More news outlets are ready to charge for online content now that software has been developed to expedite the process. Newsday, The Wall Street Journal and The Financial Times already charge online readers. -db
The New York Times
February 2, 2010
By Richard Pérez-Peña
Extracting payment from online readers has been called everything from the next great folly of print journalism to its salvation, but to get a glimpse of how it really looks, head to Lancaster, Pa.
Specifically, head to the offices of The Intelligencer Journal-Lancaster New Era, one of the first handful of news outlets to acknowledge in interviews that it intends, in the next few months, to start using a software system developed by the entrepreneurs Steven Brill, L. Gordon Crovitz and their partners, which they are calling Press+. Others interested include The Fayetteville Observerin North Carolina and GlobalPost, a news site based in Boston.
A very small number of news organizations, including The Wall Street Journal, The Financial Times and Newsday, already charge online readers, each with a system developed largely in-house, and The New York Times announced recently that it planned to do the same. But with advertising plummeting, many other publishers eager for a new source of revenue are considering making the switch, despite the risk of losing audience and advertising.
Last year, Mr. Brill and company seized on that interest, founding their operation, Journalism Online, with the aim of developing a highly flexible system that would become the industry standard, and keeping 20 percent of their client’s online revenue as their fee.
They say they have worked with potential clients from around the world, most of whom they will not name, who operate more than 1,300 news sites. The News Corporation, owner of The Wall Street Journal, is also marketing an online pay system to publishers, but industry executives say that it has made little headway.
So if it turns out that Lancaster is in the vanguard of a mass movement — and there are plenty of skeptics who say that charging could be a short-lived experiment — then Press+, if it works well, could be the movement’s chief organizer.
But in their first extended interview in months, Mr. Crovitz and Mr. Brill, while offering a look at how the system works, also cautioned against high expectations and said they had urged their clients to take small steps. It will take years before charging Internet users significantly changes the economics of a deeply troubled industry, they said.
As newsprint becomes a smaller part of the business, “you want to establish the notion that it’s worth something online,” Mr. Brill said. “What we have convinced people of is they don’t have to make a drastic decision. You can experiment.”
For those who have signed on, such lowered expectations are part of the appeal.
“We’re starting small, so if this really turns people off, we’re not playing with a huge chunk of our readership,” said Ernest J. Schreiber, editor of the Lancaster paper’s Web site,LancasterOnline.com. The site has been using and adapting the Press+ software for a while. He said it would go into effect in a month or two.
At the outset, the paper, owned by a local company, Steinman Enterprises, will charge only readers outside its immediate area and only for reading obituaries, with a little green Press+ logo next to each headline covered by the system. It will allow a reader to see a certain number of obituaries free before a box pops onto the screen demanding a flat fee to keep reading, but the paper has not yet decided what that number will be, or how much it will charge.
“We have news that no one else has, like these obituaries,” Mr. Schreiber said. “We would eventually take other sections of our online content into the system. I’m thinking local sports, perhaps.”
The system may generate only a few hundred thousand dollars a year in revenue, he said, but “that’s enough to pay for a few reporters.”
Philip S. Balboni, president and chief executive of GlobalPost, a year-old site that focuses on international news, said it would take a different approach to using Press+. Frequent users will see messages urging them to join and pay, but it will be voluntary; there will be levels of membership with different prices, and those who do pay will be able to suggest topics for articles and have access to premium content. Those who do not join will still have access to most of the site.
“We anticipate rolling it out by the end of March,” and hope to have tens of thousands of paying readers by year’s end, he said. “By Year 2, it would become a very significant contributor to our total funding, but advertising I anticipate would still be No. 1.”
Mr. Crovitz is a former publisher of The Wall Street Journal, where he oversaw its online pay system, and began to develop a new version of that system.
Mr. Brill has a long record of starting ventures in untested waters, some more successful than others. He founded The American Lawyer magazine and the Court TV channel, which succeeded, and Brill’s Content, a magazine about media, which did not. He also founded Verified Identity Pass, whose system, called Clear, allowed frequent travelers to speed through airport security, but he severed ties with the company before it ceased operation last year.
Their partners in Journalism Online include Leo Hindery Jr., a former top executive at Tele-Communications Inc. and the YES Network, and Ken Ficara, who helped develop and run The Journal’s Web site.“We are quite a ways from widespread adoption of paid content, so it’s too soon to tell how successful they’ll be,” said Rick Edmonds, a media business analyst at the Poynter Institute in St. Petersburg, Fla. But most publishers will not want to develop their own software systems, he said, and assuming Press+ works well, its chances of catching on “look pretty good.”
“The way they have set it up, letting the publishers mix and match and design their own system, I think that’s a good fit because we’re in a period where newspapers are going to begin to experiment with all sorts of approaches,” Mr. Edmonds said.
A move to charge for content means not a single decision, but dozens. Sites can let nonpaying readers see the top of an article, while only paying readers see the whole thing; they can allow unlimited reading of certain articles, while charging for others; they can charge by the month or by the click; they can limit free reading to a certain number of articles a month; they can treat readers differently depending on their location; they can charge a single price or have a tiered system; they can give print subscribers free access or charge them, too.
Press+ is meant to accommodate all approaches, collect data on how they work and share the results with clients. As with e-commerce systems like PayPal, a consumer who already has a Press+ account will be able to use it to gain access to additional sites without re-entering a credit card number.
“One of the things they’re paying for is convenience and certainty,” Mr. Crovitz said.
Mr. Schreiber said he and his colleagues in Lancaster have no fear of playing guinea pig. If charging online turns out to be a mistake, the paper will just move on to the next experiment.
Given the industry’s troubles, “doing nothing is not an option,” he said. “The sooner we can do it, the sooner we can find something that works.”
One Comment
Paywalls kill website traffic. Decreased website traffic is unattractive to advertisers. The paywall may seem necessary to many publications, but it seems to me to be an old world way of thinking about how media is consumed. It seems that traditional newspapers are slow to come to this realization and are now scrambling.
“The key is that the internet destroyed the economics of publishing, completely and irrevocably. Whereas printing presses were once incredibly expensive to set up, the cost of publishing on the internet keeps falling asymptotically towards zero. This removes both the competitive advantage and the positive returns to scale print publishers once enjoyed. However, even if society no longer needs newspapers, we still need journalism — and in that seed still lies promise for publishers who can figure out how to come out kicking on the other side of this digital revolution.” – Clay Shirky
Recently one of our favorite publications, The Portsmouth Herald, announced they will begin charging users to access their website news content. This new fee-based update took effect on November 16. This change has been met with fierce criticism from many loyal SeacoastOnline readers. John Tabor, president of Seacoast Media Group states giving news away for free online while offering the same content in a paid physical paper is “an inherently contradictory and unstable model.” The website currently does not generate enough advertising revenue to cover the costs of maintaining the site and paying Seacoast Media Group’s 33-person news staff, he said. “The truth is that the advertising online will never pay the full cost of the newsroom, nor will a single advertising revenue stream, which is very volatile, supports a lot of local news gathering that we do,” he said.
In the ever strategic words of Seth Godin “When people talk about the problem with ‘free online’, they’re missing the point. Free is creating lots of attention, but marketers haven’t gotten smart enough to do something profitable with that attention. If someone has commented on your blog or replied to your tweet [or reads your news content], they are paying with their attention. Whilst not being a monetary transaction, that attention must be acknowledged and the relationship built on in order to convert the attention to an action – whether that be clicking through to your website or buying your product or talking about your product/service with someone else (advocacy). Audience members will not sit still for having their time wasted or disregarded. If time is money (and it is) then the audience member is paying with their attention and expects to get their money’s worth.” The following is our take on this internet marketing situation with some ideas to add value to the new paywall based model.
As John Tabor stated giving news away for free online while offering the same content in a paid physical paper is “an inherently contradictory and unstable model.” Are we again focusing on the wrong part of the equation? Instead of stating that offering news for free online is what makes charging for physical newspapers an unstable model, does it make more sense to argue that continuing to run a print publication with a 33 person news staff is an unstable model? Is benevolently pushing forward a print publication simply delaying the inevitable? Is it time to rethink the business model entirely?
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