The Future of News, Viewed From Aspen's Rarefied Atmosphere

By: Steve Outing I consider myself fortunate to have been included in a gathering last week of about four dozen very smart news, media, business, non-profit and foundation leaders for a three-day conference at the Aspen Institute, "Of the Press: Models for Preserving American Journalism."

Participants included media-industry stars from old media (e.g., the executive editor of The Washington Post), to online media (publisher of Salon.com, the "oldest" new-media content company), to foundation rock stars (president of the Knight Foundation, senior advisor to the Melinda and Bill Gates Foundation), to young entrepreneurs (founder of The Extraordinaires, an on-demand volunteerism-by-mobile-phone initiative), to government officials past and present (former chairman of the FCC, current FTC chairman), to provocateurs like Craig Newmark (Craigslist founder), Esther Dyson and Jeff Jarvis.

The gathering generated some controversy on blogs and in the Twittersphere for the panelists' lack of diversity and lack of youth. And, frankly, going into the conference I had a premonition that this august and experienced group of leaders would deliver unwise (to my way of thinking) recommendations.

But my fears were largely abated. I can't predict with any certainty that the newspaper industry will deploy some of the best ideas to come out of Aspen, but my sense is that most news executives aren't planning to drive off a cliff with a last-ditch effort to fight back against the nature of the Internet and its free-distribution ways. I'm a bit more confident that they'll adapt, though I still expect to see more newspapers go out of business.

The (not-quite-) great paid debate
One of the big "battles" I expected to see unfold was between paid vs. free online news content, especially since some recent statements from news industry leaders have tended to frame the issue in black-and-white terms. (e.g., Rupert Murdoch of News Corp.: "Quality journalism is not cheap and an industry that gives away its content is simply cannibalizing its ability to produce good reporting. ... We can be platform-neutral but never free.")

Then there was the announcement earlier this year of media heavyweights Steven Brill and Gordon Crovitz's Journalism Online initiative, expected to debut this fall with an e-commerce system to allow news publishers to charge while all using a common and flexible payment technology that works across news Web sites. In a June speech, Brill said: "We just have to return to one of the oldest principles of that business model -- that those who consume journalism pay something for it."

Post-Aspen, it feels like that's mostly public posturing to try to influence search engines and big online aggregators of news links to direct more money toward the news providers. Because as the discussion evolved in the swanky Aspen Institute conference rooms, there were more shades of gray exposed.

10% is the limit
Will news publishers charge for content online? Almost certainly, yes, for some of it -- actually, for a very small part of it. I believe there is consensus among most (not all) news publishers that they can and should charge online users (and mobile, too) for the extra-special, can't-find-it-elsewhere, this-will-make-you-more-money-or-improve-your-life content they produce. And most of the news content that is the traditional fare of newspapers will remain free online, supported by advertising and additional revenue streams, and benefiting from, as Jeff Jarvis would say, Googlejuice.

If a news publisher can get 10% (probably less) of their most loyal online users to pay for something, then that's one more significant revenue source to make up for the lesser value of online ads and newspapers' losses in classified advertising.

The 10% amount is significant as an upper limit of how much of a devoted audience might be convinced to pay. Vivian Schiller, currently CEO of National Public Radio but formerly a digital executive at the New York Times, told fellow Aspen panelists that what she experienced at NYTimes.com during the TimesSelect experiment was nice growth initially, as the Web site asked its users to pay an annual fee for "premium" content like Op-Ed columnists' work and archive access. But the growth stopped at around 225,000 paying subscribers, meaning TimesSelect was worth about $10 million a year. Times management concluded that they'd make more money from advertising on the formerly hidden-behind-the-paywall content, so the 10% growth cap confirmed the wisdom of shutting TimesSelect down.

It's easy to argue that what the Times chose to put behind a paywall was a bad choice. The company's Op-Ed columnists are rock stars in the news world, and hiding their content from most of the world diminished their influence and reach.

The much more difficult decision is what to charge for. In his presentation in Aspen, Journalism Online's Crovitz (a former publisher of The Wall Street Journal) pointed out that for newspapers and magazines, discovering what information "'wants to be expensive' ... will require new thinking and new products."

I was pleased to hear him say that, because it's my belief that most newspaper companies will need to create new content that's unique, and/or create new packaging or services that online users will find worth paying for.

That will not be easy, after the newspaper industry has laid off so much editorial talent in the last few years. Clearly, in my view anyway, many newspapers will have to cut out the kind of coverage that is free, ubiquitous and more convenient to find on the Web or a smartphone, and devote some of those resources instead to creating premium niche content and personalized services that are deserving of payment by the consumer online.

The big danger for newspapers in starting to charge for some content online is where to set the line. If it's 98% free and 2% paid, there's probably not much to worry about in terms of loss of advertising revenue and user traffic. Set it more aggressively -- say, 60% free and 40% paid -- and you're probably slitting your own throat. We'll see the industry experiment in the coming year on where to set the line for paid.

We can probably count on some publishers going too far. William Dean Singleton, CEO of the MediaNews Group newspaper chain, said in one of the Aspen general sessions that "newspapers aren't dying," and his company's newspaper Web sites will begin charging for some content by the beginning of 2010. The strategy, he told the group, is to stop giving so much away free online in order to bolster print revenues. And he doesn't expect to make a ton of money from paid Web content, so it's a way to secure the core (old) business. (I give that strategy a thumbs-down, but we'll soon find out if Singleton's contrarian view works.)

Clay Shirky is right
A quote that kept coming up in the Aspen discussions was from digital-media guru Clay Shirky (not in attendance): "Nothing will work, but everything might." He wrote that while pondering whether there's a way to save newspapers, now that the Internet has "broken" their old business model.

It fit with the general feeling that I picked up from the Aspen conference participants: a recognition that the news industry is in for several years of experimentation and developing new business models and revenue opportunities. The focus on advertising alone as news Web site supporter is history; advertising and premium paid content aren't enough either. There has to be more.

?More? also can include voluntary payments or donations to support news online. Representing the "user-centric," voluntary model for paying for online content was Cynthia Typaldos, founder of Kachingle, a voluntary network that Web users sign up for and pay a $5 (or more) monthly fee, then the money is shared among users' favorite Web sites and blogs.

By not going over the line with paid premium content, solutions like Kachingle are compatible and could become another strong revenue stream. In my own presentation in Aspen, I explained several other user-donation solutions that could be promising, such as Payyattention, Contenture, SprinklePenny and inamoon. It's not clear whether one of these players will become dominant in online user donations for content, or if Web sites will use a combination of them along with the traditional revenue sources of ads and paid premium content. (Note: I did not include Journalism Online in my presentation because co-founder Crovitz presented right before me; it was not a slight.)

Don't discount user donations, and especially the membership model, said NPR's Schiller. Going from commercial media into the largest non-profit media entity in the U.S., she said she quickly discovered how powerful and strong the "relationship" between donors and NPR and its affiliate stations is. Indeed, NPR has yet to fully deploy online and mobile as donation tools. As online political contributions demonstrate, there's money to be had by asking for it, not demanding it.

Voluntary memberships can cement the relationship between a favorite media outlet and a consumer. During the recent economic slump, Schiller said, NPR donations actually went up, as listeners responded to the organization's needs to keep delivering quality news content. The same voluntary-membership model can be applied to commercial news sites. Instead of (or as an alternative to) paid premium content, voluntary memberships can include access to the premium content or services. And it's compatible with other revenue solutions mentioned above. Those Web visitors who don't want to commit to a paid membership with a single news entity online can instead support you via Kachingle in order to support multiple Web sites, or use Payyattention to donate a few cents to a specific writer or blogger.

Have you thought about spin-offs?
There were so many excellent ideas tossed around the Aspen Institute's conference tables last week that I could write a book about them. Instead, the Institute will write the book and it should be available in a few months. I regret not including in this column the discussion of the new news ecosystem currently under construction. But I'll close with one last idea that I think is brilliant.

Jeff Jarvis suggested that newspapers, as they lay off their talent, would be wise to offer buyout money to fund the former employees' news-related start-ups. Rather than severing the relationship forever, the publisher could invest in those who depart to invent new media businesses. Don't view this as "funding the competition," but rather as maintaining a working relationship with the new entity, probably partnering with it in some way, and taking a financial stake in it.

American Press Institute president Andrew Davis likened the idea to "layoffs with strings." An example might be that a group of departing journalists decides to create a hyperlocal news Web site; the buyout "seed money" from the newspaper helps it succeed; and the newspaper attaches the new hyperlocal site to the newspaper Web network. Win-win rather than lose-lose.

In effect, this idea creates small spin-offs from the core newspaper brand. That's something that non-profit organizations like American Public Media already do. APM president Bill Kling told the Aspen participants that he's been doing that routinely.

Entrepreneurs will pick up whatever newspapers and other legacy media companies lose or cast off, Kling said, so it can make sense for a newspaper company to support that and be part of it. For Kling's part, he believes passionately that public media needs to ramp up significantly, and supporting spin-off content start-ups to partner with as they succeed is one way to accomplish that.

What's next?
I left Aspen last week with a sense that "news" will come out of the digital disruption OK. Some newspapers will not, but others will make smart decisions, take their place within the new news ecosystem, and survive.

The messages from Aspen are that the next few years will be chaotic for news media; there is no "silver bullet" answer to making news as profitable as it once was, but there is lots of other ammunition waiting to be fired; and that the news ecosystem will combine legacy media, small entrepreneurial news entities (as small as one person), and a much larger role for the non-profit sector to provide the news that the commercial marketplace can no longer afford to produce adequately (i.e., investigative reporting).

(Disclaimer: The Aspen Institute's "FOCAS" conference was live-streamed, and thus public. Working groups were not, and some discussion in those gatherings was off-the-record. I've stuck to on-the-record discussions for this column.)