An update on the newspaper industry woes. Google has unveiled a plan for paying for reading sites.

[beachmom]

I realize of all the issues, Sen. Kerry is not particularly focused on this one (although I think his hearing was highly influential -- things have been moving along since it was held). However, I have been following this "beat" with considerable interest. First off, Murdoch is planning on charging for content. Now we have this from Google:

http://business.theatlantic.com/2009/09/last_night_it_was_revealed.php

Last night, it was revealed that Google is working on a micropayment system for newspapers. The plan sounds like it might just save the dying industry while accelerating the death of many publications. But, it's okay. That's probably a good thing.

Basically, the idea is you would subscribe to many publications at the same time, Google would set up an account for you to pay, skim 30% off the top, and 70% would go to the publication.

You can read their entire proposal here:

http://www.niemanlab.org/pdfs/Google.pdf

Based on my investigation into the music industry, music streaming services, and internet radio, I think a "Freemium" model would work best for most newspapers, while a "subscription only" model would work best for extremely exclusive websites (like the one that provides transcripts for all Congressional hearings which is pay only). The Freemium model would work best given the blog culture. You can read, say, 5 articles a month for free from a website, but then after that you must pay a monthly fee, say, $2 to $5, or for a better price, pay a yearly subscription fee. The Freemium model is best because it can tap into both ad revenue AND subscription revenue. The truth is the ad revenue is always going to be more money (that is true for Pandora radio, whose revenue is 10% subscription fees, 90% ad revenue). If a newspaper switches to a subscription only model, they might actually accelerate putting themselves out of business.

I suppose (grudgingly) I could throw a couple of bucks to the Atlanta Journal Constitution, if I find myself reading more than a few articles. But not the $150 a year they want for the paper edition. That is too much money. And it goes without saying that any subscribers to a paper edition should get free access to the on line service.

What do you all think of the Google proposal?

[beachmom]

1. And the dark side we all need to be aware of:

http://www.guardian.co.uk/media/2009/aug/06/rupert-murdoch-website-charges

This was the article on Murdoch deciding to charge for content. This money quote should be taken very seriously:

He accepted that there could be a need for furious litigation to prevent stories and photographs being copied elsewhere: "We'll be asserting our copyright at every point." Among quality newspapers, Murdoch singled out the Daily Telegraph's run of stories about MPs' expenses as an example of news for which consumers would be willing to pay, describing it as a "great scoop": "I'm sure people would be very happy to pay for that."

I have read up considerably on what the music industry did in terms of shutting down Napster and singling out people on file sharing sites and taking them to court (Google provided them the names). If Murdoch is serious here (and I think he is), this means he will be not just going after big fish like Huff Po or Kos, but also the little fish, too. One scary tactic would be going after individual users who post on DailyKos or even here on DU. My view is, when this thing happens, we all need to tighten up on "fair use", using less direct quotes and more paraphrasing. Or face getting sued. Based on what happened with illegal downloading of music, you can't be too paranoid about this.

I also think a lot of blogs are going to shut down in the next two years. If the lawsuits go crazy, then people will get scared and give up. I think the golden years of blogs & news are going to be over by 2012. But it will be more stable. Based on how the newspaper people talked in that hearing, they seem to be suffering from Arrogant Music Industry Disease. They could very well go the way of Hilary Rosen and declare war on their best customers, bloggers.

Maybe my prediction won't come to fruition, but it is a distinct possibility, especially if this new "paid content" experiment doesn't work the way the newspaper industry had hoped. They'll be looking for someone to blame, and bloggers will be a target, no doubt. Remember, the Dallas newspaper man thinks even putting up a headline and a paragraph is copyright infringement (which of course, it is not).

[sandnsea]

2. They used to say subscriptions weren't that important

That was always their comeback when people complained about the price or the content. Advertisers was where the money is at.

So if people are reading their online content, the advertisers should be there.

They aren't because people have discovered the news is just a repeat of AP articles.

They will have to originate content like small local papers do, build readership, attract advertisers. Or they'll fail and they should.

[beachmom]

3. Unfortunately, on line advertising is not as lucrative as print advertising.

Classified ads in print were especially good for newspapers, but due to Craigslist (not bloggers or Google), that business has been taken away.

The truth is that the newspaper business has shrunk, revenue-wise, and it's never going to come back. And, frankly, local news is really not all that compelling on its own. All the local oriented websites that have gone up are not doing well. What made a local newspaper "work" was it was one stop shopping. Yes, you got local news, but you could also read national & international news, as well as the arts, leisure, a crossword puzzle, the comics, the weather, and op-eds. I just don't see myself taking the time to check a special local website -- local news is largely boring, with maybe a story or two that is interesting popping up only once in a while. Local is what is going to get hurt. Taken from its "package" it's just not a big money maker.

Edit: I think local TV news which continues to do well (why I haven't a clue it's so bad) will be where folks get their local news. That is kind of true already.

[Inuca]

4. Interesting,....

I had a look at the article from the Atlantic, not the whole proposal. I remember reading about micropayment systems a few years ago, and one idea was to create a kind of specialized account, out of which very small charges can be deducted when you visit a "Pay per view" page with minimal transaction costs. I may be wrong, but I think that they may be able to make more money (they being the newspapers) if the fee they are willing to charge is very, very small, say no more than 5 cents. Maybe I just extrapolate my own likely behavior, but if a click costs me say 10 or 15 cents, knowing that there are days when I do click a lot, I am much more likely to avoid the click altogether. For a few pennies... probably I will click. There is a certain psychological cutoff point I think below which something is perceived as very close to "free". Of course it depends on the person, but still...

Just a few random thoughts on the topic :-).

[karynnj]

5. I would respond like you do, but suspect the cost could be lower

I agree with you on 5 cents being the upper limit - that means 100 articles are $5. To put it in context, it is more than the cost for a paper newspaper - even if you consider a realistic number of articles at least somewhat read. Using Beachmom's estimate of $170 for 365 newspapers - that is about 50 cents a paper. (The newstand cost is higher - I think about $1.25 for a week day NYT) The net based price SHOULD be lower because there are no distribution costs - and I would bet lower marketing costs.

There are three papers that we get - the NYT, the Morris County Record and the Randolph Reporter. I think these papers will fare very differently.
What likely will happen though is that as Beachmom says local papers, as we know them, will go away.

I think there will be a demand for a source of JUST local news. In my town, the Randolph Reporter is mailed to subscribers and is available in local stores. It covers NOTHING other than local stories for 2 towns. Other than ads, it is at most 10 pages. It is allied with other local papers in nearby towns and some county articles are shared. I would imagine that there will still be demand for this - but over time, it might become email or a website.

The Daily Record, a Gannett paper, might fare the worst. All of its national, international and even state articles are from Gannett News or the AP. They do cover local articles with their own reporters, but they do not cover the local minutiae to the degree that the papers like the Randolph Reporter does. (Much of their local coverage is sports and entertainment.) The question here is what do they have to sell? Now, the person who buys the paper gets their choice of AP and Gannett articles along with a small amount of stuff they write themselves. As Beachmom said, it is a one stop place. But, online, what does their choosing, formatting and laying out give anyone? (There may still be a value to some of them as a starting place - but I assume that in addition to splitting the money with google, there would be a need for an algorithm to split the money between the "paper" and the AP or news collective.)

The best thing that could happen is that it could lead to a niche market for high quality journalism - such as articles NYT caliber reporters could write. This really could change what the NYT is - pushing them to do well the things that they and only a few other papers can do - produce well thought out articles both on events and the on the underlying issues.

One thing the internet does well is allow niches to exist. For instance, in my town, there are people impressed by John Kerry, but I might be the only one who sees him as representing what I think is often the best of leadership in this country. Only on the internet could I - post 2004 :sad: have found a community who agree with that. Likewise, if the NYT allows some of its better reports to produce excellent series of articles on a subject that they really research, there are likely countrywide - or worldwide, enough people wanting that to make it popular enough to be profitable - and journalism to be proud of.

[beachmom]

6. I have some experience with micropayments, and let me tell you,

you stop and think about every dime!! There is this wonderful music streaming site called Lala.com:

http://www.lala.com/

The way it works is that you can listen to any song on the site, in its entirety, once. After that, if you wish to hear the song an unlimited amount of times (it is web only, no mp3 is downloaded here), you shell out about a dime. Now here is the thing: the song is far more valuable than a newspaper article. Why? Because you can continue to enjoy that song for months and years to come. It has considerable value. The newspaper article OTOH is almost always disposable. You read it usually once. If it is a really, really nice article about Sen. Kerry, maybe you'll read it three times. :) But even there, you're not going to read it over and over again for months to come. So given that distinction, I can tell you I really have to think about it before shelling out that dime for a song. Even though the dime is very low cost, it still is an unusual extra purchase. I can imagine purchasing an article for 5 cents will be pondered. And most of the time, I'll skip it. It just is not going to work for me.

I prefer the freemium model. Ads for casual readers. Subscriptions to regular readers. Because even 5 cents is too much. It's psychological guys. How much value is the article? Can I just get a good enough summary from Huff Po?

As to the NYT, that is a great paper, and they will do fine. You're right that it will be more difficult for locals. We have free local papers here that are left on our driveway. These papers don't do real journalism. I mean some. But not really. I have to force myself to look through it, so I don't miss something relevant that relates to, say, the school, but it feels like a chore to read it it is such a poor paper.

Edit: But if they offered a subscription to a long list of great papers, that might work. Like to the NYT, WP, and other big city papers. But it can't be too expensive or forget it. Thing is, I'll just read my Time and Atlantic magazines more thoroughly if they decide to put up a wall. I just don't see this working very well, and the more I think about it, the more down I get about it.

[beachmom]

7. Jeff Jarvis tweets a response to Google's proposal. Heh:

http://www.buzzmachine.com/2009/09/11/google-to-the-rescue/

“A cynical act, I’d say: a tool no one uses used to coopt foes on a useless quest.” In response, Charlie Williams tweeted, “How about savvy & low risk?” And I said that savvy and cynicism are by no means mutually exclusive.

[beachmom]

8. Excellent comprehensive article on newspapers planning to charge fees:

http://www.ajc.com/business/want-to-read-all-143087.html

Here is why it is not so simple:

In a worst-case scenario, imposing online fees would drive away so much of a newspaper's Web audience that publishers would lose more in Internet ad sales than they would gain in new revenue.

In a best-case scenario, newspapers charging their online readers would still retain enough of the audience for their Web sites to remain attractive marketing channels. What may be even more important, the fees might make readers more willing to pay for the print editions if the same content isn't on the Web for free, especially if print subscriptions include free or discounted Web access.

Preserving the value of their print franchises is one of the main reasons for publishers to charge for Web access. That's because newspapers still get most of their money from print ads, which accounted for $35 billion of the industry's revenue last year. Newspaper print ads are on pace to fall below $30 billion this year.

Online ads, in contrast, contributed just $3.1 billion in revenue last year. And while that category had been growing until this year, it wasn't fast enough to offset the erosion in print ads. From 2005 through 2008, the industry's annual revenue from print ads dropped by $12.7 billion. Meanwhile, newspapers' annual revenue from online ads increased by just $1 billion.

Just as an FYI, sites like the BBC and NPR are going to continue to be for free. And at the end of the article there is a survey of publishers: 44% say charging fees won't work. Many might wait on charging and win in the end.

Personally, I think there is going to be a bloodbath, and we'll just have to see how it all swings out.