The Bandwagon Is Gaining Speed – Newspapers Need To Charge For Their Online Content

Philip M. Stone February 5, 2009

This column has often written, to much derision, that the newspaper Internet model is broken, advertising doesn’t bring in the necessary revenue, and newspapers need to start charging for news on their web sites. While many newspaper publishers have told us they agree the model is broken when it comes to that particular fix there’s a lot of shuffling of the shoes and murmering, but little else.

In other words, they accept the current model is not working, but they don’t have the courage to be among the first to take the necessary steps to fix it. Trouble is if they don’t fix this real soon some of them won’t be around much longer to worry about it!

Newspapers in print and their Internet sites do not lack readership – indeed although print circulation has fallen steadily publishers will tell you the combined print/Internet readership is probably at all time records. The problem is the lack of revenues the current print-Web system produces.  The Internet’s advertising model just isn’t bringing in the necessary revenue to replace print’s losses, so why not go back to what publishers know has worked with print for more than 400 years – make the reader pay for content.

ftm has made this proposition several times but it has been very lonely out there,  but within the past couple of weeks some big names have been coming forward and are basically saying the same thing.

Even the most popular US newspaper web site, nytimes.com, is rethinking its strategy. It certainly has the readers – some 18 million unique vistors a month – but it’s not getting in the revenue it deserves for that traffic. Editor Bill Keller just this week in a question and answer on his site said, “A lot of people in the news business, myself included, don’t buy as a matter of theology that information wants to be free. Really good information, often extracted from reluctant sources, truth-tested, organized and explained – that stuff wants to be paid for.”

The question that didn’t get asked is since the print newspaper charges for exactly that type of NYT coverage, why does the newspaper give it away for free on the Internet?

Henry Blodget has written a long detailed analysis of why he believes the salvation for the New York Times’ current financial problems is to start charging for its news on the Web. Blodget, formerly a top securities analyst  until he ran into trouble with the feds, now has a second life as a respected blogger on Internet trends. Last week he recommended The Times undertake a hybrid system like the Wall Street Journal’s under which some stories are available on the first day to everyone for free, that content be indexed by Google and other search engines, that there are deals made for free linkage from various sites, but only subscribers to the WSJ print edition can access print edition stories on the site.

He makes all sorts of financial assumptions and suggestions on what the Times should charge for subscriptions and advertising and at the end of the day he concludes, “This would put the online business ahead of where it currently is now. It would also eliminate the incentive of print subscribers to drop their print subscriptions so as to read the paper for free online.”

And then there is Steven Brill of Internet and Court TV fame who caused a lot of soul-searching back in 1999 when he gave a lecture titled, “Can The Press Fix Itself?”  The American Journalism Review caught up with him for its February/March issue and quotes him saying, “If I were to give the same speech today I would say the press has to stop commiting suicide by giving journalism away for free. Start charging for it, start believing in your product.”

And he gives this example of how financially silly the current newspaper Web business model is -- he used to pay a lot of money for home delivery of the Washington Post at his New York home but then, he said, the newspaper  “decided that I needed a subsidy. So they now e-mail the Style section for free.” He called that “totally insane”.

Douglas A. McIntyre, a partner of the 24/7 Wall Street Web site recently wrote that the New York Times hopes it won’t have to go through another newsroom cull with Web revenues saving the day but “whatever hope there may have been that the Internet would save those jobs is nearly gone.”

So there now seems to be a variety of respected people saying out loud that the newspaper web advertising model doesn’t work and that charging for news is now the way forward. But will publishers and editors change their ways?

Keller, the Times’ editor, said in his Q and A session , “A lively, deadly serious discussion continues within The Times about ways to get consumers to pay for what we make.”

Right now many publishers remain in the mindframe that the more eyeballs they have on their site the better off they are. Maybe in readership but certainly not in revenue. For most metropolitan and smaller newspapers local news is their gold, so why give it away? The national and international news is basically public domain, so that can continue being advertising supported only.  It could well be that the number of eyeballs accessing  that local news may go down some 80-90%, but those 10-20% who pay plus some advertising – how does that revenue compare with the current advertising models?

It’s an exercise the financial people should be put to.