Words from another yard

Links and comment from Scott Rosenberg
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JUNE 3, 2009 11:49AM

Once more into the pay-wall breach: No gravedancing edition

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Rick Edmonds at Poynter offers a summary of a white paper that the American Press Institute provided to attendees of the recent newspaper execs’ conclave. (The paper doesn’t seem to be available on the API site. UPDATE: Nieman JLab has it.)

The overall thrust seems to be: time to make the customer pay up. Newspapers must “establish that news content online has value by charging for it.” If this is really the level of the paper’s economic reasoning, the industry is in even worse trouble than I thought. News flash: Pricing a product does not establish its value. What you have to do is find a price that people will pay.

Similarly, the report urges a new “Consumer Centric” strategy, which sounds dandy, until you realize that “Refocus on consumers and users” does not mean “serve the customer better” but rather “refocus” on their wallets instead of those of advertisers.

Reading this made me sigh. In the contours of this latest iteration of the argument over charging for content, I’ve recognized an unfortunate pattern. Those who advocate the “charge ‘em” strategy cast themselves as hardheaded pragmatists and their opponents as wild-eyed Web idealists and anarchists.

Sadly, however, I submit that most of us in the “charging for content is a bad bet for newspapers” camp are coming at this from the perspective of bitter experience. We are grizzled veterans of this argument. We have Been There and Done That. We aren’t grave-dancing; we’re saying, “Maybe you don’t want to fall into that grave that almost swallowed us.”

During my time at Salon we tried every online revenue strategy you can imagine: Gate off some of the content. Gate off all of the content. Don’t gate any content but ask users for cash to join a premium program. Slate tried a subscription program well before us. Many others followed. Yes, there are differences between such sites and local newspapers. Yes, 2009 is different from 2000-2002. But the fundamental lesson remains: you can get some revenue from readers, and there’s nothing wrong with trying; but if in doing so you cut yourself off from the rest of the Web in any way, you are dooming yourself to irrelevance and financial decline. Don’t make your content less valuable at the instant you’re telling people it’s going to cost them more to get it.

The strongest confirmation of this fact (as I pointed out in an earlier post that was recently echoed by Silicon Alley Insider, and it’s nothing new either) comes from that poster-child for pay-wall advocates, the Wall Street Journal. The Journal has the longest-running and arguably most successful subscription program around, but it has smashed a giant hole in its pay wall and allowed anyone arriving from Google to read any article on its site. (That’s right: you don’t need a WSJ subscription. Just plug any WSJ headline into Google and walk on through the wall.)

The Journal execs can say, “Hey, we’re just being flexible, it’s a hybrid strategy,” and they’re correct, in a sense. What their strategy fails to take into account is how much traffic and mindshare they have lost from the perception that their articles aren’t a linkable part of the Web.

The Journal’s subscription model isn’t a crime or a disaster. It just isn’t the future. As the company’s own discovery that it needs to let Googlers in for free shows, this model is classic newspaper-industry short-term thinking. It’s backward-looking, and won’t help newspapers figure out where they need to be tomorrow.

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I hope TalkingPointsMemo and TomDispatch find working economic models. Both of these sites, in my view, provide the most challenging investigative reporting around. I'm sorry but Salon IMHO is falling to the second tier. There is less orignal reporting even though I still enjoy its niche. Greenwald is still the bomb and his recent supreme court oberservations have been valuable. Plus how the world works is still as facinating as ever.

The newspaper isn't about the medium, in this case paper but it's about the news. Online or in print doesn't matter all that much. It's about reporters researching good stories and no matter what the medium I hope good reporting still can find a market.

The larger problem is that good reporting is difficult, and most newspapers can't find a market for that reporting. But they compound the problem by dumbing down their product and doing the stenography routine ie Bumiller. If the N Y Times takes a dive I don't know how much real damage will be done. But the poltical elite will have lost one of their main communication channels and will have to find another channel to communicate their point of view.

I would like to hear more about Salon's history regarding its views in the news business from its decision makers. We hear enough from the Murdochs of the world. It would be cool to hear more from the "other side". As the despised anonymous conservative proves Salon has played a vital role in progressive activism. I know I haven't read enough Open-Salon to really make the best judgement, but I for one would like to hear about some of the lessons you have learned from your journeys into news from a more progressive point of view.
I haven't worked at Salon for almost two years now, so I'm speaking as a private citizen rather than a company person. To me there's still a lot of good hard reporting in Salon. People started telling us that "Salon isn't as good as it used to be" from practically the moment it was born, so it's hard to know what to make of that kind of criticism. Certainly Salon's percentage of original reporting is lower than that of your typical newspaper, but way higher than that of most websites, including HuffPost.

As for Salon's history, it's long and full of too many stories to know where to begin. The piece Gary Kamiya wrote on our tenth anniversary is probably a good start.
I don't think newspapers are going to solve this problem until they restructure completely. And by "restructure," I don't mean it in the corporate-speak way of "we'll fire--excuse me, "lay off"--a bunch of people, and then fiddle around with the org charts. No, I mean *restructure*, as in completely rethink how to deliver their product. Which is not ads, or comics, or trenchant analysis (there's more than enough of *that* available for free now--and I would a thousand times rather read what digby, or Sullivan, or Greenwald, or Marshall thinks about something than Will or Dowd). It's *news*.

News is delivered by reporters. The industry has to rebuilt around this fact, or they're in for a world of hurt. They need to be asking themselves: do they need big buildings in mid-town Manhattan? Offices in multiple satellite exurbs? Absurd redundancy and overhead by having "senior White House correspondents"? A whole host of editors built around a model of sections, past-ups, broadsheets, and giant printing presses? Or can the reporting be delivered more economically?

My guess is that newspapers *won't* figure this out, because the change has to be made from the bottom up, and no editor, managing editor, or publisher is going to say, "Let's restructure this to make *my* job redundant." So it's going to be a long, slow slide, I reckon.
Thanks for writing this--every time I hear about this argument I wonder what the people behind Salon are thinking. (Though you're not at Salon anymore, that just makes you Steve Wozniak, if you will, in a good way. Or Guy Kawasaki?)

Gary Kamiya's piece you mentioned said, "a big part of our income now comes from subscriptions." (!) Like USXPat, I would be interested to hear what Salon's more recent experience has to say to the news business.
as a "wild-eyed Web idealist and anarchist" i take offense to being compared to newspaper editors
Ironic piece, because it's clear that Salon's model doesn't work either. Salon's doors stay open because Hambrecht and Warnock have funded it as a hobby/toy - the company has never generated positive cash flow in its history, and there's no indication it's ever going to.
I completely agree. The problem is with all the so-called "pragmatists" everywhere in the media saying whoredom is the only route. "I have to suck up to TPTB or I'll lose access!" or "Let's write for our advertisers!" or "Squeeze the reader for every dime!"

Doesn't anyone believe in integrity anymore? If people could go to a news source and KNOW they were getting the truth, would they not flock there in droves? Who wants to read thinly veiled advertisements disguised as news. Oh, I know all the corporate cretins think that's really clever and whatnot, but it drives people away.

Content has to come first in order for any of the business decisions to be relevant. What would Walter Cronkite's rating be like today in a world of corporate whores? People are starved for someone they can trust.
@Harry Homeless

And yet Fox News has much better ratings than CNN - there doesn't seem to be any correlation between credibility and success.
@Bob

I'm not saying there isn't a market for lies. I'm saying there is no gold standard out there. I didn't see CNN or anyone else busting [the anti-Christ 43rd President]'s balls on his multi-year campaign of lying. I have yet to see mainstream exposure of the war profiteering in Iraq except to to pose it as isolated cases and not systemic stealing. All I want is the truth, just gimme some truth.
@Harry Homeless

Salon does a lot of this, and they remain smaller than Fox News's coffee cup budget.
nice point Bob Jones...

for the life of me, the only companies I can envision making real money off of online subscriptions are niche specialists (i.e. rivals.com for prep sports recruiting, ancestry.com for genealogy, etc...)

The big, big sites (search engines, facebook, myspace, espn.com, nytimes.com) might be able to get some money through internet service providers-- like the cable channels on t.v. Most people already pay for access to the internet, they just don't think about it because it is a once a month bill. Big time sites could potentially charge the ISPs to un-firewall their content. I'm not sure if the technology is even there... and that won't help the vast majority of news websites, unless they came together under a big umbrella.

My point is, web publishers will have more success going through ISPs than they will hitting individual consumers. If facebook charged say, comcast $1.00 per household per month for access to its site, it might work. No one wants to pay $50 per month for high speed and then be denied access to their favorite sites....
How about trying ALL the pay models simultaneously by (here's where it's user-centric) letting the user choose HOW (but not Whether or What) to pay (see http://PayCheckr.com). And btw, the system doesn't have to be "perfect" -- we're just trying to open up some new revenue streams here. PayCheckr.com: "Keeping what's read in the black."
@Bob, Salon will be glad to hear you consider them the gold standard of truth :)

However, if you want to go the anecdotal route, I can point to here in Dallas/Fort Worth where both mainstream papers are in trouble, even to the point of sharing reporters. However, both the free alternative weekly papers are thriving and are even thicker than before. That's because the weeklies break stories regardless of who it pisses off and tell the real truth and people want to hear that.

Now imagine if that mentality was moved to one of the dailies.
Well-stated. I wanted to pose a question, that may not seem directly relevant to your article: How will our society (specifically, capitalism), adapt, if we are increasingly able to provide services for free? While it will always cost money to fund investigative journalists, traffic helicopters, and even web servers, there's no denying that part of this picture is the decreasing cost and increasing availability of free media (not just news, but entertainment). The reason why the newspapers plans to charge consumers look so hack is that the value of their product, as you state, is artificial. Obviously we could let market forces do their job, though on the other hand, the good done by a strong editorial board may outweigh the price people are willing to pay for it (and advertising doesn't seem to make up the difference).

In short, perhaps we're entering an era where decision-making about spending shouldn't be left as much in the hands of the consumer as it has been in the past? I know it's fun to watch the big papers crash and burn, especially considering their tone-deafness and hostility to the Web, but in an era when nearly everything is becoming more readily available, I'm increasingly weary of the market as a major decision-making force.
No talk of being stweards of the public trust? I'm shocked, just shocked let me tell you. Newspapers have to add value (something for which I'm will to pay for). Executives don't understand that. Advertisers aren't interested in paying exhorbitant rates that give them fewer impressions.

When executives realize that they are in the information business and not in the "newspaper" business and find ways to create demand for people to pay for information that adds value, they're doomed to follow the same path the railroads took in the 1960s. Great post.
i am struck by the way we must assume there is value in this content.

don't get me wrong... a lot of content is out there that i will pay for, but the price indicates nothing at all about the craftsmanship of the journalists or the quality of the news. it's sad to go to a pay site and see horrible typos and plagiarism and downright idiocy.

i've been thinking a long time about the fact that we have a right to a free press. this phrase is often used to refer to a free press corps, not a literal free press. and the press corps is beholden to our government for access and commentary in a way that makes them complicit with power. they grant anonymity to officials and pull stories. their behavior is not consistent with the role they have to play in our democracy. i don't know what the answer is, but the newspapers have been coasting on the idea that they represent a powerful check on government power. in the meantime, the new york times, for example, actually enabled it, then went on a speaking tour to tell us how brave and patriotic they were.
http://www.perrspectives.com/blog/archives/000996.htm
"News flash: Pricing a product does not establish its value. What you have to do is find a price that people will pay."

Bingo. They don't seem to get it: it's just supply and demand. Right now, "content" is the most common thing in the whole world. You can't charge for it, because if you do, other people will just give it away, anyway. Information is ubiquitous. Therefore, it's free. Like tree leaves.

Information was never scarce: what was scarce was distribution space. That's gone.

Frankly, they should go to a web-only model. After all, their big cost is in printing all that paper: how much does the New York Times spend every day on printing? And the newspaper websites should not only sell advertising: they should have dedicated advertising sections, tailored to people who want to see ads - like your newspaper does.
Part of the problem is that "news" has become so ubiquitous that most of it has no cash value.

It used to be that I had to buy a paper to get timely information on what was happening, but now, if the President goes out for a hamburger the news appears almost simultaneously on hundreds of web sites.

And so you're right in laughing at publishing wonks suggesting that they must start unilaterally setting a price for news. They simply don't have the power to charge me for information that is widely available for free.

And what of the 10% of news that isn't just canned stuff? Well, unfortunately it's a small per cent of the population that has the interest, attention span and money to pay for good, investigative reporting. And I suspect that the market at this time is not big enough to bring in very much revenue.

And so, I agree that there will be a slow, decade long adjustment that will result in a completely new model of news delivery emerging. But before that happens we may have to see a period of time where most papers close their doors and a lot of quality reporters leave the business.
"Right now, "content" is the most common thing in the whole world. You can't charge for it, because if you do, other people will just give it away, anyway. Information is ubiquitous. Therefore, it's free. Like tree leaves."

not exactly true. Most people access the internet at work, at home, in public libraries or in public wi-fi spaces. People are paying for that access to information. At home, high-speed internet access costs at least $600 per year per household. People are paying for the content, the content providers just aren't getting any of that money.
Edgar,

You make a good point. The situation can be likened to a big flea market where people pay admission, but all of the goods and services inside are free, and all of the vendors fight and scratch for the right to provide you with the free stuff once you're inside.

Ultimately, it's 90% of the content providers online who have been duped into thinking that eventually they'll make money. But let's face it - blogs, online news, product information - nearly everything is technically worthless these days. Sure there are still some companies stupid enough to pay for banner ads (seriously, does ANYONE every buy a product because they saw a banner ad?) and popups and the like.

But ultimately, business and capitalism haven't changed. You make money by selling product that has value and that people will buy. So, if you're Amazon great! But still, Amazon is simply a store. That's all they are. eBay: a store.

Anyone thinking their going to make money online would be wise to acknowlege this simple fact: people pay for products and services that they can't get for free. But they DON'T typically pay for information, regardless of how valuable you, the seller thinks that information is or how much it cost you to produce.
@ Harry Homeless

People, sadly, doflock to the most trusted news source. Their most trusted source. That is not, necessarily, the most truthful.

People, in general, tend to seek validation of their own beliefs. When some media outlet, whether or not they call themselves "news," starts saying, "everything that's wrong in your life is this other guy's fault," there's suddenly pitchforks and torches gathering outside.

While I know that many of the issues currently plaguing us are the fault of the most recent administration, I also find fault with my neighbors who can't pay enough attention to realize what a bad idea it was to vote them into power. Who's fault is it no one pays attention to the "truth?" Ours.
@ Edgar - the problem is, with paying/charging for unfettered access, it very quickly becomes extortion. This is the very thing being campaigned against under the Net Neutrality laws we're currently trying to get passed.

Where would, say, Comcast feel inclined to not charge your new business startup a premium to not choke the bandwidth of their customers to your site? What stops TimeWarner from trying to sell their customers a "premium" package by hobbling every popular site (you're paying for one level of access, but certain sites are squeezed even slower)? Want to go to Salon.com? that's OK, but if you're trying to get to facebook, expect to wait an hour for the pages to load.

That ends up coercing the consumer onto certain sites - controlled by the ISP - simply because of faster response time.
Well said, Scott.

I'll be back.
I've been paying for the right to blog for five years. Granted it is a so-called writing site, but it served a purpose. I now feel like there are so many other sites I can go to for free, and ones who do not make it so difficult to add a photo to...and, nobody who pays their money to say, "I am a writer." If you write you are a writer, and not necessarily good.

A very interesting perspective, and I love and miss my LA Times. I hope something can work.

I thought of print on demand paper, so that it is current as I walk out the door. Feasible to charge to do?