Pay = “mass delusion”: Schiller

I know I’m a day late, but I can’t resist quoting Vivianne Schiller, head of NPR and former head of NYTimes.com, in Newsweek on paid content. Mind you, she is one of the few executives in the industry with real experience on the subject.

Q: While employed by The New York Times, you helped the newspaper stop charging for online content. Now it’s reconsidering. Generally, why do you oppose paying for content?

A: I am a staunch believer that people will not in large numbers pay for news content online. It’s almost like there’s mass delusion going on in the industry—They’re saying we really really need it, that we didn’t put up a pay wall 15 years ago, so let’s do it now. In other words, they think that wanting it so badly will automatically actually change the behavior of the audience. The world doesn’t work that way. Frankly, if all the news organizations locked pinkies, and said we’re all going to put up a big fat pay wall, you know what, more traffic for us. News is a commodity; I’m sorry to say.

Q: But the Times did get people to pay, right?
A: We far exceeded our expectation—225,000 subscribers paid $50 a year, in addition to the home delivery subscribers, who got all of the Web for free. But guess what, that’s $10 million. Instead of 225,000 who pay the $50, let’s say it’s one million subscribers. OK. That’s $50 million a year. That’s not going to save any newspaper. It’s going to kill your advertising base. The numbers don’t work.

I also like her coinage that what we’re trying to protect is not much vaunted investigative journalism but instead “accountability journalism,” which includes beat reporters, watchdogs.

In the New Business Models for News Project, I hope to speculate on how NPR and its affiliates could play a key role enabling local networks of accountability journalism.

  • http://npharder.wordpress.com ken

    Wow, I think $50 million / year would be pretty good. Its not going to save a paper news organization, but isn’t it enough to run an online news organization, and pay for a lot of quality reporting?

    • Paul Evans

      $50 million a year would be great for an organization other than The New York Times. As of only a couple years ago that figure would have been less than one-fifth the annual budget of the NYT editorial department.

      However, I believe Ms. Schiller is trying to say:
      1. They probably couldn’t get 1 million such subscribers to NYT online; and
      2. That “only” having 1 million subscribers would gut their advertising revenue. Remember, the NYT website averaged about 20 million unique visitors per month in 2008.

      The extrapolation for both of those for an average US metro or local newspaper is your online subscription revenue would be a fraction of what the NYT could get; and your audience would be a fraction of what the NYT could get. I believe a group kibitzing at the CUNY news business models gathering last year figured that a new organization with revenue of $5 million — one-tenth of Schiller’s revenue figure — could pay of a staff of about 30 or 35. At my newspaper that would be less than one-tenth the staff we had two years ago and certainly not enough people to stay on top of many beats or do a lot of in-depth coverage. It is only 20 or 25 people to do all reporting, photography, multi-media and other types of content production.

      And the revenue under this model wouldn’t increase unless you raised online subscription rates, because the fractionalized audience would leave you with no advertising. So, if she is right, the pay model simply wouldn’t work.

      • http://npharder.wordpress.com ken

        Scaling up Jeff’s business model, 50 million / year gives a staff of 300 to 350, and 200 to 250 content producers. That’s not shabby. They only have 350 staff writers now, and maybe 800 or 900 in their newsroom. So 25%. Although they’ll probably have to go through bankruptcy first to shed some debt.

        Ad revenue wouldn’t go to zero either. Right now they make $70 million per year online. Their optimized advertising + subscription revenue will fall somewhere between 70 million and around 100 million, depending on the demand curve for subscriptions and response of advertising dollars. Worst case, 70 million, advertising only. If they were to get 50 million in subscriptions it would only make sense if they retained at least 20 million in ad revenue. Scaling up Jeff’s numbers that’s 400 or 600 staff, and 300 to 400 content producers, maybe half of what they have now (350 staff writers, and a newsroom of 800 or 900). That can work. It probably has to work. And hopefully the somewhat lower number of writers doesn’t hurt ad revenue or subscription demand too drastically, and if so the business just settles at a lower number.

  • Eric Gauvin

    I’ve often wondered how NPR is coping with the effects of the crisis in news media. They almost seem like they’re immune to what’s going on. They’ve always seemed to be somewhat of a “different breed” and I’ve wondered if other news organizations could learn something from them. Is it really as simple as those pledge drives lead one to believe? Is this something you’re looking at in your New Models program?

    NPR says they get 31% “from listeners in the form of pledges, memberships, and other donations”

    (I have a feeling they like to pump up that number for some reason. During the pledge drives they make it sound like pledges cover most of their operating expenses.)

    http://www.npr.org/about/privatesupport.html

    But their annual report seems to say 1% from pledges (but I’ve never been good at reading annual reports)

    http://www.npr.org/about/annualreports/2005_Annual_Report.pdf

    • http://corifaklaris.com Cori Faklaris

      What the rest of us in the news media can learn from NPR is to suck up to extremely wealthy elderly people so they leave us a boatload of cash to finance our journalism.

      “November 6, 2003

      NPR will benefit from a bequest of more than $200 million from the estate of philanthropist Joan B. Kroc, NPR President Kevin Klose announced Thursday.”

      http://www.npr.org/templates/story/story.php?storyId=1494600

      • Eric Gauvin

        someone believes in the MSM…

  • Dave

    What bothers me is that the industry – like so many right now – acts with such arrogance. Everyone can publish now, and there are millions of excellent writers and reporters out there – many who are NOT journalists. Yet still so many journalists act as if they are the gatekeepers of news.

    The simple fact is, they are not. Whatever you are doing you have to do well, and be useful. A printing press is an anchor, and a brand can die quickly if people rest on their laurels or early successes.

    Oh, and PLEASE stop giving me the iTunes model. People will listen to a song over and over for their entire lives. No so with a fifth write-thru story. The value is fleeting.

  • democratsarefascists

    Nothing will save the New York Times or Newsweek now.

    They have no credibility left.

    Newsweek quietly laid off twenty percent of its management structure this month, and they’ve canceled all promised raises.

  • Bob P.

    So what are your thoughts on delivery of news content for mobile devices? NYT has an iPhone app that is free. But — thinking about regional, metro papers here, more than national ones — I often ask friend who have iPhones, “would you pay a couple bucks a month to subscribe to a local-news iPhone app?” More often than not, they say yes. (I know, they SAY yes, but would the DO it?) But maybe people haven’t become so accustomed to everything being free in the mobile world — because it’s not. Plenty of nat’l news already is. But maybe local news has not been as “commoditized,” as you say, as nat’l news, especially in a form that’s convenient for mobile devices. To me mobile delivery seems a real opportunity for local newspapers. In fact, it seems to me if papers have a digital future, it’s probably more in mobile than in browser form. Forget the Web. To anyone with an iPhone, in a lot of ways sitting down at a computer is just what you do at work. Most of the rest happens in the palm of your hand. Maybe you’ve discussed this before and I missed it. If so, sorry. But what do you think? Why aren’t more metro papers delivering iPhone and other mobile apps?

    • http://ukfree.tv Briantist

      Ah, you iPhone people don’t realise that everyone else’s mobile’s applications and content are free.

      • Bob P.

        Huh? I don’t know a lot about the range of mobile devices, but a lot of Blackberry apps are not free as I understand it. Sometimes you just have to buy the app for few bucks. Sometimes it comes as a subscription kind of payment — Pandora, for instance, you have to pay for monthly if you go over 40 hours, apparently. It’s the same with iPhone apps. Some are free, some aren’t. Anyway, we might be getting off the topic of this post. The question was, would people pay for LOCAL news on their mobile device? And just for the record, I’m not an “iPhone person.” This technology does fascinate me, however.

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  • http://e-games.com Free games

    They almost seem like they’re immune to what’s going on. They’ve always seemed to be somewhat of a “different breed” and I’ve wondered if other news organizations could learn something from them.

  • http://www.paycheckr.com Allan Hoving

    We need to separate out the pursuit of journalism (which is a public good and can be carried on by nonprofits) from the business of selling content online. Once you do that, you can focus on how best to monetize. The advertising vs. subscription argument is bogus: you can have both revenue streams simultaneously – along with many others – by offering a variety of choices to the user. That’s the model behind PayCheckr.com (demo online now).

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  • http://www.theobamaexperiment.com Michael Cuffe

    Wow,

    I really can’t believe the Times is even considering it. Totally mindboggling to even think in that direction.

    Being a twenty-nine year old who grew up hooked into the net from the early days, I understand this just doesn’t work.

    I just finished Jeff’s book “What Would Google Do?” and he actually mentioned when they charged a few years back, which I had totally forgotten about.

    I used to actually be a reader of the Times back then, and never went to the site because it was a charged service. I never found the value in paying the enormous fee, when I grew up in a generation where we expect that information (The Times) to be free. We are visiting their site after all, and still have to look at the ads they’re making money off of.

    In fact, CNN tried to do a tiered charge thing for their videos also, which they intelligently backed out of. I guess the figures for CNN didn’t work out as well as planned either.

    Content has to be free. That draws traffic. The more content they produce, the more valuable they become… all with good search engine optimization of course. ;)

    This is a classic example of old business (charge for everything) clashing with the new. That is why newspapers all over this country are failing. Not because of economy, but because of confusion over what the current currency really is.

    We are at the dawn of a time where ideas, thoughts, and what we produce can be shared and is valued on a whole new scale.

    You gotta keep up if you want to play with the kids on the block: Youth.

    • Bob P.

      WARNING: RANT AHEAD …

      How can everything be “free”? Step back a second, and it just seems nuts. Anybody remember “Dow 45,000″? The “new economy”? How ’bout all the Realtors running around saying, “Oh, maybe house prices can’t keep going up so fast forever, but they’ll just level off, they won’t go down! The one thing they don’t make any more of is land!”?

      Good lord. Ain’t no such thing as a new economy. “We are at the dawn of a time where ideas, thoughts, and what we produce can be shared and is valued on a whole new scale.” OK, whatever that means. If you think human nature dawns into new eras, you need to go back and read those 2,500-year-old Greek plays. Or Shakespeare. The more things change …

      It’s when you start thinking all of the sudden you’re brighter than everybody who came before or that you just see things more clearly or that you understand the new technology better and that you see this revolutionary change coming to the human condition … well, that could be when you’re on the path to trouble. Actually, that’s what some of those old Greek plays were about.

      Anyway, some of this dreaming about all information being free — even though collecting that information comes at great cost, or at least the cost of paying someone to do it so they can eat and pay the rent — seems to me to be hatched from the same egg as ideas about “the new economy” or the nuts who kept fueling the real estate boom. “The rules have changed!” they shout.

      Yeah, I understand that some people see the masses rising up to overthrow the old fogey media, those jerks who actually get paid to rewrite press releases and such. Volunteer/citizen journalism certainly has value. I’m not going to turn my nose up at it. I just don’t see it ever filling all the gaps once you get to a point in your life where you are no longer sleeping on a futon and can move from one apartment to another with one trip in a borrowed pickup truck.

      It’s like anything you observe from the outside. It looks easy. “Damn, those fools keep making mistakes. Why can’t they just do it right?” You see this happening everywhere. So many self published books these days — “look, ma, I’m a novelist!” Anybody who can pick up a guitar can make a CD. Anybody with a blog can be a journalist.

      I don’t mean to denigrate all this. Sometimes, there are hardworking, talented people who come to prominence via those routes. Not very often, but sometimes. The cream will rise. But, lord, I look at the comments on stories on newspaper Web sites and I have to think, “yeah, if that guy wrote a letter to the editor, it would never see print — and for good reason.” So often they are just ranting nuts (just like me!). But that’s fine. I can sort through them. Give them their soapbox if it makes ‘em feel better.

      But you’re gonna put your status as an informed citizen into the hands of who knows who? Not me.

      I’m sure Jarvis understands the need for paid, professional journalists. Sure there are bad ones, but there are good ones, you know.

      But it just looks to me that the present situation has to be temporary. Of course it is a time of transition. Much of the “commodity” news that people supposedly aren’t willing to pay for is generated by people who are paid — probably by a company that is now losing money or just barely hanging on. How is that sustainable? If they go away, what will fill the screen at Google News?

      I give Google all the credit in the world. They figured out how to make a bundle by getting people information but not really having to do the work of compiling the information. A stroke of damn genius. Wish I thought of it.

      And I understand that some things change. Yes, the concept on which The AP was founded, for instance, makes no sense anymore. At the time it began its formation — in the mid-1800s during the U.S. war with Mexico, when the fastest way to move information was a diminutive man on a good horse — the “news cooperative” idea was also a stroke of brilliance. With today’s technology, it has outlived its usefulness.

      But in the end, meaningful information requires human labor — to gather it, to compile it, to translate it from some bureaucratic jargon into something readable, to present it in visual or written or audio form, and to deliver it somewhere.

      Human labor will never be free. At least it shouldn’t be in any civilized society. Neither will information. It has value. If it has value, somebody will figure out how to make a buck on it. Hell, there’s this thing going on that you read about now and then about how some very large corporations are trying to privatize water supplies. If you think they’re gonna let information go free, you’ve gotta be crazy.

      Google certainly has made a buck on information that others have compiled. With regard to news, I won’t go so far as to say Google is killing newspapers. Newspapers deserve plenty of blame. But Google News is relying for the information that it aggregates upon institutions that are sick and withering. How is that a good business model? But then I doubt news generates a big part of Google’s revenue, anyway, so maybe Google could really care less about newspapers’ survival.

      I know. It all comes back to advertising. It makes a lot for Google, but not so much for others. Right now advertising is not paying the bills for traditional news outlets.

      Google has blazed a path here, though. I guess I just really think they need some competition so that maybe the advertising revenue they have been reaping will be forced to pay out in more fair ways. So I think this Microsoft-Yahoo news is good. For the first time in my life, I think, I’m now rooting for Microsoft – and I’ll be using Bing. Who knew Microsoft would be the underdog one day? And it’s certainly conceivable that one day Google, too, will be an underdog. Hubris can do that to you. Damn, it always comes back to the Greeks.

      • Eric Gauvin

        Seems like google’s main objective is to pump as many advertising dollars out of the everything-should-be-FREE internet as they can so the geniuses can eat for free.

  • Tenrou Ugetsu

    In this day and age, newspapers seem to be going by the wayside. Believe me, as journalism major turned law student I saw how tough it was out there. Most people don’t want to take time to read a long in-depth article, let alone pay for it. It’s all quick and short news now (the news stroller at the bottom of every 24 hour news station is a good example). If it can’t be Twittered then people don’t seem to care about knowing about it.

  • http://woip.blogspot.com Patrizia Broghammer

    Why not taking in consideration the word saving?
    That means producing the same at a lower cost.
    This is perfectly feasible.
    You do not need to have millions in the Middle East reporting about the same event.
    You need millions to write about the same report.
    This and that happened on this and that day.
    Any Newspaper can describe the same event and talk about past, future, reasons, motives, involvements as he pleases.
    You can have one reporting it and one million different ways to see it.
    As many as the tastes of the readers.
    The news can come in many flavors even starting from one, unique report.

  • DumbIdea

    This woman is clueless and knows nothing about business strategy.

    • http://www.buzzmachine.com Jeff Jarvis

      “This woman” ran the New York Times digital business and knows more about the realities of paid content than probably anyone.

  • DumbIdea

    If she was so smart, why did they shutter the business?
    If she was so smart, why did she go to work for such a dinosaur?

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  • http://www.lidadestek.com/ lida

    We need to separate out the pursuit of journalism (which is a public good and can be carried on by nonprofits) from the business of selling content online. Once you do that, you can focus on how best to monetize. The advertising vs. subscription argument is bogus: you can have both revenue streams simultaneously – along with many others – by offering a variety of choices to the user. That’s the model behind PayCheckr.com (demo online now).

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