Asne-pay

Charging for Digital Content: Fix or Folly?

These are file notes by Bill Densmore on this morning’s session at the American Society of News Editors in Washington, D.C., “Charging for Content: Fix or Folly?” The panelits are James M. Brady, president, digital strategy, Albritton Communications; Merrill Brown, founder and principal, MMB Media LLC and a spokesman for Steve Brill’s Journalism Online initiative; Kenneth J. Doctor, analyst, Outsell/Content Bridges; and Walter Hussman Jr., president/CEO of WEHCO Media, at the Little Rock Gazette.

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Merrill Brown advice

Engage in a product development process. Over the next five to 10 years you are all going to be offering subscription products of one sort or another. Get engaged in it today or the bus is going to pass you by and the business models you practice today will pass you by.

Ken Doctor

A lot of consciousness about this. "The harder question publishers and editors have to ask, is where does this fit? . . . "To take eyes off the blal of advertising, which is still going to be the main support of general news, is a problem. I think a balanced approach to paid content and lookin gat paid content as not just subscriptions, but membership and metering, which the Ft has proved weill in the UK and also look at a huge question now in front of us and mobile and mobile access and what that means for charging -- iPad-plus -- and we'll talk more about that."

Walter Hussman

"We think it has been at least a fix for us." The started out as a free site and "we had the same rationale for doing it -- we wanted to be the leading information providers in our community -- online or however we want to do that." They were free for a year or so. People kept coming up at parties and saying glad you put it online for free I don't need to subscribe to your paper any more. they put it up on 2001. "We got a tremendous number of complaints when we did it." The told their story and people said they understood it.

Daily circulation over 10 years they were up 1.7 percent. All ohter newspapers around them - "the main thing that differentiates us from those other newspapers is we did not give our content away for free." They have free want ads. "The main thing I think is that we haven't given our circulation away for free."

In the middle of the pack in circulation growth. "Demographically we are very similar to the rest of the United States."

When they went paid, they lost 60% of their visitors, but only about a third of their page views. "And, slowly, people started coming back." Pageviews grown: "and why have they grown when our circulation as remained relatively constant." They don't give away the things that are unique that they really report on. But they put things online that they don't have room for in print. They have listings, they have a videographer. They have all their classifieds online for free.

Today they have more traffic at their site than the FREE tv station sites in their market. "We have added so much free content to our site, but it's not necessarily what's in the newspaper."

Advertising on their website the get $4/thousand Best Buy has an insert in every Sunday and they pay $40/thousand. "So why would want to be platform agnostic when I can get $40 a thousand, instead of $4 a thousand? . . . I think advertisers get results in my newspaper, and I think they get results in your newspaper too." Online: we are not going to use it to cannibalize our print."

Jim Brady

He thinks charging is somewhat folly, although it has been successful in Little Rock. Has to be a combination of advertising and services. Generation coming up has lots of options on the web; you have to produce content that is of really high quality to be able to charge for it. "Anyboyd who charges is going to be increasingly under seige from outside forces."

"This is not some earthy ideal." It is not that content wants to be free, it is just basic business principles. "You can't build business models on what people should pay for, you can build business models on what they will pay for."

His advise for people who are thinking about charging: He says forget about the web and go for the mobile web. "YOu are starting for a charging system that is built in. Hit one button and you've paid for it." People will pay for relevance.

He says don't waste time building content on the browser-based web, concentrate on building it for the mobile. "Get out there and figure out what products people will pay for on mobile."

Discussion

• Doctor: "Let me second that in terms of mobile . . . what we are really looking at is a lost decade in business . .. . now, Best Buy sees the value of the preprint. Five years from now, he's not so sure they will . . . The way it works in digital is by the time it is big enough, there are already three other competitors who appear to have a sustainable advantage . . . This is the biggest opportunity in a decade for a duel.” The ability to do that on iPad products plus smart phones, and make money from both subscriptions and advertising “is now right in front of the news industry.”

• Merrill Brown: “We ought to be reinvented our core products with this challenge in mind: At what level can we engaged our local communitiy, in what fashion … can we engage people … in a way that will force engagement so that we are invaluable. …. Do we really believe that young people care less about city hall and the board of education … that they won’t find our information of value.”

• Merrill Brown asks Walter Hussman – what do you advise ASNE members in the audience to do?

• Hussman: “I think they need to go to a paid site. It connotes to people that you have a valuable product. I think you’ll catch some flack from people, but they’ll get over it.” He says people are worried about the local paper going out of business. They understand. He would also urge people to get a mobile site immediately. Ask people to pay for the whole story; the headlines can be free. “I don’t want those people getting all their news on the iPhone and dropping their subscriptions . . . . they charge $7.95 a month for the website. It will be $9.95 with the iPad. If you get it with the paper it is $15.95 a month for all of them.

• Brown: “There is a global revolution. Everybody is talking about it (as far as charging).” But he also says local advertising is going to go through a significant and positive revolution.

ADVERTISING: Tablets big deal with agencies, Doctor says

Bob Sulzberg (spelling?) They have had a charge site for many years. He says it is neither fix nor folly. He asks what is going on with mobile advertising?

• Doctor: If tablets succeed, it is a totally different advertising medium “Digital advertising agencies making a lot of decisions – they love these things and they are planning major campaigns around them. And there is something markedly different aobut using our hands to navigate the web.”

Doctor says the problem newspapers have with online advertising is they are strongest in the online category which is most mature, which is online display.

• Hussman: Says he thinks there is “tremendous opportunity” for advertising on the iPad. “I don’t think it is going to be like the newspaper, or link online advertising. I think it is going to be something different.” He says with a subscription site, he will know who is looking at the ad. He suggests that you could sell one ad to credit-card customers and Dillard’s and another type of ad to a non-credit card customer. Maybe the person lives in a high-income area, or in a duck-hunting area – different ads. “We can do that with the iPad becuas we know who our customers are, and because you know who your customers are because you have merged your database with ours . . . so I do think there is real potential with the iPad.”

• Doctor: Hussman is right – the advertising industry is doing mixing and matching and analytics on a grand level. Yahoo can match an add to the incoming web viewer in one twentieth of a second. “Getting very smart about this is absolutely key to mobile, and online.”

• Brown: “The value of analytics here and taking the data about our customers seriously is absolutely critical.”

Floor question: How much can paywalls bring in?

• Hussman: Not much. That’s not the point. You don’t want to have attrition from a profitable platform to an unprofitable platform.

• Doctor: Although the Financial Times is now making more from online on a per-thousand basis that it does in print. The key is what are you trying to sell. Looking at what they have been doing and how they move those metrics.

• Brady: There is also a philosophical issue here. Trends of rising in search engines and social media – some of those people who arrive at you site are people you would like to have, even if they are not your subscribers. “To put up a wall in front of that generation and way we would love to have to have you but you have to put up a wall to come through … you stunt youself.”

• Brown: “But we don’t believe metering does that.”

What is the landscape for print newspapers in 10 years??

Margaret Sullivan asked the question.

• Doctor: “I think newspapers are becoming a Starbucks buy . . . it’s becoming a niche . . . it will be there in 10 years, I’m not sure what it is going to cost on a daily basis . . . if you look at the numbers on usership on news, Google is the new mass market.” But the big problem – right now 85% of newspaper revenues are still in print.

• Brown: He says his children will never contemplate subscribing to a print newspaper. “We have to be niche products in our print form and mass products in our digital form in order to have a online jobs secure future . . . I’m not bullish on badly operated publishing companies”. . . he thinks a newsweekly will go away in another year and he worries about the unwinding of the Tribune bankruptcy.

• Hussman: Newspaper that don’t charge – more and more will struggle and go out of business.

• Brady: Not bullish on newspapers either.

What are the models that JO is unveiling?

Brown outlines three approaches – one is the meter, one is the over-time and the third is the club model (at Global Post).

• Doctor: Within an app that curates lots of content, you have a much bigger, better value proposition for users. I think you can charge for it, and if people are going to use it, the advertising opportunities are substantial.”