Yale-payments-panel

FRIDAY 5 P.M. PANEL: The quest for pay models

What follows is an honest attempt to document a two-day conference at Yale Law School, "Journalism and the New Media Ecology: Who Will Pay the Messenger?" The reporter is Bill Densmore of the Donald W. Reynolds Journalism Institute at the Missouri School of Journalism. As with a similar in-the-moment report from a gathering at Harvard University two weeks ago, I make no warranty about the accuracy of direct quotes -- captured on the fly -- but make a promise to have supplied appropriate context as best as possible. The sessions are being videotaped. Consult that source for the final history of this event.

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Related links:

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• What will support news?
• The collaborative idea
• MORNING SESSION: The overview
• AFTERNOON SESSION: The public option
• AFTERNOON SESSION: What is to be done locally?
• 5 p.m. SESSION: New business models

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This panel, "The Quest for Pay Models," included Steven Brill, of Journalism Online LLC; Jim Kennedy, vp-strategy, The Associated Press; Tom Glocer, CEO of Thomson Reuters; Robert Picard, of JonKoping University, Sweden; and Penny Abernathy, of the University of North Carolina. You can launch or download audio of this session (1 hour, 40 minutes).

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Penny Abernathy opens with an overview of three books and an examination of the likely future of business models. Her key conclusion: Legacy newspaper companies will not be able to cut their way out of their current dilemma. She observes that one of the authors believes there will be one national aggregator brand in journalism -- and that aggregator will be Google. The path to renewal for newspapers: Shed legacy costs and re-establish links with community. Accomodation will never work "what you need is creativity . . . The likelihood that the structure of this medium will remain as before is nil."

Jim Kennedy outlines a "New Model for News," in a set of slides which describe the AP's strategy. His key point: Harness the new forces of nature, the new experience of the web and figure out how to build a new platform for news that allows everybody to win -- the producers, the entrepreneurs, the aggregators and others.

32,900 results from an AP story snippet?

Kennedy puts up a screen shot of a Google search he executed. He took the first two paragraphs of a unique AP story slugged: "AP IMACT on Child Porn" and he got 32,900 search responses. Kennedy said there are not that many websites with legitimate rights to AP content. He found that after the first few links to legitimate sites, most of the rest appeared to be sites that had copied and pasted large chunks of the story without the copyright permission to to so. "This is not a judgement about the blogs or that practice," said Kennedy, but rather just an observation that the notion of copyright is broken on the web and therefore broken for The AP. "What signal do you get from that search result?" he asks.

He then cites the example of the Watertown (N.Y.) Daily Times, a city he grew up near, which used to be 34,000 daily circulation and is now around 20,000 daily and he called the paper "in a death matcH" with a local online website, NewszJunky.com, which does not original reporting, but only aggregates information from many sources in upstate New York. "My point ot view is not to bemoan the rise of these new models, but how to make this new news ecosystem work better," says Kennedy. "The old model has been upended and the news piece has fallen out."

Finally, Kennedy cites an AP ethnographic study that shows that young consumers see news as facts, updates, back story and future story. But the young consumers say the are overloaded with the facts and updates and yearn for the context and backstory. People aren't going to home pages, they are going in through back doors. "This pattern is not connected ... we are mostly moving through this at random . . . it is not a good experience and it doesn't really serve the stakeholders ... principally the users."

Kennedy: The packages don't work anymore

"The old business model of the packages really doesn't work any more," says The AP's Kennedy. "We can't push them out anymore, the user is in control." He says the hold system was a package -- the newspapers. Then newspapers dropped the whole package online, where the aggregators then came along and atomized it into its pieces. What needs to happen now is to collect the atoms back into some form that serves the needs and interest of consumers, says Kennedy.

He thinks there is a role for the AP in "helping to hard-wire the connections." The AP is doing this through creating a digital platform, starting a news regisration, developing a search strategy (through AP "landing pages"), and coming up with a social-media model. "We hope we'll convince the search engines to take a look at this and use it," says Kennedy. "We would hope they will use information if we can show them an index of authoritative news."

Brill: Journalism Online -- one account, password

Brill now discusses his Journalism Online LLC initiative which he describes as an effort not to create a new business model for news but create the facility for the re-emergence of an old model -- direct consumer payment for content. The online model of using to advertising doesn't work because there are too many websites competing to sell advertising -- it is a market of abundance, not scarcity. And that has cut prices for advertising.

With Journalism Online LLC, user will have a common account and a common password. He says he will help news organizations, not with a paywall but with a set of dials that will enable a mix of circulation and advertising revenue and you will "gradually wean people off the idea that everything is free . . . a gradual process, a flexible process that publishers can do and they will do . . . the reason they will do it is quite simple -- the stuff that they have to sell has real value."

Brill sees JO as "putting that kind of economic power" back in the hands of publishers, "correcting a hiccup" in the evolution of the web during which publishers decided to put their content on the web without charging for it. Brill said: "We have now signed up over 1,200 affiliates to do this."

Pickard: Focus on content, the money will follow

Research academic Robert Picard at Jonkoping University, in Sweden, has been studying the economics of the news industry for decades. He notes that there are still lots of resources in the news industry, but they aren't being deployed on news. "It is not as simple as saying we are going to throw a paywall up there and make it work," he says. He sees a big push for paid content, grounded in the comfortable notion that people ought to pay for what news organizations are producing. But he says the conversation should be refocused on product, not money, on business models and not on pricing -- overall focused on what consumers want. "You have a huge product problem -- if you solve that, the money will take care of that . . . "what are you offering people that is unique, valuable to them and gives them an incentive to pay for something?"

Paying for news is not the same as paying for music, video and other content, Picard says. The demand for entertainment is much higher than for news and can support much higher price points. And online news is not the same product as offline news. The online experience is not very good -- there is not enough personalization or navigation or service. The discussion has first to be about "what we are delivering online before we think about paying for it."

Tom Glocer of Thomson Reuters

"What Steve's doing is I think brilliant because what he is giving back is control and losing the controls and flexibility of the media back to the content providers ... and that's very creative." Newspapers have lost touch with the balance between advertising and subscription. "It's the mass suicide that Steve talks about."

Physical paper: "We are obsessed with that as a media. I think we are going to look back in a few years and think, what an amazingly stupid process."

"Why does the NYTimes have to do everything soup to nuts."

He sees a bring future for journalism. Thomson Reuters is a niche publisher -- a $13 billion niche of business and professional content sold on a subscription basis to professionals, 90% of it delivered electronically. "And we do it becuase we focus on what are the real needs of those professional customers who don't want to be titilated or entertained, they absolutely need that information."

QUESTION AND ANSWER PERIOD

A questioner asks: Was it a mistake for newspapers to give away the news online?

Kennedy: It made sense in the beginning. But when search took over, that's when the industry should have switched gears. We should have innovate around that.

Brill: I think it was a mistake. "The incremental revenue is tempting but it is really short sighted and it continues to be really short sighted. ... we are not talking about a paywall. We are talking about finding the 10 or 20% of most engaged readers." He acknowledges that it is better for customers to get something for free than to have to pay for it. But he thinks people who pay create a much better environment for journalism "because it forces you to pay attention to your readers instead of your advertisers . . . that changes the culture of a newsroom. It restores it . . . If the New York Times is going to charge $5 a month, it is concerned about its readers. YOu know it is worring about its consumers because if it doesn't do it,there isn't going to be a New York Times and there isn't going to be a Huffington Post that exists off the New York Times."

Brill: "We see that for newspapers their model is they can get a small percentage of their most avid readers to pay . . . most newspapers who start with us in January, February or March ...."

Robert Picard: Average U.S. newspaper is 38,000 circulation. About 90% of the ad money going online is going to the top 10 sites. There is not a lot of ad money to be made out there. He is creating some mechanisms where some of the local papers can benefit. For a small paper: If you go online, you've got to protect those 10 exclusive stories.

QUESTIONER ASKS AP'S KENNEDY: "The AP's vision is to do a command and control that will funnel me around the Internet with an experience that will be useful to me .... we don't need that."

Kennedy: "Our point of view is search doesn't produce results, it produces discovery . . . You'll get stories, but in some cases it won't match up with the geography. How do you sort through that? Maybe you are good and finding the needle in the haystack, but a lot of people are not. We are just trying to make it possible to have a machine-assisted soution . . . As we develop the Internet further, the machines and the individuals can find that information."

QUESTION: What about the loss of influence? People in newsrooms are worried.

Brill: There are only about four papers who have put up a pay wall. They just started for everything at once. If you did everything we tell you do as a local publisher, you might lose about 10% of our page views.

Carr: He thinks it will be hard for journalists to work back to a sustainable business model with legacy media than to go with some of the nascent models.

Chambers: "There is a sort of tentativeness to the discussion for all of us who are doing this because we don't know if we are going to be funded." But she does believe Branford wants what she is doing. "I hope other people will come into it, we just have ot get to the financial model that will sustain it."