News Leadership 3.0

August 13, 2009

Beyond the pay wall. Can news organizations charge for services?

A club or membership model may produce revenue without alienating users who want their news for free

I got some great comments (thanks all!) on my post “Pitfalls of the pay wall.”

I especially liked Tom Grubisich’s suggestion that a news organization “bring in an outside “impresario” who could look at the paper’s resources with a fresh eye and discover how to exploit them for profit.”

I also got a few questions about how a paid model might work. So here is a short primer on pay models (dubious as I am about them):

1. Two-tier. The New York Times pioneered this approach with its Times Select. Most of the news content on nytimes.com was free, but to see the work online of about three dozen columnists, subscribers paid $49.95 a year. The Times halted Times Select after two years, in 2007, and returned to all-free online content. The idea that the news organization could make more money by growing Web traffic and attracting more advertisers than Times Select was generating (about $10 million a year, a tiny fraction of company revenues). I’ve talked with local editors who also are considering something like this—blogs and breaking news would be free but more in depth work and multimedia would be behind a pay wall.

As Ed Cohen noted in the comments: “I’m still a big advocate of the freemium model. Keep 90 percent of current content free, maybe even 100 percent, but offer a “pro membership” which gives you access to special content from top writers, columnists etc., maybe even a kind of Twitter feed with news and commentary the minute the writer hears it. This way you keep the big numbers of eyeballs to satisfy advertisers, but you also have a secondary revenue stream akin to newsstand sales.”

2. Subscription.
With advertising declining, the Times, among others, is revisiting the idea of users paying for a subscription to access content online. The Times says it is considering setting a fee of $5 a month to view any of its content online. Joshua Benton at Nieman Journalism Lab argues that the Times might as well charge a lot more.

Another version of the subscription model is to price online higher than print in order to push subscribers back to the print publication. As Nieman Lab reported, the Newport Daily News in Rhode Island, charges more than double the amount for an online only subscription than it charges for the print newspaper. The site does offer some free content so it’s using the two-tier model as well.

3. Pay as you read.
  The Times also is considering a “meter system,” in which a user can explore the site freely until she hits a certain number of page views. Then the pay meter starts running. Much discussed micropayments are another form of this, a small fee per use of a piece of content. Either option would require a seamless payment interface lest people simply stop reading instead of just pausing to pay.

4. Tip jar. Steve Outing is a big advocate of enabling users to make voluntary contributions. This option doesn’t seem to be getting much traction, but I wonder if it isn’t a way to test the pay waters (and newsroom assumptions about value) without turning off a lot of users.

Here are two ideas that are less about paid content and more about fees for special services:

5. Membership.   News organization offers special items - sponsored events, discounts from advertisers, etc. - for a membership fee. The Times also looking at a form of this, offering newsroom tours and behind-the-scenes accounts by reporters for an annual fee.

The Guardian is also exploring a club membership idea that might include events, special offers and access to journalists. paidContent.org reported:  “The Guardian not only has a degree of brand loyalty, it also has several niche audiences it could call upon from its daily supplements—media, education, society, technology and entertainment—some of which already have associated events and other extras. It may be that survey results will indicate a greater desire to belong to a “club” than to pay for content.” By the way, Guardian digital director Emily Bell rules out a pay wall as “a stupid idea in that they restrict audiences for largely replicable content.”

6. Services. Again, this might or might not include content. But if news organizations can figure out ways to save consumers time and money, they can generate revenue. Paul Gillin suggests news organizations might help businesses organize and market events to sell their products, facilitate transactions (such as ticket sales) in exchange for a cut of the transaction, and develop databases that save users time and money when they make consumer decisions such as buying a house in the local market.

It’s hard to see how any of these ideas produce large revenue streams, especially at first. But at least the membership and service ideas reflect the changing nature of the relationship of a news organization to news consumers: The one-way street is gone.

As my former Oregonian colleague Steve Woodward said in comments in the pay wall post: “No matter how many times the industry clicks its heels and repeats “Pay wall,” it’s not going back home to Kansas. We’re better off acknowledging we’re in Oz and spending our time developing Oz-based solutions, not trying to turn back the clock.”

What have I missed? What other ideas are out there for charging for news content and do you think any of them will work? Who is charging for content or services and making it work?

Comments

I think Angie’s list (http://www.angieslist.com) is the obvious model. It’s nothing more than a services directory, which every newspaper I ever worked at sold with considerable success. The difference is an user-driven rating system. None of it is anonymous. The information is thorough. And it is accompanied by editorial. Users get regular reminders to participate.

The cost to join is $67 a year with additional charges to add access in other places. For instance, I’m a member where I live in Detroit and pay extra to access the list at the Jersey Shore, where my aging mother-in-law lives.

I read recently that Angie now has more than 750,000 subscribers. That’s at least $50 million/yr gross revenue. Not chump change.

Newspapers already have everything it takes to compete with Angie. More, actually, because they know their local markets.


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Exploring innovation, transformation and leadership in a new ecosystem of news, by journalist and change advocate Michele McLellan.

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