Posts about newspapers

Sin or sense?

Oh, no, the “original sin” meme of newspapers not charging for content is rising again. Sigh.

Dick Tofel, general manager of Pro Publica and former assistant publisher and assistant managing editor of The Wall Street Journal, is a very smart and reasonable man and he has written a smart and reasonable Kindle Single (enabling him to charge as a matter of metaphor) about “why newspapers gave away the future.” But his case is not exactly what it appears, for this is more of a history than a reverse-Reagan (that is, “Mr. Gorbachev, build this wall!”). Tofel writes (his emphasis):

[T]o say that a monumental mistake was made in 1995-1996 is not a prescription for business models in 2012. Consumers have been accustomed to a cornucopia of free content for nearly a generation now. And the newspaper industry is, in many places, a shadow of what it was in 1995…. This has been a meditation on one of those hinge points in history, not an exercise in nostalgia or a call to somehow repeal the past.

In the end, he is asking us to value journalism for the future. On that, we agree. But on history, not so much.

After setting out a well-written review of newspapers’ entry onto the net, Tofel argues (my emphasis) that “it must follow that the decision to give away newspaper content was a mistake, that an alternative future in which nearly all newspapers sought to charge for content on the web, just as they had charged for it in print and on the online proprietary services, would quite likely have produced a happier outcome.”

I could argue that newspapers were doomed to lose their monopolies and thus their pricing power over both content and advertising and that continuing to execute a business model based on controlling a scarcity would lose to those able to exploit the economics of abundance created by the net — read: Google. But I won’t argue that now because this has been argued so much before.

I could argue that all newspapers pricing in concert would have been antitrust and that it would have taken only one to ruin the game. But I needn’t argue that because that’s just what happened (I lived through the industry’s disastrous attempt at conspiratorial collusion, the New Century Network).

I will argue in a piece in the Guardian on Monday that it might also prove to be a mistake to see ourselves in the content business when others use content, including our content, as a tool to generate signals about people so they can extract much greater value out of that knowledge — read: Facebook. But I’ll save that argument for next week.

Instead what interests me about Tofel’s thesis is his cultural contention that newspapers fell victim to West Coast vs. East Coast thinking — a variant of the SOPA/PIPA worldview of Northern California vs. Southern California. Read: Silicon Valley vs. Hollywood; Silicon Valley vs. Sixth Avenue; technology vs. intellectual property; platform vs. content.

I hear this argument in other, more emotional and less reasonable terms often. I hear it when my ilk and I are accused of being internet utopians or technological trimphalists. I hear it even back to arguments over Gutenberg and technological determinism.

There was indeed a meeting of the Future of News conspirators only a week ago. But at any such gathering, I never hear anyone predicting or even longing for a utopia. I never hear them say that the outcome of this change is certain, only that change itself is certain. The real difference I hear is between those who welcome the change and fret over it, those who see opportunity and those who see destruction. Read: the disruptors vs. the disrupted.

“[T]he insecure management teams of the newspaper companies chose to follow the supremely confident leaders of technology in making some of the key strategic choices posed by the rise of the web,” Tofel writes (my emphasis). There he is blaming the technology cult for leading the newspaper institutions astray. Oh, he gives much blame to the institutions’ proprietors, especially for killing their own efforts at innovation and collaboration.

But he’s really blaming the newspapers for answering the siren call of the geeks. “Simply put, the notion that ‘information wants to be free’ had become Hip [his capitalization], and the idea that readers should pay for content online as they long had in print had become Square. Publishers, never the most self-confident bunch even in the most stable of times [ed: oh, how I disagree with that, having rarely witnessed such hubris as I witnessed among newspaper executives], desperately sought to be regarded as Hip as the new technologies roared across the landscape of their business, threatening to upend everything.”

In the end, Tofel reduces the economics of the net to the level of a fad. There’s where we fundamentally disagree. He tries to impose the industrial economics of scarcity and print and local monopolies upon the net’s economics of abundance and bits and openness. That’s what didn’t compute.

Oh, yes, we can debate the hypothetical of what would have happened if…. We can debate whether The New York Times pay meter works — but please first define “works” for me, as the company is still shrinking. Once I agree that I want the Times plan to work and tell you that I subscribe to the paper, then we can debate whether the walls will work or are working elsewhere. But none of that leads to a sustainable business strategy for news in a new reality. I believe we are in a new reality and that old models and old rules need not apply.

Tofel ends by imploring us: “In short, this time we need to do better” for journalism. He has done very well for journalism, helping to found Pro Publica, which is doing great work both in investigative reporting and in new models of collaborative reporting. Except it’s not economically sustainable. That is, it’s not a business. It has to beg for charity. Though that charity is well-deserved, there’s only so much foundation money to go around and that, I think we’d agree, is not how journalism will survive or prosper in the future.

This is why I started the Tow-Knight Center for Entrepreneurial Journalism, to help students and entrepreneurs find new and sustainable models. I’ll have you know that just yesterday, I had a meeting with an entrepreneur about charging for content and I’m about to commission a study on best practices in paid and free newsletters to help. I’m not opposed to charging for content. I just don’t think it’s the solution that got away.

I also am not sure that concentrating on the past is where we are going to find those solutions. Oh, yes, there are lessons there (that’s why I’ve gone farther back and become obsessed with Gutenberg and his disruption). But the risk — the siren’s seduction of the recent past — is that we’ll still think we can maintain the old ways in a time of disruption. I think we have to be willing to throw out old assumptions so we see new opportunities.

And that’s what I think the newspaper industry failed to do because it still thinks its job is to make and sell content when I think its job should be to serve and enable their communities — read: Facebook and Google, which were able to find new value in content.

I do recommend reading Tofel’s essay (it’s only $1.99) as, again, it is well-written and researched and smart and reasonable. But then I also urge you to take the assumptions made by the industry and reflected in it and question them.

Why not a reverse meter?

As I ponder the future of The New York Times, it occurred to me that its pay meter could be exactly reversed. I’ll also tell you why this wouldn’t work in a minute. But in any case, this is a way to illustate how how media are valuing our readers/users/customers opposite how we should, rewarding the freeriders and taxing — and perhaps turning away — the valuable users.

So try this on for size: Imagine that you pay to get access to The Times. Everyone does. You pay for one article. Or you pay $20 as a deposit so you’re not bothered every time you come. But whenever you add value to The Times, you earn a credit that delays the next bill.
* You see ads, you get credit.
* You click: more credit.
* You come back often and read many pages: credit.
* You promote The Times on Twitter, Facebook, Google+, or your blog: credit. The more folks share what you’ve shared, the more credit you get.
* You buy merchandise via Times e-commerce: credit.
* You buy tickets to a Times event: credit.
* You hand over data that makes you more valuable to The Times and its advertisers (e.g., revealing where you’re going on your next trip): credit.
* You add pithy comment to articles that other readers appreciate: credit.
* You take on tasks in crowdsourced journalistic endeavors: credit.
* You answer a reporter’s question on Twitter and the reporter uses your information: credit.
* You correct an error in a story: credit.
* You give a news tip or an idea for an article The Times publishes: credit.
Maybe you never pay for The Times again because The Times has gained more value out of its relationship with you. If, on the other hand, you hardly do any of those things, then you have to pay for using The Times.

I’ve been thinking about this, too, in light of a few other trends I’ve seen with newspapers online. First, some that are trying meters are finding that very, very few readers ever hit the wall (which papers are setting at anywhere from 1 to 20 pages). That so few hit the wall is frightening. It means that most readers don’t use these sites much. That’s nothing to brag about. Engagement is criminally low. Second, I’ve seen many sites that get a surprising proportion of their traffic from out of their markets — traffic that is valueless (or even costly, in terms of bandwidth) to sites that sell only local ads. This comes from following a goal of pageviews, pageviews, pageviews — brought in with search-engine optimization — rather than valued relationships.

After hearing a few such stories, I suggested that a site with a meter might want to reward local readers by giving them more free content and charge out-of-market readers by charging them sooner.

You see, that values the local reader over the remote reader. My idea for the reverse meter values the engaged reader over the occasional reader — and even rewards greater engagement. And therein lies, I think, the key strategic skill for news businesses online: understanding that all readers are not equal; knowing who your more valuable readers are; getting more of them; and making them more valuable.

Now I’ll tell you why my reverse meter won’t work: When I spoke with all our journalism students at CUNY about their business ideas on Friday, I asked how many had hit the Times pay wall — many — and how many had paid — few. Abundance remains the enemy of payment. There’s always someplace else to get the news. The Times can make its present meter work because (a) it’s that good [the Steve Jobs exception that proves the rule], (b) it’s still sponsoring — that is, giving a free ride — to its most valuable readers, though that is supposed to end soon, and (c) its engagement is still too low and thus many readers don’t even confront the wall (that needs to change).

So never mind the idea of the reverse meter, but retain the lesson of it: Value should be encouraged, not taxed. Readers bring value to sites if the sites are smart enough to have the mechanisms to recognize, exploit, and reward that value, which comes in many forms: responding to (highly targeted and relevant) ads; buying merchandise; contributing information, content, and ideas; promoting the site…..

The key strategic opportunity for news sites is relationships — deeper, more valuable relationships with more (but not too many) people. Engagement.

Do-not-track hypocrisy

Sunday’s New York Times editorializes in favor of Do Not Track and other privacy legislation going through Congress and the Federal Trade Commission. Yet The New York Times itself makes much use of personal, private, and tracking information itself. Indeed, it requires tracking.

The editorial (my emphasis): “Congress should act on the F.T.C.’s recommendation to establish a system that would allow consumers to effectively opt out of all tracking of their online activities. There are other worthy proposals, including the administration’s call for limits on the collection of data about consumers online. Lawmakers have proposed about a dozen privacy bills this year alone. But with Congress stuck in a partisan rut, it is reassuring to see the F.T.C. at work.”

Now read The Times’ privacy policy (and highlights):

* If you subscribe to the print New York Times, the company will sell your name *and address* and other unspecified data to others. “If you are a print subscriber to The New York Times newspaper and subscribed either by mail, phone or online, we may exchange or rent your name and mailing address and certain other information, such as when you first subscribed to The New York Times (but not your e-mail address) with other reputable companies that offer marketing information or products through direct mail.” That’s not opt-in; it’s opt-out.

In Public Parts, I argue that privacy policies in old media have long been far worse than online. Magazines, newspapers, and other recipients of your media money have for years sold information about what you read and consume and who you are and where you live to large data-base companies and marketers. If a library or an online site did that, it would be shot. But The New York Times does that. Want to pass a law about that, Times?

* The New York Times requires that you use cookies. It decrees: “You will not be able to access certain areas of our Web sites, including NYTimes.com, if your computer does not accept cookies from us.” So what happens when Congress passes Do Not Track, Times?

In its explanation of cookies, The Times says: “Our registration system requires that you accept cookies from NYTimes.com in order to log in to our Web site. Cookies are not spyware, viruses or any other kind of malicious program. For best results, set your browser options to accept all cookies from NYTimes.com. You can use your browser options to clear the cookies later, if necessary.”

Precisely. You have many means now to get rid of cookies: You can turn them off, kill them at the end of every session or whenever you want, or open a private session (an “incognito” window in Chrome) that relays no data about you. Do Not Track is redundant. It’s political cynicism.

Oh, and The Times — which gathers more personally identifiable data about you than most any other newspaper — could not operate its paywall without cookies.

* Just like other online marketers, The Times uses cookies to target advertising. “The New York Times Home Delivery Web site also transmits non-personally identifiable Web site usage information about visitors to the servers of a reputable third party for the purpose of targeting our Internet banner advertisements on other sites. To do this, we use Web Beacons in conjunction with cookies provided by our third-party ad server on this site.” Would The Times outlaw this essential business behavior? This is how The Times earns its premium rates with branding advertisers.

* The Times hires a number of analytics companies to track your behavior, from the creepily named Audience Science to WebTrends for the web and from Localytics to the fluffily named Flurry for mobile.

* The Times logs what pages you see and uses that to recommend content.

* It logs your location if you use mobile applications.

* It allows third-party ad servers to place cookies on your computer and track your behavior.

Note, too, that The Wall Street Journal, which has been on a Reefer Madness high regarding privacy, also collects personally identifiable information and connects it to browsing history without users’ permission. More hypocrisy.

Mind you, I do not object to any of these tracking behaviors. They are, in my opinion, necessary to pay for the content we get from The Times and The Journal and much of the rest of media. They are used to reduce noise, repetition, and irrelevant advertising and content. They are all-in-all harmless and have been demonized by privacy’s regulatory-industrial complex and now even by The Times. If The Times gets its wish and Do Not Track passes, enabling too many consumers “to effectively opt out of all tracking of their online activities,” then I fear we will get less content or more paywalls or both.

I also argue that media and marketing companies have done a godawful job of letting their customers know what information they were gathering and what they were doing with it and how consumers benefited. They long ago should have learned from Amazon, which reveals what it collects and what results and enables customers to see and control and correct that information (which also only gives Amazon yet more valuable data). So it’s their own damned fault they’ve been demonized, opening the door to the cynical pols and bureaucrats who proposed Do Not Track — and to their allies, such as The Times editorialists, who argue on the basis of nonspecific emotions rather than tangible facts about harm and consequences.

Digital First

At CUNY’s Tow-Knight Center for Entrepreneurial Journalism, we invited John Paton, CEO of Digital First Media, Journal Register, and Media News, and Justin Smith, CEO of Atlantic Media, to answer questions about how they are executing their digital first strategies. I interviewed them, digging down into revenue, costs, transition for staff, audience, and advertisers, and more. Here’s the full video:

Digital First and the Future of News from CUNY Grad School of Journalism on Vimeo.

Paton made it clear that digital first is a transitional strategy, not an end game. He said that at companies like Paid Content, he cannot ever imagine them having a digital first discussion because they obviously are already digital. But he has to transform his companies into digital companies. He talked about cost-cutting and efficiency; about how he is multiplying digital revenue; how he motivates sales people to sell digital; about digital journalism; and about the size of a digital company versus a print monopoly.

Smith — who also launched The Week magazine in the U.S. with a unique and successful strategy — came at many of these questions from the perspective a magazine that sells high value. So he is not only multiplying audience through digital. He is making Atlantic, more and more, into a digital marketing agency for his clients. On the one hand, he says, costs decline from paper to screen, but costs also increase as advertisers need and will pay for greater services. (I think we’ll find that even down to the local level, media companies will have to act like agencies, helping advertisers execute their own digital strategies …. more on that another day.)

In a time when much of the rest of the newspaper and magazine industries are moaning and mourning about their fate, these two executives are building a new future. They are optimists, as are we at Tow-Knight. They have reason to be as they begin to find successes on this difficult path.

The disintegrating economics of newspaper circulation

Anna Tarkov calculates that the Chicago Tribune’s Groupon deal — two years of the Sunday ‘bune for $20 — works out to 19 cents an issue.

What’s at work here is the myth of legacy media, that every reader sees every ad thus every advertiser pays for every reader … thus every reader is equally valuable and it’s worth losing money holding onto any reader.

Those aren’t the economics of online, where advertisers pay only for the readers who see (or click on) their ads, and where abundance robs publishers of pricing power over their once-scarce inventory.

My favorite illustration of this is the Star Ledger killing its stock tables in 2001, shaving $1 million of costs and losting only 12 subscribers.That means that prior to this, the paper was spending $83,000 per reader to hold onto them. Papers had been scared of losing one reader because, in their economics, every reader was equally valuable. But no longer. I keep urging papers to calculate the net future value of readers and decide who’s worth keeping and serving and who’s not, economically speaking.

The Tribune is losing much money on every one of those Groupon readers — not only the lost retail value of every discounted sale but also the fact that the paper no doubt was already published at a loss — that is, it costs more to produce a copy than its sold for because each reader is valuable to advertisers. But is she?

What the Tribune is also trying to do here is hold onto its critical mass. When its Sunday circulation falls below a certain level, certain lucrative advertisers — coupon and circular advertisers — will stop using papers as their means of distribution. That will be a kick in the kidneys almost equal to the creation of craigslist and it’s coming any day. In fact, it’s already starting … that, surely, is why the Tribune is so desperately trying to hold onto every reader.

But those economics will quickly disintegrate. Watch it happen….