Saturday, January 31, 2009

Papers must charge for websites to survive

You don't get free gas from a gas station.
You don't get free meals from a restaurant.
You wouldn't walk into the Googleplex ... that's Google's corporate headquarters in Mountain View, Calif. ... and expect a staffer to rush to the lobby with 1,000 free shares of Google stock for you.
At least we don't think so.
So why is the newspaper industry the only one in America that is expected to give its product ... in its electronic version ... away for free?
Wrestling with that question will determine the fate of this nation's newspapers.
Our answer: except for the "Big Four" national players, newspapers will not survive unless they 1) convert out of print and totally into the Internet, 2) confine themselves to local news and, most importantly, 3) charge for it.
Astonishingly ... despite many erstwhile titans now tottering on the brink of bankruptcy or outright extinction ... we're talking about big ones like the Chicago Tribune, Los Angeles Times, Miami Herald, Rocky Mountain News, Chicago Sun-Times, Minneapolis Star-Tribune, Philadelphia Inquirer ... almost no one in the industry charges for their web site product. Even as they swirl down the drain, they give it away for free.
"Giving away information for free on the Internet while still charging 50 cents to $1 for the print version of the paper was one of the most fundamentally flawed business decisions of the past 25 years," says Prof. Paul J. MacArthur, who teaches public relations and journalism at Utica College. "Newspapers told their paying customers that the information truly had no value. They told their paying customers that they were suckers. Why would anyone pay 50 cents for something he or she can get for free? This poorly conceived and obviously flawed strategy has helped put the newspaper industry into its current financial condition and hastened the demise of many publications."
Prof. MacArthur is one of the experts across the nation who responded to my web site,, and our special project examining the future, if any, of newspapers.

Step 1: Papers are being overwhelmed by enormous newsprint, production and delivery costs ... and a huge amount of staffing associated with them. All no longer needed.

Newspapers can still "deliver" their product ... instead of being flipped from a speeding pickup truck at 4 a.m. on or near a driveway, its content can be delivered electronically to a customer's computer or to a portable wireless electronic reading device such as Amazon's Kindle.
What's more, "content providers, once called newspapers, are experimenting with on-demand delivery particularly to mobile telephones," says Michael Ray Smith, communications professor at Campbell University. "Telephones are computers and computers make moving information more convenient than ever. In some cases, information alerts and bursts can be downloaded from a source at work or home or even in transit and then read while on the road."
Let's hope that papers have a heart and offer the best severance packages and retraining possibilities they can to their blue-collar workforce, many of whom tend to be long-term, loyal employees.
But obsolescence is obsolescence.
Oh, yes, the four papers that probably can survive in print ... of course they're USA Today, the Wall Street Journal, the New York Times and the Washington Post.
They're in the right place ... "I see New York and Washington always having newspapers because they are the seats of financial and political power," says David E. Johnson, CEO of Strategic Vision, an influential public relations firm in D.C.
They have a national base in their financial and/or political reporting and an affluent readership that surely is strong enough to keep them going.

Step 2: Carve out a niche that makes the paper's web site dominant, irreplaceable and one of a kind.

"I would like to offer a two-word solution to the financial woes of our ink-stained friends: 'local news,' " says business consultant Jonathan Stark, who has consulted for a number of U.S. papers. "Newspapers have real roots in the communities they serve. They have history, tradition and personal relationships. In some cases, they are a source of local pride. If newspapers are willing to let go of their print-based history, invest in their writers, embrace technology and dedicate themselves to being THE source for local news, they will have readers for as long as people can read."
Who else can do it better? Local TV station news anchors and skimpy throwaway weekly papers can't. They feed off the big local paper anyway.
While papers have cut their editorial staffs not only to the bone but inside the bone, there's no excuse for them not coming up with a dynamite local news website. That's because they can reallocate the staffers who work in national or international news or other areas of the paper to the local effort. Go for it ... marshal all the resources into this one specialty. Local news, local features, local business, local sports, local commentary. If necessary, use "citizen journalists" for neighborhood news. Cover the community top to bottom.
This is not only a financial and logistical advantage. It creates a journalistic improvement, too, as news can be instantly added and obsolete or inaccurate information removed. The expertly crafted story or hard-charging enterprise piece or beautiful set of photographs can remain on the site for readers' enjoyment for a while instead of becoming tomorrow's bird cage liner.
In doing so, it would behoove the papers to play it straight. Millions of readers have deserted newspapers in disgust over political agenda-driven reporting.

Step 3: How much to charge? The Arkansas Democrat-Gazette, one of the few if not the only sizable metro paper to charge for its web site, makes readers pay $4.95 a month. Since that's about 16 cents a day, we'd say it's far too low. We'd make it a nice round number, easy to remember ... $20 a month. That hopefully would bring in a substantial amount of revenue.

Readers, of course, have become conditioned to free content on the Internet. Many expect it, some stridently demand it. Can that habit be broken?
"The only way you can charge online is if you have something so special that no one else can re-create it," says Paul Swider, a former St. Petersburg Times reporter who also did a citizen journalist web site for the paper. "Don't charge for national politics because there's 1,000 other outlets to which the reader can turn, so you're done. But if you have a synthesis or data or other unique quality of content that others can't duplicate, you could charge for it and succeed."
That means local news.
And what of the current business model of newspapers ... the one that has them give content away free on the Net in hopes of luring huge number of readers and the attendant "page views" to lure advertisers. Well, if it works, why are so many papers failing?
Papers should do both ... charge for their content and work hard to get advertising on the site. Wouldn't a lot of advertisers prefer quality over quantity in readership ... wouldn't potential business customers be a lot more likely to be those who pay for the paper instead of those who freeload?
Walter E. Hussman Jr., publisher of the Democrat-Gazette, noted in an op-ed piece for the Wall Street Journal in 2007 that the U.S. newspaper industry collectively spends about $7 billion a year to gather news. "By offering this news for free and selling it to aggregators like Google, Yahoo and MSN for a small fraction of what it costs to create it, newspaper readership and circulation have declined," he wrote. "Why would readers buy a newspaper when they can get the same information online for free?"
He added this point: ads have much more impact in print than on a computer screen. "While consumers often find pop-up ads a distraction (on a web site) and banner ads as more clutter, readers often seek out the advertising in newspapers."
Hussman's paper, incidentally, while not exactly flourishing, has suffered much less advertising and circulation declines than most other of his peers. Since Hussman whipped the much larger Gannett in Little Rock's famed newspaper war of the early '90s, we'd say he knows how to survive in this business.
Which brings us back to our original question: why do people expect newspaper web sites to be free?
And there's no good answer. The so-called experts use airy, meaningless phrases like "because that's the Internet culture" as if this notion just floated down from heaven somehow.
In fact, that's how Google CEO Eric Schmidt, who benefits immensely from basically free news, views it. In an interview with Fortune's Adam Lashinsky, he actually said, "the culture of the Internet is that information wants to be free."
Information doesn't want to be free any more than gasoline wants to be free or food wants to be free. When Mr. Schmidt stands in the lobby of the Googleplex and hands out free shares of his company stock, then maybe we can believe the "free" rationale. Until then, papers should charge for what they do so they don't go out of business. Simple as that.

Source: Knight Digital Media Center

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