Paid Content

The title of this post is a little homage to paidcontent.org, the wonderful chronicle of the digital media business that started life four-plus years ago as an advocate of subscription-based media Web sites. At the time, paidcontent published several excellent essays by a consultant named Robert Spears, under the title Spears and Daggers, pointedly asking why Web publishers were so loath to charge for their content.

That’s still a very good question, because the situation really hasn’t changed very much. Top-notch Web media content remains largely free, even though Spears, in provocative essays such as “The Seven Deadly Sins of Free Content” (which is sadly gone from paidcontent’s archives) did an excellent job of lampooning the tendency for content to be offered for free.

The heresy of paid content is a mystery to me. Why would publishers give something away online that they charge for in print? Why leave money on the table?

Free content had its origins in the mid-90s, when publishers first moved to the Web. “Information wants to be free,” went the mantra. Yeah, well, my car wants to be free, and so does my dinner, but I still have to pay for them.

In following this foolhardy notion, publishers managed to do to themselves what Napster did to record companies: condition the audience to getting everything for free. That effectively established that expensive-to-produce Web content had no value because it was offered at no price. And so, with some notable exceptions, it continues to this day.

Yes, I know the arguments: If content isn’t free, then it doesn’t receive enough visits and page views to sell advertising against. Hogwash. Just as in print, subscriptions can work in concert with advertising to provide revenue. Web publishers complain all the time that online advertising doesn’t pay the bills. Then why not seek out additional forms of revenue—like, oh, say, subscriptions?

In fact, several publishers are doing very well charging for content on the Web, even as the majority of their brethren avoid it like the plague. Exhibit A: The Wall Street Journal, whose wsj.com site has more than 800,000 paying customers (that makes it larger, in terms of paid circulation than all but FOUR of the printed newspapers in America. At an average price of around $75 per subscription (depending on whether the customer also subscribes to the printed Journal), that means that Dow Jones is taking in something like $60 million a year on WSJ.com before it sells a single ad. Not too shabby. And craftily, the Journal has convinced the Audit Bureaus of Circulation to count its paying online accounts alongside its paying print subscribers, instantly adding several hundred thousand subscribers to its overall circulation. Nifty.

Yeah, I hear your arguments—as did Spears in Spears and Daggers four years ago: The Journal is a unique publication, because its subscriptions generally are paid for by businesses and/or are tax-deductible as business expenses. Leaving aside the fact that WSJ.com is one of the best newspaper Web sites (I gladly pay $99 a year for my subscription), that argument crumbles in the face of several successful consumer-oriented subscription sites, such as consumerreports.com, Zagat.com and ESPN.com’s premium service, Insider. Not to mention a hardy group of smaller newspapers around the country that have put their Web sites behind subscription walls.

And then there’s The New York Times’ much-vilified TimesSelect. For $49 a year—free if you’re a subscriber to the print newspaper—the Times makes its columnists and some other features available, as well as free access to its archives. One might quibble with putting the columnists (rather than something else) behind the pay wall in an era of blogging, but the Times hasn’t backed away from its plan, and TimesSelect now counts more than 600,000 subscribers, 200,000 of which are online-only. That’s $10 million a year in revenue that didn’t exist 18 months ago.

TimesSelect is by far the highest-profile effort by a Web publisher to switch from a free model to one that at least partially depends on paid subscriptions, and it's been roundly criticized by people who somehow don't think they should have to pay for the Times' excellent content. But that quality content is expensive to create, folks. You should be paying for it, even if you don’t want to. That’s just not a good enough reason. There’s no constitutional right to freeload. The First Amendment guarantees a free press—not a "free" press.

Not every print publication should be charging for its Web site, and I’d argue that there are very few that can successfully put the bulk of their online offering behind a subscription. But I’m shocked that there hasn’t been more experimentation with focused paid models, a la TimesSelect. One notable failure was the Los Angeles Times’ attempt a few years ago to put its online Calendar section behind a pay wall. That was just a bad idea, because the entertainment listings and content in Calendar just weren’t unique enough to warrant asking people to pay for them online. You can’t charge for commodity content. That makes no sense.

Rather, media Web sites should take a hard look at what’s unique about their content and think about ways to charge for access for it. An interesting potential example is my old company, Washingtonpost.com, whose leadership is absolutely adamant about not charging for online content. (Indeed, privately they believe that position gives them a competitive advantage over the likes of TimesSelect.) But Post.com provides some amazing features, such as its discussions, multimedia galleries and blogs, that aren’t available anywhere else and might be the core of a premium subscription service.

Or look at it another way: Fully 90 percent of Washingtonpost.com’s traffic comes from outside the Washington area (yes, you read that right, 90 percent). Yet aside from some syndication, there is virtually no other way to get access to Washington Post content outside of a 50-mile-or-so radius of Washington. Unlike The New York Times and Wall Street Journal, the Post doesn’t have national print distribution. Yet the Web site's traffic demostrates that there’s broad interest in what, in print, is a regional newspaper.

Doesn’t that argue for some sort of an online subscription strategy, to monetize all of that out of town traffic? It seems completely obvious: Create scarcity, then charge for it. The demand is clearly there for the Post's content, and moreover, the Post has always had trouble monetizing its national traffic with advertising. A subscription plan to at least get some revenue from that 90 percent of non-local traffic seems like a no-brainer.

There are other models that Web publishers have followed and can follow in contemplating charging for online subscriptions. In my next post, I’ll talk about them.

Comments

[Nathan Roberts]

Users can get into most of these sites now free with a thing called a netpass from: http://news.congoo.com

Its some kind of newly formed publisher consortium

[Bruce Bartlett]

I think that one thing people have a resistance to is buying a continuing subscription to a publication they may only access from time to time. I think newspapers need to provide a simple way for occasional readers to pay to access their web sites on a per use basis, the same way they sell copies on news stands. Let people click a button and pay $1 for a one-day pass and I think you might have the makings of a paying model that works.

[Now a PR Guy]

I think it's important to remember that the NY Times has something very different to offer than most papers. Same with the Wall Street Journal.

My former employer, a major Metro Daily, tried paid content but it failed. Why? Because it wasn't special and exclusive. No one outside the metro area wanted to read what their columnists had to say and everyone inside the area could find out by picking up a copy of the paper at work.

The NY Times columnists and features are very unique and have national reach. This model ONLY works with media that has national reach -- and their aren't a lot of those anymore.

NYT, WSJ, Washington Post, LA Times (sorta), Inky (not anymore really), and a few others.

[Mathew Ingram]

Mark, as a journalist who works for an online newspaper site, I sympathize with your thoughts on this -- but I would just point out that while newspapers charge for their printed content, what people pay (as you probably know) doesn't actually pay for much of anything. Advertising pays for the vast majority of content in print -- why should online be any different?

[Mark Potts]

Matthew: Thanks for your note. I believe that the online model is different in so many other ways that we need to experiment with new revenue models, as well. And I'm not advocating subscription revenue trumping advertising—I'm just saying that in most cases, there's NO other revenue besides advertising. As I said, it perplexes me that there have been so few experiments in finding other sources of revenue, especially from subscriptions. I'll talk more about strategies in my next post, in a couple of days.

[overburdened new media employee]

The Times is voluminous. They are consistent at creating online content, as a subscriber I get a lot for my money. Medium and small market papers need to develop their sites with a tremendous amount of local content and make itself essential to the lives of their community. This has to happen to ever justify spending money to visit. As an employee at a medium sized newspaper we are understaffed and incapable of providing enough content for paid subscribers, the addition user-generated content is not enough to fill the gaping hole. Most papers need to invest before they should think about charging for their product.

[Andy Vogel]

Mark, as a Bears fan it only mildly insults me that you failed to mention PackerInsider by the Journal Sentinel in Milwaukee as a well run paid site.

Like other newspaper sites, fully 90% of the subscribers are outside the state of Wisconsin because much of this content is freely available. When I was at the Journal Sentinel we worked hard to grow local subscribers through a variety of grassroots methods. We focused on user generated features like photos and a podcast of fan "rants and raves."

We did a good job of growing subscriptions, but the marketing spend didn't cost justify itself, and eventually the person in charge of marketing cut all funding.

I guess that's just another argument for seperate p&l's and physical seperation from the "core."

[Robert Stewart]

That congoo site's news channel is amazing. Why didnt I think of that?

[Mary Specht]

The most influential reason people expect online content for free is that paying takes too long. Stopping to fill out a dozen fields on a payment form is anti-thetical to the way people consume news online.

Today's technology makes payment cumbersome. Long-term (months) and short-term (days or individual articles) subscriptions will become commonplace when a universally-adopted, near-instantaneous payment system comes around.

I'm thinking of an EZ-Pass Express of e-commerce, a concept that should ring a bell with anyone who drives regularly through New Jersey.

[Bill Burger]

Mark:

You've correct that quality journalism faces a serious business-model crisis. But with all due respect, I couldn't disagree more with your suggestion that subscriptions are even a partial answer to the problem. When a simple registration screen is enough to cause most people to abandon a promising link, just think what a barrier a paid subscription would be for all but a rarefied few. I'm one of those who live outside the 50-mile radius of Washington, and I follow plenty of blog links to the Wash Post and other sources from around the world. But would I continue on if asked to pay? With the exception of the WSJ and NYT, the answer is no, and I suspect that few people would. The 90 percent of the traffic the Post gets from outside its circulation area would evaporate and so would the ad revenue. Worse, the Post would no longer have a seat at the national dinner party conversation.

The nature of media is changing radically. This extraordinary video now making the rounds may be the most powerful statement I've seen in a long time on how different things are--and will be:
http://www.youtube.com/watch?v=6gmP4nk0EOE

[Bill Densmore]

Mark:

Thanks for sticking your neck out on this. The well-intentioned folks who manage news-industry websites are all incented to push advertising and they believe that precludes pay walls of any sort. They continue to believe they are in the advertising business, not the news business, and that their competitors are new-media websites. But the mass-market advertising business is a game of numbers, and they will never catch up to Google, Yahoo, MSN, MySpace et cet. in raw "circulation."

There are perhaps three ways journalism as we know it is going to be supported going forward:

1) Sponsors (read: advertising)
2) Donors (philanthropy or socially motivated ownership)
3) Users (subscription/per click)

So far, most of the web has explored only No. 1 -- Which is going to drive dvertising rates toward the floor -- nothing like what would be needed to support general-market journalism provided by the formerly de-facto, accidental, fortuitous, near monopolistic or oligarchic positions of many mass-circulation newspapers and broadcast networks.

The other two legs need to be explored. I feel a conflict getting out front pushing this view, because of my continuing non-operating ownership stake in Clickshare Service Corp., which provides a system for making it easy to charge for information across a network of affiliated websites, each of which maintains their unique customer and content relationships but each of which may share and exchange revenue from both advertising and information.

A a group might consider working on a paper -- sort of the next phase of Geneva Overholser's "Manifesto" -- a call for a new approach to ownership of the "convener" of news in a community. It is not going to be a newspaper -- centralized daily printing is going to become a niche product for rich people -- much like magazines. It is going to be a 24/7, platform-agnostic nerve center that finds, organizes, shares and makes sense of information from a vast array of paid, volunteer, independent and partisan sources -- and then serves it how you want it, when you want it.

SEE:
http://www.mediagiraffe.org/manifesto

It will be a service organization -- like a law or accounting firm -- and it will be paid accordingly. At first, it will be extremely difficult to convince people to pay for such a service. But as the years go by, it will be seen as an absolutely indispensable way to get through the day. People will become as reliant on their "newshare" as on their car, doctor, parent or colleague. Larger cities will have competing "newshares" offering this information valet service.

see:
http://www.mediagiraffe.org/wiki/index.php/Graytalk

These newshares will compete largely on technical grounds -- who does the better sort, who finds the real gems, and who provides premium information at the right price bundle.

SEE:
http://newshare.typepad.com/newshare/2006/01/newspapers_must.html

Advertising will be part of all this, but it will be an option -- if you are willing to receive advertising, the cost of your "newshare" will be less. "You will actually be PAID for you attention when you look at an ad, and that payment will be a credit to an account which you can then use to purchase premium information. An ebb and flow of info-currency, depending upon whether it is information you ***want*** or information someone ****wants you to have.****"

-- Bill Densmore, densmore@newshare.com

[Bill Densmore]

A quick aside: As I now read the replies above mine, I endorse Mary Specht's notion of an "E-ZPass" for information which doesn't require multiple log-ins or passwords, and Bruce Bartlett's notion of a day pass. These are the sorts of innovation required.