A mistaken matter-of-fact statement in an Associated Press story launched Chris O’Brien on an insightful blog post that had little to do with the original story.
In the same way, a statement in Chris’s post launched me on this post, which will start out in a different direction from his blog.
The AP story, about Microsoft, said, “If it doesn’t make the right calculation, the software maker could find itself in the same position as newspapers that gave online content away and now are struggling to replace print revenue.”
Chris, contributing to the MediaShift blog, wrote: “That second line is almost a throwaway, written with no attribution. That means that the notion has officially entered into conventional wisdom: Local newspapers screwed up by giving away for free the content everyone used to pay to consume.”
That launched him on one of the best explanations I have read about the paid-content issue. I’ll get back to that in a while, but first, as promised, I want to take this in a different direction.
The AP story was repeating a notion that has been gaining traction all year. Newsosaur blogger Alan Mutter called publishers’ decisions not to charge for online content their “Original Sin.”
Mutter is right that newspapers are still paying for an Original Sin committed in the early days of the Internet, but he (along with the AP story and lots of newspaper executives today) chose the wrong sin. (For one thing, many newspapers did try charging for online content, both initially and through the years, but that’s not my point here.)
The disastrous error that newspapers made early in our digital lives was treating online advertising as a throw-in or upsell for their print advertisers. Helping businesses connect with customers was always our business. We were facing new technology and new opportunities and we did next to nothing to explore how we might use this new technology to help businesses connect with customers.
We just offered businesses the same old solutions that we offered in print, but pop-up ads and web banners somehow didn’t work as well as display ads. Which was just as well, because we told our business customers the ads weren’t worth much by the way we treated them.
As Borrell Associates pointed out in the Newspaper Next 2.0 report, about 60 percent of online advertising comes from businesses who don’t advertise in print. And newspaper ad staffs barely bothered with potential new advertisers, instead calling on our usual suspects. In addition to conditioning those advertisers to think that online ads were just a throw-in of marginal value, many of them just took their online ads out of their print budget, so we weren’t really getting new revenue, just shifting what they already spent with us. And increasing our dependence on the same businesses, some of whom were also failing to innovate. So we grew increasingly vulnerable to an economic recession. But that was a boom time and our business boomed.
Meanwhile, other businesses such as Amazon, Google, eBay and craigslist were exploring the possibilities we were ignoring. We could have been developing the possibilities of search, direct sales and self-service ads.
Our Original Sin was failing to see beyond our original business model, not failing to force more of it on the new opportunity.
Which brings me back to the paid content issue. I wrote last month that I would try to stop blogging about paywallers. As soon as I wrote it, I knew it wasn’t true, so I hedged the promise immediately (I noted that it was a promise to try to stop, not to actually stop), rather than deleting it. OK, I tried for about a month.
I was goaded back into this tireless discussion by a Twitter exchange with Tim O’Brien, editor of the Sunday Business section of the New York Times (and apparently no relation to Chris, though I haven’t asked either about that). I’ve never met Tim but we’ve followed each other on Twitter a while. While I don’t always agree with his tweets, I think of him as one of the thoughtful voices of the Twitterverse.
He took umbrage when I favorably tweeted a link to an Information Week post by Michael Hickins. What I liked most about Hickins’ post was this passage: “The problem with the newspaper industry isn’t that free online content has destroyed its business model, but rather that the Internet has exposed and exacerbated its inherent weaknesses.”
Tim tweeted that the Hickins piece was asinine, the first of 15 tweets he addressed to me over Friday, Saturday and Sunday on the subject of paid content and the views of Hickins, Chris O’Brien and me on the topic. I fired back nine tweets and Chris, a business writer and journalism innovator at the San Jose Mercury News, joined the conversation with six tweets of his own. Guy Lucas, Media General manager, also weighed in with a tweet in support of Hickins.
I won’t repeat Tim’s tweets here (though you can read all our tweets by clicking the links above), but the essence of his argument, against both Hickins and Chris, was that they didn’t cite data to back up their opinions. (I wonder how frequently you could say the same thing about columns in the New York Times.) He specifically took issue with Chris’s contention that people buy newspapers for a variety of reasons — news stories, yes, but also for the coupons, comics and crossword puzzles. Tim dismissed this as anecdotal, demanding data to support this obvious point.
I was tempted to argue the value of anecdotes (the lead story in the NYTimes.com business page starts with an anecdotal lead) and to brush off the demand for data by saying that most newspapers have years worth of Belden and/or Scarborough research reports (mostly proprietary, so Chris or I couldn’t have access to them, much less cite them) showing the variety of reasons why people buy their products. But it took me just a couple minutes to find related research from the Readership Institute (delivery is one of the most important issues to newspaper readers; news content ranks more important than ad content, but advertising is important).
(I should add here that Tim’s paper, along with the Wall Street Journal, USA Today and perhaps a few others, is far different from most metro papers, and I presume that a greater percentage of Times readers do buy solely for the content than is the case for most metro or community papers. But I am sure that they buy it for different kinds of content: some for the national news coverage, some for the sports or arts, some for the business coverage, some for a particular columnist, and most, I presume, for a combination or for the whole package.)
I also need to address Tim’s dismissal of Chris’s citation of analyst Lauren Rich Fine‘s figures on where newspaper revenue comes from (only about 20 percent comes from subscriptions, she said). Tim dismissed this as unrelated to the issue of why people buy newspapers. Here’s how the two are related: They are the two sides of the business model.
It is true, I believe (sorry, I won’t cite data here), that most newspaper customers do think of themselves as paying for the content of the paper, whatever reason(s) they buy the paper. So from that standpoint, it is a change for them to receive that content online without charge (and publishers who decide to charge for content invariably mention that they are tired of subscribers saying they quit taking the paper because they could get it free online). But the business model involves more than customer motive. Fine’s figures are relevant because, whatever newspaper customers think, their subscription or single-copy price barely covers the cost of production and distribution, if that. So, regardless of why customers buy the print edition or what they thought they were paying for, they never paid for the content. They would have paid several times more than they do if that were the case. What would that do to circulation? Would that model have thrived in print in the pre-Internet days?
So here’s the bottom line: Whether I am right about paid–content being a foolish idea or the paywallers are right about it being wise and necessary, it’s going to be a new business model, not the restoration of the old model. That was the central point of Chris’s blog post and I stand by my initial tweet that it was maybe the best take I’ve seen on paywalls. (And this doesn’t even address the challenge that our industry is facing in trying to force a paid-content model into a medium where free content reigns.)
And before I could get this post finished, other tweeps called my attention to two more related posts:
- Blogger Bill Wyman (no, not the guitarist), who says he has spent most of his career in the alternate press sniping at daily newspapers, wrote a long treatise: “Five Key Reasons Newspapers Are Failing.”
- Howard Weaver, a retired McClatchy editor and executive whose writing about the business is usually insightful, responded in his Etaoin Shrdlu blog with a post headlined, “Why are newspaper doomsayers usually so sloppy?” (exactly the kind of sweeping generalization for which he criticized Wyman).
Like Weaver, I agree with about 80 percent of what Wyman wrote. He did paint with a broad brush and damn the whole newspaper industry for some failings that were common but far from universal. His view was far more cynical than mine. But Wyman was so much closer to the truth than most of the industry leaders now that I’ll stand up and cheer the 80 percent that he got right and let the rest slide.
Wyman’s other four points deserve attention and I hope you read them. But for the purposes of this post, I will focus just on his first point: “Consumers don’t pay for news. They have never paid for news.” He went on to elaborate: “Subscribers didn’t pay for news. Advertisers did. … Some people liked the news, sure; most thought they were paying for it. And some papers spent more money on news than they had to. But the papers weren’t selling the news. They were selling ads and charging a lot of money for them because of one thing only: They held an informal monopoly on a societal convention whereby they deposited those ads—around which they wrapped some reporting, some of it serious, some of it fluff —on subscribers’ driveways.”
With this many people sounding off this vigorously on the issue of paid content, I had to weigh in. And I probably will again. But I am looking forward to a live chat for the American Society of News Editors later this month (Aug. 27, details to come soon) about some ways to innovate beyond the paywall issue. I do wish we could get past this issue and spend more time on genuine innovation.