If You Want To Charge For News, Can You Answer These Questions?

from the please? dept

Tue, Mar 10th 2009 11:55am — Mike Masnick

Want to know why the old school newspapers are failing one after another? Maybe it's because they're spending all their time rewriting the same column over and over again. The latest is David Carr of the NY Times who has written the same column that has been written about fifty times in the past 6 months by others, saying that newspapers should all collude, stop giving away content for free, force Google to pay to link to them, among some other nonsense that makes no economic sense whatsoever.

Steve Yelvington, however, has put up a good list of eight challenges that any newspaper or reporter who wants to charge for news should need to respond to in full. His list is focused on those who want to charge for "local" news, but I think it mostly applies to all news:

1. The painful lessons of experience. You might want to look into the history of attempts by general news sites to get consumers to pay for access. Did you actually think we hadn't thought of it, and tried it? Your ignorance of the field and of history is one of the things that makes the online guys reject everything you say. Do you need a list? The burden of research here is on you; it's your idea, after all. But I can tell you where to start.

2. The problem of scale (volume). It takes scale to make paid content work, and you don't have the volume you think you have. Quit making up wishful percentages based on your totally bogus monthly unique-user count ("well, if we get just 10 percent of our 85 zillion unique users to pay"). If you're going to engage in wishful thinking, base it on the cohort of individuals who visit your website more than three times a week. You will be shocked, and dismayed. I've been saying this for years: How can you get them to pay if you can't even get them to visit frequently when it's free?

3. The problem of scale (breadth). The idea of premium paid content (to generate reader revenue) plus free commodity content (to support an ad model) is alluring, but be honest with yourself. Local sites don't have the breadth of content to simultaneously support a paid premium content model, while maintaining enough free pages to harvest the advertising benefits of the open model.

4. Relative strength of the geotargeted advertising model. Ultimately the idea of paid content goes to war against the idea of ad-supported content. In local markets, the ad model is stronger than in global markets. There is, and always will be, a gross surplus of ad inventory on the Internet, and that drives CPMs into the sand. But actual deliverable geotargeted advertising -- and please understand that I'm talking about a reality that includes the entire sales support system, not theory -- is an entirely different matter. Local advertising sold by local sales forces is a substantial revenue stream, and if you're not tapping into that, it's your own fault.

5. Competition. There are plenty of competitors and would-be competitors just waiting for you to strangle your own website so they can step in and steal your future. The larger the market, the more this is true. In some relatively small, isolated markets you may be able to get away with it. For awhile.

6. Lack of unique content, coupled with a false sense of being unique. When you've had a virtual monopoly for decades, you grow arrogant and develop blind spots about your own weaknesses. From the viewpoint of the consumer, you're not nearly as unique and special as you think. And you've exacerbated this problem with your poor pay scales historically, and more recently your vicious cutting aimed at higher-salary veterans.

7. Support costs. If somebody drops 50 cents into a newsbox and it won't open, they just go away mad. If somebody is paying for access to your website and it won't work, they're going to call and suck up 12 dollars of staff time. You have no idea what you're getting into. Computers are evil, perverse devices aimed at driving humans crazy.

8. Your own staff. Your online staff hates the idea and they'll do everything they can to undermine it. Yeah, you can fire them. Why don't you get a table saw and cut off the fingers of your right hand while you're doing it? I've seen this happen time after time as newspapers consolidate print and online staffs, and the "formerly known as print" people conspire to expel the "formerly known as online" people. The result is a great leap backward. It's self-destructive.

I'd add another important factor to this list: What value are you providing that makes it worth paying you? That's the question I keep asking. Newspaper folks seem to think that their content is magically so valuable that everyone will start paying if they charge. There's no evidence that's true at all. So what value are they adding beyond all the other content out there that makes it worth actually paying for?

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Filed Under: charging, news, newspapers, questions, steve yelvington

28 Comments

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R. Miles, 10 Mar 2009 @ 12:04pm

Just newspapers?
Wow, in reading this, I can apply this to any distributable source which thinks they own a specific market.

I'm stealing, er, borrowing this.

Thanks, Steve Yelvington. :)
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Shawn, 10 Mar 2009 @ 12:12pm

Just an Idea
I have an idea to help newspapers survive. Offer what the web cant (or doesnt). Stop regurgitating AP wire stories and simply re-printing corporate and political press releases. Do some actual investigative journalism, use people who have the connections and expertise to originate content that actually offers your readers some value for your product.
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Lucretious, 10 Mar 2009 @ 12:28pm

does this NYT columnist actually think the papers could run a wall around the news (global and local) and have it not make its way into the free public domain in a timely manner?

I might be a simpleton but I know enough that such a fantasy is so far out of the realm of happening that its laughable.
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Nick Stamoulis, 10 Mar 2009 @ 12:38pm

The name of the game is monetization. Many large high trafficked still to this day would not survive if it wasn't for funding.
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Joel Coehoorn, 10 Mar 2009 @ 12:52pm

scabbers
The great problem with all of these proposals is that they all depend on collusion:

"If only _all_ the newspapers would get together and lock up their content under one unified paywall, then people would start paying and the money could be distributed equitably."

It fails in three very big ways:

1. There is a lot of news reporting that happens outside of the newspaper world: tv, radio, internet, blogging. People can find other ways to make it work.

2. It's probably illegal under price fixing/monopoly/cartel laws.

3. As soon as it happens, some smaller newspaper will look around and say, "Hey, if I break away from the pay wall I can grab an audience disproportionate to the size of my paper, because readers won't have to pay to see my stuff." And then they'll do it and find other ways to make money around it. It's essentially the same problem early unions had with scabbers, but on a much bigger scale and there's not as much that the big papers can do about it.
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alex, 10 Mar 2009 @ 12:53pm

the washington post cant even get me to sign up for a free account to read their online articles. i deleted the feed and get my news elsewhere now.
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GodzillaJack (profile), 10 Mar 2009 @ 1:01pm

Buggy whips
The Times aren't changing as fast as the times are changing. Ain't that just a dirty shame? Rhetorical question.
With the speed of the internet worldwide news spreads faster than a speeding press. It is called progress and if a company can not evolve fast enough it will be replaced by one that will. Uh, do the big 3 auto manufacturers deserve to be bailed out after time and again they refused to develop a car that we wanted to buy or just keep on making those that were created to be replaced in 10 years. With yet another cookie cutter car.
Yes newspapers will still have a place in our lives and not necessarily in a birdcage or in the out house out back. Oops, we moved that indoors didn't we? My bad.
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Pete M, 10 Mar 2009 @ 1:35pm

A value added service on a news-paper that's still free... http://editingtheherald.blogspot.com/2009/03/tuesday-march-10-2009-cannibal-on-trial.html
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Anonymous Coward, 10 Mar 2009 @ 1:38pm

People don't pay for news, they pay for well written news. The Wall Street Journal had a pretty good article on this exact topic. Hire writers that can write and people will pay for the way you present the news.
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Newspaper Shopper, 10 Mar 2009 @ 1:46pm

Cheap != Good, Scarce = Valuable, Commoditzed News = NewsCorp
I used to subscribe to the Wall Street Journal. My experience with WSJ started with a 300-level business class. I immediately took a liking to the style, investigative reporting, and well balanced opinions. After College, I continued my experience with the rag, first switching to the online format, and later re-adding the paper format, primarily as a symbolic gesture that they were doing things right. They also seemed to have exclusivity to the story for a day ahead of anyone else, which provided value.

All this changed when I started noticing politicization of the narrative and re-packaged and re-purposed by other NewsCorp outfits. (They shall remain nameless) I got the feeling the WSJ became the internal "research arm" for NewsCorp. So in my mind, the entire news ecosystem established by the WSJ started going downhill, and it appeared some articles were written with a particular political viewpoint in mind, which devalued the overall brand and objective reporting I came to like over my 16 years with them.

All papers spew the same AP/Reuters stories. But what's missing from most is good, investigative reporting. Maybe reporting costs more per page from internal investigative reporters than regurgitating an AP/Reuters story. If you want to read a AP wire story, there are hundreds of sites you can go to. You can go anywhere, and there's no value in having a subscription.

WSJ was one of the few profitable newspapers because the model worked, and they were once considered the record of source. But that seems to have changed recently after the DowJones merger. If I worked for NYT, I'd snatch up a few of the investigative reporters from WSJ, remain unbiased, and claim exclusivity to inhouse-produced content for a 24-hour news cycle. In short, replicate parts of the model used by legacy WSJ. That's why they were profitable.
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Vic (profile), 10 Mar 2009 @ 1:59pm

Media fears
Print media is having to adjust to massive competition from the internet and other information spreading means. Their model: gather/create-print-charge is obsolete and they are paying the price for their lack of foresight.
Furthermore, some have wrongly attempted to recreate their traditional model on the web by charging for content access. That certainly did not endear them with generally younger and more technologically savy internet users would just visited free access news sites.
So now what? I think that fundamentally print media has to determine if they want to be printers or content providers and break from the other. In a world of heavy competition, the only way to survive is to specialize.
The NYT and other "papers" will have to choose between latest news content (very, very difficult to stand out) and thoughtful analysis or thorough investigative work. It is on their ability to provide unique content coupled with positive word of mouth feedback and promotion that people will consider spending money to read it.
Many of these media insitutions already have great writers. Instead of pushing them away to cut costs they should press these talented people to produce more in depth content.
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Christopher Masiello, 10 Mar 2009 @ 2:01pm

Print Media Doesn't Get It
These print media guys never get it. They think that they are in the business of selling bundles of paper with stuff printed on it. That's why they can't make the transition.
They are in the business of creating content that can be distributed and monetized in numerous ways.
Print- Some people like to hold a paper or magazine, so keep making them.
Online- Some people like the RSS, blog, newsletter method. Create a feed and stick in the ads.
Podcasts- Get an attractive person to read/talk about your content and put commercials around it.
Segments on TV- Do a Wall Street Journal minute (discussing your content) on CNN, Fox, ABC, etc. Make the networks pay you a cut.
I could go on, but you get it.
Blogs with one writer generating an article or two a day can make a little money, why can't someplace that has an army of professional writers, photographers, analysts, and editors churning out high quality content put it together? (Not to mention decades of existing content to draw on.)
Could you imagine how much money Engadget, Perez Hilton, Tech Crunch, or LifeHacker could make with those resources?
They have the Goose that Laid the Golden Egg and they're killing it with their bare hands.
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Anonymous Coward, 10 Mar 2009 @ 2:05pm

I am one of that cohort who visit newspaper sites more than 3 times a week. In the small market wher i live, there really is no other source of timely local news.

One of the papers i visited frequently (5+ times per week) recently required registration to view full stories in their "online" edition. The registration was free, but not worth my time, so i just view the teasers then move on to the other local paper's website.
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Anonymous Coward, 10 Mar 2009 @ 2:10pm

Google will pay them for their content... ever here of "AdSense?"

Funny thing is, they may not realize that if they really have a lot of visitors to their site, they could be sitting on a goldmine of Ad clicking by their visitors.

Google will share their profits, but the newspapers don't want to play the game their way.
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hegemon13, 10 Mar 2009 @ 2:31pm

Re: Cheap != Good, Scarce = Valuable, Commoditzed News = NewsCorp
The only statement I have a problem with is that you suggest the NYT "remain" unbiased. If that is your idea of unbiased, you are as wacky as my Grandmother, who makes the same claim about Fox News.
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inc, 10 Mar 2009 @ 2:33pm

"Computers are evil, perverse devices aimed at driving humans crazy." so true
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Ryan, 10 Mar 2009 @ 2:43pm

ads too
If only they'd learn this about their ad pricing too. Stop assuming that if you have 1 million subscribers, that my ad on page 7E is going to get 1 million views.

Have you priced a newspaper ad recently? Such an ad is likely to get me about 25-30 responses, but will cost over $1000 dollars.
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Anonymous Coward, 10 Mar 2009 @ 3:02pm

I have worked with Wall Street Journal writers both before and after the buyout. From their perspective (the reporters perspective) nothing has changed in the editorial.

Maybe your views have changed and you see them now as biased, but according to the folks I have talked with, there is no difference.

Don't assume the writers are a bunch of right wing dingbats, they are not. One was an enbedded reporter in Iraq, one is pretty liberal. Just because someone writes things that you don't agree with, doesn't make them a right wing nut.
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Haywood, 10 Mar 2009 @ 3:28pm

I can't see paying for any content
If Google wanted to charge for Gmail or any other service I use every day, I'd drop them like a hot potato. If a forum or group I belong to wanted money to belong, I would be gone. I certainly would never pay to read news or other articles, and would be highly unlikely to sign up for a free log in either.
I doubt I am unique.
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Vic (profile), 10 Mar 2009 @ 3:31pm

Re: Print Media Doesn't Get It
The other side of the coin is that we as consumers will have to address a paradigm shifting responsibility concerning our consuming behaviors. Since there are so many free options or fairly easy means of getting things legally or not for free, we will have to learn to give voluntarily as opposed to being forced to do so (you want you pay) or it will be very difficult for services to gain traction long enough to survive.
For example, giving some information about yourself to a website that doesn't charge for its service is not a tremendous obligation. Another example, like many, I like to play games on line. While clans don't require money to join and there are many clans to choose from, it takes a voluntary decision to give money to help your clan continue to exist. The same process applies to all websites that don't rely entirely on advertisment.
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Vic (profile), 10 Mar 2009 @ 4:02pm

Re: I can't see paying for any content
See my comment about this point above. While you are certainly not unique and may even be part of the majority at this time, I think this is exactly the mindset that will have to change for services to develop on the web beyond the 3-tech-nerds-in-a-room model.
I do think that if Google was to charge a small amount/year for their Gmail, they would lose many users, but they would also retain a large enough number that would provide a dedicated stream of income to develop additional services that are presently left out due to cost issues.
The problem with free is that it makes it very difficult for competition to offer a sustainable alternative. Google doesn't make its money from Gmail so it's easy for the company to offer free email. Only super large competition can challenge them with similarly free services.
In the real world this is like dumping, an illegal practice of selling goods below cost to gain market share.
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Bob Weiss, 11 Mar 2009 @ 5:18am

Why Newspapers Can't Charge For Content
Because they don't "charge for content" now, actually. The newsstand price of a quarter or the price someone pays for a home delivered subscription pays for DELIVERY only. As a long time former adult newspaper carrier, I can assure you that what I got paid to deliver the papers pretty much ate up all the subscription revenue the paper was getting for those customers. Same with the newsstands - the cover price pays the store something, what - you thought the 7-11 was selling those papers as a public service? And of course the cost of the big truck and driver who delivered the papers to the store.
Newspapers profit from advertising revenues only!! That's where the real money is. Subcription fees pay for distribution costs, period. The distribution cost on the web is pretty close to zero, so the subscription fee should be zero. Newspapr web sites need to be advertising supported, just like the print versions are now!! So - journalists - quit your whining, understand the cost structure of your current business, and make your web business work the same way.
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Anonymous Coward, 11 Mar 2009 @ 5:33am

Re: Re: I can't see paying for any content
Except that's the opposite of what google is doing. And it would fail horribly.

First, a gmail paywall would cost over 99% of the users. Please explain one reason for me to use that service over yahoo mail? Just one reason that I would be happy to pay google when their biggest competitor is giving it away?

Now google pays for its mail with targeted ads.

For instance, if a friend and I send 20 emails back and forth about finding a Nintendo Wii for the kids at Christmas, and a google advertiser has developed a way to track hard to find products, I get the perfect ad. I'm happy to pay for that service. Google is happy to get the ad revenue. Toyfinder.com is happy too.

So google can continue to occasionally make money from me. Or they can never see another dime from me. Read point 2 above again. You have to make someone completely dependent on your service before they are willing to pay for it.

I like google. I'm glad they have figured out large profits from the internet. But they would be stupid to charge. They currently make $13 a share without charging.

Now google has figured out profits without charging. Please call your 10 closest friends and find out who they pay for their email? Not their ISP, that's internet access. Please tell me what other company had huge earnings last year selling email.

Google would go bankrupt if they started to charge individuals.
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Anonymous Coward, 11 Mar 2009 @ 5:54am

Re: Just an Idea
Here, here to that. I dumped my local paper because all I see in it are AP drek and local fluff pieces. There is rarely any 'news' in it and many of stories I've seen on the net 2-3 days before it hit the paper.
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Anonymous Coward, 11 Mar 2009 @ 6:04am

What is really funny about the print media's posturing is consumers don't pay for news in newspapers today. Consumers pay for 'delivery', not the content. We pay $.50 a day to have print copy dropped on our front lawn.
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Brendon Ehinger, 11 Mar 2009 @ 11:44am

New for Free - in Canada.
Just a tidbit I heard on local radio the other day. I live in Winnipeg Manitoba (Canada). The story was about how a rural area newspaper, the Thompson Citizen decided rather than to fight against progress, it would embrace it.

"January 2, 2009, the Thompson Citizen broke ground by taking a price tag of the newspaper and giving it away free to area residents. Complete copies of the Citizen can also be downloaded online at its website [www.thompsoncitizen.net]"

source - http://en.wikipedia.org/wiki/Thompson_Citizen

Unfortunately I can not find a transcript of the original story I heard on the radio, but in an interview the owner of the Thompson Citizen claims that not only has ad revenue increased since they changed the price to Free, but the actual size of the paper has increased to accommodate the increase in ad sales. Seems that advertisers understand that more people reading the paper means more people read the ads, and the paper understands that the less they charge (free) for the paper, the more people will pick it up and read it.
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nasch, 11 Mar 2009 @ 9:00pm

Re: Re: Print Media Doesn't Get It
This is just the newspapers' argument all over again. We need money to keep going, therefore our customers will pay us. It's totally backwards. Customers don't think that way. There are a few people out there willing to pay for something even though they don't have to, in the interest of propping it up. But they're few and far between, and certainly can't be relied upon as a business model.

As Mike keeps saying, any business, newspapers included, needs to give its customers a reason to pay, and that reason in order to be successful must be something other than "because we'll go out of business if you don't." Generally people don't care if a company goes out of business anyway. Some other company will step in to fill its place if there is a place to fill. And if it wasn't serving any useful purpose anyway, good riddance.
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chimezie goodluck, 16 Mar 2009 @ 10:01pm

like to know
my dear editors,please i just wan't you to help me on this word. when you said THE MEDIA CAN MAKE YOU AND ALSO MAR YOU . PLEASE I WAN'T YOU TO COMENT OVER THIS. THANKS.
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