May 27 2011

The Paywall

Posted by Steve Ross in media

Ed Note: I started writing this yesterday afternoon. Since then there have likely been updates that I’ve missed, and I may be restating some stuff that’s already out there. Time constraints being what they are, I offer this in the spirit of talking about what could be. As time permits and more information emerges, I’ll either update, or offer additional posts on the topic. It’s a big one.

Bold move or big mistake?


It was announced yesterday, perhaps a bit prematurely, that the Comercial Appeal was going behind a paywall at some yet to be determined time for $10/mo., if you aren’t a subscriber. There are more details, like day passes and such, but I’ll wait for them to get their release out before I really get in to all that.

Mediaverse has a good start on the whole scene, and is promising more later.

There are a lot of questions yet to be answered. In the mean time one of the most interesting things about the announcement is that it was covered elsewhere first. Not exactly controlling your message guys.

So what about the paywall? Why are they doing it and what do they hope to gain from doing it? Well, I think everyone knows that newspapers are dying, right? Well, maybe not dying, but a the landscape has changed, and that means things have to change, and revenue streams have to be made more revenuee. As the CA has worked to adapt to that changing landscape, they’ve made some missteps, that I hope they don’t repeat.

So while we’re waiting for the details, I thought it would be a good idea to give some suggestions about how a digital subscription, or paywall might be of value to consumers of news, especially the junkies like me. All of this is in the spirit of keeping a journalistic institution not only alive, but thriving, which is essential to a functioning democracy.

Content

The deadwood has been getting thinner and thinner, and not just in numbers of pages, but also the width of those pages. Some of this is due to slow ad sales, some due to rising costs. All told, it costs a lot to by ink buy the barrel and paper to put that ink on. At the end of the day, people don’t take the paper because of ink or paper, or ads, excluding perhaps the Sunday edition, they take it for content. I believe one of the biggest challenges facing the CA is that of detailed and original content.

This is not a reflection on the reporters, it’s a reflection on editorial decisions and space constraints. I see the reporters at public meetings and events all over town. More often than not they’re either scribbling down notes, or pecking at a laptop. Heck, I know most of them. I see them writing, but I’m pretty sure I often don’t see their product, and if I do, the number of column inches doesn’t match the scribbles and pecks that I observed.

This is a condition caused by the constraints of a physical paper. You got the ads to pay for a 50 page paper, go for it. If not, it’s more like 35. I get it. So if the paywall means freeing yourself of the constraints of the space deadwood allows and actually having a “this is what we printed, there’s more online” type of paper, I’m all for it. Do it tomorrow for crissakes. But I’m not sure that’s what y’all had in mind, so you’ll have to pardon me if I seem a bit skeptical going forward in the post.

Access

The way this was presented is that it may cost more to access the paper if you’re not already paying for it. I get that reporters, editors, paper, and ink aren’t free. I’m willing to pay for access, as long as the content is guaranteed to be there. After I read Chris Peck’s editorial back in January, I was and still am hopeful that more and more detailed content is coming. Mostly because of this paragraph:

There is an appetite for local news. But the bill for the full-course meal increasingly can’t be paid for in the old way. The print audience isn’t as big as it was, the paid adverting revenues aren’t as rich as they were, and the number of paid journalists has declined as a result.

To me, this signaled upcoming expanded coverage of local and statewide news.

While there has been more focus on local news as of late, and thank God for it, coverage of statewide issues has been largely lacking, and not just from the CA, but from just about every paper in the state. I touched on this Wednesday.

So if paying for access means that there are more reporters covering more stories and deeper coverage, here, please take my credit card. But I’m not sure that’s what Peck et al. have in mind. It would take over 350 digital subscriptions to get to one reporters salary (maybe more maybe less, I have no idea what they make). When I’ve seen this happen at other newspapers I’ve seen an initial burst of expanded coverage, and a slow spiral back to where they were before the paywall or “premium” content launched.

This may be because they didn’t get the subscribers they needed to pull it off. It may be because of editorial decisions, or it may have been because of a need to drive shareholder value, and that’s what I fear this is really all about.

Business is the Business of Making Money

It’s not called “the newspaper business” because it’s a charity, folks. They are in the business of making money and they do it all while informing the populace. But newspapers are and have been for some time, a big money business. It takes a lot to get into the deadwood side, and that means you have to have investors who want something in return for their investment.

I understand and am fine with this. If folks don’t make money, no one gets paid. I like getting paid and I’m sure you do too. But news isn’t and hasn’t been a big growth industry. Just look at the staff size compared to the days of the newspaper wars and you know that the business is contracting.

The newspaper business isn’t like oil, or consumer goods that have a big upside and rake in billions a quarter. News is slow growth, it’s personal, it’s conversational and very fragmented. What I want as a consumer is very different than my neighbors, or the people down the street.

Sony, or Apple or whomever doesn’t have this problem. They make a thing, add a bell or whistle, presto, people either buy it or they don’t. Balancing the content that consumers want is a difficult task indeed.

At the end of the day, content brings in readers which should increase circulation. Greater circulation brings in more dollars. More dollars should allow for more content spurring for more growth. But that’s not how its worked out. News organizations are expected to outperform the economy, just like every other business out there. If they don’t do it, then there have to be cuts, and that’s been at the expense of hard working reporters, printers and editors. Eventually, someone’s gonna lose, and so far it’s been lifelong newspeople and consumers, which, in my view has depressed the upside of the business and I’m not sure that shareholders and boards get this.

Conversation driver

The promise of digital content is the removal of one of the biggest costs associated with the news, the actual physical paper. But its a crowded space, with national and international players taking an ever bigger piece of the pie. Maintaining a revenue stream to pay for the other huge cost of a newspaper, payroll, is hard to do with all the competition online.

The way to do it is to offer compelling content that draws people in. As Peck noted in his Tsunami editorial, the CA does drive a lot of the news in this area. Think of the Ernest Withers/FBI piece, and all the articles and broadcast news stories that followed. It was a conversation driver.

But driving the conversation and realizing the revenue from that is difficult in both the online space and the deadwood. You don’t see the immediate gains from it like you do when you come out with a new model of TV or computer because the space is so personal. And just like relationships, they can take a long time to foster and a short time to destroy.

While I’m a firm believer that reporters, editors, printers, delivery folks and investors need to get paid for their investment, be it time, expertise, or money, I also know that springing something like this on people, without really laying it out there for them is off-putting, and I think some folks felt the brunt of that yesterday.

People Hate Change, And Hate It Even More If It Doesn’t Deliver

People say they want change, but the rarely like it when they get it. It’s so easy to ignore that there are costs associated with everything. We all want more for less. We don’t care how much it costs someone else as long as we don’t feel it. It’s a cultural thing, a disconnect that is fueling a toilet tornado.

While folks like me have been hollering for more content, not everyone gets that there’s a cost associated with it. I do, and like I’ve said already, I’m ready. But with change comes a danger, a danger that you may not deliver. That’s the chance you take.

If you do deliver, some will notice, others won’t but hopefully they’ll just keep paying. If you don’t deliver someone will step in and do it for you, which nets you nothing.

Remember, this is about relationships, and nothing says goodbye like disappointment.

Fee Structure for the Future?

Finally I want to talk about the fee structure as I understand it. As Bruce at the Memphis Flyer noted, a Sunday subscription is less than a digital subscription for a year. This tells me something:

That the Commercial Appeal doesn’t believe in the strength or stability of their online ad system and instead of working to strengthen it, have chosen to push people to the deadwood to drive up physical circulation and by extension ad revenue from that physical circulation, which is the largest piece of the pie in terms of revenue.

I hope this isn’t the case because this is not a forward looking solution, it’s a stop gap. In effect, the digital subscribers are paying more to defray the lost revenue of declining or stagnant ad revenue in the deadwood.

If this is the case, then I don’t have a lot of hope for expanded coverage either.

I’m in wait and see mode. I want to hear what the leaders of the CA have in mind. I will give it a chance. I will set my expectations to what they promise to deliver. But no matter what that promise is, as a consumer, there are things that I want. If the CA wants my money in perpetuity, then they should work to deliver those things. If not, I’ll look elsewhere and take my money with me. That’s the free market folks, and everyone needs to understand, there’s no monopoly on news. Especially not now.

In other news, E.W. Scripps, the parent company of the Commercial Appeal, has announced the exit of the senior vice president of its newspaper division. Interesting timing.