Over the past little while, the Toronto Star has been running a series of in-house ads about how newspapers play an important role in delivering the news. Today, for example, there’s a full-page ad that says: “You shouldn’t have to search for clarity or direction”.
The ads are creative and they do make you think about how newspapers play a vibrant role in the news ecosystem. But they are dancing around the key issue: the economic model in which newspapers give away all of their online content doesn’t work.
It is becoming obvious newspapers must start charging for their online content. I’m not talking about Great Wall-like pay walls in which every story is buried unless you pay but a variety of user-friendly subscriptions that provide value to readers while providing revenue to newspapers.
And I’m not talking about subscriptions being the only source of online revenue. In fact, the newspapers that get it right will create a variety of revenue sources – advertising, e-commerce, premium services such as exclusive access to reporters and columnists, etc.
Of course, pay walls will be a significant part of the new economic landscape but there is no other way that newspapers can be viable. Sure, pay walls have failed in the past but the industry has found itself in desperate straits. If something isn’t done quickly, there will be far fewer newspapers left – something that would be a disaster.
For anyone who disses the idea of pay walls, ask yourself this question: how else will newspapers be able to pay the journalists who collect, synthesize and write the news that more people than ever are reading?
It’s time for newspapers to start implementing pay walls. And it’s time for consumers to realize that the free all-you-can-read buffet is going to disappear because is makes no economic sense.
Sure, there are going to be growing pains and difficult decisions will need to be made newspapers have no choice. They have to just do it.
Of course, someone has to be the first to jump. Maybe it will be media domo Rupert Murdoch, or maybe the New York Times, which recently initiated voluntary buyouts.
It’s like the old Fram oil filter commercial in which the mechanic says: “You can pay me now or pay me later”. For newspapers, the question should be rephrased – “You should pay me now and pay me later”.
More: Twitter CEO Evan Williams had some interesting things to say about the relationship between Twitter users and journalists at the Online News Association conference in San Francisco.
He suggests that while Twitter users provide “”little bits of information”, it’s journalists that identify the signals from the noise. This may be true but unless newspapers remain viable, all we’re going to get is lots of noise, and no one to do any sifting.
Even More: Google CEO Eric Schmidt wants newspapers to survive but the question is how Google could or will help them be economically viable.
3 Comments
Maybe markets under the age of 20 could be pulled over to paying online for newspaper content, particularly if it was .01c per day.
Baby Boomers are just never going to pay for newspaper content online personally for a whole host of psychological and social reasons which have been discussed for the past 15 years – ad nauseum. Accept that brutal fact. Once the newspaper publisher accepts that, how else can they do the business model?
First, look at the life blood of the paper – ad revenues. We all know there is a Chinese wall between advertisers and editors. There is your first paradigm shift required – to sell content into aggragators like TD Bank. For current editors, that idea is too much of a shift. Imagine though, if you looked at target market for content. Let’s use Margaret Wente who would be of interest to women Baby Boomers, a great target market.
Second, who are top richest Canadian companies – the big banks. Could you sell Margeret Wente to TD Bank’s Wealth section who are trying to add value to the day of a Boomer woman?
American Express gets early tickets to AGO and ROM special events. Why couldn’t TD Bank have early editions of The National Post only available to its TD clients? As TD clients log into TD, they would get the online National Post too for free. That would build client loyalty for TD and aggragate a readership for the newspaper, building a new habit of going online to check the bank balance and read the paper.
I'm out of time but these people need a serious strategist to bust down their dreams and get on with building the new world of media.
Why do people think that there are only two revenue models for newspapers? Pay walls and advertising? Look at what some of the top blogs like TechCrunch, Read Write Web , Ars Technica and GigaOm are doing. They are selling special reports, building exclusive communities, and still leaving their main content free.
I think these are just a few of the current options I think there is more innovation to come: http://www.newcommbiz.com/a-glimpse-into-the-futu...
Unless a newspaper truly has unique content the minute they throw up the pay walls 90% of the papers will go out of business. Why do you think Rupert hasn't pulled the trigger yet? Yes the WSJ will survive but he'll have to shutter most of his properties.
The reason newspapers are struggling is because they've made cuts in the wrong areas. They've cut their reporting staffs instead of cutting their bloated middle management. Their structure is wrong for the business model they are using.
I also believe that most newspapers should be privately held not publicly held.
Like you Mark, I wish the newspapers would hurry up and put up their walls so that we can let the carnage begin and the new business models emerge. It may be ugly for a few years but as a capitalist I have to believe that the Market will fill the gaps. It always has.
Tac,
You make a good point about what RWW, TechCrunch and GigaOm are doing in terms of driving revenue from places other than advertising by doing things such as conferences, premium reports and other events. Newspapers could learn a lot by watching how some of these new content "empires" operation.
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