The print media is getting a lifeline as some unexpected players, including the industry's bogeyman, Google, have approached beleaguered publishers with plans to charge readers for the news they have been reading online for free. Keach Hagey weighs the prospects The financial crisis could not have happened at a worse time for newspapers. Just as their business model was being dismantled by the internet, the recession knocked the last remaining points out of their profit margins, making it impossible for publishers to invest in the research and development required to figure out how to make money online.
For much of this year, as newspapers folded across the US and Europe, it looked possible that the 400-year-old industry would not survive the leap into the digital world. But recently, some unexpected players have been reaching out to newspapers across this chasm. The least expected overture of all came from Google, traditionally regarded in the newspaper industry with the same mixture of fear and respect that the villagers in Beowulf reserve for the murderous Grendel.
Earlier this month, the Newspaper Association of America (NAA) inadvertently made public on its website a proposed micropayment platform that Google had submitted in response to the NAA's request for paid-content proposals. The news that Google was considering sinking some of its own research and development money into creating a practical mechanism for newspapers to charge for news online, however profit-motivated the project may be, came as a revelation to many in the newspaper industry. They had come to regard the search giant as a kind of parasite, profiting from the advertising revenue that their content brought to the internet as a whole, without sharing the proceeds.
But it probably shouldn't have; Google's rivals, Microsoft, Oracle and IBM, have also recently indicated they want in on the paid content game. The more important point was that, suddenly, there was a whole bunch of companies trying to make a buck out of helping newspapers make money online, and that could mean only two things: either they smelt desperation and wanted to capitalise on it, as more than a few cynical bloggers have suggested; or there is real money to be made in online news.
Way out in front of this pack of tech behemoths is Journalism Online, launched six months ago by a group of media executives including Steven Brill, the founder of Brill's Content, The American Lawyer magazine and Court TV, and Gordon Crovitz, a former publisher of The Wall Street Journal. Journalism Online plans to deliver its online payment system to publishers this autumn, which would allow the company to keep 20 per cent of the revenue collected by each publisher.
Mr Crovitz says publishers' attitude towards making readers pay for news has reached a tipping point in recent months. "Over the last six months since we formed our company, Journalism Online, we've seen the debate on paid content switch - from 'whether to charge' to 'how' and 'when' to do so," Mr Crovitz says. "Journalism Online has now signed up over 1,000 newspapers, magazines and online sites to become affiliates, which demonstrates the larger recognition among publishers that charging for journalism in one medium while giving it away for free in another is a seriously flawed business model.
"The recent advertising drought has pushed publishers to finally confront a long-time problem: the decaying value proposition of the quality journalism that they produce." But until recently, charging for online news content was considered an idea so foolish as to be a non-starter. Those who wanted to make this point pointed to The New York Times's unsuccessful experiment with paywalls, or access fees, for its Times Select. The US$50 (Dh183.65) annual subscription service to the paper's premium content was scrapped in 2007 after a two-year run because it was hurting advertising revenue.
But lately, another American newspaper, The Wall Street Journal, which is the only major paper apart from the Financial Times to charge for its content online, has been getting more attention. When the paper's owner, Rupert Murdoch, announced last month that his News Corporation would begin charging for content online next year, many in the industry took it as a pivotal moment for micropayment advocates.
This notion was confirmed, albeit gently, by a recent study by the America Press Institute, which found that 58 per cent of the responding newspapers were considering online fees. Of that group, 22 per cent said they expected to introduce the fee before the end of the year. The findings drew upon 118 interviews of newspaper executives in the US and Canada. "I think it makes all the sense in the world for newspapers and other publishers to get paid for the content they produce," says Alan Mutter, a US-based media entrepreneur and consultant.
"Their original sin was to start giving it away a decade and a half ago, and conditioning a whole generation that content should be free." But Mr Mutter is sceptical about newspapers' ability to charge for basic news stories. "There is no empirical evidence to support that subscribers will sit still for being nickelled and dimed for most things and most websites," he says. "The idea that you can charge for a Senate vote or baseball scores is laughable, but what you could do is charge for particular types of services or content that are special."
He points to the example of the Financial Times's monthly China Confidential newsletter, which charges a fee and contains information that business people cannot access elsewhere, or the Milwaukee Journal's Green Bay Packers' subscription, which has exclusive content about the US city's professional football team. Mike Masnick, the chief executive of the TechnDirt blog, believes micropayments for content is a suicidal idea. If the newspaper industry seems to be turning towards them, he says, that is only an expression of their financial desperation.
"I think the turning point wasn't so much what Murdoch said, but the fact that people are finally realising that most newspapers took on way too much debt and had done nothing to adapt to the times," he says. "Their market share [both readers and advertising] started to decline and suddenly people began to realise that most would never be able to repay the debt, even if they were operationally profitable."
He says micropayments "are not a solution, they're a way to increase the problem, because they quickly kill off most ad revenue and there's a very small number of people who will pay". Nevertheless, newspapers are increasingly putting their faith in a kind of hybrid micropayment solution. The Pittsburgh Post-Gazette, for instance, recently launched a subscriber-supported website that includes coverage and commentary on sport, politics and entertainment that is in neither its paper nor on its free website. The service costs $36 a year or $3.99 a month.
The New York Times is also reportedly considering a tiered system of paywalls, such as a proposed silver level for $50 a year that gives readers early access to some stories as well as some additional features on the sites, a choice of company products and early access to tickets for the newspaper's events. The gold level, at $150 a year, gives the subscriber access to exclusive events, direct access to reporters and a newsroom tour.
Google's proposed paid-content model is similarly hybrid - not charging for everything, but looking for ways to package desirable benefits into something that readers would pay for. "Google believes that an open web benefits all publishers," its proposal reads. "However, 'open' need not mean free. We believe that content can thrive supported by multiple business models, including content available only via subscription."
Also this month, Google launched Fast Flip, a product aimed at boosting newspaper readership online with a pleasing and fast-loading visual interface, while throwing a bone to the newspaper industry by agreeing to share ad revenue from the service for the first time. Getting Google to agree to share the money from the ads that it sells alongside newspapers' content is a major concession. The initial group of participating publishers - which included news outlets such as BBC News, The New York Times, The Washington Post and Newsweek, as well as magazines including Cosmopolitan, The Atlantic, Esquire and Good Housekeeping - tended to see Google's project as a kind of olive branch extended to the publishing industry.
Before Fast Flip, services such as Google News argued that they did not need to share revenue with the news services that they aggregated and linked to, since they helped boost these sites' traffic. Ken Doctor, an analyst with Outsell, told The New York Times that Google's decision to begin sharing revenue was a "chink in Google's armour" and "could be a path to peace and rationalisation of the relationship".
Mr Crovitz sees Fast Flip as part of a larger trend towards acknowledging that, one way or another, publishers need to get paid for the use of their content online. "The overall trends we see in all such developments are encouraging: first, an industry-wide recognition that the status quo is unsustainable and second, a shift towards solutions that reward publishers for the content they produce."
khagey@thenational.ae
