Monday, March 9, 2009

Pay for WHAAAT?

David Carr writes in the NY Times of his desire for all newspaper execs to come together (in violation of antitrust laws) and agree on "No More Free Content," and "No More Free Ride to Aggregators" among other naive solutions. Jeff Jarvis correctly describes Carr's presciptions as a "medley of old songs about old newspaper business models in a new world." Rod Overton, a former TV executive, comments that even if newspapers move to the pay for content model, then local TV stations will sweep in and start delivering online local news (heavily promoted by their on-air personalities). Hard to believe that local TV would compete with local newspapers,in reporting real news, but probably true.

But some of the most perceptive comments come from Kathy E. Gill, in WiredPenn:

"I think that if I hear another newspaper person utter this phrase — no more free content — I will scream. It’s either that or shoot the guy. (It’s almost always a guy.)"

She correctly notes that paid content is a myth. "when you buy a subscription to a newspaper, are you 'paying for the content'? No. You are paying for the delivery of the content. Maybe."

When I was in charge of the circulation department at the LA Times ten years ago, the revenue we earned from subscriptions and street sale copies didn't come close to covering the cost of ink, paper, manufacture, and distribution. The newsstand and subscription price has come up a lot since then and the costs have gone down (much smaller circulation means less paper, fewer delivery trucks, more efficient printing) but I'm sure that circulation revenues don't cover much, if any, of the cost of the newsroom. So what you are paying for the newspaper is really paying for the "convenience" of having it delivered to you or available outside your favorite coffee shop. Not the content.

The real dilemma is that print advertising dollars translate into digital advertising nickels. The cost per thousand is much lower on the web, where ad inventory is huge, and competition for readers is worldwide, rather than limited to a specific geographic boundary, and measurement of advertising impact is much more meaningful. And this is not just a problem for newspapers, but particularly for the Television industry. Several years ago, an IBM research study framed it correctly in its study: "The end of advertising as we know it." (Based on interviews with 2400 consumers and 80 advertising experts.)

Instead of whining about giving away their content for free (most of which is based on wire service reports and available on countless web sites), newspapers should be thinking about different revenue opportunities. They should take a cue from the B2B publishing industry, which developed and monetized lead generation tools, white papers, webinars, trade shows, email newsletters and the like. Check out the comments of B2B web innovator Colin Crawford on this


  1. What are your thoughts on the viability of niche papers to successfully charge for their content? My feeling is that nobody will pay for content they can get elsewhere (e.g. stories from the wire services as you mentioned above), but would pay for unique and specialized information they can't get elsewhere. Would it be anathema to suggest that newspapers think like marketers and find out what their readers want and would pay for? I would assume that should be the first step, no?

    - Matthew Gilbert

  2. There are examples of niche publishers charging for content, more successfully in the B2B world, but "nearly consumer publishers" like the WSJ and Consumer Reports can do it. Read my earlier blog entry to newspaper publishers where I encourage them to think as niche media players rather than mass media. Still, it's not easy for general interest newspapers because folks will only pay for information that is unique and has long lasting value (an itunes song gets reused over and over, how often do you reuse a news article?), such as data like market share, pricing information, sales trends. The challenge is that newspapers cover "news" which is not protected by copyright, is not usually unique, and whose value doesn't last very long. Still, I think newspapers and magazines could be much more effective in carving up the markets they serve, re-purposing the content they are already creating, and monetizing it with new indigenous advertising, and in some cases, a pay for content approach.