‘E&P’ Column on Paying for Online Draws Heat — Outing Responds

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By: Greg Mitchell

We received a lengthy letter yesterday in response to the latest column by our longtime contributor Steve Outing from Mary McFadden of San Francisco. Here it is, along with his lengthy reply.

Check out the original column, here.

***
Mr. Outing’s recent piece, “Getting Money from Readers Who Won?t Pay for On-Line News,” rehashes unfeasible ideas masked as solutions to the wrong problem. The problem is not simply that readers won?t pay for news, it?s that readers don?t understand the connection between the cost and presence of news to their lives.

News organizations, especially newspapers, have failed to convey how vital their business is, how worthy of financial support and how often its product is viewed and used. If news were shoes, there would be a lot of barefoot people. Also, like many on-line businesses, news organizations have not addressed the scrawny pay-for-advertising feature of web sites.

Newspapers are simply the biggest business to face the issue of small and diminishing on-line ad revenue. All the solutions proposed by Mr. Outing are merely versions of coupon clipping, special event and gift- with-purchase ideas from drugstore flyers and cosmetics company promotions. Adjusting content so it suits Kindle, iPhones and Blackberrys is just a pay-for-content idea that he says at the beginning won?t work. Finding a way to base rates on the number of views instead of the number of click throughs would shift the model slightly.

Underpinning Outing?s article is the premise that content is not important for what it is, but for its relationship to the ?link economy.? That?s like saying that practicing medicine isn?t important for people, but to keep health insurers and bedpan makers in business. News is the product; diminishing the product doesn?t make the industry that creates and distributes it any more solvent, it just makes the product less desirable and, ultimately, less marketable.

People do pay for things they value. Businesses pay for financial information, for subscriptions to an assortment of industry publications and source material because they recognize the usefulness, the need for that content. We already feel nickel-and-dimed at every turn. There are service and convenience charges for tickets, for delivery, for attention. Charging for pop ? the style section, sports scores, gossip ? is already in full swing, why not a single fee for all the news?

As with taxes, making it clear that the choice with newspapers is between paying to have a necessity or not having it all is not simply a scare tactic, it?s a basis for selling the product. People want good public schools with competent teachers. Taxes pay for that. People want to know that public schools are good and the teachers are competent. Newspapers send someone to school board meetings to make sure that happens, send someone to find out the superintendent?s history, send someone to compare teacher?s salaries to the cost of living.

We need to pay for that or we, the public, will be limited to searching for substance in an free form ether made of style, sports and gossip.

Mary McFadden
San Francisco, CA

***

Mary,

Thanks for the thoughtful critique of the ideas presented in my latest
column. I don’t agree with them, however, so if you’ll indulge me I’ll
make a few points:

1. You wrote: “News organizations, especially newspapers, have failed
to convey how vital their business is….”

No, newspapers have failed to appreciate that new competitors are
rising and that because these competitors understand the new media
landscape, technology and consumers’ new habits better than newspaper publishers, they will succeed; the newspapers that don’t adapt and die.

I believe that no amount of crowing by newspapers will be convincing
enough, and that a new news landscape will arise.

2. I’m skeptical that advertising can ever again support the newspaper
industry the way it has in the past. There are simply too many media
sites, blogs, just an explosion of publishers of all sorts vying for a
share of consumers’ time and advertisers’ finite pool of money. So new
revenue streams in addition to the advertising core must be devised by
newspapers if they are to survive. I believe that trying to force web
users to pay for content would lead to a quicker demise of the
newspaper industry, should publishers en masse take that road.

So our fundamental disagreement is that you believe even on the web that people must recognize that news content has high value and costs a lot to produce and therefore pay for it; I believe that on the web
specifically (not necessarily other media forms) news cannot succeed
with a price tag unless it is of the valuable niche variety that you
cite.

Tim Windsor at the Nieman Blog today put it well in comparing online
news to bottled water. You can get water for free from your tap, even
free filtered water assuming your sink has a filtering system
installed. Yet people spend billions of dollars buying bottles of
water. If you carry that analogy to news, you can probably sell a lot
of people a nice package of news, but not the raw general news on
the web. It used to be easy to sell the package that was the printed
newspaper; but now news is atomized on the web and the only way to
make money from selling it online is to come up with a valuable
packaging, where the news consumer pays for the value of the packaging or editing or curation by professional editors.

3. Classifieds for years supported the newspaper industry, but now
they’re half what they were and are sinking more. They had nothing to
do with the news content in the printed paper; but because they could
be included in the same package as the news, they supported the news
gathering costs of the organization. Therefore, I argue that a serious
news membership program (not the lame discount coupons and flyers and promotions that you describe) could serve real value (a reason for
many people to plunk down $10 a month or whatever) while the equally
strong marketing message is that by being a member you are supporting news gathering. So, a combination of greedy capitalism and NPR pitch.

4. Lastly, in my view, the web is simply different than any previous
medium. It shifts control to the consumer/user and away from the old
powers (like newspapers). Attempts by publishers to take back control
(let’s charge for our news) will be turned back by a new wave of news
entities eager to grab away the revenues from those old newspaper guys who don’t understand how the web works (as well as non-profits that will quickly form to fill the holes left by newspapers).

Consumers/users will find ways to circumvent news pay walls erected by newspaper publishers. Newspapers’ web advertising problems will become that much harder to solve.

I think the newspaper industry must look to other solutions. I
presented one idea. Perhaps someone else can crack the valued-package problem and devise online (and mobile) services that people will pay for, such as a really useful and fine-grain personalized or
individuated news streams. (Here’s an upcoming conference tackling
just that: http://www.individuatednews.com/ ) But again, they’ll be
paying for the service, not the news itself, which is ubiquitous and
free from so many sources online.

— Steve

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