USC Annenberg Online Journalism ReviewUSC





From Free to Fee in 10 Easy Steps

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The pundits said it couldn't be done. They said charging readers would spell doom for news sites. The ABQjournal proved them wrong: Traffic and advertising revenues are up since the site started charging in 2002. Here's a step-by-step guide to how they did it -- and how you can do it too.

Information wants to be free, or so the mantra of the Internet generation goes.

I believed the mantra. I believed it and fought for it.

As the Albuquerque Journal (independently owned, 156,000 Sunday circulation) prepared to launch our online edition in 1996, my boss asked -- why don't we charge for our site? San Jose was charging. The Colorado Springs Gazette Telegraph was charging. Why should the Albuquerque Journal be free?

That's not how it's done on the Internet, I explained. On the Internet, information wants to be free.

My arguments prevailed, and ABQjournal.com joined the free content frenzy in 1996.

Our launch was a great success: More than 50,000 unique users visited our site some days.

But our success was a mixed blessing. As traffic increased, our bandwidth needs increased. The site was moved from a hosted, shared server. Our costs climbed.

My boss asked me again why we were not charging readers for a service that was costing us money. He worried about reports that people were dropping their newspaper subscriptions because they could get all our stories for free online. "Shouldn't we be charging?" he asked.

"Since we closed off our site to all but paying subscribers two years ago, 35,000 print newspaper subscribers have signed up to use the site. Almost 2,000 people are now paying either $8 per month or $60 per year for online-only subscriptions. That's more than $100,000 in truly new revenues generated by subscriptions.

No, I assured him: If you make readers pay, they'll just go away. They'll get their news online somewhere else. We'll lose the next generation of readers, who will get used to finding their news elsewhere online, and will forget about us.

Finally, the publisher decided he'd take his chances. In December 2000, he ordered us to start charging for access to ABQjournal.com. 

I started to protest, but then I looked at the facts: Newspaper circulation was down. Web traffic and costs were climbing. Web advertising was stagnant or falling. I held my tongue. Business realities replaced my enthusiasm for free. Information may want to be free, but I wanted to be paid.

Since we closed off our site to all but paying subscribers two years ago, 35,000 print newspaper subscribers have signed up to use the site. Almost 2,000 people are now paying either $8 per month or $60 per year for online-only subscriptions. That's more than $100,000 in truly new revenues generated by subscriptions.

Page views are up 30 percent; our advertising revenue is up more than 50 percent. And our print subscriptions are not falling.

And now I have found a different mantra: What I do has value. What we all do has value. We spend our days and nights pulling together a top quality, useful service. Like anything else you consume, you should pay for your local newspaper, whether you get it on your doorstep or online.

The Remote Places Rule

Many pundits -- including Borrell Associates analyst Peter Krasilovsky -- say closing off your news site to all but paying readers is a formula for failure. Unless.

Unless you happen to be the sole provider of local news in a remote place, like Spokane or Albuquerque.

"It's time to declare the free content model has failed."

In remote places, charging for news online can work, the logic goes, because readers don't have another place they can easily go to get the content and service you provide.

Krasilovsky spoke to a group of Knight media fellows recently about how the Internet is encroaching on newspapers' bottom line and what media companies can do about it.

He said other than papers in remote places, newspapers can't get away with closing off their sites to all but paying readers.

I think he's wrong. I think the ABQjournal model can work at all newspapers.

Yes, readers can get the news basics from Yahoo and Google and plenty of other places, but there's only one place they can go to get quality, in-depth, daily local reporting that brings them up to date on what's going on in their backyard: the local newspaper and newspaper Web site.

In chaos, we seek authority. The Internet is the most chaotic information source of all time. For that reason, many of the most accessed news sites on the Web are those supported by newspaper companies.

I call it the authoritative content model.

Readers need what you have to offer. And if you stop giving it away for free, they will pay for it.

We Are Not Alone

The Wall Street Journal charges. Consumer Reports charges. Encyclopaedia Britannica and The Irish Times charge. From Mexico to England, newspapers are charging for access to their Web sites. Local newspapers charge as well, including The Columbus (Ohio) Dispatch and the Tulsa (Oklahoma) World.

Bernard Gwertzman, the former online editor for The New York Times, recently told OJR that he believes it is time for some publications to look at switching from free to fee.

"I believe that now the Times and other publications with large subscriber bases should charge a fee, even if that means the number of viewers may drop," he said. "Otherwise there is no way to earn enough income to expand the online newspapers into solid news publications in their own right."

Time Warner has jumped on the subscription bandwagon by charging to access some of its magazine sites, including Time, Entertainment Weekly and People. Sports Illustrated recently announced that it plans to start charging to access parts of the SI.com Web site.

CanWest Global Communications Corp. -- owner of Canada.com and 10 major daily newspapers and the National Post -- will begin charging readers to access online news content in November.

As I recently told a crowd at the World Association of Newspapers conference in Ireland: "It's time to declare the free content model has failed. Quality content is too expensive to produce and too valuable to its readers to give it away. In fact, the act of giving it away devalues it even more."

If you're ready to take that bold step and try charging for some or all of the content on your news site, here's my 10-step guide to help get you from free to fee:

1) Decide why you want to charge and convince your newsroom it's the way to go

It could be as simple as you're tired of putting more money into your Web site than you're getting back.

Or maybe market research is showing a decline in print readership, and you're worried your site is "cannibalizing" print readers.

It could be as simple as the boss said "charge."

Whatever reasons you have for wanting to charge, you're going to have to convince your newsroom it's the right way to go.

How do you convince your staff that charging is a good idea? First, point out that people pay for the printed newspaper -- there's no reason they shouldn't pay for the same product online.
 
Longtime Albuquerque Journal copy editor/designer George Gibson put it this way: I work hard to package the content, write the headlines. If I walked into McDonald's, grabbed a burger and ate it and then refused to pay, they'd put me in jail. What I do has value, he said, and people ought to be willing to pay for it.

Reporters may be your hardest sell. What reporter would be in favor of reducing his potential audience? Reporters often choose journalism because they want to report the truth and share it with the largest number of people that they can. Journalism is a higher calling to them, not a business.

Reporters will object to their stories not being available to everyone. They will object -- as Albuquerque Journal environmental reporter Tania Soussan did -- that their enterprise stories aren't available to the people they cover who don't subscribe to the newspaper, or to their peers in the industry.

There is a workaround to this problem: Reporters can e-mail stories to sources in the same way they might clip and send the printed newspaper. ABQjournal.com also makes it easy for subscribers to share stories: They can send a story to as many people as they like, and the people they send stories to can read them for free. Viral marketing spreads the brand without damaging the subscription model.

And when the story warrants it -- such as with our recent series on drunk driving -- we can and will open our articles to both paying and nonpaying users.

But there's another problem not so easily solved: Stories Soussan and other reporters break are often picked up by the Associated Press, bylines excised, hard-fought details removed, stories trimmed -- and redisplayed at sites from Google to Yahoo with nary a mention of the newspaper or reporter. 

Sites such as the Society of Environmental Journalists then link to the stories and attribute them to the site where they appear with the Associated Press credit line -- losing branding for the newspaper and credit for the reporter.

2) Set your paid content model

The model determines everything else: who receives access to the site, how they access the site, what areas they can access. A few of the models in use include:

The ABQjournal model:
Byline news, sports and features created by newspaper staff are behind a paid curtain accessible by print subscribers who have registered for access. All others who attempt to access these stories are greeted by a message asking them to subscribe to the print or online edition. Access to classified and display advertising is free. Special sections are free. Headlines are free. Summaries are free. Seven-day subscribers to the printed newspaper receive access to all content on the Web site as part of their print subscription.

The Business 2.0 model:
Nonsubscribers can see the front-page promos and can read the first page of stories, but once you try to go to page two, you're prompted to subscribe. There is no Web-only subscription option.

This solves a few fundamental problems. First, you don't have two subscriber lists to deal with. Second, online subscribers also get the print edition so they see the product with all news and advertising. Third, you don't have to figure out how to count online subscribers in your Audit Bureau of Circulations numbers. Online subscribers are print subscribers. Print subscribers are online subscribers.

What about people who don't want the printed product? You might donate their copies to Newspaper in Education programs or other charitable deliveries like nursing homes or prisons.

The Winnipeg model:
The Winnipeg Free Press allows only subscribers to see any news. It doesn't offer headlines. It doesn't offer news summaries. The home page makes it quite clear: Subscribe or you're not welcome here.

The Borrell premium content model:
Borrell believes most newspapers can't successfully charge for the main news content. Instead, analysts believe, newspapers should charge for value-added and premium content such as archives, newsletters and delivery of personalized content.

For example, The New York Times sells repackagings of archived stories, and recently began selling subscriptions to their News Tracker, which e-mails you stories of interest to you. The Guardian in London also charges for news alerts, as does the Asahi Shimbun in Japan and many others.

The Times of London model:
Charge readers outside of your circulation area for access to your Web site. The Times charges overseas users about $150 a year to access the site.

What about single-copy buyers? Some people walk to the local 7-Eleven and buy a newspaper every day. Business 2.0 prints an online access code in the table of contents of each issue. Newspapers could do something similar to give single-copy buyers online access.

3) Set pricing

You don't want to set the price for your online edition so low that local subscribers would be tempted to drop their print subscriptions to save money. The pricing should also not be so high to deter those truly interested in the content from signing up.

ABQjournal set its price at $8 for monthly and $60 for yearly access. Daily in-area delivery of the paper costs $11.25 per month.

Our Web-only pricing was set to be slightly more than 25 percent of the print cost. We thought this would qualify online subscriptions to be counted by the Audit Bureau of Circulations, but ABC rules have been a moving target. Be sure to check with the ABC before making any decision based on its rules.

Digital editions that are an exact replica of the paper as it appeared in print seem to adhere strictly to ABC rules for being counted as circulation. Some papers -- notably the Freedom Newspaper chain -- seem to be using these to replace mail editions in markets such as Colorado Springs at the Gazette Telegraph.

What about micropayments? It is expensive to charge small amounts of money to a credit card. So if you're going to charge small fees for each article, let's say 10 cents each, you must aggregate the charges before posting them to a credit card processor. Micropayments have been a failure in most cases since processing fees eat up potential profits on charges of less than about $6.

But the potential is there. Services such as Clickshare and Yaga offer software and services to aggregate these charges.

4) Mechanics of locking content

If you're using an open source Web server such as Apache, locking down content is not a big deal. If you're not, a company such as Clickshare can help.

Using Apache, you just need to specify parameters that determine level of access using configuration files. You may then close areas of a site either site-wide, by directory (section) or by story or page.

In our case, an editor may make the judgment to make a story free at anytime by placing it in a "free" directory. This allowed journalists to make all the news related to Sept. 11, 2001 free immediately without the help of technicians. The entire site can be opened up by a member of the editorial staff at any time.

Using an open-source solution, an in-house developer or a hired programmer should be able to set up access in an afternoon or less. Setting up the user database takes a little more effort, but not much. We programmed our registration system using Perl programming language and a Mysql database.

5) Keeping track of users/backups

If your model is one where you are giving free access to print subscribers, you must have a way of comparing the online user information to your print subscriber information. You must know who your customers are in order to provide access to the site for them.

Your circulation department only needs to know one thing to deliver a newspaper: where. They don't have to know where the bill is being sent. They don't have to know who is going to read the paper. They don't have to know the phone number of the person receiving the paper.

The circulation department may tell you it knows the who, what, where and when, but for 5 percent to 10 percent of the subscribers, data will be incorrect. So if you have 150,000 potential customers who may register for the site and you're matching on phone numbers in the circulation records to see if the person is a paying subscriber, at a minimum you could have 7,500 potential problems.

When the computer tries to match the two records it will fail. A loyal customer will then be blocked from access. So how do you deal with that?

In our case we chose online self-registration with a trial period for anyone who registers. So, if you go to our Web site and claim to be a subscriber you will immediately gain access to our Web site.

Your subscription record will be checked and if it matches, you will be added to the online subscriber database. If it doesn't match, the information will be sent to the circulation department, which will then try to manually match the records and use the information to sell you a paper or online subscription. 

Each morning the online subscription records are matched to the print subscription and any account that has been marked as inactive in the print system becomes inactive in the online system.

6) Getting the money

If you allow online-only subscriptions, you need a way to collect and process payments. You'll want to accept payment any way a customer wants to pay.

Most customers will be willing to give you credit card information via a form on a secure Web server. This information can then be processed either online through a credit card processor company such as iBill, or can be passed off to your credit department to charge the card manually.

You'll need to set up a secure (HTTPs) server that will encrypt the credit card numbers from the customer to your billing department. You must have an SSL (security certificate) and deal with a payment processor such as VeriSign Payment Services.

Some customers will want to pay by mail. Others will want to give you credit card numbers over the phone. Some will want to pay with a check. Some will need you to send an invoice to their accounting department. Some customers will even send or bring in cash before submitting an online form. Still others will want to pay via online services such as PayPal.

Some customers will want to transfer funds from their print account and back. That is, they'll start an online-only yearly account, then after two months decide they really want the printed newspaper. You certainly want to encourage the switch back to print, so you need a way to easily transfer funds from online accounts to print accounts and vice versa.

Customers don't care which department should be dealing with their problems. It doesn't matter if it is an advertising, circulation or online problem: to the customer it is a newspaper problem.

Make it easy for your readers to say yes to paying for your online content. There are a million possible ways for them to give you their money -- be ready to take it in whatever form they offer it.

And be ready to encounter a problem all merchants face: bad faith. That could include fraud, or people who sign up and then experience buyer's remorse, requesting their credit card to refund the amount of the purchase, aka a chargeback. If chargebacks exceed a certain limit -- 1 percent for MasterCard -- your company will be forced to refund the payment as well as pay a penalty, in some cases $15 on a $60 purchase.

7) Customer service

Some of the people who are willing to pay you still may foul the payment process. They might enter wrong information in the form including credit card number, credit card name and billing address -- all items that will halt the transaction. The customer also might not have enough credit to complete the transaction.

When users start to register, they'll have problems. Some won't be able to follow simple instructions. Some of your simple instructions might be more complicated than you think. Some of your users will be experienced working with computers and registering for Web sites. Others have never signed up for anything.

The problems they'll experience are innumerable: They'll forget usernames. They'll forget passwords. They'll never register but think they registered. They'll subscribe to your competitor's Web sites and think they've signed up for yours. Their husband, wife, son, granddaughter, friend, grandfather will have signed up for them.

And someone will have to help them all.

Who should handle the online customer care? You could give the task to your print customer service staff -- the people used to dealing with customers. But will they have the tools and knowledge to deal with the problems? Or every time the circulation customer service staff hears the words Web or online or electronic will they transfer the calls to your newsroom editorial staff?

Your online staff already is dealing with external customers -- readers -- and internal customers in the newsroom, the advertising department and everywhere else in the business, answering questions about e-mail, about Web sites and about viruses. You should consider having your Web staff handle online customer care.

Whoever ends up handling your customers' many questions, make sure they're set up to respond quickly. People expect service, be it by phone or via e-mail, seven days a week. Consider offering them both an e-mail where they can contact you and a phone number where they can call you. You can also use live chat software to handle questions via live online chat. 

8) Communicating the decision to charge

After you've made the decision to charge, you must communicate it to your staff and your customers. ABQjournal.com sent out an e-mail and put a pop up on our site explaining why we'd decided to charge. We still send this out as an e-mail to anyone who asks why our site is not free.

If you are going to inform your readers about the changeover via e-mail, here's a good piece of advice from European online publishing consultant Norbert Specker: "Never assume anybody has read the mail you sent before. Always repeat the key points of your message even if it is stuck on at the end of the message."

If you are charging for limited sections of your site, clearly explain in your e-mails and on your site which parts of the site they can still access for free, invite them to become a subscriber and ask them what it would take to make your product valuable enough for them to pay for it.

9) Test your setup

If you are creating your own online circulation system or are dealing with a vendor, don't expect to get it perfect the first time. Once you've created your software and user interface -- the sign-up forms and the log-in screens-- have a few people try them out and be ready to make improvements.

As Albuquerque Journal columnist Jim Belshaw always says, never use version 1.0 of anything.

Your company -- not being a software development house -- will not have the resources for large-scale usability testing. Our systems were not written by software engineers. A team of software testers did not stand behind us ready to point out errors.

We tested our registration systems as best we could, trying them out first on our staff, then the power users in our newsrooms and then the ultimate tests: our parents, family and company executives.

We explained the procedures and wrote FAQs. We revised the forms to try to fit in a single window on the screen. Our dozen or so in-house testers caught a lot of problems, but many more usability issues came up once we launched and started getting more than 100 sign-ups a day.

Our registration software went through multiple daily revisions as we saw some of the things that made our readers stumble on their way from user to customer. Almost immediately we added:

* A self-service way for customers to retrieve username and password. And we put it on every page.

* A requirement to enter the e-mail address twice while registering. If a person enters a bad e-mail address, we have no way to send them a password. We also improved our checks to make sure what they entered was an e-mail address rather than a partial e-mail address, a URL or who knows what else.

* Required city as well as ZIP code on registration. This made it easier for our circulation department to check questionable registrations. That is, they didn't have to look up the city using the ZIP code.

* Made the "are you a subscriber" field default to "no," but put a check in the program that would set it to "yes" if they matched our circulation records.

Even two years later, we continue to tweak our registration pages, our software and the processes we use to communicate with our circulation department as different situations arise.

10) Continuing to fight addiction

As with any addiction, you are never cured. You will find yourself wishing for the days of free. You must adhere strictly to these 10 steps if you wish to move forward with a sustainable business model supported by a qualified, paid circulation base and a strong advertising component that will let you do what you really want to do: quality journalism.

Sites such as Rafat Ali's paidContent.org can you help you find the support you need to break the addiction to free.

For more on the argument over whether content should be free, see What Free vs. Paid is Really About by Robert Spears.

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Donn Friedman: "Business realities replaced my enthusiasm for free. Information may want to be free, but I wanted to be paid."

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