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A Tip for the Herald: Explain What Happened

The Miami Herald very quietly announced it has extinguished a very brief experiment asking its web readers for voluntary contributions.

This announcement was so quiet, and the experiment so brief, one can only surmise that it didn't go very well. That the newspaper is making us surmise at all about the successes and failures of what has become known as the "tip-jar program" is disappointing, but more on that in 30 seconds or so.

When the company announced last December that it was going to provide a link for payment in the form of a donation at the end of each of its online stories I have to admit I thought it a bit goofy

But after thinking about it for another minute or two, I mostly loved it.

Continue reading "A Tip for the Herald: Explain What Happened" »

Coming Soon: Universal Pay Scheme

Amid the continuing fiscal meltdown for print media, a group has come up with a pay scheme that would make paying for reading a little less painless - at least a lot less cumbersome than the absurd mirco-payment method.

Though no one has yet signed on, the idea is quickly gaining currency. In essence, a reader can go to a central site and make a payment, which allows him access to numerous affiliated publications.

(Why didn't I think of this first?)

There's much heft, at least in terms of name recognition, behind the venture at Journalism Online LLC. Among the principals include Court TV founder Steven Brill, former Wall Street Journal publisher Gordon Crovitz, and Leo Hindery Jr., who has headed communications companies like Tele-Communications Inc., Global Crossing and the YES Network, and now runs InterMedia Partners, a private equity firm that specializes in media.

Brill, who said the system will be up and running by the fall, thinks the fee should be around $15 per month for the readers. He said the venture streamlines the paying process and facilitates easy access:

"The most important thing is it's simple to use. Much of the barrier to charging online is the transaction friction, as opposed to the actual cost. With this system, you'd have a single password, give your credit card number just once."

Beyond getting money from the readers, the venture is mulling over charging search engines and news aggregators for royalty. This, without a doubt, will be met with some pushback, especially from dominant Internet entities such as Google.

A pay scheme seems inevitable in the near future as newspapers continue to flounder with sharply decreasing ad revenues. In 2008, newspapers reported a 16.6 decline in ad revenue, coinciding with the recession that began in late 2007. This year, ad revenues are down by as much as 30% in the first quarter, as a few papers have folded with a number of others also teetering on the brink of extinction.

Newsday Plans to Charge for Web Site

Newsday on Long Island may become the first U.S. metro daily newspaper to jump into the pay fray as a way to sustain the current business model. During a conference call Thursday, Cablevision CEO Tom Rutledge said his company, which owns Newsday and News12, a cable TV network in the New York metro area, will be charging for content on their sites, though he did not specify a time.

"When we purchased Newsday, we were aware of the long-term issues facing the traditional newspaper industry," Rutledge said. "We plan to end the distribution of free web content and make our newsgathering capabilities a service to our customers."

Newsday reportedly lost over $300 million in the fourth quarter last year and, with a well-trafficked web site, pay-for-content may help to offset some of the losses. Currently, the Wall Street Journal is the only U.S. newspaper site that requires a subscription.

Of course, it didn't take long for skeptics to emerge. In his blog, Ken Doctor thinks Newsday may be committing web site suicide:

The average unique visitor on Newsday.com spends four minutes, 25 seconds per month on the site. Ouch. That number can sub for lots of focus groups, price elasticity testing and the like. Newsday's would-be digital audience has voted with its fingertips. That number is up almost one minute from a year earlier, here courtesy of E&P's monthly Nielsen rankings, but still ranks Newsday as having the lowest online engagement of the top 30 newspaper sites.

Confronted with having to pay for a site you may use less than five minutes a month, you think you are going to pay for it? Wrong site. Wrong year. Wrong metro area.

He may have a very valid point. The New York metro area is blanketed by newspaper web sites: The New York Times, Daily News, Post and Star-Ledger, not to mention the Journal. This goes back to the argument that if a paywall has to be erected, the most probable way for it to succeed is having a cooperative among all newspapers.

Erecting the Great (Pay) Wall for Newspapers

Let's face it, pay-per-view will be returning to newspaper web sites with a vengeance in the near future. If not by the second half of this year, definitely 2010. Ad revenue is way down - for both print and online - and the recession isn't going anywhere soon.

By now, everyone's shared their own ideas about how to rescue the business. But lately, it's become apparent that we've run out of new thoughts. Most everyone has returned to some variation of a pay scheme.

No one except the Christian Science Monitor dares to do the obvious, which is to shut down the print edition altogether. Newspapers are still too afraid to embrace the new world by leaving the "paper" part of their legacy behind. Since that's the case, a paywall seems to be the only thing that might keep more newspapers from going out of business, for now.

But if we must erect a paywall, let's not make it just any wall. Let's build a Great (pay) Wall that's strong enough to keep the barbarians at bay.

Let's start by creating a cooperative, managed by the NAA (Newspaper Association of America). Every paper that's part of the NAA may participate in this cooperative, which will serve as the clearinghouse for the new great paywall.

Then, with ample warning to the readers, put up the wall on September 1. Why September 1? Because the summer is over, kids are back in school and adults are back at their computer terminals. But more important, it's the dawn of the football season, when web traffic typically spikes for news sites.

Once the wall is up, every newspaper web site is accessible only to paid subscribers. Each paper may decide to allow some free content daily, but it must be extremely limited. The index page for every paper's site should be so full of teasers on the good stuff that a reader just can't help himself but to pay to see what he's missing.

So how do you subscribe? There would be two kinds of subscribers. Anyone who subscribes to the print edition of any paper would be granted a complimentary online subscription. If you don't want to subscribe to your local paper - or any paper, for that matter - you may become an online-only subscriber, at say, $50 a year for the privilege.

Your unique username and password would allow you access to every newspaper site that's part of this cooperative. But here's one catch - you could only access it from one computer at a time (like how an AOL account works) so you won't be so inclined to share your account with dozens of your buddies. Educational institutions and large companies may purchase corporate accounts so that individuals using school or company terminals will be able to bypass the wall.

So how would the money be distributed? Papers get to keep all of the print subscriber money, so it makes sense for individual papers to work to drive up circulation. As for the online-only subscribers, half of the money would be equally divided among all members (socialism), the other half would be distributed according to web site traffic (capitalism), so papers would have an incentive to drive in more traffic to their own sites.

Let's do a little, and very crude, math. According to the NAA, its 2,000 member sites average about 75 million unique visitors. About 25 million already subscribe to a paper, so leave them out. If we may extract 50 bucks out of the rest of the 50 million heretofore freeloaders, that's $2.5 billion. Counting conservatively, at $1 billion, that means under the 50-50 scheme, the smallest of the papers would make about $250,000 annually. The New York Times, on the other hand, would make about $90 million, Wall Street Journal $33.5 million, San Francisco Chronicle, $38 million.

This model may tide the papers over the tough times until they figure out just what needs to be done for long-term survival. And there are challenges to implement this scheme: The Justice Department may have to sign off on the cooperative. There may be fierce pushback initially by the consumers. An independent auditor would be required to referee disputes.

And finally, the newspaper business has to be ready for the potential that this concept may be more like the Berlin Wall than the Great Wall of China - merely a flawed stop-gap rather than something that brings about stability and longevity. At some point in the future, the papers must accept the new reality and act accordingly.

That starts with stopping the presses.

A Newspaper Bailout?

With newspapers seemingly failing faster than banks, many ideas have sprouted in an effort to "save" the business. Content-sharing between former rivals is one. Reducing or eliminating print editions is another. And a couple of chains have resorted to unpaid furloughs to save jobs.

L.A. Times' Tim Rutten, his own paper also in a world of trouble, thinks that making the readers pay is the only way out. His idea certainly isn't original, but his proposal adds one twist - allowing the newspaper business to be exempt from existing anti-trust laws:

Two major newspapers -- the Wall Street Journal and the Financial Times -- charge readers tiered fees to view their online journalism. The rest of the industry has decided there's more money to be made in charging advertisers for the larger audiences that free content attracts than in selling online subscriptions.

That's wrong, in my view, but it's hard to argue with as long as some major newspapers are giving their online journalism away; until they stop, nobody can risk charging for theirs. That's where the antitrust exemption would come in: It would allow all U.S. newspaper companies -- and others in the English-speaking world, as well as popular broadcast-based sites such as CNN.com -- to sit down and negotiate an agreement on how to scale prices and, then, to begin imposing them simultaneously.

Walter Isaacson, former managing editor of Time, thinks a model based on the concepts of iTunes and PayPal might work. And his system could be used to encompass all media, including magazines, blogs and even garage bands.

Another idea, suggested by two Yale money men David Swensen and Michael Schmidt, is to get rich guys to endow newspapers, as they do universities. Essentially, they'd be sugar daddies subsidizing non-profit outfits:

Note that just as endowed educational institutions charge tuition, endowed newspapers would generate incremental revenues from hard-copy sales and online subscriptions. If revenues were to exceed the costs of distribution, the endowment requirement would decline.

Many newspapers will not weather the digital storm on their own. Only a handful of foundations and wealthy individuals have the money required to endow, and thereby preserve, our nation's premier news-gathering organizations. Enlightened philanthropists must act now or watch a vital component of American democracy fade into irrelevance.

Either method, however, introduces the potential dangers of polarizing both the publications and the audience. Sure, maybe the New York Times and Wall Street Journal might get an endowment from Bill Gates or Warren Buffet, but what of the Bakersfield Californian and The State of Columbia, S.C.? And if we go the route of the cartels, inevitably the big papers and large chains will band together, leaving the smaller, locally-owned papers in the cold.

It is the demise of the local papers that would have a greater impact on journalism. After all, the masses - the majority of the people in the United States - do not read the Times or the Journal to get their news. If the smaller chains and papers disappear - or are forced to a pay model that their customers are unwilling to support, then we would have an increasingly ignorant and less engaged public. They cannot be blithely written off - as the elites wish. They need to be part of this conversation.

A Pay-Per-View Future?

The raging debate in the media industry these days is centered on whether media entities - specifically newspapers - should charge for their content. And if their readers are willing to pay for it.

Pay-for-content certainly isn't a new idea. The New York Times launched "Times Select" in 2005, putting some of its premium content behind a pay wall and charged $49.95 annually for it. It lasted just two years before the Times abandoned it in September 2007. The Wall Street Journal and Financial Times maintain pay walls, but no other major U.S. or U.K. publications do so at this time.

Of course, with the current economic climate and plunging ad revenues, the pay-for-content concept is enjoying a rebirth - at least it's back in the conversation. Writing in the Times, David Carr pondered the possibility of an iTunes-like setup for newspapers to deliver the news, only to paying subscribers. It needs to go that way because the current model of online advertising just isn't going to pay the bills:

As a report by Craig Moffett of Bernstein Research stated last year, "The notion that the enormous cost of real news-gathering might be supported by the ad load of display advertising down the side of the page, or by the revenue share from having a Google search box in the corner of the page, or even by a 15-second teaser from Geico prior to a news clip, is idiotic on its face."

Slate's Jack Shafer responded to Carr's challenge by suggesting a Kindle-like device for the purpose of receiving the news - with subscribers paying a fee for the privilege. But Shafer admits that this model potentially would only work for the big dogs - the Times, Wall Street Journal, Washington Post, maybe USA Today and Los Angeles Times.

This is where the future of newspapers - at least in the U.S. - may be reaching a fork in the road. There will be national papers that provide national and international news coverage, do investigative reporting and publish commentaries from the top thinkers and movers. Other papers would have to become aggressively local, covering cities, towns and rural areas - and they could charge for this content, too, since they will be found nowhere else.

The success of any pay-per-view model, however, will hinge on the public's willingness to fork over the dough for stuff it's taken for granted for some time now. At the moment, less than 10% of the public is willing to pay $30 a year for currently ad-driven free sites. Mike Vorhaus of Advertising Age writes that "Consumers might 'hate ads,' but not enough to pay even as little as a few cents a day to avoid them."

19-Vorhaus-120808.jpg
Source: Advertising Age

So the question remains: Will newspapers last long enough to finally get their readers to pay up for reading the news online?

Heading for the Cliff with Blinders On

Sometimes I just don't get newspaper journalists, my onetime comrades-in-arms. With doom and gloom all over the newspaper business, many of them can't seem to see the big picture. Most often, they'd blame the impending demise of the papers on either corporate ownership or the Internet.

Here's latest example. Writing for the Wall Street Journal, Paul Mulshine of the Newark Star-Ledger thundered:

So if you want a car or a job, go to the Internet. But don't expect that Web site to hire somebody to sit through town-council meetings and explain to you why your taxes will be going up. Soon, newspapers won't be able to do it either.

Has it ever occurred to him that the web and the survival of newspapers need not be mutually exclusive?

For newspapers to stave off elimination, they need to start seeing the web as an ally, not an enemy. You can still practice journalism on the web, but you can't practice journalism when you're unemployed. What newspapers are facing now is mostly a technical issue, not one of their relevance. People still need journalists to do their jobs, they just don't necessarily need their news in the form of printed paper thrown at their doorsteps.

Glenn Reynolds and Will Leitch don't pretend to be - and they'll never replace - journalists. But instead of spending countless time bashing them, journalists need to open their eyes, and minds, to survive the Internet Age.

To Charge or Not to Charge ...

Joel Brinkley, a former foreign policy correspondent for the New York Times, had what he considered a revolutionary idea for floundering newspapers to regain their footing. In essence:

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. No paper would have to charge, and each paper could determine its own price. But 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.

Basically, Brinkley wants the Justice Department to allow the newspapers to practice a form of collusion so they can begin charging for original content. Collusion is required because unless almost all of the papers decide to get in, it would blow the pooch.

The problem with this thinking is that unless the entire world goes in on it, it just won't work. In fact, Brinkley's idea is really backward thinking - his old employer, the New York Times, had tried it and it didn't work. The Times Select concept was officially abandoned in September 2007 because paywalls only hurt business.

Newspapers would be better off thinking up ways to extract more out of their advertisers than the ol' pay-per-view route.