In Which I Aggregate Too Many Partially-Related Thoughts About Paying For News Online, Micropayments, And Newspapers

Posted by: Jon Fine on February 19, 2009

At times I have way too many things—whether they’re wise or wooly-headed—to say about any given topic to cram into the space allotted for my column. This is one of those weeks. So consider this a supplement to my upcoming column, which is about new business models for news online and which will go online late this afternoon (and now can be found here).

1. I am growing increasingly convinced that in the next 12 to 18 months, you will see several new attempts from news organizations to claw fees from online users.

I do not think this is a particularly good idea. I do think the least-bad way to go about would be for a bunch of organizatios to get together—New York Times, CBS News, Los Angeles Times, CNN, you get the idea—and form an online site that can only be accessed after you pay a subscription fee. (I wrote about such a site, in a differetn context and with a similarly tepid endorsement, in this column from a few years ago.) Said subscription fees and all ad revenues are divided up, etc.; scarcity is created, in some smallish way, within the endless informational expanses of the Web.

More broadly, I expect a backlash this year against the idea that the news has to be free, a backlash that will result in significant changes in how news sites structure their approaches on the Web.

2. For all its flaws, I like the content-consortium-subscriber-site approach better than the foundation approach, which was suggested here and here. This has newspapers like the New York Times and the Washington Post receiving funding from well-endowed (sorry!) entities. Because they’d have to be well-endowed, as it very soon gets to be really, really freaking expensive. A New York Times run by a foundation would require $5 billion, says the guys who dreamed up the idea. A healthy endowment for a Washington Post foundation would require $2 billion, says Steve Coll, a former Post-ie (-er? -ite?) who now works for the New America Foundation. Hey, that’s real money! And it’s only two newspapers. You’d probably be at $10 billion before you get to the ten biggest metro newspapers. And then you’ve got the rest of the country to worry about, still.

3. Micropayments: puh-leeze. At least seven companies that started up with the specific aim of weaving a micropayments system throughout the Web’s ecosystem—Flooz, Internet Dollar, BitPass, Millicent, First Virtual, Digicash, and Cybercoin--have failed. (Problem for the next generation of micropayment companies: many of the obvious names have already been taken.)

Also, please, I'm begging, can we finally stop assuming that the iTunes metaphor might somehow be extended to news? It won't. It can’t. There is a long history of people paying for small bits of larger musical works, whether they were buying singles in the 1950s or buying ringtones last month. There is no such analogue for buying small bits of news, or any such slices from a larger print product. Ask any newspaper or magazine how well they did when they were trying to sell individual archived articles through their Web sites. And has Kindle or anyone broken up short story collections to sell them by the story? No.

4. Lastly, this has been bugging me for a while. Steve Brill, interviewed in the Daily Beast:

Q: You've been very critical of the New York Times policy of giving away its content online for free. Why do you think this is unsustainable?

A: It's unsustainable because it's never worked ever in history. No one has ever made a viable independent business out of providing quality content for free. It's just never happened.

Well, how about 60 Minutes? How about Meet The Press? Yes, fine, I know, they’re not “independent” businesses in the strictest sense of the word. But they remain enormously profitable businesses—with massive ad revenues and substantial ad demand--based entirely on giving their content away for free. And those are just the ones I came up with off the top of my head.

5. Really lastly: Alex Balk's revolutionary taxation proposal that might save content!

It's at least my second-favoritest idea of all those mentioned in this post.

Reader Comments

Steve Outing

February 19, 2009 6:39 PM

Jon: You missed an important and different solution. I've written extensively about this issue lately. Try these:

At EditorandPublisher.com:
http://is.gd/j63S

On my blog:
http://is.gd/j64y
http://is.gd/jERq
http://is.gd/k9dJ

Important point to remember about any pay-for-news-content scheme: It will supplement the primary ad revenue stream, not fund a news org on its own. When deciding to charge for commodity news content, don't do damage to existing ad revenues, which is what all the forced payment plans and cartels do. That's why I'm convinced that an effective, user-controlled voluntary monthly content fee scheme (a la Kachingle) is the best way to go, from all the options I've seen so far.

The harder challenge -- and one most newspapers have failed to do, yet alone succeed at it -- is to reinvent their advertising departments and offer new services that are relevant to the times. The newspaper industry for the most part gets a D- on that.

Todd Havens

February 19, 2009 6:45 PM

Thanks for the wrap-up, Jon.

This is a big issue (obviously) and your subjective take on things helps me to digest it all. Like a Tums. Or a Rolaids. (Trying to be fair here.)

The recent Charlie Rose interview of 2/11 (http://tinyurl.com/atrkl9) was also a great primer.

Mathew Ingram

February 19, 2009 8:19 PM

I think you're dead right about the iTunes model, Jon -- unfortunately, I think you're dead wrong about the consortium-walled garden idea, which has "fail" written all over it. And as for the Charlie Rose interview that Todd mentions, some of the comments that Robert Thompson from the Wall Street Journal made were cringeworthy -- Google devalues everything it touches? Come on. With that kind of brain-dead attitude, it's no wonder newspapers are in the state they are.

Ken Leebow

February 20, 2009 7:54 AM

What's happening to the newspaper business is old news. You need to start looking into the future (about a year) and see what will happen to the TV/cable broadcast world.

Functionally, they are obsolete. For example, last night I couldn't find anything to watch on the tube, so, I headed to YouTube...lots of content, searchable, and on demand. Can't do that with TV/cable/DVR.

I end with . . . WSJ's Robert Thompson, made the following observation: "Google is great for Google, but it is terrible for content providers."

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