Free is Not a Business Model

One of the reasons I chose the sobriquet "Recovering Journalist" is because I long ago got over the idea that journalism is some sort of a mystical, romantic calling, somehow exempt from the laws of nature, physics and economics. Indeed, supporting successful journalism is a business, and those that ignore or fail to understand that eventually will find themselves out of business.

The sheer, delirious, lip-smacking glee that is being exuded by various commentators over the demise of The New York Time's TimesSelect is proof that a lot of people still don't really understand this. They're still living the dream that journalism somehow happens by magic, and that attaching revenue and other business principles to it (ooh, profit!) is somehow dirty. Alternatively, some of these people are just freeloaders, who simply don't want to pay for anything on the Web and still believe that old canard that "content wants to be free." Yeah, right.

Look, there's no question that the "open Web" is a good thing, and that anything that encourages more site traffic is beneficial. That's great. No doubt dropping TimesSelect—which as I said earlier this week was misguided in its focus on columnists—will make Times content more visible in search engines, bring more traffic to Times columnists and involve said columnists more in the ongoing conversations about big events of our time. All good.

But committing good journalism is expensive, and so far, there's no indication that advertising will pay the entire way, especially for premium content from the likes of organizations like the Times. By dropping TimesSelect, the Times is walking away from more than $10 million in annual revenue, and it remains to be seen how quickly the resulting traffic bump—and attendant advertising—can make that up. A blanket statement that "content is now and forever free," as Jeff Jarvis put it in his triumphant posting is just misguided—and belied by ESPN.com, ConsumerReports.org and Zagat.com, not to mention countless high-end subscription-based information and analysis services that serve professional markets. Oh, and print media are still successfully enjoying arevenue stream from subscriptions, you may have noticed.

Analysts with more thoughtful takes on the subject believe, as do I, that publishers, offline and online, need to continue to look at non-advertising alternatives—including subscriptions. Far from the Times decision signifying that the debate over paid content is dead, I think we're only at the beginning of this argument, as we are with so many issues in online media. Over the next few years, I think we'll see the emergence of many new business models. This is hardly a mature medium.

Meantime, the restless villagers, feeling their oats over the death of TimesSelect, have taken their pitchforks and torches and "free, free, free" chants over to the Dow Jones castle. It will be interesting to see how that plays out, given that there already are obvious divisions between DJ execs and new boss Rupert Murdoch over charging for WSJ.com. Again, it's not clear why, in an era when newspapers are chasing every dollar, Dow Jones would willfully walk away from $50 million-plus in annual revenue. Oh, and note that subscribers spend considerably more time with WSJ.com—and its ads—than random one-time visitors from search engines. And that WSJ.com can charge higher rates because it knows the demographics of its subscriber base. These are the kinds of subtleties that you need to understand in evaluating business strategies rather than making knee-jerk decisions because you somehow think journalism is different than other businesses.

At an online media conference a couple years ago, I heard Jarvis, no less, wonder aloud, "Does everything have to have a business model?" Well, yes, it does—otherwise, it's just a hobby. Creating good journalism requires a sophisticated business model, with revenue from multple sources—including, in some cases, paid subscriptions.

Comments

[Tish Grier]

Hi Mark,

I have to agree w/you quality journalism costs money--but think that hiding content behind a pay wall isn't the answer. I see this locally with the Daily Hampshire Gazette, and think it's something of a deterrant to not just local non-subscribers (thus, a deterrant to participation in local matters) but also to people outside of the local area who would simply like to keep up with the home town from time to time...

More importantly, newspapers may have to re-think what they do online to come up with other ways to create income. Take a look at some new media start-ups (or is that up-starts?) to see how many create income from all sorts of sources, not just advertising. These can range from little things like ringtones to much bigger community based services (we may be reaching a tipping point with social networking, so I'd hesitate on that one.) Newspapers may need to start thinking out of the box in order to find ways of creating income (rather than just thru ads) to sustain journalism.

[Mark Potts]

Thanks, Tish. I'm not advocating hiding all content behind a pay wall. Certainly, commodity content, available elsewhere, has no business behind a pay wall (which is why LATimes.com's paid events-listings experiment a couple years ago was such a fiasco). But there are specific circumstances where specific sorts of content—particularly unique, highly specialized content—can be properly packaged to find a paid audience, and publishers should be experimenting with those. The Sacramento Bee's political insider product, while ridiculously overpriced, is a good example.

I'm endlessly amazed by companies that flatly declare that subscription models don't work (WashingtonPost.com, I'm looking at you) without ever actually trying one. And of course, as I've said before, publishers need to be looking at all sorts of other innovative revenue streams, as well.

[Ken Doctor]

Mark: You're right -- the glee is misplaced. Certainly, the case can be made that the Times is an important starter of The Conversation, and that The Conversation is made different by the web. Quite true, though often inflated in its sense of self-importance. As you point out, you've got to have a business model under-girding that conversation.

It appears a full-armed embrace of web advertising -- without any support from readers -- is the path the Times and others are taking. I think web advertising will continue to grow well, though its rate of growth will slow as well.

One thing that means is that publishers representing the public interest -- the industry formerly known as newspapers -- has to find a way to allow readers to help pay for the cost of reporting. Otherwise, we'll all be wholly dependent on the whims and trends of advertising. One way will be the NPR-like membership model (like what MinnPost is trying in the Twin Cities). Maybe that replaces subscriptions and "circulation".

But publishers have to find away to let readers back into the paying picture, one way or the other, both for reasons of funding the enterprise and reinforcing the notion of "public interest."

[Sebastian]

You write "Free is Not a Business Model", and you're right. "Free" is a Distribution Model, the Business Model are ads.

You think ads don't work? Well, it seems to work for the companies that earned about 20 billion dollars with ads last year.

You know what? Ads work for TV journalism, too.

If you speak about 10 million dollars of revenues, you have to keep in mind that most of these 10 million dollars had to be invested to get subscribers. A high-quality newspaper like The New York Times will very fast make high ranks in search engines.
Of course just opening up isn't enough. They'll have to get into conversations with their visitors. This keeps them on the site. Let them post comments on stories and discuss with the columnists.

You're right: Free is Not a Business Model. And revenues aren't profits.
Whining over 10 million dollars that very likely didn't ever create a single dollar of profits is dumb.

News papers will have to be creative if they want to survive. If they want to, if they try hard, it will work. With most of their profits coming from ads. Probably some high-quality papers will be able to charge for some contents, but definitely not the way they did currently. Definitely not by decreasing their audience. Definitely not by charging for articles and columnists.

If you don't understand that, you aren't creative enough.

[Neil Elliott]

From what I hear, the NY Times just led us into a disastrous war that has cost thousands of lives and millions of refugees. Was this content worth paying for, whatever their prima donna delusions of grandeur? I've published over three dozen books, fiction and non-fiction, and I don't know anybody who reads this newspaper that puts your knickers in such a twist. Their circulation is not even 1% of the population. If I don't read it, nobody does. Good riddance. We're not buying buggy whips any more. The Times is just a bunch of monks in a monastery scribbling with quill pens as Gutenberg prints his Bible.

[Bill Densmore]

At The New York Times, the ad folks won the internal battle on this . . . it is a form of death for journalism as we've known it. The competion for advertising on the web is such that it seems hard to imagine the sustainable rates will ever support the amount of original reporting we have had in this nation for the last 50 years. It will take some years for this to become really obvious, and then we'll swing back to premium-content services. By then, the newsrooms of newspapers will be hollowed-out shells unless they are subsidized by things like About.com, Kaplan, other businesses, or philanthropy.

I don't know that there is any other way for The Times to have played this. We are watching an evolution that is really not under any individual's or institution's control. There is one possible scenario that could alter this -- and that is if a system evolves which allows sites to charge premium rates for personalized advertising -- because of superior demographic targetting. This is suggested in the article the Times' carried on its own decision. Or suppose The Times were able to get paid when its users are served demographically-targetted ads from third-party sites? Then it could "monetize" the demographics of its quality-jouranalism-seeking audience.

Now suppose The Times got a commission when it served up content to its users from other websites? Bottom line: Newspapers have to start behaving like information valets. (See: http://newshare.typepad.com/newshare/2007/04/what_is_citizen.html)

A number of other thoughts on this subject are at: http://newshare.typepad.com/newshare/

[Jason Bogovich]

I think the premise of what you are saying is correct, there needs to be a diverse amount of income strategies for any business that plans on making it big. However, you have to realize that these companies are making a bet. They are making a bet that this quality journalism that you are talking about, which consists of good thoughtful writing, and well connected people, will be able to directly compete with very very high traffic sites.

Just because a site is free, doesn't mean that you are not required to register, and you can learn much about your demographics in many other ways. In fact, I think you end up making much much more money in the long run by looking at the fact that you will be using content to drive vertical income sources like social networking, not to mention value add in services like customizable home pages. Build the network out... It's not a one way street anymore, it's about having a conversation... Just like you expected when ou wrote this piece. It will take people who challenge the old ways to make it happen, or these people will be dethroned by a new generation, who already expect something I call interactive content.

That's what the web2.0 is all about. Content... If you build it they will come, they will ad value to your professional journalism, and you will end up making money out the wahzoo.

[Bill Densmore]

One other point -- there's middle ground. See:
http://newshare.typepad.com/newshare/2007/09/old-new-comprom.html

[Craig Stoltz]

Mark--Excellent post. I agree paid content isn't dead, though I'd argue (I think) that it's not going to work well for standard news and opinion. There is so much of it available for free that few will pay for whatever perceived quality difference there may be between the Times and, say, CNN + Slate, which gives you free commodity-level news and some first-rate thinky brain-food.

I think your point about people being willing to pay for stuff like Consumer Reports and other premium-quality sources is dead-on.

[Jay Rosen]

Hi Mark: Please excuse a tone of mild frustration you may hear in my comments.

If you don't like freeloaders who are cavalier about the future of the news business (understandable), then I don't like being called "delirious" and irresponsible, even if it's by implication. Especially since there is nothing I claim in my post--allegedly one of the delirious ones--that you disagree with.

http://journalism.nyu.edu/pubzone/weblogs/pressthink/2007/09/18/rip_times_selec.html

We agree that the "open Web" is a good thing, that encouraging more traffic to news sites is a good thing, that dropping the misguided TimesSelect will make the Times more visible in search engines, a good thing, plus it will bring the columnists into the online conversation, also a good thing.

The post I wrote is about the Times realizing all this, coming to terms with it. I can't be delirious for pointing those things out unless you are delirious for agreeing with them.

True, I quoted Jeff's blanket statement that charging for news is over forever, just as I linked to two of your more skeptical posts, and to news reports that Murdoch might, in a fit of delirium, stop charging for the WSJ.com.

Maybe there are people who breezily and uncritically quote the line, "information wants to be free," but I don't use slogans like that and don't wish to be grouped with those who do.

Check out this PressThink post from 2005. It's a Q and A with Bill Grueskin of WSJ.com, in which he goes back to the source of that quote and finds that it's conveniently parsed. The original (from Stewart Brand) says, "Information wants to be free. Information also wants to be expensive."

http://journalism.nyu.edu/pubzone/weblogs/pressthink/2005/04/14/gru_int.html

I don't think journalism happens by magic, just as I don't think that authority follows from being labeled a "pro" journalist. I didn't argue that there is no way to charge for content online. To me that remains to be seen, but I think it is quite likely that the Times won't try it again for a long while.

I think you are a little frustrated because you would like to be the adult at the online content party, but don't know what to recommend as a revenue strategy for outfits like the Times. Of course, neither do I.

The good news is that we are in accord on the basics: Time Select deserved to die, and the business puzzle in journalism remains quite unsolved, which is worrisome for those who care about quality news.

Finally, I do think that it would help if pro journalists realized that any solution is probably going to require them to add more value than they had been putting into their work before this crisis emerged. That's a hard thing to for people at the top of a professional pyramid to realize.

Cheers!

[kpaul.mallasch]

The Long Tail is one place where independent publishers (grassroots journalists) can shine. Because we don't have paid walls, the content gets placed into Google (search engines) and starts to collect traffic. I hope Gannett continues to nickel and dime their old articles for years to come. The numbers when I was there weren't too impressive.

Not that the extra pageviews would necessarily mean anything in the ever changing field of what's important in web analytics, but the search engines have helped a lot of people find my site. (And since Gannett's The Star Press won't publish a mention of us, work with us or even allow me to buy advertising, it's been one of the few ways I can cost effectively grow my business.

I'm a romantic, a poet, a journalist, but I do see the need for revenue/profit. I want to see more owners, though, instead of giant near-monopolies running the media in this country. A free press is one of the things that makes this country great, and it should be more than 'just a business,' imho.

-kpaul

[Free ads India]

Nowadays journalism is not just confined to newspapers. Print media journalists are often qualified and few in number. Over the net, we can find several journalists or whatever we can call them. Every media ( print, TV etc ) has their own associations or self-regulatory bodies that make quite an activity. But net journalism doesnt seem to have consolidated yet and is still open. Perhaps this is the time to standardize a few things here.

[janet jubilee]

This is the way to survive in the news paper world:

1. Keep stories short, creative, interesting, local and positive.
2. Use at least 50 pound paper. People hate holing cheap paper in their hands!
3. Circulation must be better than all the
rest in your area.
4. Web sites should only be used in addition to your papers, NOT IN PLACE OF!