Another round of paid-content nonsense

Submitted by yelvington on December 22, 2008 - 2:34pm

Every nine months or so, some mossback proclaims -- in print -- that newspapers would be just fine if they'd stop giving away their content on the Internet.

The latest is Stanford University journalism professor Joel Brinkley, who dishes out a mixture of bad reporting and wishful thinking in a Sunday op-ed piece in the San Francisco Chronicle, one of America's great failing newspapers.

Examples:

"Web advertising generally pays 10 cents for every $1 earned from print ads."

It's true that many (poorly performing) newspapers bring in 10 times as much revenue from print, but that completely misses what's actually happening in local marketplaces. Pure-play Internet companies are walking away with the local markets of poorly performing newspapers. Charging for access would destroy any chance a newspaper might have of competing with those pure plays. All the growth is in digital media.

"When the sites were regarded as technology curiosities, there was no thought of charging people to use them. By the time papers realized that they should be charging, it was too late."

False. The first online initiatives mounted by U.S. newspapers were all based on pay-for-access systems.

When the Web arrived, the first major response of the U.S. newspaper industry was to plan a unified pay-access online consortium. The original visionOne early vision for the New Century Network was for each participating newspaper to charge for access, and bundle into the deal a sort of library card system that would let you get news from every other participating newspaper as well.

Some newspapers even tried bundling newspaper content access with Internet access.

It didn't work. In science, this is called empirical data. When data contradicts your theory, guess which one wins?

"Several papers tried charging, but most backed off."

This is a non sequitur to the previous claim that "there was no thought of charging," but hey, everybody needs an editor.

It's true that several papers did try charging for access, and in nearly every case it's proved to be a bad idea. The single clear exception is the Wall Street Journal, whose subscription fees are nearly always covered as business expenses.

Rupert Murdoch, who can count money much more accurately than your typical journalist or journalism professor, has looked closely and declared WSJ's model pretty much a wash. It might make about the same money by dropping its user fees and opening up the site. Or not, depending on economic winds. Either way, it demonstrates that even if you have amazingly great content that readers can con their employers into paying for, the model just isn't a slam-dunk.

"Over the years, the Justice Department has issued numerous antitrust exemptions allowing two newspapers in a community to combine their business operations so both newsrooms could survive."

No, it was Congress that enabled the numerous exemptions, through the Newspaper Preservation Act of 1970. How's that working out for you? Not so well. I worked for one of those preserved-but-dead newspapers, so I know that from personal experience.

"Now, here's my idea: The newspaper industry should ask the Justice Department for an antitrust exemption that would allow publishers to collaborate on a decision to begin charging for their Web sites. ... if most papers in a region - San Francisco, Oakland and San Jose, for example - began charging for Web access at more or less the same time, many readers would likely subscribe."

And if we put a tooth under our pillows, we'll raise enough money to bail the San Francisco Chronicle out of its million-dollar-a-week hole. This conclusion is based on what market research, exactly?

The truth about newspapers is that news is not, and never was, the real reason for home-delivered subscriptions. The real reason was entertainment. Even the act of reading the news was primarily an entertainment-seeking behavior. Gee, let's just go around and cut everybody's cable lines. And wrap the houses with tinfoil to keep out the radio signals. That'd save newspapers for sure.

Comments

Submitted by Patrick Thornton (not verified) on December 22, 2008 - 2:49pm
I thought professors did research. I was just as surprised as you to read his poorly researched and thought-out op-ed. Does he -- or anyone else in journalism -- really think no one thought of this? Really? Most publications simply cannot charge for their content online. The market has spoken. And what kind of industry are we when people are proposing collusion (which journalists would decry in any other industry) as a business model? Now, I am a fan of charging for premium content and features (features usually meaning technology that is above and beyond what typical news organizations have traditional provided). But this has to be truly premium content. The kind of content that appeals to 5-10 percent of your users -- the really dedicated ones. ESPN.com does this with their Insider subscription. I subscribe, and it gives me premium features like scouting reports on every NFL player. Now, does the average sports fan (ESPN.com users) want this or care to pay for this? No. But I'm willing to pay for it. I think news organizations can charge for some premium content and make some nice profit in the process. But, and I cannot stress this enough, this has to be truly premium content. Premium content is almost never written content. It is never commoditized content. And almost every news organization that has tried to charge for content did so without offering premium content. The WSJ is an outlier, and I'm not sure if it can continue with a strong pay wall indefinitely. But I do think the WSJ can continue charging for premium content for years to come. In the next 5-10 years we may see more and more of the WSJ's content become free (this has already begun), while new premium features and content are developed. In my case, I don't read WSJ.com because I'm not willing to pay for their content, but if it was all free, I would go there all the time. That's something they'll have to think about moving forward.

Submitted by yelvington on December 22, 2008 - 3:39pm

In response to a private note, I updated my post to clarify that paid access was part of the original consideration for NCN, but tone down the suggestion that it was the original vision. I saw a proposal that outlined such a system in great detail in the early days, but I think it's fair to say that it was off the table before it hit the table. The free Internet was a tsunami before most of today's media pundits got their first Internet accounts.

The original point -- which was that subscriber fees were not overlooked by newspapers in the early days of online experimentation -- stands. Many of the first newspaper websites were launched by veterans of paid services, including those of us who operated as affiliates of Prodigy, Compuserve, AOL and Interchange.

Reaching even farther back into the mists of time: Viewtron, the pre-Web service from Knight-Ridder, which was built on subscriber fees and lost about $50 million before it was shut down.

Dave Carlson's timeline is a good source of information for students seeking to understand how we got where we are today.

Submitted by Tim Burden (not verified) on December 22, 2008 - 4:12pm
That's some funny stuff. Mark Potts seems to suggest that had newspapers succeeded in keeping all their stuff behind a pay wall, it might have worked: "Look, newspapers largely missed the boat on charging for content in the mid-90s, when they first went on the Web. With a handful of exceptions, they opted to make their online sites free, and got consumers into the habit of not paying for information. That horse is long out of the barn, and it ain't coming back." I could be reading too much into it, but he seems to suggest that if consumers weren't in the habit of getting all their news online for free, then the subscription model would be alive and well today. I doubt that is the case. It would have taken just one entrepreneur to start publishing free, advertising-supported news on his site to blow that whole thing wide open. Why? Because pay walls are fundamentally anti-web. The Web is built on links, by definition. Pay walls discourage linking. Therefore, just as nature abhors a vacuum, the web abhors a pay wall.

Submitted by Digidave (not verified) on December 23, 2008 - 1:30am
Perhaps newspapers are worse off because they give their content away for free: but society is better because information is cheaper and easier to access. That is what always bothers me about this notion. Sure - even if it did work (fat chance) then newspapers would be making money again, but less people would be well informed. Way to defeat your social good. That said: good content does have to be funded somehow. But funding good content doesn't mean you have to fund the overhead of entire newspapers. Example: I raise money for specific independent investigations on www.spot.us - and then we will give the content away to websites to republsih. ALL the money, which is donated by individual readers (no more than a subscription to a newspaper for a small period of time) goes to the CONTENT. As opposed to when you buy a newspaper and your money goes to pay for a 40k stapler. The newspaper industry was designed during the industrial age. We are now in the information age. The industry must adapt. This suggest that the information age must reverse itself. I don't think you can slow something with that kind of momentum.

Submitted by Anonymous (not verified) on December 23, 2008 - 5:32am
I do not know one person - not one - who would pay a subscription fee to read a local newspaper online. The medium of a news WEBSITE is far, far different than the medium of an actual paper err paper. The later used to sell well because (I would think) people found them satisfying, comforting, and interesting. Staring at a screen, sat upright, messing about with links and bandwith problems, scrolling up and down the screen, reading angry and nonsense comments, etc is just not an attractive selling point. People have stopped buying newspapers because people do stupid things. God only knows how the news industry can turn it around. If papers fold then people will miss out on what it was like to be engaged in proffesional, well-funded journalism. I just cannot see how the dollars can roll in with ad revenue and certainly not subscription fees. Lets hope some bright spark comes up with something...soon.

Submitted by Mike (not verified) on December 25, 2008 - 7:43pm
Does it burn anyone else to see the Drudge Report trumpeting the death of newspapers while 70 percent of their content is created by newspapers? GM workers are being laid off because Toyota made better cars. How angry would people be if GM workers were being laid off because the bosses decided to give cars away? A few paid content sites might not work, but letting everybody in the world reprint your work does not work and is not fair.