The pros and cons of charging for news

Robb Crocker, a mid-career grad student in communications at Rutgers, did an email interview with me about the pros and cons of charging readers for news content. He posted the interview on his blog, here's the Q and A portion.


Q. In your opinion, what are the pros and cons of charging readers for online news?

A. On the pro side: it helps put in the minds of readers the idea that this content has some value; that there is a cost to producing it. And of course, in theory it creates a revenue stream for the publisher. Against this, on the con side, are these arguments:

(a)  Before online distribution, news in most media was free: radio, TV, and even newspapers — the subscription price or newsstand cost of a newspaper is really a convenience fee readers were willing to pay for their own personal copy. Historically, at least until the 1980s, it was a kind of freemium model: you were likely to find a newspaper to read sometime in the course of your day: at the barbershop, on a bus, in a waiting room, at the lunch counter, etc., and the pass-along readership factor was quite high. So if the prior news media never established value and a willingness of consumers to pay for news as distinct from convenience, then doing so for online news will be very difficult.

(b)  Except for a handful of publications with high-value content, like WSJ, FT, possibly NYT and various more topical niche publishers, it will be very difficult to implement a paid model in which the loss of ad revenue from lower page views is offset by the subscription income. Small local publications will simply not be able to implement pay systems by looking at the models that work for the high-value and niche publishers. 

(c)  Content has become atomized. The typical reader assembles a stream of online news not from a single source but from multiple sources, and will be unwilling to return to a single-source model.  

The Times should develop paid niche channels, not broad premium content packages

Yet another stage of the New York Times’s exploration of paid content options has come to light via Gawker, which has posted the text of two potential content packages, labeled “Silver” and “Gold.” It’s clear these are hypothetical options; Gawker quotes a Times spokesperson as writing them that “It’s very early in the process. We are still in the data collection phase.”

As described in the survey, Silver would be priced at $50 a year and offer benefits called FirstLook (early access to some stories) and BackStory (extra background on some stories), as well as TimesWire (now free) and TimesMachine (an archive service now largely free). You also get some extras including bling (coffee mug, tote bag, baseball cap, or a copy of the New York Times Style Guide) and discounts on photo reproductions and other stuff from the Times store.

At the Gold level, you would pay $150 a year for all of the above plus TimesEvents (preferred access to events organized or sponsored by the Times), and TimesInsider (personal access to some Times writers). The pitch for Gold is “with NYT Gold, you won’t just read the Times, you’ll experience it.”

Silver and Gold sound like packages dreamed up by Times execs who were thinking, “how can we add a couple of layers to the free content we’re putting on the site, and make it look like something some people might pay for?”

And what they came up with was something that resembles how memberships are generally packaged at cultural non-profits like the museums, opera companies and symphony orchestras of New York City, which those Times are undoubtedly members of. As a museum member, you might get similar invitations to special events, admission to special exhibits, a chance to meet the curator, behind-the-scenes tours, discounts at the museum store, and so on.

But the Times is not a museum. It’s a business with customers. And rather than creating general access packages that are aimed at all of its customers, the Times should look at the many specific niche interests of its customers and offer packages aimed at as many of those niches as possible. Few people are willing to pay for broad news content, no matter who they get to rub shoulders with, but many people are willing to pay for content relevant to their passions. If the Times asked their customers about that, they’d find that frequent traveler might be willing to buy premium travel content; a film buff might pay for deeper movie content; an avid gardener might pay for specialized horticultural material. The Times should think about a suite of TimesChannels: TimesTravel, Times Tech, TimesGourmet, TimesDesign, TimesGarden, TimesArt, TimesFilm, TimesWeather, TimesPuzzles, TimesBooks, TimesPolitics, TimesFinance, TimesWhatever, each with much deeper content than the free website has, each priced at $50 a year, and each potentially capable of attracting an audience as large as TimesSilver or TimesGold might get.

My prior posts at NiemanLab

The Boston Globe drama: what's next?

In the high-stakes poker game to at least erase the Boston Globe’s reported $85 million annual operating loss and get to breakeven, it looks like management has won the first few hands. Following deals with several other unions, the Globe and the Newspaper Guild reached a settlement in the wee hours this morning. All of the deals need to be ratified, but assuming that happens, what’s next?

The employee concessions so far will only bring the deficit down to $65 million, which leaves a long way to go. Presumably, the restructured union contracts will provide management the flexibility it needs to pursue strategies that not only close the gap, but reshape the business into a news enterprise ready for a new age.

Here are some thoughts on what else might be coming down the pike for the Globe of tomorrow to survive and be profitable:

Continue reading this post at Nieman Journalism Lab.

Paying for online news: Sorry, but the math just doesn’t work.

The morning’s RSS scan brings another couple of entrants in the ongoing conversation about paying for news on newspaper web sites:

• As Roy Greenslade reports, News Corp. chief Rupert Murdoch favors charging: “People reading news for free on the web, that’s got to change.”
• In in an AJR article by Paul Farhi questioning the wisdom of AP’s decision, years ago, to start selling its content to online-only publishers, AP president and CEO Tom Curley is quoted as favoring reader fees, as well: “The readers and viewers are going to have to pay more. Advertising is not there. Advertising will likely be contracting. So there has to be a shift. If I had tried to suggest this a couple of years ago, I’d be hollered out of the room. Last year the realization started to occur. I would say the conversation has now turned from a whisper into a roar. Media CEOs are saying, ‘I’ve got to charge.’”

OK, newspaper CEOs, let's have a look at that urge to charge you’re roaring about every morning when you wake up. I ran some numbers derived from the NAA’s just-reported 2008 newspaper revenue recap. Here’s what the back of my envelope says:

Read the rest of this post at Nieman Journalism Lab.