-part series on Afghanistan and the fate of nations. It's, ya know, like a business: you have to give the customer what they want. But it is fun to chat about the old days, especially around those whippersnappers who think the Internets started with the Web. cjf, building Internet newspaper apps since 1985; had to convert the CyberBury BBS at the Waterbury Republican-American when that new-fangled Web thingee came along

I still remember reading the story way back about how the Colorado Springs Gazette decided to stop charging for its content, after realizing that it only had about a hundred paid subscribers, which probably didn't pay the bill to install the pay wall in the first place. Why is everyone talking about this paid content canard again?

Yeah, don't call Steve's bluff on the cue cat. Pretty sure that picture was taken in the last 24 hours. I never kept mine, unfortunately.

I did shoot that picture yesterday, with my Blackberry, of the Cue Cat I keep on my desk.

Cue Cat jokes are easy; heck, I've told enough of 'em. Here's the true lesson, though-Cue Cat succeeded way beyond expectations as a startup ... and that doomed them as a technology and as a business. Here's what I mean: Digital Convergence succeeded wildly as a startup, where the first job is raising money. I don't know how much they raised total exactly, but it was in the vicinity of $100 million. That's the good news. The bad news is that this left them without what a startup needs most: room to fail. There's no way to know exactly how something new works; you need to ship, evaluate, iterate ... do it again. DC had no such luxury: they had to show results suited to that enormous investment. So they shipped millions of Cue Cats -- literally -- and started printing codes in millions upon millions of magazines, newspapers, etc. Of course, the problem was if you were reading your Wired at lunch and saw an interesting article with a bar code, you had to tear it out or drag the magazine back to your desk because your Cue Cat never got more than 1 meter from your PC. (Don't even get me started on Cut Cat TV -- does anyone even know about that?) After the whole thing imploded we started getting crates of the their hardware because we were the largest investor. We didn't want 'em, but they kept coming. The final shipment was different; there was a small box of tiny, almost jewel like key chain fobs. After it was too late for DC they had invented something truly interesting: a bar code scanner that went on your key chain, scanned with you all day, then synched with your computer via Bluetooth when you threw your keys on your desk. cjf, oracle of dead technology ps: Maybe I should have kept all those boxes: Cue Cats are going for $10/pop on EBay ... http://shop.ebay.com/items/cue%20cat?_dmd=1&_sop=12

Reading this thread reminded me of when the Strib got a new CTO who came over from IBM. He insisted that we change over to Lotus/Domino for our publishing system for startribune.com. He had no clue about the difference between enterprise scale and Web scale. How many cycles did we waste on that albatross, Steve?

Rocky, That's funny and it has now dawned on me just how many online efforts were apparently sabotaged by inappropriate IBM technology! Evan

The Strib was converting to FutureTense when I headed south. Another dead end. Over the years much energy and capital has disappeared into the black hole of vendor-driven content management systems.

Only paper I know that actually implemented Lotus Notes / Domino as a Web-facing system is the St. Louis Post-Dispatch. I think they're still on it. There may have been others.

The real train wreck, though, is inside the newsroom, where most of the CMS vendors are utterly clueless about the Web. Tagging? Geocoding? Continuous updating? Forget it. Oh, but we'd also like to have complete and total control of your website so it never becomes anything more than an online edition of the newspaper. Ecch.

We're about to put a new workflow CMS in place in a couple of our newsrooms, feeding sane structured data to Drupal in real time. Ironically, the solution we're trying -- NewsEngin -- originated as a Lotus Notes project, years ago. There's no Notes left in it now, though. Pure PHP/MySQL/Ajax, hosted in the Amazon EC2 cloud. Quite a leap.

The urge struck me to google search for "Cyberbury BBS" Hell.. I even tried to telnet to cyberbury.net Just thought I'd reminisce a little on that, Chris-WizOp -Matt-SysOp