Newspaper Execs Hold Private Meeting On Paid Online Content

Here’s a story the newspaper industry’s upper echelon apparently kept from its anxious newsrooms: A discreet Thursday meeting in Chicago about their future.

“Models to Monetize Content” is the subject of a gathering at a hotel which is actually located in drab and sterile suburban Rosemont, Illinois; slabs of concrete, exhibition halls and mostly chain restaurants, whose prime reason for being is O’Hare International Airport. It’s perfect for quickie, in-and-out conclaves.

There’s no mention on its website but the Newspaper Association of America, the industry trade group, has assembled top executives of the New York Times, Gannett, E. W. Scripps, Advance Publications, McClatchy, Hearst Newspapers, MediaNews Group, the Associated Press, Philadelphia Media Holdings, Lee Enterprises and Freedom Communication Inc., among more than two dozen in all. A longtime industry chum, consultant Barbara Cohen, “will facilitate the meeting.”

One hopes it displays the same sense of purpose as, say, troubled world leaders did at Yalta in 1945 or, in a rather less respectable sector of the economy, beleaguered mob bosses did at a legendary Apalachin, New York, confab in 1957.

Cross one’s fingers on their behalf, even if there’s worry that some don’t really possess the nerve and vision to exit a mess for which they hold significant responsibility.

There was a dinner Wednesday and, according to the agenda, Thursday begins with a quick declaration of goals at 8 a.m., then an 8:10 a.m. session labeled, “Fair Syndication Consortium/Attributor.” It’s described as a “presentation on technology/service to track content on the Web and to extract payments from third-parties and ad networks that have appropriated newspaper content.”

Presumably, Google, Yahoo! and any one of thousands of websites could, and should, get mentioned with scant reverence. Perhaps the age of content theft is coming to an end.

That first session is followed by “Journalism Online: Presentation on proposed service to charge for access to newspaper content and to license that content that (sic) online aggregators” (the assistance of at least one of the many copy editors sent packing by the attendees might have been sought).

That presentation would seem quite important, with many conflicting ideas floating about whether charging will work and how to even try. The stark reality is that the industry will have to soon start demanding payment for at least some of its online handiwork.

There are various ways to go about it, and one size won’t fit all. During their days of print advertising plenty, the people in this room, or their predecessors, made the catastrophic, myopic decision to not charge. They gave away their expensive efforts for free. They by and large misjudged the significance of the internet.

It’s now safe to wager that most attendees, who were scheduled to include Michael Golden of the New York Times, Gary Pruitt of McClatchy and Tom Curley of the Associated Press, will be dragged into charging for at least some online content. Cross one’s fingers that a dirty little industry secret, namely the qualitative decline of many papers (the New York Times a notable exception) amid rampant cost-cutting, doesn’t now give even long-loyal consumers legitimate pause about paying up.

Ultimately, many in attendance will start charging for some online content because they don’t know what else to do.

They will listen to a session titled, “Aggregating User Data: Collecting enhanced online newspaper user data across newspaper properties and mining that data to aggressively sell target content to specific audience segments across the network (e.g. golf enthusiasts).” Hey, perhaps an industry largely inept at creative marketing will corral Tiger Woods, or other cultural icons, as spokesmen. They could do worse.

There will be a “discussion about content models” and, then, lunch. The afternoon brings a session on the disastrous decline in classified advertising and, finally, talk of “Next steps” before most folks scoot to O’Hare and home.

 I suspect some at this de facto summit were, at best, passable managers while times were flush but never really cut out to think on their feet. There are a few leading executives who come from the considerably easier realms of television and radio, where they made lots of money and then got promoted to oversee the far more complicated organisms of newspapers at their multi-media corporations.

Executive recruiters likely do not swarm the industry for talent; certainly not in the same way they’ve gone after leaders at companies such as General Electric, Wells Fargo Bank or Microsoft over the years. Indeed, the June issue of Fast Company, a very sharp tech and business publication, features a cover story on “The 100 Most Creative People in Business.”

Perhaps I missed it but I don’t think I saw a single newspaper executive mentioned.

Why not? Now, more than ever, is a time for creativity and nerve, not just hunkering down and crossing fingers that safe harbor will appear on the horizon. It’s a wonderful and important product, vital to American communities. Unlike a lot of jobs, you can look yourself in the mirror and know you’re doing some good. Many newsrooms remain filled with a sense of mission even amid the looming dread.

At the behest of new corporate superiors (yes, some from radio), I helped oversee the painful layoffs of about 100 in the Chicago Tribune newsroom last year, before being dispatched by someone the Marlon Brando character in “Apocalypse Now” might characterize as “an errand boy sent by grocery clerks to collect the bill.”

Fine. It was now their company. I just wish that what would have ensued might have been a strategy beyond a rather pedestrian one, rife with talk of “relevance” and “utility,” with a multitude of lists, consumer reporting and de facto aping of local television; all the while needlessly undermining the loyalty of tried-and-true older readers while chasing after youth. It’s less what the late philosopher Hannah Arendt tagged the banality of evil than it is the evil of banality.

If one believes that newspapers are critical to democracy, one must wish the best to those attending the Thursday meeting. It’s sort of like the auto industry: those guys in Detroit screwed things up something fierce but I do hope those companies succeed. In this case, I hope the newspaper honchos, and minions back home, devise new “models to monetize content” and marry them to sophisticated, high-quality editorial visions.

It’s hard to believe but, who knows, maybe history will one day recall an important meeting in godawful Rosemont. As my my “Star Wars”-obsessed five-year-old son might say, may the Force be with you.

• The Guardian, Monday 11 May 2009

                

                       Rupert Murdoch, 2009 Photograph: Fred Prouser/Reuters

When Rupert Murdoch indicates a shift in strategy, the rest of the media industry takes notice. So the News Corp boss’s clear signal last week that his newspapers, such as the Sun and the Times, could start charging for online access over the next year gave fresh momentum to a debate that is dominating internal newspaper discussions.

“The inchoate days of the internet will soon be over,” Murdoch pronounced, citing an “epochal” debate in the industry. Having flirted with the idea of turning the Wall Street Journal website free before realising he had bought one of the world’s few newspaper sites that makes money, Murdoch has come down in favour of online charging.

For a long time many journalists have been bemused and frustrated that their work merits a price in one medium but is given away free in another. Carolyn McCall, the chief executive of Guardian Media Group which publishes MediaGuardian, believes publishers need to think about where they might be able to charge in the future. “There’s no review of the charging model, there’s no formal kind of agreement that we should be charging at all, but it would be wrong not to think about what we would do in the future,” she says.

Charging for business-to-business content, however, is a “no-brainer”, says McCall, who led GMG’s acquisition of Emap’s B2B operation on the strength of its capacity to generate digital revenues. The model supporting so-called business-to-professional sites, such as MediaGuardian.co.uk, is “something we need to keep revisiting”. But, in general news, the presence of the BBC makes charging impossible: “You basically have a fully funded and publicly funded news organisation on your doorstep. How can you compete with that?”

The BBC is what makes all newspaper executives think twice when it comes to making the internet pay. It has played its part in creating the notion that news should be free, which stands as a barrier to introducing any element of pay to newspaper websites.

Until now, the most important aim for newspapers has been to grow online readership: the higher a site’s unique user numbers, the more advertising it could hope to sell. And the numbers have been impressive – titles used to falling paper sales now have millions of new readers. There is no doubt that online readership has massively extended the reach of British newspapers.

Indeed, the combined online audience for the seven audited UK national newspaper networks – the websites of the Guardian, Times, Telegraph, Independent, Mail, Sun and Mirror – peaked in January at around 140 million unique users, when Guardian.co.uk hit a record of 29.8 million. It has tailed off very slightly since then, the first sign that online readership may have reached a plateau now that broadband access has become so widespread and online habits more settled.

To some extent, revenues have followed the trend for readership growth – but not fast enough to make up for the fall in print advertising. Trinity Mirror, for instance, reported that total digital revenues in 2008 grew by 27.1% to £43.6m. But they also represented just 5% of the group total, albeit an increase from 3.7% in 2007, at a time when overall revenues dropped by more than £60m.

Advertisers have always seen a difference between consumers of print products who might be expected to spend considerable time reading them and looking at many of the adverts in the process, and a web user who may have merely strayed on to a web page by chance or as the result of making a speculative search.

And even if online readership has yet to reach saturation point, some industry executives think that growing overall numbers may no longer make much difference to their ability to generate new revenues – although they will not find it easy, initially at least, to allow competitors to overtake their traffic figures. Not only is there a finite amount of money available for online advertising, but there are also many, many sites competing for the cash. Newspapers are wondering whether they backed the wrong horse by going for volume rather than subscription.

The focus is now moving to the handful of pay models that have already been developed in publishing. The only British paper that has successfully introduced charging is the Financial Times which, seven years after doing so, has around 110,000 subscribers. A basic subscription to FT.com costs £2.99 a week – £155.48 a year – while a premium deal that includes mobile news and the Lex column costs £3.99 a week, or £207.48 a year.

At less than a third of the £650 cost of buying the print FT every day, and less than half the £468 required to take out a print subscription, the online deal looks like bad business for the company. But Rob Grimshaw, the managing director of FT.com, says the cost of online distribution is far less than printing and distributing a paper. “Online, the marginal cost of adding a new subscription to FT.com from anywhere in the world is pretty much zero. Once you look at it from that aspect, the online business model is extremely favourable. You don’t tend to make nearly as much revenue as print but you make the same profit or even more profit.”

But without the FT’s business niche to target, can other papers charge for content? The fear is that their product is too disposable and substitutable – with multiple versions of the same story online. “Consumers aren’t stupid,” says Grimshaw. “If they can find something for free they won’t pay for it.”

Then there is the problem of how to charge. Rather than relying on a subscription model, a solution could involve micropayments – although there is no consensus on how much they would be. Newspapers will have to ensure that whichever system they use is efficient and easy, like Amazon or iTunes. Indeed, newspapers look hopefully towards these other areas of the media where a pay model has already been introduced. The music industry, after its crippling battle against piracy, has finally found a way to sell digital content, albeit at a discount compared with CD sales.

The broadcasting industry offers a less clear picture. The principle of paying for TV, mainly on the back of premium content, has become enshrined after 20 years of Sky, and on-demand viewing through subscriptions has become popular. But there is little evidence that people are willing to go online and pay for individual programmes. The success of the licence-fee funded BBC iPlayer has encouraged ITV to follow suit with a free, ad-funded model, while Channel 4’s 4OD service has shifted away from pay-per-view since launching in 2006. Project Kangaroo, the three free-to-air broadcasters’ attempt to develop an online home where they might have sold their programmes, was thwarted by competition concerns. (Equally, if newspapers were to make a collective decision to charge for content, which would avoid losing market share to other titles that remained free, there might be similar concerns.)

Perhaps the best hope for newspapers is technological. In the same way that the iPod helped sales of digital music, newspapers hope that there is a device on its way to make the online paper seem more valuable than it does on a computer screen. Some newspaper groups are believed to have had discussions with Amazon about getting their product on to the Kindle reader, a new version of which was launched in the US last week by Jeff Bezos (pictured left). But few believe these first-generation digital readers represent an iPod moment.

Murdoch last week hinted at some of the work News Corp has been doing. “We are looking at lots of things, models for charging, mobile readers,” he said. “I don’t believe in the Kindle model but I do think it is very interesting that people are going to that and to their BlackBerrys to view content.”

In two years’ time he hopes that charges for online content will produce digital revenues that make up for newspapers’ print losses. That may be optimistic, but there is no doubt the recession has concentrated minds on moving out of the free era.

“There are not many companies out there that make a successful living by giving away their product for free,” says Grimshaw. “In the future, quite a lot will be written about how an entire industry managed to persuade itself that it would be smart to give away its product to everybody.”