Editorial: Response to Yelvington.com's Eight Barriers to Local Content.

In a recent post on Yelvington, the author argues why paid content is a false grail. Summarizing:

1. The painful lessons of experience, i.e. it has not worked before. It certainly hasn't worked well for the PC internet. Handhelds hold promise because people are used to paying for value added service on a mobile. But no models for news content have emerged. Local media companies will have to invent new applications for handhelds, rather than re-purposing local news content.
2. The problem of scale (volume)--basically, unique visits mean nothing, the users who visit three times a week for more than one minute at a time are the key. A paid content model would require a large number of these users, because only a small percentage would opt to pay. The numbers are not there. "How can you get them to pay if you can't even get them to visit frequently when it's free?"
3. The problem of scale (breadth)--Paid content, along with enough free content for advertising...that is a whole lot of content.
   
4. Competition--It is true that re-purposing existing content to the Web is easy. Therefore, there is a sea of competition. Supposing then we differentiated with local content? That leads to the next item.
   
5. Lack of unique content, coupled with a false sense of being unique. The argument is that newspapers maintain the mindset of a decades-old but now broken monopoly, while your audience has less confidence in your brand and uniqueness. The author makes a (cheap) shot at newspapers, saying newsroom cuts in recent years has exacerbated this problem.
6. Support costs. Not a big deal in my book. Outsource it.
   
7. Your own staff--Makes the valid point that your online people will fight against paid content because they buy into Web 2.0 free and open hype. However, increasingly I talk to experienced media executives who understand sales driven online initiatives. Your online guys are the ones I try to avoid when I sell into your newspaper.
8. Relative strength of the geotargeted advertising model.--Though this was initially number 4, I saved it here for last because it is the lesson. I once heard someone say that given the difficulties of running any enterprise, always use an existing business model rather than try to invent a new one. Yelvington points out that there is so much inventory on the web that CPM of non-local advertising has been driven into the sand. Local adverting, supported by a sales team, is a substantial revenue stream. Moreover, it is an established model. What has changed, as mentioned above, is that the local monopoly is kaput and the brand has been eroded. So innovative energy is better spent creating a new mix of print and digital content that reinvigorates the brand, with a local advertising value proposition that can be sold to local businesses. "Local advertising" is itself too simplistic a term, as local news-gathering organizations are positioned to help local businesses use a broader spectrum of methods to communicate with local customers.
   

Links and Sources

• Yelvington.com: Eight barriers to local paid content
  

Hearst plans to start selling porn?

Much of the conversation regarding the crisis affecting newspapers has revolved around the idea that people should not get content for free. The tone of this argument is unfortunate, because it reeks of the antagonism the music industry has shown to music fans in recent years, accusing them of stealing content. There is one key difference--there never was a true model for paid content for newspapers.

For most newspapers, the primary source of revenue has always been display advertising, and subscription fees are there really just to cover print and delivery costs, and assure advertisers that people actually read the thing. Raising fees to cover the rising costs is one thing, but it is hard to believe that newspaper companies would try to make print subscriptions a key source of revenue going forward.

However, the Hearst memo indicates that it intends to do just that.

Our print subscribers don’t pay us enough today that we can say they are actually paying for content. Rather, we only ask readers to pay for a portion of the cost of printing the paper on newsprint and delivering it to the reader’s doorstep. We must gradually, but persistently, change this practice.

Innovations in distribution and cost structure can make the print edition a lasting force. Indeed, technology like the Kindle are the first step in putting "print" (or rather text) back into our hands at breakfast time. However, there is no reason to expect a subscription model for paid newsprint will ever be viable. Concentrate innovative powers on local advertising and other ways of adding value to local businesses.

However, it is probably easier to build an offline paid content model than an online one. Bill Bishop, an associate of mine here in Beijing, fellow SAIS graduate, and founder of CBS Marketwatch, once said to me, "People will only pay for four kinds of content online; Business/financial intelligence, entertainment (games/music), gambling, and porn."

Perhaps Hearst plans to start selling porn?

Links and Sources

• Wall Street Journal: Hearst to Begin Charging for Digital News


• Wall Street Journal: Information Wants to Be Expensive


• Seeking Alpha: Newsday et al: Too Little Too Late
  

Newsday has the audience to make paid content work.

"We plan to end the distribution of free Web content and make our news gather capabilities a service to our customers," Cablevision COO Tom Rutledge said on an earnings call. The statement is up to interpretation but it has added to recent conversation about micropayments and other models for paid content.

Ken Doctor at Content Bridges sites E&P Nielson Rankings in arguing that Newsday will have a tough time monetizing the mere 4.5 minutes a month the average unique visitor spends on the site. Number of unique visitors is not a significant statistic for the purposes of understanding how a paid-content model will work.

Unique visitors include everyone who has seen the site, even those who arrive through Google search and stay only a minute. The people who would pay for Newsday content are those who (1) visit the site often, (2) have high engagement in the website's offerings, and/or (3) are already paying customers--either to a print subscription or classified/display advertising. The goal is to find out who they are a create a paid content product for them.

Newsday has a strong subscriber base. According to a Newsday classifieds rep reached by phone, they have 700,000 exclusive readers, circulation of 387,000, and altogether 3/4 of adults in Long Island. 75% of their readers have the publication delivered to their door. However, of that circulation, who is using the website, and how are they using it? Alternatively, how much of those unique website visitors pay for a print edition or for advertising, and (again) how do they use the website?

Content Bridges quotes email from an unnamed Newsday reporter, "[At Newsday] the Web is seen, still, as an accessory to the dead-tree edition. There is no emphasis from the newsroom editors on getting content online quickly, on blogging, etc.". Newsday will not succeed by adding an online price tag to made-for-print content. It has to build the internal structures needed to develop digital content products to an audience that will pay for them.

Links and Sources

• Editor and Publisher: Experiment to Watch: 'Newsday' To Launch Pay-for-Play on Web
  
  
• Content Bridges: Paid Newsday Site? What's 4 1/2 Minutes Worth to You?


• Editor and Publisher: EXCLUSIVE: Top 30 Newspaper Web Sites, By Time Spent