News Leadership 3.0

February 11, 2009

Ideas that get in the way of saving journalism, Part 2

“People absolutely should pay for news.” Or “People absolutely won’t pay for news.” Actually, people might pay for specific reporting or delivery even if they won’t pay for general news

Earlier this week, I started my short list of ideas that get in the way of saving journalism.
No. 1 was the idea that only newspapers can produce quality journalism.

Today I want to look at a related statement that keeps cropping up:

No. 2. People will (or will not) pay for news. (Related: We tried charging and it didn’t work. We should have charged before but now it’s too late.)
That statement frames the issue from the point of view of journalists (and I am not disputing the premise that journalists need to be paid). But I don’t think it realistically describes what people think they are paying for or what they will pay for.
First, I think people more often pay for convenient delivery of news than for news itself.
Second, people are less and less willing to pay for mass or bundled content, which is what a newspaper and many news Web sites represent (and that’s the real reason a general subscription to a Web site rarely works.) That doesn’t necessarily mean people will not pay for specific content.
Long before the Internet, many people were thinking about delivery, not news creation, when they plunked down their subscription fee.
Then: When the most convenient method of delivery was the newspaper, I subscribed to my local newspaper and to The New York Times. I was paying to have news delivered to my doorstep in time for breakfast. I was paying for something I could carry around all day and read whenever I liked. Otherwise, I could have gotten the news later if I purchase a radio or television and watched (mostly ad supported) programming. Or borrowed my neighbor’s newspaper later that day. (If I remember my newspaper budget math correctly, subscription fees covered delivery and at least some of the newsprint but the far more prodigious advertising revenues paid for the journalism.)
Now: I pay an internet service provider and a cell phone company to deliver the news and information I need. I use free services such as Google and social networks (also ad supported) instead of editors in the newsroom to help me find news and information.
This does not necessarily mean that people won’t pay. But trying to sell them on paying for a broadly defined news product - the old newspaper or the new subscription-based Web site—is probably a waste of time.
Los Angeles Times media writer Tim Rutten argues that newspapers and major broadcasters should band together and stop giving free access to online content as a way to force people to pay.
This newspaper-centric idea seems unworkable if you consider how many small sites could pop up, start covering local niches and cumulatively eat the advertising lunch of the big outfits. And forcing people to pay uniformly for online content poses the same problems as newspapers are facing—people don’t want to pay for content they don’t want. It undermines any claim of service in the public interest.

Even the idea of a general subscription to a specific news organization seems less appealing. People simply are less loyal to a specific news organization than journalists would like them to be. The Web empowers users to search out the news and information they want or that their friends recommend, which makes it harder for any one organization to reach a threshold at which enough consumers want to buy content with a blanket subscription. I think The New York Times as a great journalism institution, but I probably doubt I want to see even one percent of the stories it produces.

So let’s replace the idea of people “paying for news” or paying to subscribe to the product of one organization with something more specific, whether it’s content or delivery service or both.

What would something more specific look like?

In ProPublica, a wealthy donor is paying specifically for national investigative reporting. That could be a model for specialized watchdog reporting on a relatively large scale.  With Spot.Us, journalist David Cohn is experimenting with the idea of micro-funding for specific news stories. Wall Street Journal online subscribers are paying specifically for financial information they believe is unique and critical to their livelihoods.
I have said before that I would pay annual fees or donations to help foster specific types of journalism—perhaps even as much as I used to pay to subscribe to their newspapers, which I no longer need. Examples: New York Times or Washington Post investigations of the U.S. government. Similarly, I would contribute to local efforts that provide tough reporting on the school system in my community, monitoring the criminal justice system. As a citizen, I value local and regional watchdog reporting in these areas and I am willing to pay directly to help make sure it happens.

The discussion about micro-payment for news may take us somewhere, as long as people don’t expect micro-payments to replace the advertising dollars that fueled journalism for so long. In addition to producing unique and highly desirable content, getting people to pay for specific information online may depend on presentation and technology to make small payments easy. 
In a New York Times Op-Ed, Michael Kinsley who founded Slate, recalls that online magazine’s unsuccessful effort to build a business on subscriptions of $19 a year (with a $20 umbrella thrown in).  But Kinsley is talking about a general subscription. His argument falls down, I think, when he concludes that micro-payments are not viable because the revenue they will generate (he estimates $2.00 a year per user) is not enough money to save newspapers.
What if micro-payments are used to support online journalism without the high cost of print and distribution?  That’s a more promising proposition, albeit probably only part of the solution.
Alan Mutter, who is expert in analyzing the costs of news gathering and the news industry, believes micro-payments might theoretically work, under a hypothetical system he dubs Universal Simple Interactive Network (UN-SIN). But Mutter is skeptical that they would work on a mass scale because publishers would not cooperate:

“The amount of the charge would be up to the individual publisher but presumably would be kept to pennies, or even fractions of pennies, to encourage maximum readership. Consumers might not like being micro-nickled and nano-dimed for every article, but they would get over it, if the content were sufficiently compelling.
“The problem with this otherwise-elegant solution is that UN-SIN wouldn’t work for one publisher if a competing publisher decided to provide the same, or nearly identical, content for free. If one publisher posted the score of a hockey game in the clear to gain traffic, then his competitors would have to do so, too. And the initiative would quickly collapse.”

Mark Hamilton ponders significant obstacles to micropayments and concludes:

“So this is where my belief that micropayments offer at least a partial solution to the who-will-pay-for-the-news question runs up against cold reality…. we need to devise a system that (1) allows for single registration for everything, (2) opens up the pot to everyone creating media with potential value, and (3) puts the user in control of establishing the value.”

Meanwhile, Steve Outing is intruiged by a voluntary contribution model and cites a soon-to-launch Kachingle, which “puts the user in control of paying a voluntary regular fee for all content online (primarily blogs and media websites) and sharing the money based on users’ preference of favorite blogs and sites, and their measured visits to those sites.”

Models such as Mutter’s UN-SIN and the new Kachingle may never refill the easy advertising revenue stream that newspapers enjoyed for so long. But each idea has some merit and I hope experiments like these move forward. Putting the consumer in charge and thinking about specifics—the market, the micro-price, the specific content that people want so much that they will pay—is a lot more productive than the absolutes of will/won’t/should pay for all the news that’s fit to print every day..

Do you think a broad-based online subscription model is viable for general news? How and where might micro-payments work? What about voluntary contributions? What holds promise in local news markets? Please share your ideas in the comments.

Comments

“This does not necessarily mean that people won’t pay. But trying to sell them on paying for a broadly defined news product - the old newspaper or the new subscription-based Web site—is probably a waste of time.”

Amen to that.


There are two main issues here.

One is the revenue potential for something valued by the news consumer. Michelle examines that well.

But I think the larger point deserves more emphasis. “Thinking about specifics … is a lot more productive than the absolutes.”

One idea that gets in the way of saving journalism is for any of us to think “I know THE answer.”

It is a time of experimentation, disruption, breakdown, and, we hope, renewal.

The mass market is breaking into niches. There will likely be different answers for different producers and different consumers.

None of us have a crystal ball. For many factors and situations, there is likely not enough evidence for us to predict the future.

Unwarranted certainty leads to unwarranted narrowing of options.

—-

Back to the payment question, consider a strategy with at least two prongs: premium and free. The premium material might be packaged with that from similar news organizations, as in cable TV. The free material could keep you at least even with everyone else’s free stuff, and possibly draw people to the premium work.


Thanks so much for these thoughts, Michele.

I see micropayment (and its cousin, microfunding—the Spot.us model) as a workable strategy…but only for some for news organizations. For other outlets—for various reasons that others (Clay Shirky et al) have noted—a micropayment model simply won’t work. But the fact that a micropayment model isn’t an across-the-board solution doesn’t mean that it’s not any kind of solution.

That’s one of things I find so valuable about your post, Michele: its recognition that we need to rethink some of the fundamental assumptions we’ve brought to the whole financial models debate. I couldn’t agree more. And those assumptions aren’t merely about the basic framing of the debate, the journalist’s perspective versus the news consumer’s, etc.; they’re also about, I think, the conclusion(s) we expect to emerge from it. Our panic about journalism’s future, it seems to me, is leading us to hope for a kind of financial-model panacea—one magical model that will extend its umbrella over all of us, funding journalism in a way that serves both content user and content provider.

Such a catch-all solution, I hate to say, doesn’t exist. Rather, I think the answer to the funding question will lie in a mixture of several innovative funding models—endowments, sponsorships, user contributions, syndication, advertising, etc.—that news organizations will cobble together in a way that works for them, individually. Which is less sexy, I know, than searching and hoping for a Holy Grail for Funding. But it’s also, as far as I’m concerned, much more realistic, and therefore much more productive in the context of our current conversation.

More thoughts, from Columbia Journalism Review‘s Web site, here.


What a great article. Finally someone has pointed out the great lie in this ongoing debate: that online newspapers give away their content for free, but in print, they sell it.

Both online and in print, advertising is what pays the salaries of the staff; the cost of the paper merely pays the distribution costs. And since you don’t need trucks and truck drivers and newspaper boys to hawk the online content, then readers shouldn’t have to pay a subscription price online.

I don’t know what the answer is to saving good journalism, but the clear thinking presented in this article is a good start.


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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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