This is because as of March 2011, it will cost you up to $35 a month to peruse the New York Times. But the Times is not the only publication investing in an online paywall as an attempt to generate desperately needed revenue. Currently only a handful of news organizations charge for online content, including The Wall Street Journal, The Financial Times and Newsday.

But is this a necessary evil for newspapers to survive or just a costly mistake that will increase popularity of free news sites? And is charging for newspapers a guaranteed way to increase viewership, revenue and advertisements?

Not at Newsday.

Long Island’s daily paper spent roughly $4 million to redesign and relaunch its site charging online readers $5 a week, or $260 a year, to get total access to news. In three months only 35 people signed up. Newsday’s free Web traffic nosedived, and advertising revenue decreased.

The $4 million that Newsday spent is chump change compared to the reported $40 million New York Times allocated to set up its new paywall.

A factor behind Newsday’s problem is the popularity of free news sites and blogs. In a major media market like Washington D.C. or New York City, a variety of newspapers cover the same geographic area and news. If the New York Times is charging for content but the New York Post is not, what is to say that the frequent former NYTimes.com reader won’t turn to the NYPost.com for free news?

Hundreds of news blogs like Drudge and Huffington Post populate their sites with breaking news and analysis. If online news consumers get stuck behind pay walls, they can search for articles from free news sources.

More traditional newspapers look to investigative stories from non-profit news organizations to publish at no cost. However, the same news story written by Texas Watchdog picked up by the Dallas Morning News and Houston Chronicle is available free on TexasWatchdog.org. As more newspapers use this free content from non-profit journalists, papers that charge will increasingly overlap quality content with those that don’t.

A website charging news consumers is not only costly to the readers but to the newspapers. Newsday’s $4 million redesign has provided a mere $9,000 in revenue. Not many newspapers in this current environment that can risk losing millions of dollars. The current numbers are still out for the New York Times paywall but with $40 million spent, they are going to have to draw a significant audience to recoup their costs.

And let’s not forget that a March 2010 Project for Excellence in Journalism survey reported that 82% of people with favorite news sites said they’d find somewhere else free to find their news if they started asking for payments. Of the more than 2,000 people survey by Pew only 19% said that would pay for online news.

And although early indications are that the New York Times paywall is racking in the readers, a reported 100,000, how many of them joined when it was offered for a free subscription and how many are paying the lowest cost of readership? If half of their readers are reading for free or at a low cost, there is no way that they will break even on this money experiment.

With the majority of the audience unwilling to pay and readily available free options, why should the New York Times paywall be any more successful than the Newsday one? The only way to ensure the success of charging for online content is for every online news site to charge, or no one charges.

Newspapers have to do something to stay afloat, but charging for online content is a risky venture that inflicts the financial burden on readers who are frankly unwilling to pay. If paywalls are the only solutions for the newspaper industry, then publishers and editors need to go back to the drawing board.

Newspapers have to do something to stay afloat, but charging for online content is not the answer.

Jason Stverak is the President of the Franklin Center for Government and Public Integrity, a leading journalism non-profit organization. The Franklin Center is dedicated to providing reporters and non-profit organizations at the state and local level with training, expertise, and technical support. For more information on the Franklin Center please visit www.FranklinCenterHQ.org.

Please quit whining about “aggregation,” or whatever other phenomenon on the Internet you’re blaming today for the fact you no longer enjoy the monopoly over local publishing you once had.

To be blunt, whining about the competition is the act of a loser. The publications that win in the information marketplace will be the ones that won’t get bogged down in snit fits over the competition because they’re too busy focusing on – and meeting – the information needs of their audience.

So it’s been with increasing frustration that I’ve been watching the New York Times’ ongoing tiff with the Huffington Post.

I find this verbal battle especially frustrating for as I’ve written before, all reporting is, in essence, aggregation. Otherwise, you’re writing fiction.

Reporting is the act of collecting information from multiple sources for inclusion within a news report. Isn’t that simply a form of aggregation?

I don’t get the complaint that certain online publishers (i.e. Huffington Post) don’t always pay the sources from which they are getting their information, either. I’ve been interviewed by reporters from the New York Times, as well as the Washington Post, NPR, the BBC and CNN. I don’t remember any of them cutting me a check, either. But they used my words to fill part of their pages and broadcast time.

If journalists really feel the need to distinguish themselves from their competition, let them make a case for the value of their reporting over someone else’s. I do believe that there are real differences in value between the various ways that publishers collect, select and present information.

But the focus needs to remain on that value and not simply on the process that a specific publisher follows. If that process creates value for someone, then it’s worthwhile. And if it doesn’t, then it’s not. It really is that simple.

If you want to move beyond the playground name-calling, let’s talk about some of the ways that a publisher might create better value for its readers:

Unique aggregation

Find voices or sources that haven’t been heard in others’ reporting or republication already. Typically, that means find offline sources who haven’t yet had access to the global online information marketplace. Talk to people who aren’t speaking online, and who have a unique experience that hasn’t been reported by someone else before. Dig through offline documents that haven’t been made easily available on the Web. Observe places and events that aren’t being well documented by others.

As more and more people get online around the world, this type of aggregation reporting becomes more difficult to do. But here’s a tip: If traditional journalists sneer that the information you are collecting “isn’t journalism,” then you’re exploring an area that might have been underreported before since those traditional journalists ignored it. That’s not always the case, of course, but don’t ever let finger-wagging from the old school stop you.

Aggregation can be made unique not just in its line-up of sources, but in the ways that they are selected and combined. This is the value of great curation, and where online journalists such as Andy Carvin distinguish themselves.

Unique analysis

This is where the future of journalism lies, I hope. The selection of sources to aggregate is the first step in analysis, but journalists ought not to be afraid of taking the next steps, to check information against other sources and make explicit to readers when information is false or sources duplicitous.

Unfortunately, too many reporters continue to see themselves as nothing more than stenographers, bound by a misinterpretation of journalism ethics that prevents them from ever calling a lie a lie. And as a result, these journalists and their employing newsrooms will continue to lose market share to publications that aren’t afraid to follow through with their reporting and allow it to lead them to a specific point of view: publications like, say, the Huffington Post.

More convenient delivery of aggregated information

Newspapers won lucrative local monopolies because they packaged and delivered information in a way that was valuable to consumers. Fifteen years ago, those consumers started to find it more convenient to get that information by visiting websites throughout the day, rather than waiting for a printed paper to hit their doorstep the next morning. Today, many of those consumers now are finding it more convenient to get information through social networks and mobile apps than to visit newspaper websites on traditional computers.

Again, don’t get hung up on process. Focus on value, and engage whatever process or medium you need to create and deliver that value.

Lower cost of delivery to user

I’m the product of a newspaper war, having worked as the Web editor for the late Rocky Mountain News when it was battling the Denver Post. Both papers were trying to build circulation by slashing subscription rates – down to $3.66 for two years of home delivery at its lowest point. (Yes, that was three dollars and sixty-six cents: a penny a day for the first year, and an extra penny for the second.)

Guess what? Circulation soared. (What brought both papers to near-death was the battle in discounting their advertising rates, not their subscription costs. What each paper gave up in subscription fees was trivial next to what they were giving away to advertisers in the 1990s.)

The lesson here is that as publications lower their cost of delivery to the audience, they build the size of that audience. That cost can be financial, in the form of a subscription fee, or it can be an opportunity cost, in the form of having to go to a website, navigate through a user interface, or be distracted by an ad.

As with anything else in business, this reduces to math. Your audience size will be a function of the value you deliver divided by the cost that audience members incur to get it. As you work to increase the value of your work, don’t forget that whoever provides the greatest value at the lowest cost will be the one who wins the audience.

The conclusion?

No one outside of the field of journalism cares if you consider your reporting more original or more worthy than others’ collection of information. They only care if your reporting delivers them more value than what those others offer. And the readers will make that decision for themselves, thank you very much.

So if you want to succeed in this business, quit wasting your time bagging on others’ business models or reporting structure. If you feel the need to criticize another news organization, hit the ones that are inaccurate or intentionally misleading, instead.

(Then, if you’re into the business of press criticism, go ahead take on the whiners. But realize that only industry insiders will care.)

Otherwise, keep quiet, and focus your energy instead on taking care of your business by taking care of the needs of your community.

The two main points:
1. Users can view up to 20 stories (including video, slideshows and other multimedia content) a month.
2. Stories you are linked to from blogs, social networking sites and the like will not count against the 20 story limit.

The Times is testing this approach on Canadian users now and it will expand to U.S. and the rest of global readers March 28.

“It’s an important step that we hope you will see as an investment in The Times,” wrote Publisher Arthur Ochs Sulzberger Jr., “one that will strengthen our ability to provide high-quality journalism to readers around the world and on any platform.”

From a business standpoint he may be right. Newspapers’ current model isn’t working and they have to pay for all that great journalism.

Now for the BUT.

The Times attempted something similar to this and failed with TimesSelect, returning columnist content to free in 2007 after two years of behind a paywall.

This is what then-Times executive Vivian Schiller (we won’t get into what’s happened to her since) was quoted by Reuters as saying of the decision to end TimesSelect: “We now believe by opening up all our content and unleashing what will be millions and millions of new documents, combined with phenomenal growth, that that will create a revenue stream that will more than exceed the subscription revenue.”

So the logic then was to increase potential ad revenue by increasing the potential audience. Now it’s to do the opposite. It’s been pretty well established that putting up a paywall decreases views and thus decreases advertising revenue.

Then there is the other issue that so often gets overlooked: The NYTimes.com is hardly the only source for news. Many other sites, particularly those run by television networks have no incentive to charge for content. They never have. Savvy news consumers can simply go to cbsnews.com or ABCNews.com or a myriad of other sites to get essentially the same news.

Content is so widely available that, except for very specific stories, users don’t need The New York Times as much as The New York Times needs the audience for advertising. But legacy media, particularly media organizations with a proud history, have a hard time recognizing that.

That is a long way around to make my connection to television news and the challenge of paywalls.

For all of the other newspapers in cities across the country that have three, four or five television stations or more producing news and running their own websites, the news of the day is readily available for free. All a paywall will do is push people to other sources. No one likes to pay for something they can get for free someplace else.

Back to the Times, the decision to allow all users to read stories they are linked to makes their entire paywall moot, anyways.

If I really want to read a particular Times story and don’t want to pay, all I’d have to do is google the headline and find it linked from somewhere else and get it that way. That would just take a few seconds and not cost $15-$35 a month like the Times.

A confidential memo from multimedia publishing pioneer Steve Brill obtained by Romenesko argues that the Times should “[flip] the Web’s lethal dynamics” and start charging for online content. Under Brill’s elaborate pricing scheme – you have to read his whole, alternately maddening and inspired memo – nytimes.com visitors would pay $55 a year to get access to all content. Search engines and aggregation sites would continue to get free access to the headline and first paragraph of each story – to help keep nytimes.com relevant as an information source on the Internet. Brill, who unsuccessfully tried to sell paid content with his Brill’s Content during the dot.com boom/bust, acknowledges in his memo “all of this may seem unrealistic,” but nonetheless concludes, “There is no alternative.”

Times Select was a bust, as was Brill’s Content. But there’s another way for the Times to exploit the potential of its website to raise needed revenue that advertising by itself can’t bring. Why doesn’t the Times mobilize its redoubtable 1,300-person-strong newsroom to start producing added-value online content for which, I’ll bet, a good fraction of nytimes.com users would pay a monthly fee? A lot of the content would help out-of-town visitors make their trips to NYC and other cities more interesting and even memorable. I spelled out some content specifics for what I called TimesPlus in an OJR article last December.

The Times is already half way there in producing added value beyond the daily report – and for which it rightly charges (and finds willing buyers). Except you can’t find it online.

There’s the New York Times Travel Show – Feb. 6-8 this year at the Jacob K. Javits Convention Center – for which tickets cost $15. The Times charges as much from $30 to $65 ($100 for “VIP” seating) for lectures, musical performances and other events at TimesCenter, the popular multi-purpose venue in the New York Times Building. Those events, and others like them, could be re-purposed as part of the multi-media TimesPlus subscription package. After all, millions of out-of-town nytimes.com users can’t go to the Javits Center or TimesCenter.

To make TimesPlus happen, the paper needs to hire an online Sol Hurok-type impresario – I doubt there’s any such person on the premises now – who could figure out how to creatively unlock all the under-used talent in the newsroom – and maybe in other departments at the paper. One Hurokian gambit might be for the Times to persuade Broadway and other theater producers to permit video clips of their shows to be part of the TimesPlus package. What a draw that would be to lure subscribers. With the theatrical industry facing shrinking audiences in what is likely to be a long-term economic crunch, producers might see such a deal as a win-win.

The annual bill for the Times daily news report is above $200 million, according to one recent estimate. If just 10 percent of the website’s 20 million unique visitors signed up for TimesPlus – at, say, $100 a year – that would pay for a big chunk of the news, which Executive Editor Keller rightly says comes only through “hard, expensive, sometimes dangerous work.”

The much-buzzed-about idea aims to develop open standards and APIs to make source documents “easy to find, share, read and collaborate on.” (You can find the full text of the proposal here.)

I asked three of the proposal’s authors, Aron Pilhofer of the Times and Scott Klein and Eric Umansky of ProPublica, to elaborate on their vision for document nirvana.

+++

Can anyone add documents to the repository, or is it necessary to be a news organization? Any concerns over the possibility of forged documents being uploaded?

Aron Pilhofer: The repository will be open for anyone to read from, but not to contribute to. It will be limited to news organizations, bloggers and watchdog groups whose mission includes publishing source documents as a means of better informing the public about issues of the day. That said, the software that makes DocumentCloud go will itself be open source, and available for anyone to use. So, if others want to create DocumentClouds of their own, they can certainly do that.

Scott Klein: We don’t want DocumentCloud to become a generic repository for all documents, or as a quick-and-dirty way to host PDFs. We want somebody to have found these documents to be of news value.

Presumably, DocumentCloud will not be branded with the NYT and ProPublica logos front and center. Would it be staffed and maintained as a separate entity?

AP: There is so much misinformation out there on this question, so I’m glad you asked. In fact, that is what we are asking Knight to fund: the creation of a completely independent entity called DocumentCloud. So the answer, of course, is: It won’t have any NYT or ProPublica branding.

Though we’ve just started to talk about structure and such, it’s entirely possible the only connection the Times, at least, has to DocumentCloud once it’s up and running is as a user and contributor.

SK: Same with ProPublica. Although I suspect somebody from both the Times and ProPublica will be part of the board for DocumentCloud, it’s important to note that this is going to be completely separate from both organizations and shouldn’t monetarily benefit either.

What is the nature of the collaboration between the Times and ProPublica? How will the work on this project be divided?

AP: TBD, but probably I will focus more on the technology side because the Times is contributing a large amount of the software and I understand that part best.

SK: I think we’ll each do a bit of everything but the plan is for the grant to fund developers, so the bulk of the development work won’t need dividing.

The Knight grants come with strings attached (namely, the requirement that projects be open-source) that might turn off some for-profit companies. Aron, how did you sell your bosses on the idea of applying for this? And, as a for-profit company, how would the NYT benefit from this grant?

AP: There’s a bit of misinformation out there about the role of The New York Times in this project, so maybe I should clarify this a bit more.

The grant is not for The New York Times, so the question of strings and for-profits just isn’t relevant. The Times won’t be involved in any way except as a founding participant and donor to the project (contributing my time and a significant chunk of software).

The grant would be used to create an independent, non-profit organization called DocumentCloud, which would manage the grant, build and maintain the software and so forth. Given the intensely competitive nature of the news business, we reckoned that this project had to be in the hands of an independent, impartial broker in order for a consortium like this to work.

DocumentCloud hasn’t been a hard sell because we’re we’re not asking anyone to do anything they aren’t already doing. We (like most media organizations) are already posting source documents online — just not in a way they can be easily searched, cataloged or shared.

If things go well, everyone will benefit because, finally, there will be open standards and open-source technologies available to make that happen. And even if it fails utterly and completely, DocumentCloud will still provide new tools to make publishing documents online easier, faster and more accessible for everyone.

If the proposal is approved, will DocumentCloud be developed in-house, or will you hire outside developers (or both)?

AP: Development will be done entirely by DocumentCloud developers (see above). Part of the grant funding is to support a dedicated development team.

SK: One tidbit that I don’t think we’ve shared widely is that DocumentCloud is designed to live in the cloud (get it?) so we plan to use Amazon’s EC2 and S3 infrasctructure very extensively, and I know Aron’s toying with releasing the DocumentViewer as an EC2 AMI to make it really easy for news orgs to use it without worrying about their content management system or IT people at all.

Seems to me that one of the biggest differences between the DocumentCloud idea and existing document-viewing systems (Docstoc, Scribd, etc.) is the provision to OCR each document, which will allow people to search within documents and to link to and annotate specific passages. Any thoughts on how the OCR part will work?

AP: We outline some of the differences in our latest grant application, but this is really quite a bit more of an apples/oranges comparison than you may realize.

DocumentCloud isn’t a viewer; it’s a standard, and a web service. It’s a system that allows anyone to make documents sharable regardless of what platform it’s on or where it’s hosted.

Scribd is similar in that users can upload documents and make them public. Within Scribd, registered users can comment on those documents, link to them, search them, etc. But everything has to happen within the Scribd environment.

DocumentCloud takes that idea a step further and removes the barriers. It allows users to search, link to and comment on documents regardless of where they are housed, or what platform they are sitting on. All we will ask is that those who are contributing documents do so in a standardized format.

So, Scribd or Docstoc could, in theory, adopt the standard and enable their users to contribute to DocumentCloud, and we hope they do.

I think some of the confusion on this point is of our own making because of the DocumentViewer portion of the project. The viewer is (or will be) nothing more than an off-the-shelf, completely open-source implementation of that standard. But DocumentCloud will be completely agnostic in this regard. If Scribd or Docstoc (or GovernmentDocs.org or The Smoking Gun) want to create their own compatible viewer, they are completely welcome to do so.

The reason we included the viewer in the grant application (and there was a lot of discussion internally about this) is because a key part of this project is lowering the barriers of participation. Many organizations don’t have the capability of developing their own software for viewing documents or integrating them with DocumentCloud, so we felt that was an important part of the project too so we kept it in.

SK: Aron’s making a key point here: This isn’t competitive with Docstoc or Scribd, and isn’t even meant to replace a simple list of PDFs if that’s what you want to use. DocumentCloud is a way to organize all of these disparate ways of storing digitized source documents in a way that makes them maximally useful to “reporters” (counting, of course, traditional newsroom reporters as well as bloggers, academic researchers, etc.) Frankly, DocumentViewer is, for a news organization presenting complex document collections, a really great user experience, but it’s not required to be part of DocumentCloud.

Will DocumentViewer be released to the public even if the DocumentCloud proposal isn’t funded? Is there a timeline for that?

AP: Yes, but there’s no specific timeline right now. We’re working on it in between other, more deadline-specific projects. My best guess right now is that we’ll have something releasable in the late spring. That’s about as specific as I can get right now.

What organizations are you soliciting source documents from? I think Eric mentioned the National Security Archive; anywhere else?

AP: None yet. We have talked to a limited number of groups (Gotham Gazette and, yes, the National Security Archive and possibly others) to partner with us on the development of the project. But we’re not actively soliciting documents at this point.

SK: We’ve got a fairly extensive wish list of news organizations and nonprofit groups we want to bring in on the project (none of whom would surprise you I think), and we’ve talked with some folks very informally but all of our discussions have been like “save the date” cards as opposed to wedding invitations, if you get my meaning.

Eric Umansky: As Aron and Scott have said, we’re just at the beginning of this and have just had initial discussion with a few groups. Having said that, we have been in touch with the NSA (the private, non-profit one) and are particularly excited about working with them since they are really among the best in the biz at cataloging and archiving government source documents.

Are there certain kinds of documents that you think will be particularly well-suited to perusal and annotation using DocumentCloud?

EU: Honestly, I’m not really sure. Like the best parts of the Web, what we’re trying to do is build an infrastructure that will support and encourage intelligent contributions. So, not to get all web doe-eyed about it, but the very utility of it is that people will have the ability and interest to submit documents beyond the one we’re already aware of.

How do you plan to surface the most interesting stuff from within this potentially vast database? Will there be a blog or a recent highlights list of some kind? Will you take some pop-culture cues from The Smoking Gun?

AP: We’re hopeful that users will surface this stuff, and we won’t have to. We have not talked about whether we’ll have a blog or highlights — or even if DocumentCloud itself will have a web presence outside the APIs. It’s just not something we’ve decided yet.

SK: We’re laying the foundation for the great work of others, and have very little interest in applying our own editorial judgment on what people post, assuming two things: 1) people follow whatever rules we come up with (like don’t post inappropriate things, etc.), and 2) they themselves apply editorial judgment to what they upload. I think it’s impossible to predict what kinds of stories this will help tell, and I find that really exciting.

EU: I agree with Scott and Aron. We’re really at too early a stage to have a concrete sense of this. And I’m the farthest one here from the software side of this, but one thing we would like to do is build a kind of reader loop into the system. So, not only could you sort by the “most read” documents but you could also sort specific pages that way. For example, if you had a 500-page report that had juicy bits buried on pg. 432, the “crowd” would eventually point you there since it would be flagged and become the most popular page.

Any updates on the News Challenge judging process? Do you know if you’re in the “top 50″?

AP: No idea.

SK: All we know is that we’ve passed the first of four rounds of scrutiny, as have some other really great ideas.

Winners will be announced in the fall, according to the Knight News Challenge site.

With advertising in its print edition continuing to slide by double-digit percentages, the Times is pursuing, in the words of President/CEO Janet L. Robinson, a “strict cost discipline.” But, happily, it’s looking as if the company finally understands that it can’t cut its way back to financial health (and a stock price that doesn’t look like an unfortunate misprint).

In August 2007, when the company’s stock had already fallen to a 12-year low, I argued in these pages that the Times could fight back by leveraging the power of its nytimes.com website through the force of social networking. Finally, it’s begun doing so.

The results of the Times recent presidential election promotion on Facebook are amazing – 68.3 million page views of the “What should Barack Obama do first as president” teaser ad and the number of Times “fans” on Facebook soaring almost overnight from 49,000 to 164,000. That’s precisely what viral marketing can do – when there’s untapped potential behind the marketing hype. And nytimes.com – with more than 20 million unique visitors monthly – has potential that no other newspaper site can approach.

I stress “potential,” because the Times, so far, has done too little to capitalize on an audience that includes big slices of all the demographics that advertisers want: