A woman from Queens had phoned Brill -- responsible for endowing the Yale Journalism Initiative -- to ask why he steered her daughter toward an non-lucrative career in journalism. It made him feel like a "drug dealer in a schoolyard," with the realization that the profession was under a great threat.
But that phone call sparked an idea. Brill wanted to find a way for online content providers to make money from quality journalism -- other than from advertising revenue.
The result? Journalism Online, a new initiative co-founded by Brill along with L. Gordon Crovitz, the former publisher of The Wall Street Journal and former cable Executive Leo Hindery Jr.
The founders are convinced -- after more than a decade of mostly freewheeling access -- that publishers can capture revenue from people willing to pay for some content.
As early as a year ago, the subject of charging for online access in some capacity was a non-starter among newspaper executives. But newspaper online revenue is no longer the promising growth engine it once was. In the past few quarters, online revenue has taken a nosedive. In Q1, it fell 13.1% and represented a hair more than 10% of total ad revenue, according to the Newspaper Association of America.
With the drop in revenue, newspapers executives have grown increasingly interested in other ways make money online, including charging for some content.
Crovitz and Brill were on hand this morning in New York to participate in a briefing for press. According to the Journalism Online founders, newspaper executives are prepared to make that leap, though the company was not ready to announce its partners.
"The question is not 'whether' but 'how,'" said Brill.
Journalism Online wants to help with the "how" by giving content providers a wide set of tools. Its platform allows for an array of options allowing publishers to charge in numerous ways, including: micropayments, sampling, the ability to turn off the system at will, the ability to convert users from micropayments to a subscription model, the ability to bundle print and online subscriptions, the ability for a publisher to refer a user to another content provider and get some revenue, the ability to return a micropayment, access to all entry points whether the content is read online, on a smart phone or a digital reader, and one common password and account that will follow the user no matter where they land.
According to an All Things Digital Conference survey conducted by Penn, Schoen & Berland Associates, 92% of respondents said they would be willing to pay something for online news -- an average of $25 a month.
Brill said that while that number is encouraging, it's probably much lower in practice; Journalism Online is modeling on the much more conservative percentage of 10%.
The founders are not pushing content providers to completely wall off access. A better approach is one used currently by the Wall Street Journal, which sets a lot of its content free and charges for content it considers "premium." (Journalism Online is offering to assist publishers on that front too.) The company also figures that by focusing on 10% on avid readers, on average a Web site would keep 88% of page views and 91% of ad revenue if it put in place a paid-content strategy.
Using a hypothetical newspaper with a circulation of 1 million and a Web site that draws in 20 million uniques as a model, Journalism Online concludes that the sample can realize a bottom line benefit of $29.8 million in the first year and $82.8 million in year two. The online subscription model has three components: an annual rate of $75, a monthly rate of $7.50 and a per article rate of 25 cents. The model assumes that the sample newspapers brings in $175 million in online advertising, $600 million in circulation revenue, with a print subscriber acquisition cost totaling $75 million.
The percentage to the bottom line increases for smaller papers, Brill and Crovitz noted.
The model does not take into account additional revenue streams that might be had from e-readers and mobile devices.
Another benefit to charging online now is that will train people to pay when the distribution of content moves from print to digital. "It's to get them used to the idea to as the franchise changes," Brill said.
Besides, he added, the idea that the reader pays something has "always been the model of journalism."