Pay to click?
Will online news consumers pay to click?
Dec. 5, 2009
As newspapers search for a way to make money from their online content, researchers at the Reynolds Journalism Institute are charged with finding new ways to keep media alive and sustainable.
Every day, thousands of people visit the Tribune’s Web site to read news stories, browse classified ads and check out the latest online comments, blog entries and editorials.
But would they pay to do so?
That’s a question nagging many newspapers as they try to compete in an online world where information is easier than ever to obtain.
The Tribune is moving toward an online subscription system that would require Web visitors to pay for content they now access free of charge. Andy Waters, vice president for interactive media, said there’s no timetable for implementing such a system because he’s trying to determine the best way to go about it.
“We’re still looking at what’s going to emerge as the industry standard,” he said. “There isn’t one yet.”
Earlier this year, the Newspaper Association of America requested proposals from companies with ideas for ways newspapers could charge for online content. Giants such as Google and Microsoft responded to the request, as did startups hoping to set the standard for pay models.
Some media companies have been charging for online news since the Internet’s inception. Perhaps most notable is the Arkansas Democrat-Gazette, owned by Little Rock-based WEHCO Media Inc. WEHCO President Walter Hussman Jr. has been an outspoken proponent of charging for online news coverage, vocally challenging the logic of giving away something in a new format that was previously sold.
In a widely circulated Wall Street Journal editorial, Hussman questioned why computer-savvy readers would buy a newspaper when they can get that information online for free. By giving away online content, newspapers have created competition for their print editions.
Hussman contends that ending the online giveaway protects print newspapers. In his editorial, he noted his circulation was up while circulation dropped among newspapers giving away news online.
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There are dozens of ways newspapers could package and sell their content online, said Clyde Bentley, a Reynolds Journalism Institute Fellow and University of Missouri associate professor.
One way would be a digital newsstand that could allow mobile phone users to pay a quarter for their daily newspaper. Or multiple news outlets could bundle their products and offer them in packages, much like cable channels are grouped in television packages.
Researchers at the Reynolds Journalism Institute are charged with finding new ways to keep media alive and sustainable. The institute works with corporate partners such as Apple, Adobe and AT&T to integrate media and technology to create new multimedia products.
One of the products under development at the institute is Circulate, a news tool bar created by startup CircLabs that captures and groups stories of particular interest to users according to their preferences and surfing history. Readers would subscribe to Circulate through their local papers, but the tool would give them a way to purchase stories of interest from multiple sources.
Circulate is in the testing stage of development, and newspapers around the country have expressed interest in signing up, said Bill Densmore, a former RJI Fellow who co-founded the tool.
Waters said the Tribune is leaning toward a metered approach that would give readers a certain number of online stories for free. That would allow readers who are interested in only one story the opportunity to access that story without having to pay. Readers wanting more news content would be able to purchase packages that fit their desired access.
Although details are being hashed out, Waters envisions giving readers the option of paying for a month’s worth of news or a certain number of stories, or allowing them to buy online packages in other ways, such as subscribing to sports-only coverage. In any scenario, Waters said, the plan for now is to provide those subscribing to the print edition with free access to the online version.
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Waters said he is optimistic that loyal Tribune readers will pay for the paper — be it in print or online — but others who follow paid content trends aren’t so sure.
Reynolds Journalism Institute Fellow Michael Skoler is skeptical newspapers can start charging for something they’ve been giving away for free.
In retrospect, most experts agree, providing news online for free from the beginning was a mistake. But the Internet was birthed in the idea that information would be free, so it might have been tough for media outlets at that time to justify charging, Bentley said.
“The concept was that all information was free and that no one paid for the Internet,” he said. “That’s always been something of a fallacy, though, because someone had to pay for the telephone line and computer. But we still had this kind of culture that all information was free.”
And in the beginning, many believed online advertising would fund the salaries of those collecting and providing content, in the same way print ads support newspapers.
“There was a hope that online advertising would cover the cost of creating the content we put on the Web,” Waters said. “But it just hasn’t gone that far.”
That’s partly because those ad dollars have been going to news aggregators such as Google and Yahoo, News Corp. Chairman and Chief Executive Rupert Murdoch said at a conference earlier this week in Washington, D.C. He challenged media outlets to charge for content, in part, to stop those search engines from “feeding off the hard-earned efforts and investments of others,” The Associated Press reported.
The trend isn’t likely to change anytime soon, the World Association of Newspapers and News Publishers said in its annual news trends update this week.
“If newspaper companies wish to maintain their strong content leadership, someone is going to have to pay,” association CEO Timothy Balding said in a summary of the report. “It looks like we have to solve the digital payment issue and soon.”
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Skoler said using the print advertising model with newspaper Web sites hasn’t worked, so he questions why newspapers think a subscription mechanism will make online content profitable.
“Erecting pay walls, especially for newspapers, is focusing on the past, keeping what you have and at least making it survive,” Skoler said. “I’m interested in how to make news and information a growth industry again, finding a new business model and creating the news business around that model.”
Skoler is studying niche outlets that provide unique news and services to targeted audiences, such as Politico.com, which is geared to political insiders, and ConsumerReports.org, a consumer-focused product review site run by the not-for-profit organization Consumers Union.
“Consumer Reports’ model is instead of simply gathering information out there and available, they start doing something with it,” he said. “They’re adding value to content. Going beyond just reporting what’s out there and what’s happening, that’s when people will see value and be willing to pay for it.”
Similarly, newspapers are going to have to come up with new services and products to add value to their content, he said.
“You can’t simply start charging people for what you’re already doing,” Skoler said. “Putting up pay walls is the wrong strategy. It’s not about creating new value for people. Assuming you’re valuable and sticking up pay walls to see how many people agree with you, that’s risky.”
Waters is willing to take that risk. “What we have to offer is unique enough to get away with charging for it,” he said.
Research is partly on Waters’ side. A new study from The Boston Consulting Group says most consumers are willing to pay for unique local news, but they’re not willing to pay a lot for it. The study found that readers in the United States are willing to pay an average of $3 a month for “meaningful” content.
Bentley said the results make him think of the Apple iTunes store, which offers individual songs, music videos and other content online.
“Nobody wanted to pay $10 for a song, but they were willing to pay 99 cents,” he said. “That’s what you’re seeing there. You can’t overprice it, but people are willing to pay.”
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Niche Web sites that feature free online classified ads and real estate listings pose as much threat to small papers as anything else, Skoler said. “If your community paper is in a relatively small area, you can have those things picked away from you very easily,” he said.
Newspapers have seen outside threats before, Bentley said. “We saw the same threat from garage coupon books,” he said. “Coupon books were cheap; one person could do them, and they didn’t have a lot of printing costs.”
Blogging and citizen journalism also are prominent, but Bentley said he isn’t worried those will replace professional reporting.
“Journalism is, essentially, a dirty job,” he said. “Anyone who’s sat in a planning and zoning commission meeting at 1 a.m. knows it’s not a fun job. That part of journalism that documents routine life in a community and parts of civic life — which is our job to cover — that’s not something that is effectively covered by people who don’t want the job.”
Bentley isn’t sure charging for news in Columbia will work unless all media outlets got on board. “It’s going to be a little tougher here than in most places,” he said.
The Columbia Missourian is aware of industry discussion about paid content but has not considered charging for its online news, Executive Editor Tom Warhover said.
It might be tricky for the morning newspaper to do so, Bentley said, because it’s a learning lab under the umbrella of a public university.
Regardless of how pay models are implemented, it’s imperative that media outlets survive, Bentley said. He doubts people want to rely solely on government Web sites and hobby blogs for information about their communities.
“I’m a big advocate of the Web, but I also realize you can’t use the Web to destroy the media system,” he said. “Otherwise, we’re left with a country with inadequate information. We’ve got to do something because America can’t afford for us to go broke.”
Article courtesy of the Columbia Daily Tribune, Dec. 5, 2009