Charging for Access to News Sites

Monday, 20 July 2009

John Plunkett, reporting for the Guardian last week, in a story titled “Financial Times Editor Says Most News Websites Will Charge Within a Year”:

The Financial Times editor, Lionel Barber, has predicted that “almost all” news organisations will be charging for online content within a year.

Barber said building online platforms that could charge readers on an article-by-article or subscription basis was one of the key challenges facing news organisations.

I wish them good luck with this, and I mean that sincerely, but I believe this is a fundamentally flawed strategy. People bought (and continue to buy) real paper newspapers and magazines because it feels like you’re getting something worth the price. A real physical object. Yes, the true value was, is, and will be the content, but the evidence so far is that media consumers don’t see it that way. When you pay a dollar for a newspaper it feels like you’re paying for the actual stack of paper, and it feels like a fair price. That just isn’t the case with web pages. And pay walls prevent linking, and linking is how you gain traffic. And, even more importantly, they’re competing against online-only news sites that are still going to offer free access to readers.

To me this is glaringly obvious, and perhaps that is why I’m so inclined to dismiss Chris Anderson’s Free — the crux of his argument is so obvious to me that I’ve forgotten how many media industry executives still don’t believe it. I’ve argued that Daring Fireball is not “free”, it’s just that I don’t charge readers, I charge advertisers and sponsors. But this model, obvious as it seems to me, is apparently very much in dispute at existing news publications.

Undeniably, there is money to be made in digital publishing with free reader access, but whether that revenue leads to profits depends upon the scale and scope of the organization. The potential revenue does not appear to be of the magnitude that will support the massive operations of existing news organizations. What works in today’s web landscape are lean and mean organizations with little or no management bureaucracy — operations where nearly every employee is working on producing actual content. I’m an extreme example — a literal one-man show. A better example is Josh Marshall’s TPM Media, which is hiring political and news reporters. TPM is growing, not shrinking. But my understanding is that nearly everyone who works at TPM is working on editorial content.

Old-school news companies aren’t like that — the editorial staff makes up only a fraction of the total head count at major newspaper and magazine companies. The question these companies should be asking is, “How do we keep reporting and publishing good content?” Instead, though, they’re asking “How do we keep making enough money to support our existing management and advertising divisions?” It’s dinosaurs and mammals.

And it’s not really surprising that they’re failing to evolve. The decision-makers — the executives sitting atop large non-editorial management bureaucracies — are exactly the people who need to go if newspapers are going to remain profitable.

Upton Sinclair’s adage comes to mind: “It is difficult to get a man to understand something when his salary depends upon his not understanding it.”