What We’re Willing to Pay for Online

Forgive the USA-Today-style headline, but a new report from Nielsen on attitudes toward paid Internet content may offer some hope for a revenue stream for online news providers.

Nielsen surveyed 27,000 across 52 countries. The survey showed that about four out of 10 consumers would consider paying for online newspapers, and one in three would consider paying for Internet-only news sources. Nearly half would consider paying for magazine content online.

Those numbers may sound unexciting, but consider that news consumers probably make up a modest portion of the general consuming public Nielsen surveyed. It indicates that there is at least a market for pay-for-content in news, though maybe a reluctant one.

The survey results, however leave many unanswered questions about a business model for online news:

“Regardless of what systems they choose, media companies will almost certainly not abandon advertising; and consumers will doubtless still see ads along with paid content. For the 47% of respondents who are willing to accept more advertising to subsidize free content, that may be tolerable. Yet it will probably not sit well with the 64% who believe that if they must pay for content online, there should be no ads.”

Pole vault over the paywall?

Turns out, there could well be a chink in the paywall of nytimesonline.com.

In fact, it may not be a wall at all, and may not address the  issue  of news aggregators linking to content generated by newspapers.

Of course, The Times wants to encourage links to its online content, perhaps particularly so once The Times asks us to pay for that content upon reaching a certain number of visits to its site. Naturally, those includes links from bloggers and on Facebook and Twitter and other social media. And if you follow such a link, it won’t count in your “metered” number of visits.

Q. What about posting articles to Facebook and other social media? Would friends without a subscription then not be able to view an article that I think is relevant for them? — Julie, Pinole CA

A. Yes, they could continue to view articles. If you are coming to NYTimes.com from another Web site and it brings you to our site to view an article, you will have access to that article and it will not count toward your allotment of free ones.

But as Jay Rosen points out,

Google News is surely “another Web site,” therefore all articles found that way will be free and accessible. … No matter how often Google News is used to get to the Times, if you come back by that route you will never be charged.

Which means that for those people who get their news from the web itself, using search, aggregators, social media and blogs to find the stuff they want, the stuff they find from the New York Times will always be available, free of charge.  That looks a lot less like a pay wall to me. It isn’t a metered system if I can access the Times via the link economy without limit.  This scrambles a lot of what’s been written on the subject.

This whole paid content issue gets more complicated the further one gets into it. That’s obviated by the fact that the big brains in the business have yet to solve it. But we’ve got to try something. If it turns out the NYT system fails to provide significant revenue for news gathering, let’s tinker some more. The decline of journalism is too urgent to cling to unproven hopes of an new model emerging or to stand on the sidelines naysaying all efforts to make the Fourth Estate viable again.

NYT appears close to move to paid content

New York magazine reports that the decision is imminent. Unclear whether the Times would go with a metered model or a two-tiered scheme like the Wall Street Journal, in which some parts are free but others require a subscription. The Times tried and abandoned the latter course a few years ago, with its unsuccessful offer of paid “premium” content.

So what has changed? The timing now may have to do with technology, the magazine reports.

(Apple’s tablet computer is rumored to launch on January 27, and sources speculate that Sulzberger will strike a content partnership for the new device, which could dovetail with the paid strategy.)

UPDATE: It’s official. It will be a “metered” system, in which you get a certain number of free visits, but after that, you must pay.

Thoughts over beers on paid content

A friend and I were chewing over a favorite topic over pizza and beers the other night: the decline of quality and quantity of journalism at a time we need it most.

Acknowledging the hopelessness of the print model, we went on to complain about the deficiencies of online news consumption. The problem, of course, is that creditable, fair, balanced and researched news content online is almost entirely provided by print publications whose underlying business model is as dead as the trees on which they print. When we want to research coverage of a certain issue or event, the online aggregators, such as Google News, blend in blogs and other opinion outlets with the legitimate journalism, which damages the credibility of all online news. (Of course, there are a few journalistic blogs, but separating them out and branding their credibility is the issue.)

We agreed we would happily pay for reliable, quality journalism, but that it continued to amaze us that no one seemed to have come up with the viable, comprehensive solution. I said I liked the micropayment model, in which I set up an account with an outlet I have deemed to be reliable, and then each time I click a headline or blurb to read the full version of the article, my account gets charged a nominal amount, say a dime.

My friend noted that the problem with that is that many people would be averse to the open-ended cost structure and would hesitate to set up accounts when they didn’t know how much they would end up spending. He preferred the model of the Wall Street Journal, where you sign up for a year or so and get unlimited access.

One key difficulty with each is that we like to read multiple news outlets, and we will never have a finite universe of news producers we like and trust. We never know, for example, when an article from the Toledo Blade or the Milwaukee Journal-Sentinal may provide just what we’re looking for.

Then it hit us. Why not have a central organization, international in nature, that becomes both the certifier of journalistic integrity and the accountant for news providers worldwide? This body could be an offshoot of an existing journalism organization or a federation of many around the world. News gatherers and producers could join this organization by certifying, and winning  the organization’s recognition, of their adherence to basic journalistic principles — independent research, concern for fairness and balance, accuracy and accountability, etc.

News organizations belonging to this body could carry the logo on their own sites. The organization itself could aggregate the content of its members on its site.

A news consumer could sign up once with a credit card and choose either a monthly fee, say $30 for unlimited use, or a pay-per-click fee — again, about 10 cents. The technology would have to be such that once logged in to the umbrella organization, the consumer would not  have to log in to individual news outlets or enter payment information for each click.

The hope would be that by first establishing credibility, consumers and advertisers would follow. It seemed like a great idea at the time. I’m sure there are a few wrinkles in this concept. Care to weigh in?

Details on Journalism Online’s pay plan

Journalism Online has presented details of its pay-for-news proposal to the Newspaper Association of America.

JO’s pitch says that much online content would remain free and would produce ad revenue, but that newspapers could expect to sign up 10 percent of visitors to paid subscriptions at $7.50 per month or $75 per year (earlier estimates were $50-60 per year). The details available at the Nieman Foundation’s blog are unclear, but I assume that the $.25 micropayment charge is for non-subscribers who want to obtain premium content. It seems unlikely that someone paying $7.50 per month also would pay two bits per article they view. If I’m right, the subscription price would appeal only to those planning to download more than one story a day or 300 stories a year.

JO would take a 20 percent cut of these fees after credit card charges. JO says it has agreements with media companies representing 176 dailies, but has revealed few names.

Pay-Pal and Google Checkout have their own schemes for paid news content, but JO says its version will produce more revenue for newspapers.

FT editor says come on in, water’s fine

This is rich. The editor of that venerable peach journal of capitalism, The Financial Times, urges other newspapers to hurry up and join the FT in charging for content. The editor, Lionel Barber, says:

“What I would say to the competition and to the rest of the world is that it’s getting late. If we move now we can assure ourselves of a prosperous future.”

Translation: “Don’t leave us hangin’ here, fellas.”

Further, he warns other newspaper editors not to compete on price, because that would be wrong. Some capitalism, there!

But I do think he’s right to focus on brand and business model, and the FT is ahead of the pack there. He doesn’t see ad revenue as the answer, although it ought to supplement paying readers.

Competing with the BBC is a prickly issue for private news gatherers in the UK, and the interviewer badly wants the FT to pick that fight, but Barber won’t go there. Nor will he attack blogs that cut and paste news content. He doesn’t see that as competition. He sees the players as those with big brands built on credibility and value. Lot of sense in that.

Moody’s: Newspapers should get out of printing and delivering

Editor & Publisher reports that on Thursday, Moody’s Investors Service said newspapers’ credit ratings will continue to fall as long as they spend “far too much on producing and delivering a printed paper than on creating its content and selling the product.”

Moody’s calls it a “structural disconnect” with just 14% of cash operating costs, on average, devoted to content creation, while about 70% of costs are devoted to printing, distribution and corporate functions. The remaining 16% of costs are related to advertising sales — another example of devoting too few resources to the principal revenue driver.

Low credit ratings impact even the digital arms of newspapers, Moody’s noted.

“If newspapers can’t monetize the content in new digital channels at the same level as with print, or cut structural costs enough to keep up with the changing competitive environment, the prospect of additional recapitalizations or shutdowns will grow, adding further pressure to ratings,” he added.

So, newspapers need to get out of printing and delivery, meaning digital is all that’s left. And they need to find a way to pay for digital. This explains the industry’s sudden rush to paid content, including secret meetings.  Anti-trust alert!

American Press Institute: Paid Content Is the Future for News Web Sites

The 31-page white paper, summarized here by Rick Edmonds of the Poynter Institute, concludes:

“Newspapers can make the leap from an advertising-centered to an audience-centered enterprise” and should get on with it immediately.

 

The report, titled Newspaper Economic Action Plan, recommends that industry leaders follow five new “doctrines.”

• True Value. Establish that news content online has value by charging for it. Begin “massive experimentation with several of the most promising options.”
• Fair Use. Maintain the value of professionally produced and edited content by “aggressively enforcing copyright, fair use and the right to profit from original work.”
• Fair Share. Negotiate a higher price for content produced by the news industry that is aggregated and redistributed by others.
• Digital Deliverance. “Invest in technologies, platforms and systems that provide content-based e-commerce, data-sharing and other revenue generating solutions.”

Consumer Centric. Refocus on consumers and users. Shift revenue strategies from those focused on advertisers.

Full text of the report is available here.

Cable Pioneer John Malone on How to Get People to Pay for Content They Now Get for Free

Interview with Walter Mossberg in today’s WSJ:

MR. MOSSBERG:But you’re the guy that got people to pay for what was free television.

MR. MALONE: There’s the secret.

MR. MOSSBERG:How did you do that?

MR. MALONE: This is a titanic fight, Walt. … The way it was successful was blending together the transport service with the charge for the content. When you were a cable subscriber, you weren’t sure whether you were paying for connectivity or whether you were paying for the content that was embodied in the connectivity.

You had broadcast television initially. Then you started out with distant broadcast. That’s where Ted Turner comes in. Distant broadcast television is brought into a market and added and a charge is increased. You want to get the superstation; it’s another dollar, right? Were people paying for connectivity or were they paying for content? Then, as that blurred environment continued to grow, along comes HBO and says you can watch non-commercially-interrupted movies, but now it’s optional. You don’t have to take it, but it’s another X dollars a month.

At that point, the concept of paying for some television was well enough established in the public’s mind that paying a little more for some premium television started to sell. Of course, that created the opportunity to add the CNNs and the Black Entertainment Televisions and the Discoveries and all of that. Every time we added a channel, we charged a little more. Some of the money went back to the producer of the content.

When the Internet came along, I was terribly concerned that here’s something that’s “for free.” People will pay for connectivity. The industry’s never made successfully the transition to higher-quality content or unique content delivered by the Internet you should pay for. That’s a big intellectual jump.

MR. MOSSBERG:Having not charged for something, how do you then all of a sudden turn around and charge them for it?

MR. MALONE: That’s really the challenge. You should be asking a psychologist. We did it by tying together something that people are perfectly used to paying for—connectivity, communication—with content. If you can introduce incrementally—now you’re getting this 4G wireless data service and, by the way, part of that are these three very interesting things that only work if you’ve got enough speed to enjoy them. Perhaps that’s a way that it can be introduced, just the intellectual concept of paying incrementally for content.

I suspect that it will evolve over time. People will pay on a per-view or on some kind of subscription basis for content on the Internet if the quality is there and there’s convenience. The question you have to ask yourself is, is there going to be an aggregator doing that? This is the role that HBO traditionally did in movies. They aggregated movies and they sold you in bulk. You got 30 movies a month for seven bucks when they started.

MR. MOSSBERG:Netflix is doing that on the Internet. Amazon is doing that on the Internet. Apple is doing that to some extent on the Internet today.

MR. MALONE: I think that if they can differentiate themselves, have uniqueness, then they would become very big.

The cable industry would love to be the aggregator. Hulu would love to be the aggregator. There’ll be a real competition for that role in the future.

Is there a parallel for newspapers and news Web sites? It all comes down to perceived value.