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On the Media: 'Old media's' dilemma of charging for online content

Some experts agree that pay-to-read is an economic necessity, but the key is finding a price and billing plan that won't scare off readers.

November 06, 2010|James Rainey

Fred from high school e-mailed this week out of the blue, wondering why the "old media" sources he depends on don't stop carping about their economic problems and do something.

"When are the print media going to join forces to solve their problems?" Fred asked. He said he would even pay $30 a month to read his favorite news outlets online, money he hopes would keep serious reporting from going away. Just don't bog down Fred with multiple registrations and billing plans.

Many more people scoff at the mere notion they would cough up their credit card number for something the Internet has been delivering to them for free for more than a decade. They vow to skirt any "pay wall" that stands in their way.

What has been mostly an academic debate will finally emerge as a real-world trial in the coming months, with giant News Corp. pushing several of its newspapers worldwide into the pay-to-view camp, the New York Times soon to follow and a menagerie of smaller newspapers tentatively tilting in that direction.

The bad news is that Fred's pay-once, read-everywhere reality doesn't appear to be on the near horizon. The good news is that technology enables it, if newspapers would just get onboard. To do that, publishers want to be assured they don't run afoul of anti-trust laws that could punish them from banding together as a consortium. They also have to throw off the fear of what might go wrong and experiment. Sitting still isn't making matters any better.

Newspapers arrive in this challenging place because publishers feel like they're running out of other options. Pumping out professional reporting, photography, writing and editing requires monster energy. It can't be sustained (with any breadth or depth, anyway) on a diet of notoriously dollar-lite Web advertising. With their free websites, meanwhile, newspapers push battalions of readers away from their own print editions, which still bring in the lion's share of the cash.

But asking for money for something that has been free will be a tall task. As the payment systems go into place, news outlets will get a hard lesson on what stories and kinds of coverage the public is still willing to pay for.

The best results, so far, have been produced by the financial papers. Rupert Murdoch considered dropping payments when his News Corp. took over the Wall Street Journal, with thoughts of expanding readership and therefore ad revenue. But he quickly reversed when he learned the manifold increases in Web traffic and advertising it would take to replace online subscription revenue, now estimated at roughly $65 million each year.

The Financial Times has seen its revenue online grow 48% this year over the year before. Since just the start of the year, reported the number of subscriptions (standard price, $221 a year) jumped 50% to 189,000. To put that in perspective, 390,200 people subscribe to the print product, which costs about $350 a year.

The best of the financial press has succeeded by keeping staffing and quality high. They offer a product viewed as essential by business people — who often pay for their subscriptions as a business expense.

Other forays into the paid-Web frontier have been more mixed. When News Corp. cut off content from its Times of London and Sunday Times four months ago, the audience to its websites plunged by two-thirds, to about 2.4 million. At the same time, the papers added about 105,000 paid customers online, about half via monthly subscriptions, the rest pay-as-they-read.

The tech site Gigacom judged the London papers' trade-off — fewer customers but more paying ones — as an obvious loser. "The newspapers have been cut off from the news flow on the broader Internet, and the potential benefits of attracting links and commentary from other sites that could help to promote their content," it judged. "Not a great trade, no matter how you slice it."

TechCrunch also wondered whether the trade-off made sense in the long run, but said for now News Corp. had come out ahead. The tech site guesstimated new online subscription revenues for the London papers of about $9.6 million a year, projecting that was several times more than the ad revenue declines because of lower readership.

Newspaper analyst Alan Mutter, who has served as a consultant to the L.A. Times and many other papers, urged newspapers to throw off their fear of collaboration and experimentation to join in a uniform pay system. He invoked Benjamin Franklin, "If we don't hang together, we most assuredly will all hang separately."

Mutter, the former newspaper editor, said papers instead have launched "a scattered number of half-baked, one-off pay schemes that for the most part are doomed to fail." Without a uniform approach, he said, the vast number of users who search the Internet to find topics would constantly be bombarded with new pay and registration requirements.

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