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Newspapers Scramble to Make Profit on Web

By Ben L. Kaufman · January 31st, 2011 · On Second Thought
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The Enquirer/Cincinnati.Com is joining an arrangement where a monthly fee will let subscribers read some or all of a broad selection of dailies and news sites on the Internet. It promises one-stop convenience even though much of the content is free elsewhere.

Called Ongo.com, it is the latest effort to stanch losses of readers and ads, and to make some money from the Internet.

Ongo might build Internet audiences and advertising without aggravating paywalls and multiple online subscriptions. The Enquirer said Ongo was launched last Tuesday. For $6.99 a month, Ongo offers “selected content from The New York Times, access to all content from USA Today, Slate, and The Washington Post, as well as selected content from the (British) Financial Times. In addition, readers can choose one other news source as part of the base rate. Additional titles can be added for 99 cents a month.”

The first month is a free trial. It wasn’t clear what will be available from participants who subsequently erect paywalls. The Times, for instance, is planning to raise its paywall this year. Ongo also raises a question of why pay for what aggregators —Google, Yahoo and others — already pull together free online, albeit in summary form.

Also, Ongo will offer a clipping service and other goodies to catch and hold subscribers. Ongo is available through its Web site as well as smart phones, and the company plans to soon unveil applications for smart phones and tablets such as Androids, iPhones and iPads.

Gannett, which owns The Enquirer, is one of three primary investors in Ongo. Others include — not surprising, given the content offerings — The Washington Post and The New York Times. They’ve each pitched in a reported $4 million startup money.

Bloomberg BusinessWeek was heartily pessimistic, saying Ongo “feels like another attempt to put the Internet genie back in the bottle.” That is, weaning us from free online reading initially encouraged by news sites of all kinds. “Although it has some interesting features aimed at compensating readers for sharing content, Ongo seems like yet another Hail Mary pass aimed at trying to rewind the clock and impose scarcity on media content, and one that will likely fail just as quickly as others have.”

Ongo further complicates things by giving readers who pay the $6.99 only the top 20 stories from The New York Times as well as stories from The Washington Post and USA Today.

“Readers who want other content will have to pay a la carte for it, which seems needlessly complex and will likely turn many off,” Bloomberg BusinessWeek continued. “The service includes incentives for sharing — subscribers can earn credits by sharing stories with people who then sign up for the service, and bloggers can apparently earn credits, as well as possible cash compensation for linking to Ongo stories — but it's not clear whether these credits are going to be enough of a carrot to draw many users . . . The only way something like Ongo would really work is if everyone decided to put content behind a paywall and cut off their RSS (online) feeds. Even if that were to happen, other sites or individual users would just log into the pay service and copy the content and the post it somewhere, which others would then link to.

“Just like iPad apps and other similar approaches, Ongo is yet another attempt to reimpose the scarcity model that newspapers lost when the Web first arrived. Although it might seem presumptuous to condemn something on the day it is launched, this latest attempt seems almost certain to fail.”

Ongo sounds similar to a service that Rupert Murdoch's News Corp. conglomerate was working on for more than a year, Bloomberg BusinessWeek said. It “was designed to aggregate not just content from The Wall Street Journal, The London Times, and other Murdoch papers, but was also working on partnerships with other chains to make their content part of the paid service. The project was killed in October, just a few weeks before it was supposed to be launched, but not before it had spent a reported $30 million and hired more than 100 staffers.”

Coincidentally, The Economist offers a provocative look at ways Murdoch and other London’s publishers are maneuvering to deal with the loss of traditional circulation and advertising as well as readers’ migration to the Internet. There is no perfect analogy to urban dailies in this country, but it’s worth looking at. The Economist breaks the efforts into three broad categories: paywall, everything free online, and a hybrid: free online plus free and reduced cost paper editions.

Paywall: Closest to the American experience is that of Murdoch’s News Corp., best known here as owner of The Wall Street Journal (and Fox News on cable). The WSJ sells a lot of papers and its online paywall allows few stories to be read free. In Britain, it gives nothing away online from The London Times and generally hides its Sunday Times, tabloid Sun and weekly News of the World behind its paywall.

I’ve written about my decision to drop The London Times and The Sunday Times from my online reading rather than pay. I miss them but with the Telegraph, Guardian and Independent online, I have access to some of the best and distinctly unAmerican aggressive reporting. It’s refreshing to read their take on American politics as well as foreign news that online American sites sometimes ignore.

The Economist quotes a consultant’s research that shows that 99 percent of the nonregular London Times readers don't subscribe to the Web site and only 14 percent of Times regular readers do. “Upon hitting the paywall, most head for the BBC’s free Web site.” That, of course, is taxpayer-subsidized competition, but BBC has become so much a foundation of modern British culture that the argument is over the price of TV licenses for homeowners, not whether to support “the beeb.”

News Corp. chose the paywall rather than rely on its share of scattered online ads, The Economist noted. “A reader who visits a Web site once or twice a month is hardly worth having. The firm would rather extract more money from dedicated readers directly.” To get more money, News Corp. does not rely on Web site subscriptions alone. It has a wine club, iPad applications, theater tickets and Italian holidays. News Corp. “wants to get to the point where a newspaper subscription is like its pay television or mobile phone equivalents: something it hurts to cancel.”

Everything online free: A second, opposite approach involves the The Daily Mail — a paper I’ve often quoted for its reporting. The Economist says The Daily Mail believes that online advertising works fine “if you are huge.” This paper has whipped its competition, The Daily Express, in papers sold and has 35 million unique visitors to its Web site monthly. I’m one of them. More than anything, it tips me to source documents I otherwise might never see. In fact, The Economist says The Daily Mail might just become the top draw online when The New York Times goes behind a paywall this year.

Hybrid: What The Economist calls “perhaps the most counter-intuitive strategy” is being pressed by Evgeny Lebedev and his Russian tycoon father, Alexander. A couple of years ago, they bought The Evening Standard, which they turned into a free tabloid, and The Independent, one of Britain’s best papers. Then they launched i, which The Economist calls “a cut down Independent, priced at 20p, one fifth the price of most quality daily newspapers.” That’s about 30 cents U.S.

Lebedev papers lack what The Economist calls a “compelling” Web site.

I’m not sure what that means, given the endless celebrity/bikini focus of Daily Mail photos. (Topless “models” are pretty much the unique daily offering of Murdoch’s tabloid Sun. These “Page 3 girls” themselves have become a British institution.)

But back to the sober Independent.

The Lebedevs “think young people do want to read newspapers — they just don’t want to pay much or anything . . . The Evening Standard’s circulation has more than doubled since going free, to 700,000.” And it’s the next fact that tickles me: “Distribution costs have plunged. Papers are now handed out in central London and moved around the capital by Tube; because they are free, commuters often leave them on trains.”

The Independent was losing advertisers and its mini-paper is drawing some back with combined circulation, The Economist said. “It costs little to assemble and may help keep alive the newspaper habit by offering a halfway house between free and premium papers.”

The Economist suggests “it is highly unlikely that all three experiments will work. It may well be that none of them does.”

And it closes on a scary note, at least for this reader who was raised in part on airmail editions of the then-Manchester Guardian after World War II and reads it online daily now.

The Guardian, which first championed a big, free online presence, has been overhauled by The (Daily) Mail’s Web site. It lacks News Corp.’s expertise in bundling (other goods and services) and is far more expensively staffed than the Lebedevs’ outfits. It is a measure of how quickly things are moving that the newspaper closest to the cutting edge a few years ago now seems most in need of a new strategy.”

That sounds ominously like a “hold for release” obit. If The Guardian goes, so does its Sunday edition, The Observer, and with them, some of Britain’s best journalism.

In the ‘States, lawyer/entrepreneur Steven Brill began Journalism Online, another system that allows newspapers to charge their most regular visitors. The New York Times said Brill’s preliminary data show, that on average, advertising revenue and overall traffic didn't decline significantly on his sample: about two dozen mostly small- and medium-size papers that had been charging readers for several months.

Just as the London experience is no bright guiding light, The New York Times is finding that “divining any potential pattern for large newspapers is difficult.”

Too bad. The Times paywall will allow site visitors to read a certain number of stories for free but frequent visitors will have to pay; newspapers using Journalism Online’s system found initial success with a pay model that allows each visitor a conservative number of articles free each month. That means “most readers would not be affected” by the paywall, The Times said. Subscribers — we take The Times Monday-Saturday at home — will continue to have free, complete access.

Journalism Online said monthly unique visits to the Web sites included in its study fell zero to 7 percent, while page views fell zero to 20 percent. No publishers reported a decline in advertising revenue. Unlike a strict pay wall — which requires a subscription to view almost all editorial content — a model like the one Journalism Online employed doesn't choke off huge amounts of Web traffic, The Times continued.

Brill told The Times, “If you set this meter conservatively, which we urge people to do, it’s a nonevent for 85, 90, 95 percent of the people who come to your Web site.”

Most papers set a limit on the number of free articles readers could view from five to 20 each month. Papers charged a range of monthly subscription fees from around $3.95 to $10.95. The Times quoted L. Gordon Crovitz, a former Wall Street Journal publisher who is helping run the project, who said readers were willing to pay for some, but not all, content online. Consumers “will pay for the few news brands they really rely on, if they use them a lot,” he said.

With the exception of The Wall Street Journal, large American newspaper Web sites have so far remained free. The Times will become the largest American newspaper to employ an online subscriber option when it begins to charge the heaviest users of NYTimes.com. How that plays with Ongo is not clear.

Tim Ruder, chief revenue officer of Perfect Market, a news media consultant, said that what worked for small papers would not necessarily work for large papers. But he added that because no larger national papers have switched from free to partial pay, it was difficult to make any guesses.

“How well that success will translate to larger sites depends on many things, including the quality, nature and exclusivity of content,” Ruder said.

Curmudgeon notes:

• When local media consultant Steve Newsome approached a monthly publication circulated in Greater Cincinnati for coverage of a community event, he was taken aback by its crass response. It was “Pay to Play.” Newsome called it “probably also the most unprofessional e-mail I have seen.” Addressed to “Steve,” it said:

“Sadly, and I am so sorry this sounds shitty BUT it is honest--- if you wanna play you got to also pay SO when you ARE ready to buy space, we will run the story featuring your client’s business that same issue on page one as I promised we would, but not before. I have had commercial enterprises say “ads to come” over and over and over in my 32 years in the media business (19 as founder/owner) and always after we run stories none do buy, so I have adapted this tough (but, I feel very fair) stance.

With all deference, I think you COULD easily meet the deadline and have a meeting or talk to your clients before the 17th and make this work if you REALLY wanted to. I’ve been in this biz a LONG time and honestly, you guys don’t need a “strategy” or even a PR man like you to place ads, no matter how complex you want to make this for your own self-importance. I have seen that over and over and over, too, and as we design FREE for our customers and we bill direct, most have found they do not need the services of anyone to be a middle man, marketing person or PR director. We do it all for them FREE.You also will NOT get the special pricing I sent if you delay, costing your client more of their hard-earned cash. Finally, please don’t bother to write back and say “Because we werre (cq) shitty there will never be ads...” or that you feel I am “unprofessional” with this response. I have made it years and years in this business and I own 100% of it (me, not a bank and not a partner), so I do know of what I speak. If I had 50 for every “You will never work in this town again...” reply this same stance has been given I’d be rich and not needing to sell you or anyone anything. I’d be retired in the UK. I urge an immediate re-think!”

Pay to play is more common than many readers realize. It’s not limited to Republicans in Columbus. Upbeat news features and political endorsements are most often the promised rewards for buying ads. It’s hard to disguise and savvy readers have no trouble recognizing these faux stories and advertorials. Publishers typically defend them as the price of staying in business regardless of the state of the economy. In daily papers, special “supplements” promoting opening/reopening of shopping malls, private high schools, local colleges, auto sales, etc., are standard fare, as are magazine editions dedicated to lawyers, physicians, chefs, landscapers, interior decorates, etc., who are sure to buy ads.

• Two leading national civil libertarians provide a delightful, savvy exchange on the Citizens United decision last year in which the U.S. Supreme Court struck down limits on independent spending on elections by corporations and labor unions. Floyd Abrams, a New York lawyer who yields to no one in his defense of the First Amendment, applauds the conservative 5-4 ruling, saying the spending limits unconstitutionally limit political speech. Burt Neuborne of New York University law school, bemoans the decision as an invitation to corporate ownership of elected officials. Their exchange is in the Jan. 31 issue of The Nation.

* NPR and our local public news station, WVXU (91.7 FM), get a small but important part of their annual budgets from Congress. Rightwingers want to cut or end federal funding because politically neutral NPR isn’t the GOP’s Fox News. It’s another reason to support WVXU and other public radio stations with cash and supportive messages to House members, senators and the White House. Meanwhile, Brits offer a timely lesson of what happens when a conservative government pleads poverty and decides to slash its most famous and reliable modern export, the BBC World Service (heard here at night on WVXU). Unlike its domestic services, BBC’s World Service is funded by the Foreign Office. Despite taking the Queen’s shilling, it rarely danced the Queen’s tune; BBC has a sterling reputation for neutrality and accuracy, especially where uncensored news media do not exist. So far, cuts haven’t targeted English-language broadcasts to North America. Rather, BBC’s decision to close some foreign language broadcasts and fire of hundreds of linguists will impoverish the information available to listeners everywhere. Cuts include local-language broadcasts to troubled regions, including some countries in the Balkans and Central Asia. BBC generally relies on household TV license fees; Foreign Officer funding of World Service is an anomaly. BBC says it will restore some of those world services when the cash-short Foreign Office ends its funding in 2014 and the “Beeb” provides and controls the World Service budget.

• Here’s a story for investigative reporters: Compare the health care U.S. Rep. Gabrielle Giffords gets on her taxpayer-provided health plan and that provided to taxpayers wounded with her. Then compare out-of-pocket costs to each. Did the congressional health plan provide better care than that given to the people who paid for it?

* “When the spokesman needs a spokesman, it’s time to move on.” Words to remember from Andy Coulson, who just quit as spokesman for British Prime Minister David Cameron. Coulson, former News of the World editor, is under fire for the phone-hacking of voice mails (think the Enquirer/Chiquita debacle) during his tenure at the scandal- and scoop-hungry London Sunday tabloid. He denies any knowledge of the hacking which put a reporter and private eye in jail and more recently, led to dismissal of Ian Edmondson, the paper’s assistant editor. Hacking victims reportedly included aides to some royals, sports figures and other celebrities. Meanwhile, investigations into the police investigation of the hacking have begun. Victims are rushing to British courts, suing for invasion of privacy and other grievances. British laws are much tougher than ours: a photo of supermodel Naomi Campbell in public leaving a drug recovery program was ruled an invasion of privacy. NoTW and/or Murdoch’s News Group already have paid major settlements to some hacking victims.

* A politically diverse group of rabbis is calling on Glenn Beck, Roger Ailes and others at Fox News to back off their use of “Nazi” and “Holocaust” in political commentaries that have nothing to do with Nazis or the Holocaust. The critics say these terms are too loaded, too awful, too filled with memories to be trivialized by unrelated partisan name-calling. They also renewed criticism of Beck for implicating liberal billionaire George Soros in the deaths of other Hungarian Jews when he was a teenager during the Holocaust. Now, Beck raises a new question with his seeming fascination with Jews. Why does Beck name eight Jews among nine members of the “intelligent minority” that he says is undermining America?

I have two related questions. First, why are American talk shows and news media likelier to identify someone as Jewish (Soros), Mormon (Beck) or Catholic (Supreme Court justices) than Methodist, Presbyterian, Episcopalian, Nazarene, etc.? Second, is any imagery or memory so sacred that we can’t misuse it in political debates? Or if angry name-calling is the point, what do you call someone after you’ve called them “Nazi,” or “racist,” or “anti-semite”? Those seem to be the so-called nuclear option. “Holocaust denier” comes close; it can lead to a prison sentence is some other nations. In a recent discussion, someone mistakenly suggested my comment indicated that I was a racist. It silenced me. If that happens again, however, I think my smiling, lying response will be “Yes, I am. So?”

* My evil twin’s sense of humor was tickled to learn that Al Jazeera, the Qatar-based satellite news network, felt threatened after revealing documents on Israeli-Palestinian negotiations. Now, someone besides the U.S. military probably will bomb them. But which side? Both? And that recalled a meal in East Jerusalem when I was on assignment for The Enquirer. We went to a popular cafe jointly owned by an Israeli and a Palestinian. Because no one knew when one side or the other would toss a bothersome small bomb, the last tables filled by cogniscienti were by the front windows.

* Events are moving so fast in Egypt that almost anything I write here will be overtaken by the time you read it. This is the perfect time, however, to go online and follow events in North Africa and the Middle East on English-language foreign news media: Al Jazeera English, Beirut’s Daily Star, Jerusalem Post, and Egypt’s Daily News (for what’s not reported), etc. In Egypt, Al Jazeera is having its “CNN moment.” Recall how CNN was abused for broadcasts from Baghdad during the first Gulf War. Now, the satellite network is targeted by arsonists for a real/imagined role in ignoring/aiding the rebellions in Tunisia and Egypt. In the past week, Al Jazeera English said the Egyptian government cut landlines to its Cairo studio and jammed some of its satellite signals. A few days later, Mubarak ordered Al Jazeera to close its Cairo office, saying its Arabic broadcasts were fueling the protests.

As the government struggled to contain social networks, Al Jazeera’s unjammed satellite broadcasts to Egypt probably were Egyptians’ and the rest of the Arab world’s primary source of immediate information. That reflects Egypt’s “Mumbai moment” when officials realized the aid that Twitter, Facebook and other social media gave mass anti-government mobilization in the streets. In Mumbai, the Indian government was slow to acknowledge the possibility that Islamist terrorists in the luxury hotel were getting forwarded tweets from allies and using that information to hold off forces sent to capture or kill them. Egypt’s government was losing the streets to the protests when it shut down those social media, robbing activists of a mobilizing tool. As it was, Egyptians found ways around government censorship and images and words were plentiful online.

UC’s Elizabeth Frierson and I met by telephone years ago during another Middle East  crisis. I needed a local expert and everyone I cornered urged me to call her.  Abandoning caution, she spoke openly with me. Enquirer readers benefited from her candor and expertise as an historian of the Middle East and North Africa. The clarity of her thinking and writing are displayed again in a signed column about the evolving Egyptian revolution Wednesday (Feb. 2) on the paper’s Opinion Page. It would be hard to imagine an Egyptian writing more sympathetically about their nation, frustration and aspirations. Read it.

 


CONTACT BEN L. KAUFMAN: editor@citybeat.com

 
 
 
 

 

 
 
 
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