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.
I think the ‘failing to innovate’ is a big part of the story – but after going to several conferences on ‘what newspapers should do on the Web’ it is somewhat apparent – the belief in the ‘demand’ for the traditional newspaper content was not seated in reality.
I get the feeling that many newsrooms thought that their content was in high demand from everyone, but the issue was that some people didn’t like holding on newsprint. The wisdom, it seemed, was that people preferred to use the computer to read, so this ‘obviously in-demand’ content being there would capture all of the audience that we weren’t with print. To make up a quote that would summarize the hundreds of discussions I’ve had on this: “By putting our stuff online, we’ll recapture the audience that the internet stole.”
The problem is that this just isn’t true. News is – and always has been – an entertainment medium. It just happens to be the entertainment medium that has constitutional implications. But, still – it is entertainment time that we’re competing for, and it is this mindset that so many fail to embrace.
Online newspapers have failed to produce a different experience online. The end result, because of a few programs installed on Web sites, is that the experience is different – it offers much more chance for engagement than the print version. From the ability to comment and react to the ability to share instantly with anyone in the world – the online versions offer a fairly rich experience – for content that is not written for reaction. These are opportunities squandered.
Newspapers failed to look at the online opportunity as a second entertainment medium – a second way to command the attention from people – both from the print audience that they were currently reaching AND from the audience who, for whatever reason, were not engaged in the print product. Newspapers have failed to realize that they are competing with American Idol, with the HuffPo, with the WSJ, with YouTube, with Ashton Kutcher on Twitter, with MomBlogs, and basically anything else that can soak up one’s leisure time or the time in-between when one’s boss walks past one’s desk.
Once you admit that news organizations are just a different classification of entertainment – it’s easier to see the long history of issues with content delivery models. People are willing to pay $100 a month for more channels they could ever watch each month, but they complain about a 50 cent per month rise in the subscription fee for the newspaper – bringing the monthly total to just under $10. If we compare these two things, it should be a very troubling sign as to the perceived value for different types of content.
I’m just not sure the real issue of ‘competition’ has been admitted by the industry. But, now with opportunities in social media, we have a chance to work our way back in. Making money on it is a whole different story though. Ah, yes, innovation. That’s where innovation comes in.
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Steve – I wonder how far we can get on new business models if people still can’t agree on what the ‘old’ one was?
My wife was disappointed our weekly newspaper has not been showing up on our doorstep regularly. Why? School is starting and the weekly carries the school lunch menus.
It has not been being delivered for weeks/months but the menus were the missing item she decided she needed. Not the news OR the advertising.
Luckily no one has started up schoollunchmenus.com in the area. Yet.
Damon
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It’s more than a little ridiculous for people to argue that people don’t buy newspapers for other reasons:
– A primary purpose of the “bulldog” editions of newspapers is to give people a headstart on the Sunday sales.
– You get a lot more complaints from readers if you delete/reorder comics than if you screw up major news stories.
– Their own marketing campaigns for circulation sometimes focus on the amount of money you save using the Sunday coupons.
The ONLY piece of content that the NY Times has been able to consistently charge for online: the crossword.
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But why do people cancel their subscriptions? I daresay it is not because the comics or crossword were moved.
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That happens more often than you’d think.
I canceled because of the enivronmental impact of the print production and distribution process. (And then doing it in reverse to dispose of the paper.)
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Actually, comradity, I’ve heard from readers canceling their subscriptions for both of those reasons. I haven’t checked on reasons for cancellations at The Gazette, so my specific knowledge on this next question is several years old. But I remember when (and suspect it’s still true) two of the most common reasons for canceling subscriptions were death and dissatisfaction with delivery.
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VERY well said! It all goes back to business models and their willingness to change it. As times have been changing, models have to change along with it. They’re not willing to make a new model.
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Thanks for the thoughtful comments. Watch for schoollunchmenus.com to pop up soon, Damon. No doubt with an iPhone app. Rocky, I do know about how readers react to comics. When I was editor of The Gazette, I dropped “For Better or For Worse” when it went into reruns and heard from lots of readers who care more about old comics than they do about news.
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Actually, it looks like schoollunchmenus.com was registered by Frank Schilling in 2002.
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Damon — doesn’t the school district offer lunch menus on its own Web site? The SF school district offers them online:
Click to access K12_Aug_BF.pdf
Normally I don’t like PDFs, but this is nice and convenient to stick on the fridge.
That’s one of the other problems I see for news outlets. The “content” that was just repackaged can easily be obtained from the original sources.
This goes beyond lunch menus. The events listings are another example. I can just subscribe to the email newsletters of the clubs that I like and get that information. And likely in more depth, with pictures and video clips of the artists.
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TOTALLY AGREE that this is about a new business model and a new experience. The competition is not just newspapers and that doesn’t mean throw in some video and you’re competitive with all media.
There are clearly some hurdles that must be overcome to move forward. One is for the newspaper to breakdown the hermetic seal between them and their readers. The other is to enable a frictionless transaction/barter system that debits use and credits contribution – both by the reader and the newspaper.
In addition to the folks you’ve been debating I add the following input. Sure would be neat to see all of these folks around one table brainstorming:
There are lots of folks demanding and exploring new business models, new experiences, and new competition:
Al Neuharth who talks about innovation that competes beyond other newspapers: http://twurl.nl/ppckup,
Teenagers who in a survey say they want news to help them understand the basics so they can form their own opinion an talk about : http://twurl.nl/0m848w,
Cody Brown identifies the inherent diference between print and interactive: “Real Time”: http://bit.ly/OzAxC
Business Week agrees: http://twurl.nl/1bclqh
Real Time enables community building the utlimate reward media offers: http://ow.ly/jZn1
AP Digital Wrapper is a technology which the AP hopes will enable audience participation and use and is also open to the possibility of syndicating and protecting any content online http://bit.ly/2UL6M7. Reuters also gets that we need a solution that embracing audience participation and protects content ownership http://bit.ly/RIFLe
And Mark Cuban believes in innovation and charging for media http://bit.ly/10IoiB
I have written a lot about strategies for developing a new experience, how to market it, and monetize it. http://www.comradity.com. So do others like George Kembel. He talks about the importance of starting with empathy for your customer: http://bit.ly/W7JNa.
That’s why I see the market going in the direction of innovation, paid models, and competing against brands not vehicle. I think this is now a persistent change and we are going through the uncomfortable part – it feels like we are sailing away from the mark, but once we commit to this new direction we will actually be very close.
All the best,
@comradity
Katherine Warman Kern
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Steve —
This is a fairly ribald mischaracterization of my side of our Twitter exchange. As you say, you’ve linked above to our Tweets, so people can go back and look at them. But…
You state in your post above that I was Tweeting with you about the following part of an InfoWeek piece that you linked to on Friday night on your Twitter feed: “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.”
I, of course, wasn’t commenting on that part of the piece, as I thought our subsequent Twitter exchange made clear. Rather, I was commenting on this howler in the InfoWeek piece: “Claiming that readers of hard copies pay for content is disingenuous. What readers pay for is the convenience of delivery (either to their homes or to the newsstand) and the cost of paper and ink for each individual paper. Advertisers pay for the content – and always have.”
Uh, in a word, no.
Over the years, advertising revenue may have supported an artificially low price that consumers paid for circulation, but that fact doesn’t mean that advertisers are paying for content and readers are paying for convenience. In other words, while the outline of how print revenue is generated is true, the analysis of what that outline means is flawed.
There’s no question that advertisers paid more for the production and distribution of printed content than readers did via circulation (a truism that increasingly won’t hold true itself over time as the Web continues to dramatically undercut the mechanical and fixed costs of information production and distribution).
You muddy things in your post above when you say: “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.” So presumably you disagree with one of the main tenets of the InfoWeek piece that you linked to?
You also linked to a Chris O’Brien piece that contained the same flaw as the InfoWeek piece, from my point of view. You Tweeted that Chris “nailed” the point. But I think he missed the point. 🙂 Chris did note that he was talking about local papers, not nationals like the NYT, etc. Still, there’s a key and unsupported assumption in Chris’ piece, akin to the InfoWeek piece you linked.
Here’s the relevant stuff from Chris’ piece:
“Fine broke down the historic revenues of newspapers. Across the industry, the money people paid to subscribe accounted for, on average, about 20 percent of a newspaper’s revenue. Classifieds, on the other hand, typically brought in 50 percent of the revenue, and 70 percent of profits on average, according to Fine. So let’s reflect on that: The consumer was only paying about one-fifth the cost of the product. But what were they getting for that money? Again, the mistaken notion here is that the primary product of the newspaper is journalism. That’s the conceit of journalists, but it’s also the general misinterpretation by those seeking to re-invent news from the outside.”
And how does Chris know this? I really can’t tell. The he gets into broad brushstrokes again: “Let’s look at the newspaper from the eyes of the consumer. From that view, a newspaper is a product that, at least at its peak, provided about 50 different services for people. It helped people figure out where to shop. It delivered a boatload of coupons every Sunday. It helped them plan their weekend. It entertained them with comics and puzzles. It let them know what was on the school lunch menu. And along the way, it also delivered journalism.”
So he’s saying that readers didn’t really buy the paper for its journalism – i.e., information and analysis. Instead, he contends, they primarily bought it for coupons, comics and puzzles. And this is based on…what? (The New York Times and Wall Street Journal don’t have comics, but that would just be an anecdotal observation, not one based on broad surveys or more hard-minded data gathering).
Another assumption in Chris piece is the Fine data is indicative of reader preferences. I think that’s a very flawed way to look at her data. Besides, everyone in newspapers (and magazines for that matter) have known for decades that the (now evaporating) print revenue model depended on advertising and that subscription pricing was kept artificially low because of that. With the advertising piece of the equation shredded by the Web, print pubs have to re-engineer their revenue models or go out of business.
But to extrapolate from Fine’s data to say, as Chris does, and as InfoWeek does, that it shows that newspapers didn’t understand what their readers were paying for is ridiculous. I asked for any empirical data, reader surveys, etc., that outline why readers buy certain papers so we could look at that issue in a less subjective way, not one driven by Chris or InfoWeek’s assumptions.
And once we have more of that, then maybe I’ll be proven wrong. But the analysis has to move beyond the sort of omniscient and almost evangelical banter of “everything’s changed and the MSM never got it and if they were just more realistic about how their revenue is generated they would understand that.” Yes?
And Chris’ reliance on “design thinking” to buttress his argument about reader preference is silly, I think. I obviously think design thinking is a cool, innovative approach to marketing and consumer interaction – the Times article on design thinking that Chris linked to ran in my section last year and I edited the piece. But it’s a tool, not an end in itself.
On the misrepresentation front, here’s how you characterized my thoughts about Chris’ piece: Tim “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 never said anything like that in my Tweets to you. Of course readers buy papers to satisfy a variety of interests. What I said was that the assumption that readers aren’t paying for content because circulation accounts for a smaller portion of revenue than advertising is asinine. You said data or surveys outlining the reasons why readers buy papers is “commonly cited.” I asked for links to those.
Asking for that kind of info has absolutely nothing to do with the use of anecdotal ledes in news stories, and I don’t understand why you make that connection. Anecdotes aren’t universal truths, they’re just departure points.
You make another subjective assumption about reader preferences in your blog post above: “Regardless of why customers buy the print edition or what they thought they were paying for, they never paid for the content.” Huh? This contradicts what you also said in your post above, which I’ll repeat: “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.”
Which way are you going here?
The bottom line in all of this endless analysis of how the MSM doesn’t get the business and journalistic challenges facing it is that it isn’t really about the journalism at all. It’s about finding the proper way to monetize content to financially support sophisticated, enterprise journalism. It’s about reconstructing the revenue model. The rest of the analytic voodoo is just a diversion.
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Steve —
More food for thought here:
“http://www.nytimes.com/2009/08/17/business/media/17iht-ft.html?_r=1&ref=business
The New York Times
August 17, 2009
Financial Times Feels Vindicated by Web Strategy
By ERIC PFANNER
PARIS — Two years ago, when other media executives were convinced that the only way to succeed on the Web was to give away their content, “we were regarded as slightly freakish,” says John Ridding, chief executive of The Financial Times.
The FT, which had charged readers for access to its Web site since 2002, stuck with that strategy, merely tweaking its system to try to draw in more readers. Now, with advertising showing few signs of rebounding from a deep slump and other publishers moving to imitate FT.com by erecting so-called pay walls, Mr. Ridding feels vindicated.
“It was pretty lonely out there for a while in paid land,” he said last week. “But it has become pretty clear that advertising alone is not going to sustain online business models. Quality journalism has to be paid for.”
Other publishers seem to agree. Rupert Murdoch, chief executive of News Corp., said this month that the company intended to charge for all its news Web sites. In addition to The Wall Street Journal, which already charges for Web access, News Corp. owns major newspapers in the United States, Britain and Australia.
Executives of The New York Times, which owns the International Herald Tribune, have said they too are considering ways to get readers to pay for online access, though they have yet to announce specific plans.
That is a big change from 2007, when The Times abandoned an online pay wall for some content, concluding that it was restricting the potential for online advertising, despite the site’s having attracted 227,000 customers. Around the same time, Mr. Murdoch was talking about dropping paid online subscriptions to The Journal, which News Corp. was in the process of acquiring.
While The FT does not lack self-confidence — one of its ads claims President Barack Obama as a fan — the paper has been hit hard by the recession, with advertising probably down at least 20 percent year on year, according to analysts. Pearson, the London-based publisher that owns the paper, does not break out separate figures for the paper.
But the paper has made up for some of that loss by raising more money in other ways, mostly by charging a premium for its content.
The FT’s Web site has not attracted a huge paying audience. It stands at about 117,000 worldwide, up from 101,000 when the newspaper adopted a new Web business model in late 2007. That is far short of the one million paying customers of The Journal’s Web site.
Yet FT.com is lucrative because of its relatively high cost. A premium subscription to the Web site, with access to all content, costs $299 a year in the United States. Adding the print version of the paper costs $100 more. A combined print and online subscription to The Wall Street Journal costs $140.
Because of rate increases by FT.com, revenue from Web subscriptions has risen 30 percent over the past year, Mr. Ridding said. The FT has also raised the price of its print editions.
In another effort to generate additional digital revenue, The FT restricted access last year to its content via databases like Factiva and LexisNexis, requiring users to buy special licenses to read archived articles. More than 600 corporate customers, with a total of about 50,000 users, have done so.
The price of a subscription to the databases “wasn’t reflecting the value of what we were producing,” Mr. Ridding said. “So we took control of the pricing,” he said, adding that the change had led to “robust revenue growth.”
Also last year, The FT acquired Money-Media, an online provider of paid-for news for fund managers. Last week, it acquired MandateWire, a digital provider of news on the pension fund business.
The FT also recently started an online newsletter for investors in China, called China Confidential, which costs £2,500, or $4,138, a year.
The growth of paid online services under the FT banner shows that the paper was right to maintain pay walls at a time when other media companies were yielding to the Silicon Valley mantra that “information wants to be free,” said Tim Luckhurst, a journalism professor at the University of Kent in England and a former editor of The Scotsman.
“It has proved, in one niche at least, that editorial journalistic endeavor does create value,” he said.
For other online publishers seeking to charge readers, the big question is whether consumers would be willing to pay for general news, rather than specialized, career-critical financial information. Some analysts doubt it, but Mr. Ridding said he thought they might.
“I sometimes think there’s too much fatalism around — people throwing up their hands and saying it’s not possible for general publishers to charge,” Mr. Ridding said. “I think it is possible, and necessary, for them to charge.”
In an effort to generate more revenue from casual users, The FT plans to fine-tune its Web business, which currently gives readers 10 free articles a month before they are required to pay for access.
Mr. Ridding said the site would add a new form of paid Web access next year involving micropayments for individual articles, something that Wall Street Journal executives have also proposed.
FT.com’s system is aimed at retaining infrequent readers who arrive at the site from a search engine, to maximize the audience for Web advertisers.
Despite the downturn, advertising remains an important revenue earner for newspaper Web sites. Rob Noss, who runs the luxury group at Mindshare Worldwide, a media buying agency, said it was still unclear how readers of newspaper sites would respond to advertising if they were required to pay for access to the sites.“My personal view is that if I’ve paid for the information, my openness to the advertising will be affected,” he said.
Not every FT digital initiative involves pay walls. This autumn, the paper plans to introduce a stand-alone Web version of its weekly magazine How to Spend It, a forum for luxury advertisers. Mr. Ridding said that at least at the beginning, access would be free.
With luxury goods companies, banks and other advertisers cutting back, ad spending has fallen sharply at The FT. Pearson said last month that operating profit at FT Publishing, the unit that includes The Financial Times, had fallen 40 percent in the first half of the year, with revenue down 13 percent.
The FT’s print circulation has also fallen, with sales in June down 7 percent from a year earlier, to about 412,000 copies, according to the Audit Bureau of Circulations in Britain.
Analysts say The FT could face a renewed threat from The Journal, particularly if Mr. Murdoch developed an innovative model for charging on the Web. Mr. Luckhurst, for example, thinks he will package subscriptions to the paper with other News Corp. content.
But The FT is not facing the “existential crisis” that confronts some other newspapers, Mr. Ridding said. “It all stems from a belief in the value of our journalism,” he said. “We are pretty happy with how things have developed.”
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Like Tim O’Brien, I am going to respond in two comments. First I will address the question of whether I mischaracterized (he said “wildly misrepresented” on Twitter). Later I will respond to the substance of Tim’s response. But first, thanks, Tim, for your thoughtful response. Though we still disagree, I welcome this discussion. I think digging into these issues helps all of us understand them better.
My first point here is that nothing I wrote mischaracterized Tim O’Brien’s tweets.
As I said on Twitter, he mentioned the lack of data or the subjective nature of Hickins’ and Chris O’Brien’s posts in at least nine different tweets. And here’s how I characterized his tweets: “The essence of his argument, against both Hickins and Chris, was that they didn’t cite data to back up their opinions.” If that wasn’t the primary point of his tweets, that might reflect the limitations of Twitter as a format for arguments, but I certainly did represent the message he sent in his tweets, if not exactly the message he intended to send.
And, as Tim noted (responding to a point I made in a tweet), I linked to his tweets, so people could judge for themselves. Third parties are welcome to weigh in on whether I misrepresented myself.
Since Tim didn’t repeat here his contention in a tweet that I misrepresented what he said about Chris’s use of figures cited by Lauren Rich Fine, I will presume that he reread what I wrote after I tweeted my response and no longer has an issue with that point.
Here’s a misrepresentation: “You state in your post above that I was Tweeting with you about the following part of an InfoWeek piece that you linked to on Friday night on your Twitter feed: ‘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.'”
I actually wrote that Tim “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.'”
He did take umbrage when I favorably tweeted and I was tweeting about that passage (I was quoting part of it). Those are facts. In a subsequent exchange of tweets, I did come to understand that Tim was tweeting about a different point than I had tweeted about. I don’t apologize for not going into detail about this disagreement, but nothing above says the passage I cited was what Tim disagreed with. It says that was what I praised.
Some of the disagreement between Tim and me comes down to differing interpretations of Chris O’Brien’s blog post. Essentially, I think Tim thought Chris was saying that content isn’t a factor (or perhaps isn’t a significant factor) in why readers buy newspapers. Tim wrote: “So he’s saying that readers didn’t really buy the paper for its journalism – i.e., information and analysis. Instead, he contends, they primarily bought it for coupons, comics and puzzles.”
I don’t think Chris contended that people buy newspapers “primarily” for the coupons, comics and puzzles. I think he contended that people buy newspapers for lots of reasons and coupons, comics and puzzles are as important, or more so, for some readers as journalism is. Here’s a key paragraph from Chris on this point:
“You can shake your head, but [puzzles and comics are] as important a part of the newspaper for many people as the journalism is. For their monthly bill, which only represented 20 percent of revenue, consumers were getting a product that did many things, only one of which was the journalism. Did journalism have a higher social value? Certainly. But it wasn’t the core of the business. For the reader, an ad telling them about a sale or a new store might be just as important in their lives.”
Thanks to Tim for clarifying. I’ll agree that we both misunderstood each other. But I didn’t mischaracterize or misrepresent what he said on Twitter. (And yes, my Twitter-hating readers can take this as support for your contentions that Twitter isn’t the best tool for every form of communication.) I will comment shortly on some more substantive issues in Tim’s responses.
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Now for my response on an important substantive point of my disagreement with Tim O’Brien: He wrote: “Another assumption in Chris piece is the Fine data is indicative of reader preferences. I think that’s a very flawed way to look at her data.”
The Fine data showed that subscriptions paid only about 20 percent of newspaper revenues. I think the assumption that Tim O’Brien refers to is an assumption on his part, not on Chris O’Brien’s and certainly not on mine. (Chris is in Yosemite, and let me know in a Twitter direct message that he will weigh in next weekend, so for now, all we have is our Tim’s and my conflicting readings of Chris’s blog post.)
I think Tim is failing to recognize a common mistake of the newspaper industry. The question of whether people have been paying for content has two sides: the newspaper side and the consumer side. One is a matter of finance and one is a matter of motivation. Tim sees them as distinct; I see them as intertwined. That’s an honest disagreement and really the substance of our differences, in my view. (And from now on, I will leave Chris O’Brien and Michael Hickins out of this, because I can’t speak for them.)
Here is why newspaper finances are completely related to customer motivations in buying newspapers: Without the heavy subsidy from advertisers, the newspaper would have a price several times higher. Then, whatever the motivation, the decision changes entirely. Depending on where we go, it costs my wife, Mimi, and I about $50 to have a nice dinner at a Cedar Rapids restaurant. We probably indulge in such a dinner about once every week or two. Our motivation in going to dinner might vary: a craving for a particular kind of food, a desire for romance, not feeling like cooking tonight, wanting to join some friends for dinner. But if restaurants were subsidized by advertisers who paid them huge amounts to post messages on their walls and menus, and a nice dinner cost only $10, we would eat out far more often. Maybe cooking our own dinner would become the rare treat.
So the newspaper finance figures from Lauren Rich Fine, showing that subscriptions account for about 20 percent of newspaper revenues, are entirely relevant to people’s motivations for buying a newspaper, whether by subscription or single copy. While I can’t speak for Chris O’Brien or Hickins, I interpreted their posts to say that if buyers had to pay for the full cost of producing the content, their motivations to pay that price would have to be much stronger.
I know that many readers do think they are paying for news content (and thus indicate that it’t their motive). On more than one occasion, I have had subscribers claim that they were paying my salary (that wasn’t true, though I was less argumentative with them than I am being here; journalists have always been reluctant to say very loudly that ads pay our salaries).
Anyway, thanks again to Tim for a thoughtful comment. I think healthy discussion of these disagreements is good for our business and for our efforts to find a healthier business model. (Please recall that that was the primary point of this post. I didn’t mention Tim O’Brien until the 14th paragraph.)
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Carl Lavin, managing editor at Forbes, has an insightful post on this topic: http://indianhillmediaworks.typepad.com/07newsroom/2009/08/my-starledger-is-free-so-is-njcom.html
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I suppose the question becomes… if readers think they’re spending, say, $12 a month for the newspaper’s content, will they pay $12 a month for that content online? If it was worth $12 to them then, it’s worth that much to them now. Maybe more, if it’s more and fresher content.
Eventually, they might grasp the fact that “hey, it doesn’t cost the newspaper nearly that much to put the content online, why should I pay so much?” More likely, a competitor will say, “We can give you that content online and charge you much less, perhaps nothing at all.”
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Your final point is crucial. Newspapers can charge for their product in a context where customers are used to paying (home delivery of a tangible product of value), even if they aren’t used to paying the full cost. But to think that they will pay in significant numbers in a context where lots of information (some of it more valuable to many customers than newspaper content) is available free is wishful thinking. Even at the low advertising rates of the web, you lose more in advertising than you can gain in revenue. To say nothing of losing the users you will want if you ever bother to innovate and offer business customers something more valuable than internet advertising.
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Dear Steve, Tim, and all commentors on this post as well as Chris O’Brien’s post http://twurl.nl/odb4mx
This is a very awkward way to have such an important discussion by thoughtful, smart people.
But it proves News is a catalyst for discussion. Discussion energizes the bonds that form community. What a vast opportunity gap for newspapers to capitalize on.
I think Chris O’Brien (Future of News is more than Paid Content) would agree with this. And I think this is an example of the innovation Steve is encouraging here. So I think we agree on this.
Who pays? is the issue we don’t seem to agree on.
I don’t know if the following are in the right order . . . But, I think if we could reach agreement on the following points, we would all be at a point from which to debate the future of media:
1. There isn’t any good existing data to tell us what consumers would pay for
2. But, media brands which sell directly to their consumers have a much better sense of what consumers value than media that goes through a 3rd party or relies on advertising for support.
3. Whether news is a non-profit or for profit business, it needs funding, so someone has to pay.
4. It is a lot easier to maintain the integrity of a news product when consumers generate enough revenue so the publisher can be highly selective about advertising and what they will do for advertisers.
5. Consumers are smart enough to know that you get what you pay for and they are also good negotiators, when you ask they how much they will pay they will not negotiate with themselves.
Best,
Katherine Warman Kern
@comradity
PS I am working on an alternative platform to overcome the awkwardness of this discussion. Would you or other commentors be interested in participating?
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Katherine,
Thanks for your comment. I think we’re far from agreement on your five points. I’ll take them in order:
1. I think we have lots of data showing that people are not willing to pay in substantial numbers and amounts for news and information online.
2. I’m not sure I agree with this.
3. As you may already know, I have proposed a new business model, the Complete Community Connection, which I think holds potential to generate the revenue to fund journalism: http://bit.ly/qzsKx
4. Again, I disagree. I think you maintain integrity by establishing independence as a core value and defending it vigorously. I think most newspapers maintained integrity in a print model where consumers generated a small share of the revenue.
5. Consumers are getting a lot of value online at no charge. They are smart enough to know that they can get their news elsewhere if news sites start charging.
As for your PS, I am always interested in exploring new platforms. I have discussed innovation in my own blog and others (as guest and commentator), in conferences and seminars, video, interviews, Twitter, Facebook, LinkedIn, live chats and webinars (and probably some I am forgetting here). I welcome a new platform. I don’t think we’re going to find a one-size-fits-all platform, but I welcome new ways to continue the discussion.
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Steve,
Concluding that consumers will not pay for a new innovative product/service based on what they’ve done in the past is self-defeating, isn’t it? Why would you invest in innovation if you can’t charge more?
Also, anticipating what consumers will pay is a chicken and egg, cart and horse thing.
If you start by offering your innovation for free, you will never be able to go back and charge for it.
But if you start by charging for it, you will learn a lot about the demand for it, why there is demand for it, and have a choice of business models (e.g. paid vs. free vs. a balance of paid and free).
Granted it is so much easier selling and keeping a few ad customers than selling and keeping an audience with enough critical mass to fund your business. But what if it is worth it? What if a consumer focus rewards you with earning a premium price?
HBO sure isn’t too worried about the economic crisis with all time high subscriptions and profit margins.
Best,
Katherine Warman Kern
@comradity
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Thanks, Katherine. As I explain in the C3 Blueprint (http://bit.ly/qzsKx), charging for content and selling ads are not the only possible revenue streams. Newspapers need to widen our vision of the possibilities.
And I don’t see news sites offering (or likely to offer) content as compelling as “The Sopranos” or “Sex and the City.”
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Hi Steve:
An excellent analysis with a lot of thought-provoking ideas. Although, I agree that the way newspapers handled online ads is one of the reasons for their struggles, I still believe putting their premium content on the Web for free – to compete against their paid content in news print – is what ultimately is dooming the business.
Aggregators like Google, Bing and Yahoo have managed to exploit the free content by becoming the headline servers (and content library) for many people online. They reap the benefits of selling ads for doling out other people’s content.
As I write here http://bit.ly/23QUC this model is coming to head (especially with recent studies that show that the “link economy” benefits link servers and not content providers). Something has got to give – either aggregators begin to share revenues or content creators will be forced to wall up their content as the only way to survive.
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George, we’ll have to disagree on this. Walling up their content not only is not the only way to survive, it is a huge impediment to survival. We need to learn how to live in the “link economy,” not retreat from it. (BTW, I’m thankful to the link economy for all the traffic it has sent my way, including you, on this particular blog post.)
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[…] Newspapers’ Original Sin: Not failing to charge but failing to innovate « Pursuing the Complete C… "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. […]
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Let me clarify. I DON’T support newspaper or content creators walling up their content. I’m for free and open information. However, I think many content creators are going to try and do it anyway.
I came to your site from Media Nation (a media analysis blog by Northeastern Professor Dan Kennedy). He discussed your post and added his own opinion to it. Ultimately, Dan’s posting could come up higher in search than yours – because his site is so heavily trafficked.
So you’re own content is increasing Dan’s traffic first (and Google, Yahoo, etc.).. You might not care, but here’s the question that this solicits: Is it fair that other people – Google and Media Nation (who sell ads on their sites) are being paid for your content?
So should aggregators pay you a small percentage of the revenue they generate from the ads they sell on that search term or your link? After all, you are providing them with value.
Amazon does that with associates that use their ads on their sites. Send them business and you get a cut. Could that work?
Aggregators and content creators need to work out a compromise because the current system doesn’t work.
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Now you are onto a solution that overcomes the hurdle to innovation – finding a way to monetize the link economy.
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I’m fine with Dan and anyone else who points to my content benefiting from that however they can. If I had advertising here, their links would drive my business.
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I recommend reading the report cited in my blog post: http://bit.ly/23QUC which argues that aggregators actually send only a small percentage of traffic to content creators and don’t drive much business for them.
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I read that report last week. Didn’t find it all insightful on where we need to go. The fact is that aggregators drive plenty of traffic to content creators. Our failure to derive business from that traffic is our failure. We aren’t going to succeed by negotiating a trickle of ad revenue from aggregators.
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George (gfsnell3) –
For the sake of discussion I could also argue that grocery stores and newsstands are not content creators and we ought not to distribute our print newspaper there as they are simply taking a piece of our profit.
I think the reality is that newspapers need to figure out what business they are in online. If the business is gathering audience and selling advertising against that traffic then it is to our advantage to be open to every link, blog, aggregator and search engine we can find.
In our case – the traffic we get daily from Google, Yahoo, Bing and an assortment of other smaller players contribute to about 40% of our incoming visits.
So I am not not sure how much money Google makes off of spidering our site and displaying the search results but I do know we get almost half of our online ad revenue thanks to aggregators. Much like we probably make about half of our print revenue thanks to grocery stores and news stands.
Damon
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Not sure I understand your point Damon. Newsstands pay for the copies they sell. So do supermarkets. So you get part of the profits.
Let me again play Devil’s Advocate here (because I find I can often go both ways on this debate)
I think we’re confusing two issues here (my fault). Aggregators and search engines. Yes, you get traffic from Google, Yahoo and Bing – but probably from purely search. People search on terms and then get sent to your site as a result. You can argue the search engine is providing a service here.
Let’s put that aside for a moment and just talk about aggregators – not search. Google also has Google News. It is simply RSS feeds for different topics. Is it fair for Google News to feature these RSS feeds on different topics and sell ads around them? Google makes big money with alerts on topics — all of it other people’s content.
There are other sites that only aggregate content. They are SEO optimized for specific topics and grab content on those topics, aggregate it, and become a middle man for pushing traffic out. But they get value for the traffic they hijack and sell advertising because of it.
So I’m not sure what the argument is against content creators wanting to be compensated for the money other sites make by selling access to their content.
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Excellent point! Don’t forget all those carriers who also make money distributing our content.
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Steve,
Here’s an start at explaining why I think news can have as much value as Sopranos or Sex in the City. Instead of comparing the value of the content, compare the value of the discussion stimulated by, for example, a Health Care Reform story and a Sex in the City episode. Here’s Huffington’s oped/blog on the future of news is social: http://blog.facebook.com/blog.php?post=120584762130
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I already tweeted a link today about the Huffington Post social news plans. I am a consistent, persistent advocate of using social media to engage communities and find commercial opportunities.
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School lunch menu, nice idea but never going to see one printed in a big city daily. Even local papers where there may be a couple dozen schools would have a hard time pleasing everyone. Where newspapers are missing the boat is connecting their print editions with the online mediaverse. All I ever see is “for more information go to our website/whatever section; then what? Hunt! Using the school lunch idea, the paper could put a small feature with instructions, go to our website and type in the keyword “lunch”. Instantly the online lunch page appears, no hunting, searching, distractions or hassles. Perhaps even a link sponsored message could display for a few seconds while the page is being fetched (great demographic targeting).
The Susan Boyle story was huge, and newspapers did a great job at advertising the you-tube thing … wouldn’t it have made more sense to print “to see the video, go to our website and type the keyword “Boyle”?
Print classified ads have shrunk dramatically …. linking a print ad to online pictures and expanded information just makes too much sense …. adding a simple keyword to the print ad makes it simple to find. Newspapers should be heralding their hybrid solutions that can’t be matched by online only operations.
Disclaimer, we have a solution that could be enabled for tomorrow morning’s edition of any newspaper … frapple.com is the only keyword link system that can be made functional from any website with an unlimited number of keywords.
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[…] failed at the task of selling advertising around their online content (a failure, argues Steve Buttry, driven largely by incompetence), news organisations are now moving toward various schemes aimed at […]
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[…] failed at the task of selling advertising around their online content (a failure, argues Steve Buttry, driven largely by incompetence), news organisations are now moving toward various schemes aimed at […]
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[…] innovazione messa in campo per cogliere le nuove opportunità offerte dal cyberspazio: questo dice in pratica Steve Buttry sul suo blog sottolineando ad esempio i dati del report Newspaper Next 2.0 i quali attestano che circa il 60% […]
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Sorry it’s taken me awhile to jump back into this conversation. As Steve mentioned in a comment above, I was on vacation for a week and then got derailed by a family member who was injured took ill. So I’m just now catching up on an interesting discussion that began about two weeks ago with my post on Idea Lab and then spread to a debate via Twitter between myself, Steve, and Tim O’Brien. And upon returning, I see that it’s gone well beyond that with Steve’s great follow up post here, and Tim’s rebuttal.
As I began writing this comment, I saw that Tim O’Brien has gone on vacation through early September, so perhaps he’ll see this next month when he returns. Also, I’ll apologize for not covering all the excellent comments here. But I need to break off a small piece of this to establish some focus.
Let me just say I think Tim and I (and Steve, though he’s spoken quite well for himself here) agree on several points. Tim writes in his comment: “With the advertising piece of the equation shredded by the Web, print pubs have to re-engineer their revenue models or go out of business.” Absolutely. And Tim says: “The bottom line in all of this endless analysis of how the MSM doesn’t get the business and journalistic challenges facing it is that it isn’t really about the journalism at all. It’s about finding the proper way to monetize content to financially support sophisticated, enterprise journalism. It’s about reconstructing the revenue model.” Agreed. It’s well past time to reinvent the business model. Our industry’s main strategy, for the most part, has been to cut our newsrooms and cross our fingers and hope that we’ll reach equilibrium. That strategy has been a disaster.
Beyond that, I’ll stand by my post at Idea Lab and try to elaborate on how I came to those views.
Both from his tweets and his comment above, I believe Tim’s main critique of my post was that it was subjective in nature and lacked data to back up the claims. (Tim can correct that later, but that’s my takeaway.) I didn’t necessarily hear him weighing in on the thrust of the post one way or the other, just that I didn’t have the hard data to convince him I was right. As Tim posted above referring to my post: “And this is based on…what? (The New York Times and Wall Street Journal don’t have comics, but that would just be an anecdotal observation, not one based on broad surveys or more hard-minded data gathering).”
And later, Tim says: “But to extrapolate from Fine’s data to say, as Chris does, and as InfoWeek does, that it shows that newspapers didn’t understand what their readers were paying for is ridiculous. I asked for any empirical data, reader surveys, etc., that outline why readers buy certain papers so we could look at that issue in a less subjective way, not one driven by Chris or InfoWeek’s assumptions. And once we have more of that, then maybe I’ll be proven wrong.”
Tim is accusing me of being purely subjective. To which I can only say: Yup.
In trying to think differently about how to deal with the ongoing news business crisis, over the past two years I’ve taken an approach that is intentionally anecdotal and subjective. I won’t even try to deliver the data that Tim seeks because I simply don’t believe that any amount of data is going to solve this industry’s problems. As I’ve worked on various newsroom reinvention and research projects over the past two years, I’ve come around to believe that the quantitative approach — putting our trust in massive reader surveys, polling data, whatever — has failed us.
Instead, I’m convinced that we need to take a qualitative approach. We need to take a fundamentally different approach to understanding the behavior, patterns and needs of our community when it comes to news and information. So if Tim needs the comfort of some cold, hard facts then I’ll just say straight up that I don’t have them and wouldn’t even try to get them. And even if I did, we’d probably still argue over what they really meant (as we are with Fine’s data).
When conducting research, weighing the quantitative versus the qualitative approach is hardly new or revolutionary. Having just recently spent a weekend at a major sociology conference in San Francisco, I can see how that academic field is split between those who spend time gathering large data sets to get at abstract truths and those who spend time observing and interviewing select subjects. Both approaches provided interesting insight. But more and more, I’ve been finding the qualitative approach has more value for me.
Why? Without listing every single study undertaken and tallying all the money spent, I think I can safely assert that over the past two decades, the news industry has spent millions of dollars accumulating data about readers and what they supposedly want. And our industry has responded by altering its products and newsrooms to produce the things that they thought the data told them that readers really wanted. Today, metro newspapers write shorter stories, with faster ledes, and publish more pictures about fluffier stuff. Our leaders have steadily used this data to make decisions that have made newspapers worse every year. Somehow, no one has stopped to consider that no industry has ever solved its problems by making its main product worse. Instead, management points to the data from readers’ survey to insist they’re doing what people say they want. The result is that we’re worse off than ever.
I’ll just say this to Tim: If a data-driven approach was going to solve our problems, wouldn’t it have done so by now? Our executives have been doing what they think the data has been telling them to do, and things are worse than ever. What exactly is the piece of data you feel we’re lacking to begin to address the business crisis the news industry is facing?
I don’t believe there’s a magic data set waiting to be assembled that will lead us to the big “Ah-ha!” I don’t think we’re one reader survey away from figuring it all out. We live in an era where people turn to data as a crutch, leaning on it to give themselves a false sense of certainty. The facts don’t lie, right? Except we know that they do. A lot of such data is formed by the biases and frames through which the questions are formulated, asked, and then interpreted. The newspaper business has failed to recognize its own flawed frames. To this day, no matter what you hear from a newspaper executive, they still believe their primary purpose is to get people to read them in print. It’s why newspapers still spend so much money propping up circulation by subsidizing a large number of people through persistent telemarketing
My intention, in the original post, was to point out that within the newsroom, these questions have been asked, and continue to be interpreted, through an incorrect frame: The belief that the primary product customers paid for was journalism. It’s not. I do think that in the newsroom, and in the management suites, many in our industry have failed to grasp the need to reinvent the business side. And even among the most experienced new executives, I think there is truly a failure to understand the dynamics of our business and our relationship to the community. While the functions in the newsroom have evolved (not as much as critics say they should, but still….), on the business side, there’s been little attempt to do anything wildly different than what’s been done before.
My perspective on the quantitative versus the qualitative approach to product design began to shift two years ago when I became a member of a task force for a project called “Rethinking The Mercury News.” In the summer of 2007, our executive editor at the San Jose Mercury News charged us with zero-basing the newsroom and re-imagining all of our products and newsroom staffing as if we were just creating the company today. Rather than hunting down piles of research data, or commissioning yet another survey of readers, we decided to conduct the research phase using the “design thinking” process. Design thinking seeks to create empathy with the user of a product by using observation and interviewing to allow you to see the world through their eyes, not your own. The goal is to “re-frame” the issues or problems in the hope of pointing toward different opportunities or solutions. Tim thinks my reliance on this is “silly.” I found the experience to be a powerful way to begin to see the world through the eyes of the reader, and not the newsroom. I’m not alone on this. Currently, Gannett has been working with IDEO, one of the leading design thinking firms, to take this approach as well.
In our case, at the Mercury News, we recruited 120 people from across the company, split into teams of three, to go out and conduct wide-ranging interviews and observations of people in the community. In all, the teams interviewed about 120 people. We used the responses and observations to brainstorm, identify themes, and explore potential opportunities. We didn’t look for a scientific sample, or try to quantify the results. In the end, the prototypes we built and the newsroom plan were scrapped. But that’s a tale for another post. And when I have enough distance, I’m going to write extensively about the insights we gained, because I think there’s a lot of value that challenges about things like the future of print and the news consumption habits of our communities.
But the things we heard in those interviews allowed me to see the newspaper through a much different lens than the way I had viewed it as someone working in a newsroom for more than a decade. The insights from that work were largely what drove the content of my Idea Lab post. So yes, those views are subjective. But they’re not just the random musings of someone sitting around and sucking their thumb late one night.
For me, it’s the anecdotes that provide better insight than the numbers. For instance, when I think about the value people find in newspapers as a product, I think about the Fall of 2007, when the Mercury News all but killed its Features sections. We heard next to nothing from readers about that decision. What we did get hundreds of emails about was the fact that we moved the puzzles and comics. That was frustrating to someone who wishes the journalism inspired the same outpouring of outrage. But the deep passion these people had for the print version was still incredibly moving. Here’s the thing: If I called these people and asked them why they get the paper, they may or may not tell me they buy it primarily for the puzzles. But their actions are telling, if not scientific.
And that’s the problem with a lot of data we’ve gathered. You can’t always be sure the people themselves know why they do what they do, or what they really want. Or whether you’re even asking the right questions. During one of my Rethinking interview sessions, my team talked to a woman in her early 40s who spoke at length about how un-interested she was in technology and how she didn’t feel like technology played a role in her life. As she was speaking, she kept taking out her BlackBerry and checking her email. Now, if I’d called her on the phone, and asked her about her interests, I would have checked her off as a woman not interested in technology. But in observing her, I could see that she was. Was she lying to me or was she ignorant? No and no. But she clearly thinks about that topic differently.
To take another example, let’s look at young people and printed newspapers. If there is one piece of data that everyone seems to agree upon, it’s that young people don’t read printed newspapers, right? Its turns out that’s totally false. Over the past two years, as part of the work I’ve been doing for the Knight Foundation (The Next Newsroom Project at http://www.nextnewsroom.com), I’ve been spending a lot of time visiting college newsrooms, which are far more conservative in their journalism culture and behind the new media curve than professional newsrooms. That was confounding to me for a long time. So what’s going on? The response I heard from college media advisers and college newspapers editors has been fairly consistent: The staffs at college newspapers look around and see all their classmates reading the printed version of the college paper everyday. When they get up in the morning, the newspaper bins are empty. If everyone is still reading the print version, why should they worry much about the Internet and all this new media stuff?
As I’ve considered what that means, I’ve tried this experiment a few times myself: Go into the student union and leave a few copies of the newspaper like the New York Times or the Mercury News on a table. They get scooped up pretty quick.
In fact, the generation that doesn’t read print does read a lot of print. What the surveys have really been telling us is that this demographic won’t pay to have the morning paper delivered every day. But when they encounter a printed product that’s free, is compact, and fits the way they consume news and information, and yes, usually has the crossword and comics, then they’ll consume it in large numbers. Do I think print is the future? It’s a part of it, much bigger than most folks believe, I think. How does this square with all those surveys about the news habits of young adults? Those surveys are being commissioned by news executives who are really just trying to figure out how to get young people to pay for the newspaper. They thought they could do this by altering the content. But what they really needed to do was reinvent the product form (compact, free) to fit into these people’s lives (lots of downtime on a pedestrian campus), and that’s a step that’s too radical to be considered by most newsrooms.
These are insights that I’ve gained not through studying the data, but through the subjective, anecdotal approach.
Back to my main point, I want to clarify something raised by Steve and Tim: I think the reasons that people consume newspapers in print are because of the wide range of things it provides, including the journalism. But not necessarily just because of the journalism. Even if that’s what they tell someone in a phone survey. I base that not on Fine’s data, but on my own work in the field, as they say.
The reason I cited Fine’s data was because inside the newsroom, people continue to think that journalism is THE reason people read the newspaper. And it’s not. My use of Fine’s data was an attempt to knock down that assumption from the point of view of the newsroom. No matter why people say they pay for the newspaper, the data in this case shows they never paid the full cost of the product. That print product contains many services, including journalism. So the direct funding of the cost of our journalism was less than 20 percent. Maybe it was 19 percent, maybe it was 1 percent.
If this seems obvious to Tim or Steve, I can say it’s not obvious to the folks running metro newspapers today. Just the other day, one of our editors during a meeting opened up a discussion by saying we have to figure out how to get people to pay for our journalism again. That view is echoed by news executives and is what is driving the push toward paywalls. Fine’s data is pretty clear that readers were only ever paying for a fraction of the cost of the product. And that’s why I think the discussion about paying to read our journalism online is a frustrating dead end. It flows from the myth that once upon a time, my parents paid for the journalism. They didn’t.
That view continues to inhibit the kind of discussion that I think needs to be happening to truly re-invent the business side of our industry and get us back on a path of the kind of growth that will support vital enterprise and investigative reporting over the long term.
I say all this knowing that I’m not going to convince Tim that I’m right. If you need data, then you need data. And I can’t help you there. But in my view, the subjective approach is the strength, not the weakness of my analysis.
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[…] should note that this debate is really about a secondary point of my post a couple weeks ago. I argued that the Original Sin of the newspaper industry in the early days of the World Wide Web was not […]
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I respond to some of Chris’s points in this separate blog post:
http://bit.ly/rkoxs
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Well said, Chris. I agree that there’s nothing magically truthful about data. Its veracity depends on the framing of those who gather it and the prejudices of those who interpret it.
Data can supplement, but not replace, logic. And your logic is good.
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[…] was that not a mistake, but many newspapers did try to charge for content. I have written that the Original Sin was that we “did next to nothing to explore how we might use this new technology to help […]
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[…] priests looking for someone to sacrifice, Alan Mutter, Steve Buttry, Howard Owens, and Steve Yelvington have been on the lookout for the win that led newspapers […]
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[…] in the early days of the Internet. (Alan Mutter, Howard Owens, Steve Yelvington, Jeff Jarvis and I have all written our own views of the Original Sin of newspapers in the Internet age. I’m […]
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[…] Steve Buttry weighed in with a thoughtful piece saying newspapers’ Original Sin was failing to innovate. He’s right, although many of us did innovative online work for media organizations. More on […]
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[…] this brouhaha about newspaper’s “original sin” (see: Alan Mutter, Steve Buttry, Howard Owens or Steve Yelvington for starters) got me thinking about those pre-historic online […]
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[…] de public, ci de afacerile care vor să fie puse în legătură cu potenţialii clienţi. Într-un articol din 16 august, Steve Buttry îi contrazice pe cei care consideră accesul gratuit la articole […]
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[…] was giving their product away for free online. Six months later, the Cedar Rapids Gazette’s Steve Buttry picked the original sin idea up and contended that it was actually newspapers’ failure to […]
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[…] an oversimplification, of course. The series of tweets led to Steve blogging a response here. In the comments, Tim felt his point was misrepresented and explained himself further: But to […]
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As both a newspaper publisher and online publisher I do believe that the conditioning of the reading public has destroyed any potential for online revenue by simply charging for original content. For one thing, original content, once read, is disseminated to a variety of other sites that cite or regurgitate variations of that theme…for free, this diluting or destroying the original provider value. Pop up ads are also limited in value since the viewer can simply ignore them. Videos from news sites that require you to watch a commercial prior to the free video stand a better shot. Ultimately the whole concept of what is news and how we obtain it lies in a better understanding of the reader rather than the publisher. It is consumer driven and the lifestyle and level of expectation from the reader has shifted significantly.
One advantage the online has to the printed page is the cost effectiveness of color photography. Coupled with a couple of generations now conditioned to visual input, a reliance on photos and video can help shift the balance by tying that form of content to subscription. Free version + paid version.
Ultimately the survival of newspapers will lie in technology replacing paper with a digital version, as tactile, yet able to provide a multitude of content, be foldable, and no longer have to be retrieved from the driveway each morning. Paper will die; newspaper will live.
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[…] topic again. Three weeks later, I was back on the topic, with my third most-read post of the year, Newspapers’ Original Sin: not failing to charge, but failing to innovate. With 52 comments, that probably drew the most discussion of anything I wrote that year. I was […]
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[…] } I really don’t think this can be emphasized enough, and Steve Buttry’s post Newspapers’ Original Sin: Not failing to charge but failing to innovate makes the point […]
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[…] particularly his posts about innovation in the news business. In an August 2009 post titled “Newspapers’ original sin: Not failing to charge but failing to innovate,” he wrote: The disastrous error that newspapers made early in our digital lives […]
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[…] subsidies, Twitter, journalism curriculum, Google and other innovation issues. As frustrated as I was with the circumstances that gave me more time to blog, I am pleased that I […]
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[…] was stuck in its advertising model. I made the same point in discussing newspapers’ “original sin” of the Internet age and in discussing the future of freedom of the press. I thought Omidyar […]
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[…] Newspapers’ Original Sin: Not failing to charge, but failing to innovate […]
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[…] I won’t repeat my general arguments against paywalls, which I have repeated ad […]
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Forum, subsidies, Twitter, journalism curriculum, Google and other innovation issues. As frustrated as I was with the circumstances that gave me more time….
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[…] Nick Kristof, David Carr, Jeff Zeleny, Patrick LaForge, Jim Roberts and other Times journalists. I argued with Tim O’Brien on Twitter while he was at the Times. In my workshops on using social media, I cite the outstanding […]
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[…] Nick Kristof, David Carr, Jeff Zeleny, Patrick LaForge, Jim Roberts and other Times journalists. I argued with Tim O’Brien on Twitter while he was at the Times. In my workshops on using social media, I cite the outstanding […]
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[…] failed at the task of selling advertising around their online content (a failure, argues Steve Buttry, driven largely by incompetence), news organisations are now moving toward various schemes aimed at […]
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Thanks for the insightful post Steve. I’m encouraged by the fact that there are others out there that see the fallacy with the paywall and the arguments behind it.
As has been articulated by others, the fact of the matter is that at our peak any “revenue” derived from print subscriptions has at best simply offset all of our production costs. That includes the cost of the physical press (and the building/land in which it resides) as well as the paper, ink, distribution, subscription management, and retention. I would think that with dwindling print subscribers and the increasing costs of production even that doesn’t hold true anymore.
I’ve never heard a great argument to justify a paywall. Newspapers are in an unfortunate situation where the majority of their revenue is still derived from a distribution model with high expenditures, so they can’t ignore it completely. At the same time they are competing in the digital world where their competitors don’t have the anvil of the physical press hanging around their neck. These competitors don’t need a paywall to help offset those production costs.
A new model is needed, and for true innovation to succeed within this industry a separation of concerns may be in order. With a unified newsroom, perhaps if both digital and print production areas where to be (at worst) self sustaining then maybe we would see some truly innovative ideas flow. Not only on the digital side, but within print as well.
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[…] Ingram – Why newspaper paywalls are still a bad idea Steve Buttry – Newspapers’ Original Sin: Not failing to charge but failing to innovate Judy Sims – No, Paywalls do not Deepen Relationships with Readers Jeff Jarvis – […]
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[…] Newspapers’ Original Sin: Not failing to charge but failing to innovate […]
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The start of paragraph 8 is **EXACTLY** it. Not just newspapers. I saw it in TV, which I left 7+ years ago after almost a quarter century. As an early-adopter evangelist of the Web at my last two TV stations, I would suggest online ads … and the sales manager’s brushoff would always be, “Yeah, whatever, if they buy a spot [on the air], we’ll throw in an ad on the website, if they really want one.” However, the damage wasn’t done so much to the legacy news outlets as to new media … forced to deal with low price expectations from the very start. In that sense, not only did old media shoot itself in the proverbial foot, but the ricochet did collateral damage to its successors. Anyway, charging for content only works if that content is potentially money-making for the payer/consumer (WSJ, local business publications like the Daily Journal of Commerce here in Seattle) – for general news, no matter how distinctive, it’s never going to pay the bills.
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