Tuesday, April 21, 2009

Why Newspapers Need to Charge for Content

"I, and millions like me, are to blame for the rapid demise of ink-on-paper journalism, but I don't care. All I care about is content, and I've got content coming outta my ears."
--- Mark Kiemele of British Columbia, in a letter to Editor & Publisher.

Mr. Kiemele in this letter says he became a journalist in 1968, so, let's say he's 60 to 62. Hardly the youthquake, eh?

Chemainus, where he lives, is on Vancouver Island, about 45 miles north of the capital, Victoria; about 20 miles south of Nanaimo, a smaller city; and a ferry trip across the Strait of Georgia from Vancouver. A decade ago, Mr. Kiemele would have been assumed to be a potential customer of either the Nanaimo Daily News or the Victoria Times-Colonist if he took his local paper, the Vancouver Sun if he took the nearest major metro.

But Mr. Kiemele, who claims he hasn't bought a printed newspaper in years -- to his credit he is a supporter of the Committee of Concerned Journalists -- does not mention any of British Columbia's newspapers. Every day, he notes, he relishes reading his favorite newspaper in the world, the Guardian, along with the New York Times and the Toronto Globe and Mail. The Globe and Mail has long been "Canada's national newspaper," but there probably is not much of a readership for the New York Times, even online, in Chemainus, a former logging town of 5,000 people.

Mr. Kiemele does not mention anything having to do with advertising. He does mention as part of his daily reading the Web sites Crooks & Liars, the Daily Beast, the Drudge Report, and "anything else that catches my eye." The political differences between Crooks & Liars and Drudge being apparent, we can assume that Mr. Kiemele is not an ideologue, although he mentions that when he was a teenager he hoped to work for Ramparts. A look Friday morning at Crooks & Liars showed two ads, one for a fantasy game and the other for BJs. No ads on the Guardian home page; going to a story brought me a Best Buy ad for a photocopier, based on my computer being in the U.S. Better than an ad for Dixons, the UK equivalent of Best Buy; but the mind reels at how little the Guardian is getting from Best Buy for that ad, possibly sold out of some sort of inventory by a third party.

Every penny ads up, we remember three lines-three days-three dollars. But let's be forthright. Though he is a political junkie and an avid reader, Mr. Kiemele is not a customer of the newspaper business. He is quite happy to read lots of news and comment free -- to be correct, for the monthly cost of his ISP connection, from which the Globe and Mail etc. get zero -- some from newspapers and some not, with the content somewhat interchangeable as the mood strikes him; but he engages in no financial transaction with any newspaper, or any other kind unless he happens to post a comment. Nor does he seem particularly interested, from what we can tell, in paying any particular attention to anyone who might do so, i.e., an advertiser, particularly the local ones upon whom newspapers depend. (If that is not the case, glad to hear from him.)

The journalism of the New York Times and the Guardian are reaching Mr. Kiemele and he is part of that "more people than ever see our journalism" news-release copy newspapers like to trumpet; but he is not a customer of theirs or, apparently, of the newspapers on Vancouver Island, though Canadian newspapers are doing much better than ones in the U.S. at keeping up their print circulations. He has content coming out of his ears, much of it prepared for him at great expense and given to him for nothing, either in the hope that someone will pay the freight somehow someday, or by people whose desire to make their views known is more important than how much, if anything, they get paid for it.

(Sure is nice of the Guardian to give all that stuff free, but if they want money, y'know, maybe the Melbourne Age might look kind of interesting.) The Guardian is his favorite newspaper in the world, but at this point not a single thing in it is actually worth paying for. Or maybe it is -- but since no one is making him pay, how do we know? As Mr. Kiemele notes, it is not his responsibility that people like him are destroying the businesses of the newspapers he so loves to read. It's their responsibility.

And for this business model, we should, as Martin Langeveld said in a follow to a column that he probably wishes had not included "print is still king" -- a phrase that did obscure his point to some (thankfully not to "TTPB") -- for this we should essentially junk nearly everything we now do, to throw off the last shackles of the print mentality and become completely digital operations with no charge for content.

As a commenter to that post noted:

"Nice ideas and all, but you still don’t demonstrate how newspapers will make money! A minor point. "

To be fair, Martin responded:

"The whole point of gaining online news market share is to grow revenue. I’ve discussed in previous posts that there can be a return to reasonable (but not monopolistic) profitability essentially by shrinking the business to an online-first operation with fewer print editions (one or two in metro markets is what I would expect). This sheds a lot of expense while keeping a large percentage of the remaining print ad business."

I.e. the Detroit model on steroids, and if the Detroit model turns out to be the answer, fine -- although my suspicion is the Detroit model sheds a lot of expense, keeps a large percentage of the remaining print ad business, and does little to grow online revenue. But I wait to be proved wrong.

In the end, the main problem for the daily newspaper business is not whether Mr. Kiemele on Vancouver Island contributes to the bottom line of the Guardian. The Guardian could lose Mr. Kiemele's attention and never really care. The problem for the daily newspaper business is that Mr. Kiemele apparently contributes nothing to the bottom line of the Nanaimo Daily News or the Victoria Times-Colonist, whose advertisers, whether in print or online, are very interested in selling to a local audience such as him.

That, of course, is not the problem of journalism, journalists would say. Journalism has always had an uneasy relationship with being paid. Most of us want to be rewarded for our effort, but I still remember my college professor Earl Conn saying he would write free for a byline and we should too. Reporters traditionally are underpaid not just because newspapers were cheap-ass; there was always someone willing to fill the space for less, and the primary job of a newspaper was to fill the space next to the ads with -- something.

The Internet has shown what anyone who ran a small-town section has learned. The problem is not finding people who are willing to write something for nothing or next to nothing, or finding readers who will read what that person wrote. What you pay for is the ability to select who will write, about things they might not want to write about, at a time when they might not want to do it, and do it dependably. But if you just needed to fill pages 8 and 9 of Neighbors, a couple of ministers and the garden club and historical society presidents were happy to write 20 inches on some sort of schedule, and you could fill with Pet of the Week if they blew you off.

Mark Kiemele of Chemainus, B.C., is happy to look at whatever we wish to offer him free about what we used to call "national and international affairs." The merchants of Vancouver Island might want to talk to him through the local media, but he seems to give them a deaf ear. (Perhaps there is a local Web site he does not mention. Perhaps he gets a local shopper or orders everything online. Perhaps he has been going to the same local stores for 30 years and is set in his ways. Perhaps he has a wife who reads the Victoria Times-Colonist. In many cases, the wife has kept the newspaper while the husband spends the day going from Web site to Web site.) The advertisers in the New York Times and the Guardian may pay for hits, but is he the target audience of anyone other than the local papers?

The number of online grazers like Mr. Kiemele that the Guardian has to have to make a go of its business -- even a business without trucks and paper -- is probably going to fall short of the Guardian's expenses, because the Guardian is still going to archaically think it needs to employ professional journalists and advertising salespeople, whereas Crooks & Liars just has to pay some of John Amato's bills -- and Mark is happy to read both at exactly the same financial return to their creators, and someone is willing to sell excess ad inventory for about the same rate as well.

The Guardian still wants to publish a newspaper, online or in print or whatever; John Amato uses Crooks & Liars to tell you what he thinks, like the minister on Page 8 of Neighbors. But John Amato and the minister are not in the same business as newspapers. For a newspaper to compete with a blog economically, it has to have close to the same cost structure as a blog. In which case, it ceases to be a newspaper. To many online-journalism fans, of course, there is no problem with this; it's not just print in which they find newspapers outmoded. ("Why would I go to a newspaper for comics/weather/lotteries/ads/movie reviews/gossip/etc./etc./etc. when I can find them all at different sites online?") Newspaper owners, of course, would take a different view, as would all the retrograde fuddy-duddies of whatever age who find the newspaper's tactic of organizing the world into a coherent package still useful.

The newspaper business, like Walmart, has to devote itself to serving the customers it has and can get whom it can make a profit serving, and not worry about the rest. If you give people free anything, most will take it. If you charge for it, some will pay and some will go somewhere else, and the first group of people are your customers. If you see your customer as someone who says, "I want everything you can give me and I don't want ever to pay a cent for it," you had better have a lot of sugar daddies. If you don't, you are the U.S. newspaper business in 2009, having believed in Internet utopia far too long.

So newspapers need to find their customers among people who say, what you are doing matters enough to me that I am willing to enter into some sort of business transaction with you. I am willing to pay you something for your content because it is important to me. I have some level of commitment to your products and thus am going to dependably spend time with them and value them, which will make me a more interesting person to your advertisers. I am not just a grazer saying "gimme and if you don't gimme I'll just read something else." I am your customer. (And yes, they're not going to pay just for commodity news headlines. But they never did. Only journalists think that way.)

It doesn't matter how I do business with you, whether I deliver a paper to your doorstep seven days a week or simply publish an online resource. As long as I want to run a media business that has a higher cost structure than a blog or a shopper -- and most newspaper companies want to do something other than put out a blog or a shopper, they want to actually have capable and qualified reporters and editors and photographers covering the news, and in numbers substantial for the area -- I have to have a business that supports it.

And thus, yes, newspapers need to start charging for their content online, even though that means they will lose some, perhaps many, of their current online readers, even though disaster will be predicted, even though everything in a newspaper's DNA -- we had thousands of readers and now we have millions of hits! -- says that what we really like to sell are big, undifferentiated numbers, and even though it is a lousy time to do it.

The business model of most newspapers need not be about print, although a newspaper company's distinguishing mark still is producing and distributing printed advertising; print, online, whatever, it is about establishing committed relationships with regular customers, and someone else pays for access to them, and from all this revenue the newspaper keeps itself in business. There are many other journalistic efforts, there are freesheets, there are blogs, but we are talking about the business of the traditional newspaper company here.

Now, a journalist might not care how his journalism is distributed and might be happy making just enough money to get by from a City Hall Watchdog site with a core group of 500 readers and a sense that he is affecting public policy. But we journalists are not going to save the newspaper business' business. Journalists might love Mr. Kiemele because he is a news junkie; 21st century journalism mavens might say he is the new normal and we must adapt ourselves to him. So the typical newspaper does have to figure out if it can make money from him as well as from the great mass of people who are not like him.

But if the newspaper in the end can't make money from Mr. Kiemele, or only makes a pittance while undercutting itself in myriad other ways (such as never making enough from serving him free to make up what it could make by charging people who are willing to be charged), it has to be willing to say goodbye to him and devote itself to serving the others. As the great Juan Giner says in April's Presstime, a newspaper can no longer be for everybody, or it will end up being a newspaper for nobody.

Perhaps Mr. Kiemele would not ever pay the Guardian a cent for its content; but perhaps he would, and having done so, human nature being what it is, he probably would spend more time with it to justify his investment, and the Guardian could say that he values its content enough to pay for it, and his value to some subset of the newspaper's advertisers (British Air, perhaps) will have increased even though he lives far from London and Manchester. As long as newspapers are too scared of looking antediluvian to be willing to lose their grazers (who will howl online when the teat is cut off, of course) and find out, we will never know. Yes, they will graze elsewhere. Then it will be someone else's problem to figure out how to stay in business serving them. Not every business works really well online. Amazon works really well online; Barnes & Noble, much less so. A decade ago, Barnes & Noble was being advised that it should close all its stores and become an exclusively online business, because brick-and-mortar stores were dead. The end may yet come for Barnes & Noble, but bricks and mortar are far from dead. Not everyone lives most of life online, just the people who write about how people live most of life online.

Our journalism now has millions of readers. Terrific. Journalism needs readers, but newspapers mainly need to have customers. Without them, "our" journalism -- not journalism in some form, but "our" journalism, the journalism we in newspapers believe in -- will probably disappear. The only reason to let this happen is if newspapers truly believe that their journalism is no longer worth doing.


Note: Written last week, before Romenesko posted Mark Potts saying "Print consumers plunk down their quarters for the package, not the story, notes Mark Potts. 'News collected in a convenient, easy-to-use form that adds value. So maybe we need to figure out how to replicate those traditional collections of news by creating compelling online packages that people will want to pay for.'" And before he posted John Temple saying "'Costco charges a membership fee before customers can take advantage of the great values it offers,' and users pay it once they see the benefits, writes ex-Rocky editor John Temple. 'Instead of offering a range of benefits to their users, newspapers are still selling subscriptions to their print products rather than membership in an information company that can help people do everything from save money on groceries to pick the best school for their child to report road conditions in real time.'"

The era of Internet utopianism -- that the Web would create a medium for journalism in which the question of "How is this paid for" would be answered by, "When we have made the transition, it will all be taken care of" -- is over. There's no pot of gold, so it's back to business, boys and girls. Whether those paid memberships or prices will include "and as part of your membership price you get the printed Republican-Democrat," a la the Wall Street Journal, remains to be seen; I hope it does, but that's not the point. The customer has made it clear: If you want to be stupid and lose millions to give me free content, that's fine with me. If I have to pay, I might decide I only want free content -- but I might not, either. Let's find out.


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