Papers must charge for websites to survive

January 25, 2009 by

[Gerry Storch is editor/administrator of www.ourblook.com, a political discussion/media analysis site that bridges the gap between a blog and a book. He has been a feature writer with the Detroit News and Miami Herald, Accent section editor and newsroom investigative team leader with the News, and sports editor and business editor for Gannett News Service. He holds a B.A. in political science and M.A. in journalism, both from the University of Michigan.]

You don’t get free gas from a gas station.

You don’t get free meals from a restaurant.

You wouldn’t walk into the Googleplex … that’s Google’s corporate headquarters in Mountain View, Calif. … and expect a staffer to rush to the lobby with 1,000 free shares of Google stock for you.

At least we don’t think so.

So why is the newspaper industry the only one in America that is expected to give its product … in its electronic version … away for free?

Wrestling with that question will determine the fate of this nation’s newspapers.

Our answer: except for the “Big Four” national players, newspapers will not survive unless they 1) convert out of print and totally into the Internet, 2) confine themselves to local news and, most importantly, 3) charge for it.

Astonishingly … despite many erstwhile titans now tottering on the brink of bankruptcy or outright extinction … we’re talking about big ones like the Chicago Tribune, Los Angeles Times, Miami Herald, Rocky Mountain News, Chicago Sun-Times, Minneapolis Star-Tribune, Philadelphia Inquirer … almost no one in the industry charges for their web site product. Even as they swirl down the drain, they give it away for free.

“Giving away information for free on the Internet while still charging 50 cents to $1 for the print version of the paper was one of the most fundamentally flawed business decisions of the past 25 years,” says Prof. Paul J. MacArthur, who teaches public relations and journalism at Utica College. “Newspapers told their paying customers that the information truly had no value. They told their paying customers that they were suckers. Why would anyone pay 50 cents for something he or she can get for free? This poorly conceived and obviously flawed strategy has helped put the newspaper industry into its current financial condition and hastened the demise of many publications.”

Prof. MacArthur is one of the experts across the nation who responded to my web site, www.ourblook.com, and our special project examining the future, if any, of newspapers.

Step 1: Papers are being overwhelmed by enormous newsprint, production and delivery costs … and a huge amount of staffing associated with them. All no longer needed.

Newspapers can still “deliver” their product … instead of being flipped from a speeding pickup truck at 4 a.m. on or near a driveway, its content can be delivered electronically to a customer’s computer or to a portable wireless electronic reading device such as Amazon’s Kindle.

What’s more, “content providers, once called newspapers, are experimenting with on-demand delivery particularly to mobile telephones,” says Michael Ray Smith, communications professor at Campbell University. “Telephones are computers and computers make moving information more convenient than ever. In some cases, information alerts and bursts can be downloaded from a source at work or home or even in transit and then read while on the road.”

Let’s hope that papers have a heart and offer the best severance packages and retraining possibilities they can to their blue-collar workforce, many of whom tend to be long-term, loyal employees.

But obsolescence is obsolescence.

Oh, yes, the four papers that probably can survive in print … of course they’re USA Today, the Wall Street Journal, the New York Times and the Washington Post.

They’re in the right place … “I see New York and Washington always having newspapers because they are the seats of financial and political power,” says David E. Johnson, CEO of Strategic Vision, an influential public relations firm in D.C.

They have a national base in their financial and/or political reporting and an affluent readership that surely is strong enough to keep them going.

Step 2: Carve out a niche that makes the paper’s web site dominant, irreplaceable and one of a kind.

“I would like to offer a two-word solution to the financial woes of our ink-stained friends: ‘local news,’ ” says business consultant Jonathan Stark, who has consulted for a number of U.S. papers. “Newspapers have real roots in the communities they serve. They have history, tradition and personal relationships. In some cases, they are a source of local pride. If newspapers are willing to let go of their print-based history, invest in their writers, embrace technology and dedicate themselves to being THE source for local news, they will have readers for as long as people can read.”

Who else can do it better? Local TV station news anchors and skimpy throwaway weekly papers can’t. They feed off the big local paper anyway.

While papers have cut their editorial staffs not only to the bone but inside the bone, there’s no excuse for them not coming up with a dynamite local news website. That’s because they can reallocate the staffers who work in national or international news or other areas of the paper to the local effort. Go for it … marshal all the resources into this one specialty. Local news, local features, local business, local sports, local commentary. If necessary, use “citizen journalists” for neighborhood news. Cover the community top to bottom.

This is not only a financial and logistical advantage. It creates a journalistic improvement, too, as news can be instantly added and obsolete or inaccurate information removed. The expertly crafted story or hard-charging enterprise piece or beautiful set of photographs can remain on the site for readers’ enjoyment for a while instead of becoming tomorrow’s bird cage liner.

In doing so, it would behoove the papers to play it straight. Millions of readers have deserted newspapers in disgust over political agenda-driven reporting.

Step 3: How much to charge? The Arkansas Democrat-Gazette, one of the few if not the only sizable metro paper to charge for its web site, makes readers pay $4.95 a month. Since that’s about 16 cents a day, we’d say it’s far too low. We’d make it a nice round number, easy to remember … $20 a month. That hopefully would bring in a substantial amount of revenue.

Readers, of course, have become conditioned to free content on the Internet. Many expect it, some stridently demand it. Can that habit be broken?

“The only way you can charge online is if you have something so special that no one else can re-create it,” says Paul Swider, a former St. Petersburg Times reporter who also did a citizen journalist web site for the paper. “Don’t charge for national politics because there’s 1,000 other outlets to which the reader can turn, so you’re done. But if you have a synthesis or data or other unique quality of content that others can’t duplicate, you could charge for it and succeed.”

That means local news.

And what of the current business model of newspapers … the one that has them give content away free on the Net in hopes of luring huge number of readers and the attendant “page views” to lure advertisers. Well, if it works, why are so many papers failing?

Papers should do both … charge for their content and work hard to get advertising on the site. Wouldn’t a lot of advertisers prefer quality over quantity in readership … wouldn’t potential business customers be a lot more likely to be those who pay for the paper instead of those who freeload?

Walter E. Hussman Jr., publisher of the Democrat-Gazette, noted in an op-ed piece for the Wall Street Journal in 2007 that the U.S. newspaper industry collectively spends about $7 billion a year to gather news. “By offering this news for free and selling it to aggregators like Google, Yahoo and MSN for a small fraction of what it costs to create it, newspaper readership and circulation have declined,” he wrote. “Why would readers buy a newspaper when they can get the same information online for free?”

He added this point: ads have much more impact in print than on a computer screen. “While consumers often find pop-up ads a distraction (on a web site) and banner ads as more clutter, readers often seek out the advertising in newspapers.”

Hussman’s paper, incidentally, while not exactly flourishing, has suffered much less advertising and circulation declines than most other of his peers. Since Hussman whipped the much larger Gannett in Little Rock’s famed newspaper war of the early ’90s, we’d say he knows how to survive in this business.

Which brings us back to our original question: why do people expect newspaper web sites to be free?

And there’s no good answer. The so-called experts use airy, meaningless phrases like “because that’s the Internet culture” as if this notion just floated down from heaven somehow.

In fact, that’s how Google CEO Eric Schmidt, who benefits immensely from basically free news, views it. In an interview with Fortune’s Adam Lashinsky, he actually said, “the culture of the Internet is that information wants to be free.”

Information doesn’t want to be free any more than gasoline wants to be free or food wants to be free. When Mr. Schmidt stands in the lobby of the Googleplex and hands out free shares of his company stock, then maybe we can believe the “free” rationale. Until then, papers should charge for what they do so they don’t go out of business. Simple as that.

Filed Under: Frontpage Tagged With:

How the New York Times can fight back and win: a reprise

December 3, 2008 by

The New York Times Co. — the whole caboodle, including the esteemed and necesssary flagship paper, 18 other, mostly monopoly dailies, the spunky About instructional search engine and minority ownership of the half-redeemed Boston Red Sox — is worth less than what the company paid for just one of its properties, the Boston Globe. That’s what the stock market said as of Wednesday, Nov. 26, and that was after a bounceback from a near-historic low — $5.34 – on Nov. 21.

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:

  • Two thirds of users are in the most coveted 25-54 age range.
  • Fifty-seven percent are women (who buy or influence the purchase of 80 percent of all consumer goods, according to marketers).
  • Average income is near $80,000.
  • Close to 50 percent live in the top 25 markets.

    The Times did make one big try to monetize nytimes.com, but that turned into the flop called New York TimesSelect, which put the paper’s columnists behind a subscription wall. Only about two percent of nytimes.com users signed up for the premium service, which cost $7.95 a year or $49.95 yearly. The $10 million in revenue that TimesSelect reeled in was more than offset by potential long-term traffic losses because some of nytimes.com’s most popular features were no longer available on search engines. The walls of TimesSelect came down in September 2007, two years after it was launched.

    The big mistake of TimesSelect, beyond ghetto-izing 98 percent of nytimes.com users, was trying to monetize a mass product, which is what Times columns are, even if they bear the marquee names of Paul Krugman or Maureen Dowd or Tom Friedman. What the Times ought to be doing is monetizing all the resources of its considerably talented staff, which includes not just the renowned names on op-ed columns but scores of reporters, critics and editors who are treasure trove of valuable intelligence on any number of subjects, elevated or lowly, or know where to find it.

    Here’s how that could be done:

    Newyorktimes.com launches TimesPlus – a premium service that gives subscribers access – literally – to the minds of the entire Times newsroom staff, which includes more than a thousand information experts.

    Let’s say you’re planning a trip to New York. You would complete a checklist where you list all your preferences – everything from hotel (e.g., small, non-convention, mid-priced, convenient to theater district and Madison Avenue shops) to hot but unheralded shops and attractions. Your preferences would be fed into a continually updated database to which the entire Times editorial staff would, as part of their jobs, contribute the latest information (and maybe gossip). You would get back responses to all your preferences, and also an advisory listing discounts your handsomely embossed, computer-chip-embedded TimesPlus subscriber card would give you at New York shops, restaurants and attractions.

    Let’s say, like many nytimes.com users, you follow national politics closely. You could sit in on a weekly video conference phone call — open only to TimesPlus subscribers – during which top Times political reporters, columnists and editors would riff about latest developments and take questions.

    There would also be similar exclusive-content conference calls covering subjects like foreign affairs, the arts, books, entertainment sports, food, science and health – anything that the Times staff is expert on.

    Five times a year, TimesPlus subscribers could submit personalized requests – say, what are safe and interesting but not pricey neighborhoods in Brooklyn (or Los Angeles or Dallas/Fort Worth)? – that would be answered with up-to-date information contributed by Times staffers.

    TimesPlus would be priced at $10 a month, or $100 a year if paid upfront. If 5 percent of nytimes.com’s 20 million unique visitors became subscribers, that would add $100 million revenue that would more than replace tshrinking print ad revenue.

    The percentage of subscribers could be even higher if the Times could convince merchants, restaurants and entertainment venues in all the major U.S. markets to give special deals to TimesPlus members. For many subscribers, those deals would more than pay their TimesPlus fee – just like most holders of the Barnes & Noble Membership card save more than the $25 fee through their discounted book purchases

    TimesPlus would have its own comment boards where subscribers could contribute their ratings, and cross swords with Times experts.

    TimesPlus would also let subscribers build their own multi-media mini-sites and form groups among themselves. What a great place the site would be for subscribers to offer housing for pleasure or even business trips to New York and other cities, as well as vacations, or to sell art and other special and unique objects.

    Subscriptions might start slowly – many people remember TimesSelect – but if the site lived up to even half of its potential, viral marketing would take over and in a couple of years subscribers could swell to several million or more. Imagine the revenue potential if that happened.

    Purists might say what does all this – tips for tourists! — have to do with the mission of the New York Times. But the Times already produces reams of features that are tips about a 10,000 things less significant than how to reduce your carbon footprint. What would be different about TimesPlus intelligence is that it would marshal all the Times considerable but underused resources. The Times has a newsroom staff of about 1,300. TimesPlus would mobilize that talent much more efficiently than the space that editorial content gets in either the print or online paper.

    As recently as 15 years ago, the only New York Times was its print edition. If you lived in Peoria, Ill., you might have to drive a couple of miles to find a place that sold it. The Internet put the Times in reach of anyone with a computer. The editors still made all the decisions about what would go online pages, but at least now there was feedback – sometimes blowback — from users. TimesPlus would break down even more barriers. It would create more and direct connections between Times staff and its readers, and, let readers form relationships among themselves in all kinds of social, professional and volunteer categories. Very likely, subscribers could become a critical mass of resource material for the Times as it uses the Internet to widen its net of information gathering.

    As Times stock has descended in a near-straight line, the specter of bankruptcy has reared its head. Even reorganization would probably mean the end of revealing investigative stories we have seen during the current financial crisis, like this one that opened the door to the executive suites at Merrill Lynch as it was gorging itself on fees from flipping high-risk derivatives, or this one that did the same for Citbank.

    TimesPlus could prevent that from happening. It would provide the bridge from the print to online paper that is desperately, and speedily, needed.

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    CQ launches free site to complement sub-only CQ.com

    November 1, 2007 by

    Earlier this year, Congressional Quarterly lured Ken Sands from the Spokesman Review in Spokane, Wash., where he earned a reputation as one of the country’s top newspaper website editors. CQ.com has won more than its share of awards over the years, but brought Sands on board as Executive Editor for Innovation, in part, to further expand CQ’s Web offerings.

    This week, CQ launched CQPolitics.com, a free website aimed at broadening CQ’s reach beyond the Capitol Hill community that has sustained the subscription-only CQ.com. The new site offers a mix of blogs, columns and strategic analysis, along with selected stories from CQ and the Associated Press’ Washington wire.

    OJR swapped e-mails with Sands to find out more about the new site.

    OJR: What are the editorial, readership and business model differences between CQPolitics and the established CQ.com?

    Sands: I’m still new here, so I’m learning a lot about existing CQ practices. But I see three fundamental differences:

    First, the existing CQ audience primarily consists of inside-the-Beltway professionals and CQPolitics is reaching out beyond that to public and policy professional outside the Beltway and political enthusiasts.

    Second, the business model has been to charge premium rates for high-end, proprietary information that professionals use to do their jobs. The CQPolitics site is a free site supported solely by advertising. This is a key difference. Unlike virtually any other mainstream media company, CQ has made a majority of its revenue from subscriptions to its online products. We’re excited about adding a consumer-oriented product supported by advertising.

    Third, since its founding in 1945 by Nelson Poynter, CQ has been profoundly non-partisan. The print daily and the magazine don’t have opinion pages. It’s stunning to me that something like 85 percent of the members of Congress can agree on anything. But they do seem to agree that CQ is worth the subscription price. We don’t expect that to change. What is changing, however, is the addition of opinion bloggers to CQPolitics. Well-known left-of-center blogger David Corn has joined the CQ family as an independent blogger, as has self-described “conservative maverick” Richard Whalen. It will be interesting to see how the CQPolitics blog network grows, and how the CQ newsroom will react to the cultural change.

    OJR: Why a new website? Why not build CQPolitics’s features and functionality into the existing CQ.com?

    Sands: The existing CQ.com site primarily is a paid-content site. CQPolitics is free. I wasn’t here for the initial planning for the site, but believe they wanted to keep a clear separation.

    So an entirely new department was created. Consumer Publishing General Manager Bruce Drake reports directly to CQ President & Editor-in-Chief Bob Merry. Bruce, along with Executive Editor Peggy Girshman are in charge of the new site.

    Since I came in August, however, it became clear that significant resources from the editorial department were needed to build the site and to operate the site post-launch. So half a dozen people from the CQ Innovation department and several people from the IT department have been working nearly full-time to get the site going. It’s an exciting time at CQ and everyone’s glad to pitch in.

    OJR: What what into building and launching the new site?

    Sands: It’s quite complicated. I think Bruce Drake has the hardest job at CQ right now. The site launched on his six-month anniversary at CQ. An amazing amount of work took place in that six months, from hiring staff, to negotiating a contract with a vendor to help build the site, to building and executing a content plan.

    What you see today at CQPolitics.com is just the beginning. Perhaps as soon as next week we’ll have an interactive electoral map, highlighting every Congressional district in the United States.

    We have a staff of three designer/developers working full-time to brainstorm and implement cool new features to add the site in the coming months.

    OJR: What are your goals with the new site, both editorial and business?

    Sands: The company’s goals are pretty clear: to become one of the most-influential political sites on the web and to generate significant advertising revenue from the traffic that comes to the site. That’s very ambitious. The New York Times, the Washington Post, USA Today, MSNBC, CNN, realclearpolitics.com, politico.com, wonkette.com and the Huffington Post are some of the traditional and non-traditional sites that already are well-established.

    We have to figure out a way to differentiate our site from every other site. The media landscape is pretty full right now. The last thing anyone needs is just one more site to watch. But I’m excited about the possibility of helping to build something that will stand out. Bruce and Peggy and I already have been brainstorming with the development team about some pretty cool stuff. We’re not ready to talk about anything yet, because it’s too early in the development process and we don’t want to tip off the competitors.

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