Note the date that this ran in CJR – and even that was late for the industry to come to a reckoning. The New York Times has now embraced a pay model as its future and is beginning to see a profit from its subscription base. True, the NYT is a unique entity, in terms of content, but that’s why it needed to jump first. The next step is for other papers with a national presence – The Washington Post, the L.A. Times – to follow suit. What they are waiting for, I have no clue. If you can’t charge for your product, you have no product – a freshman marketing major can tell you as much. And again, content and copyright have value. They matter. –DS/em>
The Columbia Journalism Review, July 2009
Reprinted with permission.
Most readers won’t pay for news, but if we move quickly, maybe enough of them will. One man’s bold blueprint.
To all of the bystanders reading this, pardon us. The true audience for this essay narrows necessarily to a pair of notables who have it in their power to save high-end journalism—two newspaper executives who can rescue an imploding industry and thereby achieve an essential civic good for the nation. It’s down to them. The rest of the print journalism world is in slash-and-burn mode, cutting product and then wondering why the product won’t sell, rushing to give away what remains online and wondering further why that content is held by advertisers to be valueless. The mode is full-bore panic.
And yet these two individuals, representing as they do the two fundamental institutions that sit astride the profession, still have a card to play, and here’s a shard of good news: it’s the only card that ever really mattered. Arthur Sulzberger Jr. and Katharine Weymouth, publishers of The New York Times and The Washington Post, are at the helms of two organizations trying to find some separate peace with the digital revolution, though both papers have largely failed to do so, damaging their own still-formidable institutions and, on a deeper level, eviscerating more vulnerable regional newspapers and newspapering as whole. Yet incredibly, they delay, even though every day of inertia means another two dozen reporters somewhere are shown the door by a newspaper chain, or another foreign bureau closes, or another once-precise and competent newsroom decides it will make do without a trained city editor, an ombudsman, or a fully staffed copy desk.
This then, is for Mr. Sulzberger and Ms. Weymouth:
Content matters. And you must find a way, in the brave new world of digitization, to make people pay for that content. If you do this, you still have a product and there is still an industry, a calling, and a career known as professional journalism. If you do not find a way to make people pay for your product, then you are—if you choose to remain in this line of work—delusional.
I know that content wants to be free on the Internet. I know that the horse was long ago shown the barn door and that, belatedly, the idea of creating a new revenue stream from online subscriptions seems daunting and dangerous. I know that commentary—the froth and foam of print journalism—sells itself cheaply and well on thousands of blogs. I know that the relationships between newspapers and online aggregators—not to mention The Associated Press and Reuters—will have to be revisited and revised. True, all true.
Most of all, I know that here you are being individually asked to consider taking a bold, risk-laden stand for content—that antitrust considerations prohibit the Times and ThePost, not to mention Rupert Murdoch or the other owners, from talking this through and acting in concert. Would that every U.S. newspaper publisher could meet in a bathroom somewhere and talk bluntly for fifteen minutes, this would be a hell of a lot easier. And yes, I know that if one of you should try to go behind the paywall while the other’s content remains free, then, yes, you would be destroyed. All that is apparent.
But also apparent is the fact that absent a radical revisiting of the dynamic between newspapering and the Internet, there will be little cohesive, professional, first-generation journalism at the state and local level, as your national newspapers continue to retrench and regional papers are destroyed outright.
You must act. Together. On a specific date in the near future—let’s say September 1 for the sheer immediacy of it—both news organizations must inform readers that their Web sites will be free to subscribers only, and that while subscription fees can be a fraction of the price of having wood pulp flung on doorsteps, it is nonetheless a requirement for acquiring the contents of the news organizations that spend millions to properly acquire, edit, and present that work.
No half-measures, either. No TimesSelect program that charges for a handful of items and offers the rest for free, no limited availability of certain teaser articles, no bartering with aggregators for a few more crumbs of revenue through microbilling or pennies-on-the-dollar fees. Either you believe that what The New York Times and The Washington Postbring to the table every day has value, or you don’t.
You must both also individually inform the wire-service consortiums that unless they limit membership to publications, online or off, that provide content only through paid subscriptions, you intend to withdraw immediately from those consortiums. Then, for good measure, you might each make a voluntary donation—let’s say $10 million—to a newspaper trade group to establish a legal fund to pursue violations of copyright, either by online aggregators or large-scale blogs, much in the way other industries based on intellectual property have fought to preserve their products.
And when the Justice Department lawyers arrive, briefcases in hand, to ask why America’s two national newspapers did these things in concert—resulting in a sea change within newspapering as one regional newspaper after another followed suit in pursuit of fresh, lifesaving revenue—you can answer directly: We never talked. Not a word. We read some rant in the Columbia Journalism Review that made the paywall argument. Blame the messenger.
Truth is, a halting movement toward the creation of an online subscription model already exists; at this writing, internal discussions at both the Times and The Post are ongoing, according to sources at both papers. And one small, furtive, and cautious meeting of newspaper executives took place in Chicago in May to explore the general idea of charging for online distribution of news. As for Rupert Murdoch, his rethought decision not to freely offer The Wall Street Journal online speaks volumes, as do his recent trial balloons about considering an online subscription model for less unique publications. Where the Times and The Post lead, Murdoch and, ultimately, every desperate and starving newspaper chain will simply follow. Why? Because the need to create a new revenue stream from the twenty-first century’s information-delivery model is, belatedly, apparent to many in the industry. But no one can act if the Times and The Post do not; the unique content of even a functional regional newspaper—state and municipal news, local sports and culture—is insufficient to demand that readers pay online. But add to that the national and international coverage from the national papers that would no longer be available on the Internet for free but could be provided through participation in the news services of the Times and The Post and, finally, there is a mix of journalism that justifies a subscription fee.
Time is the enemy, however, and the wariness and caution with which the Times and ThePost approach the issue reveal not only how slow industry leaders have been to accurately assess the realities, but how vulnerable one national newspaper is to the other. Should theTimes go behind a pay curtain while the Post remains free, or vice versa, the result would be a short-term but real benefit to the newspaper that fails to act, and fiscal bleeding for the newspaper attempting to demand recompense for work that is elsewhere being provided free of charge. Neither the Times nor the Post can do this alone.
Will it work? Is there enough demand for old-line, high-end journalism in the age of new media? Will readers pay for what they have already accepted as free? And can industry leaders claw their way back in time to the fateful point when they mistook the Internet as a mere advertising opportunity for their product?
Perhaps, though the risks are not spread equally. Given the savage cutting that has been under way at regional, chain-owned newspapers over the last decade or more, it may be too late for some metro dailies; they may no longer have enough legitimate, unique content to compel their readership to pay. But for the Times and The Post—entities that are still providing the lion’s share of journalism’s national, international, and cultural relevance—their reach has never been greater.
The proof is that while online aggregation and free newspaper Web sites have combined to batter paid print circulation figures, more people are reading the product of America’s newspapers than ever before. Certainly more of them are reading the Times (nearly 20 million average unique visitors monthly) and the Post (more than 10 million monthly unique visitors), though they are doing it online and not paying for the privilege. And tellingly, the Times—its product still unmatched in print or online by other mainstream publications or anything that new media has yet offered—has transformed its print circulation into a profit center for the first time in years, merely by jacking up the price, with newsstand prices rising in June to $2 and up to $6 on Sunday.
Clearly, the product still moves. But to what purpose, when more and more readers rightly identify the immediate digitized version as superior, yet pay nothing for that version, and online advertising simply doesn’t deliver enough revenue? If the only way to read theTimes is to buy the Times, online or off, then readers who clearly retain a desire for that product will reach for their wallets. And those comfortable acquiring their news at a keyboard will be happy to pay much less than they do for home delivery.
No doubt some mavens of new media who have read this far have spittle in the corners of their mouths at the thought of the dying, tail-dragging dinosaurs of mainstream journalism resurrecting themselves by making the grand tool of the revolution—the Internet—less free. There is no going backward, they will declare, affronted by the idea that a victory already claimed can even be questioned. The newspaper is all but dead, they will insist. Long live the citizen journalist.
Not so fast. While their resentment and frustration with newspapers—given the industry’s reduced editorial ambitions—are justified, their reasoning and conclusions are not. A little history:
For the first thirty years of its existence as America’s primary entertainment medium, television was—after the initial purchase of the set itself—provided at no cost to viewers, instead subsidized by lucrative ad revenues. The notion of Americans in 1975 being asked to pay a monthly bill for their television consumption would have seemed farcical. Yet in the ensuing thirty years, we have become a nation that shells out $60, $70, or $120 in monthly cable fees; indeed, whole vistas of programming exist free of advertising revenue, subsidized entirely by subscriptions.
How did this happen?
Again, content is all. The move to the pay-cable model was preceded by an expansive effort to create additional programming to justify the upgrade from network fare to multichannel packaging. In the beginning, some of that new content amounted to little more than feature-film purchases, additional sports, and twenty-four-hour news and weather. But ultimately, the quantitative increase in programming was accompanied by a qualitative improvement in television fare. You paid more, you got more: HBO, Showtime, Cinemax, and, ultimately, a string of niche channels catering to specific audiences and interests. One can critique American TV however ruthlessly one wishes, but the industry is doing something right. More channels, more programming, more revenue—indeed, a revenue stream where none had existed.
By contrast, we have American newspapering, an industry that a quarter century ago was—pound for pound—as lucrative as television, with Wall Street commanding profit margins of 25 and 30 percent. As with television, circulation was accepted as a loss leader, strongly subsidized so that the money it cost to deliver content was more than made up by advertising dollars.
But unlike television, in which industry leaders were constantly reinvesting profits in research and development, where a new technology like cable reception would be contemplated for all its potential and opportunity, the newspapering world was content to send its treasure to Wall Street, appeasing analysts and big-ticket shareholders. There was no reinvestment in programming, no intelligent contemplation of new and transformational circulation models, no thought beyond maximized short-term profit.
Incredibly, and in direct contrast to the growth of television, the remaining monopoly newspapers in American cities—roped together in unwieldy chains and run by men and women who had, by and large, been reared in boardrooms rather than newsrooms—spent the last of their profitable days cutting product, scaling back news holes, shedding veteran reporters, and reducing the scope of coverage. Hiring freezes and buyouts were ongoing in the early and mid-1990s, all of this happening amid the unspoken assumptions that the advertising base was everything, that content didn’t really matter, that news was the stuff troweled into the columns next to the display ads, that there was more profit producing a half-assed, mediocre paper than a good one.
In the 1970s, American auto manufacturing was complicit in its own marginalization through exactly the same mindset: Why not churn out Pacers and Gremlins and Vegas, providing cheap, shoddy vehicles that would be rapidly replaced with newer cheap, shoddy vehicles? What would captive American consumers do? Buy a car from Japan? Germany? South Korea?
Well, yes, as it turns out. But the analogy doesn’t quite capture the extraordinary incompetence exhibited by the newspaper industry. After all, a Toyota is a good car and all that was required for Detroit to begin its agonizing decline was for consumers to be offered a legitimate choice.
In the newspaper industry, however, the fledgling efforts of new media to replicate the scope, competence, and consistency of a healthy daily paper have so far yielded little in the way of genuine competition. A blog here, a citizen journalist there, a news Web site getting under way in places where the newspaper is diminished—some of it is quite good, but none of it so far begins to achieve consistently what a vibrant newspaper, staffed with competent, paid beat reporters and editors, once offered. New-media entities are not yet able to truly cover—day after day—the society, culture, and politics of cities, states, and nations. And until new models emerge that are capable of paying reporters and editors to do such work—in effect becoming online newspapers with all the gravitas this implies—they are not going to get us anywhere close to professional journalism’s potential.
Detroit lost to a better, new product; newspapers, to the vague suggestion of one.
Beyond Mr. Sulzberger and Ms. Weymouth—and yes, get cracking, you two; September comes fast—there is, in retrospect, a certain wonderment that so many otherwise smart people in newspapering could have so mistaken the Internet and its implications. A lot has been written on this phenomenon and more will follow, but three factors are worth noting—if only because of their relevance to the online subscription model that is clearly required:
First, there is the familiar industrial dynamic in which leaders raised in one world are taken aback to find they have underestimated the power of an emerging paradigm.
When I left my newsroom in 1995, the Internet was a mere whisper, but even five years later, as its potential was becoming a consideration in every other aspect of American life, those in command of The Baltimore Sun were explaining the value of their free Web site in these terms: this is advertising for the newspaper. Young readers will see what we do by “surfing the Web” and finding our site, and they will read some, and then settle down and buy the newspaper.
Looking back, it sounds comical. Absent the buyouts and layoffs and lost coverage of essential issues, it would be buggy-whip-maker funny. But as it stands, the misapprehension of men and women who spent their lives believing in the primacy of newsprint is as tragic as the strategists who built battleships even after Billy Mitchell used air power to bomb one to the ocean floor in 1921. Regardless, it was industry-wide in newsrooms. On the business side, they were a little busy hurling profits at Wall Street to pay much attention.
Second, the industry leaders on both the business and editorial sides came of age in an environment in which circulation had long been a loss leader, when newspapers never charged readers what it actually cost to get the product to their doorstep. Advertising, not content, was all.
This specific dynamic maximized everyone’s blindness to the real possibilities of a subscription model. Every reader who can be induced to accept an online subscription to a newspaper—at even a half or a third the price of doorstep delivery—represents the beginning of a new and quite profitable revenue stream.
For example, if The Baltimore Sun’s product isn’t available in any other fashion than through subscription—online or off—and if there is no profit to be had in delivering the paper product to homes at existing rates, then by all means, jack up those rates—raise hard-copy prices and drive as many readers as possible online, where you charge less, but at a distinct profit.
Yes, you would lose readers. But consider: 10 percent of the existing 210,000 Baltimore Sun readers, for example, who pay a subscription rate less than half the price of home delivery, or roughly $10, would represent about $2.5 million a year. Absent the cost of trucks, gas, paper, and presses, money like that represents the beginnings of a solid revenue stream. In the same fashion, the first handful of subscribers to HBO watched bad movies and boxing, but as the revenue grew, it paid for original programming and, ultimately, a vast expansion of product. First, someone had to dream it. At newspapers, no one did. Newspaper dreams of the last fifty years involved luscious department-store display ads and fat classified sections—visions that can no longer be.
Last, and perhaps most disastrous, the rot began at the bottom and it didn’t reach the highest rungs of the profession until far too much damage had been done.
As early as the mid-1980s, the civic indifference and contempt of product inherent in chain ownership was apparent in many smaller American markets. While this was discussed in some circles, usually as a matter of mild rumination, little was done by the industry to address a dynamic by which men in Los Angeles or Chicago or New York, at the behest of Wall Street, determined what sort of journalism would be practiced in Baltimore, Denver, Hartford, or Dallas. If you happened to labor at a newspaper that was ceding its editorial ambition to the price-per-share, it may have been agony, but if you were at the Times, thePost, The Wall Street Journal, or the Los Angeles Times, you were insulated. As the Internet arrived, profit margins were challenged and buyouts began at even the largest, most viable monopoly papers in regional markets. But only when the disease reached their own newsrooms did it really matter to the big papers.
Last year at The Washington Post, the paper’s first major buyout arrived at about the time of its six Pulitzer victories. The day the prizes were announced, newsroom staffers publicly predicted that such winning journalism would likely not be replicated at the Post in an era of cutbacks. This, they moaned, might be the newspaper’s last great prize haul. But of course the buyout of one hundred reporters at the Post, while painful and damaging, represented a bit more than a 10 percent reduction in force. At that point, the loss of the same number of reporters at The Baltimore Sun would have been a 30 percent reduction. The Sun, at this point, has had about eight rounds of buyouts and layoffs, beginning well before the arrival of the Internet, dropping the editorial staff from 500 to 160. Given that kind of carnage, there was no need for the Post to have any prize-based worries. In the end, the Times, the Post, and the Journal will be taking up more seats at the Pulitzer luncheon, not fewer. With whom, after all, do they think they are still competing?
The cancer devouring journalism began somewhere below the knee, and by the time the disease reached the self-satisfied brain of the Washington and New York newsrooms, the prognosis was far worse. Or to employ another historical metaphor: when they came for the Gannett papers, I said nothing, because I was not at a Gannett paper.
For the industry, it is later than it should be; where a transition to online pay models would once have been easier with a healthy product, now the odds for some papers are long. But given the timeline, here are a few possible outcomes, if the Times and The Postgo ahead and build that wall.
First scenario: The Times and The Post survive, their revenue streams balanced by still-considerable print advertising, the bump in the price of home delivery and newsstand sales, and, finally, a new influx of cheap yet profitable online subscriptions.
And reassured that they can risk going behind the paywall without local readers getting free national, international, and cultural reporting from the national papers, and having seen that the paid-content formula can work, most metro dailies will follow suit. As they do, they re-emphasize that which makes them unique: local coverage, local culture, local voices—coupled with wire-service offerings from the national papers otherwise available only through paid sites.
Some of the chain dailies may well make the mistake of taking the fresh revenue and rushing it back to Wall Street. We need to worry that although readers, like television viewers, might be convinced to pay online for a strong, unique product, there is little in the last twenty years to suggest that newspaper chains would reinvest to create such a product. For those papers, it’s likely that a thin online subscriber base will reflect the hollowness of their product.
But in our scenario, others do reinvest in their newsrooms, hiring back some of the talent lost. Coverage expands, becomes more local, even neighborhood-based, which in turn leads to more online subscriptions, as well as additional online advertising lured by those subscribers.
Second scenario: In those cities where regional papers collapse, the vacuum creates an opportunity for new, online subscription-based news organizations that cover state and local issues, sports, and finance, generating enough revenue to maintain a slim—but paid—metro desk. Again, given the absence of circulation costs, such an outcome becomes, by conservative estimates, entirely possible.
Here is a back-of-the-envelope plan. In a metro region the size of Baltimore, where 300,000 once subscribed to a healthy newspaper, imagine an initial market penetration of a tenth of that—30,000 paid subscribers (in a metro region of more than 2.5 million), who are willing to pay $10 per month. This is less than half their previous Sun home-delivery rate for the only product in town that covers local politics, local culture, local sports, and financial news—using paid reporters and paid editors to produce a consistent, professional product.
That’s $300,000 a month in revenue, or $3.6 million a year, with zero printing or circulation costs. Moreover, that total doesn’t include whatever money online advertising might generate. Advertisers—considering a paid circulation base rather than meaningless Web hits—might be willing to once again pay a meaningful rate.
Round it up to $4 million in total revenue, then knock off a half million in operating and promotional costs. At $100,000 a position for editors and reporters, that’s a metro desk of some thirty-five paid souls, enough to provide significant coverage of a city and its suburbs. If the reporters are on $50,000 contracts and benefits are not initially included, it’s a newsroom of seventy—larger than the Sun’s metro staff in the nineties.
And if that online-only, paid-subscription daily were a locally-run nonprofit, with every increase in subscriptions going to fund additional coverage, well, what more does professional journalism require to survive at the state and local level?
Third scenario: Except for one in which professional journalism doesn’t endure in any form, this is the worst of all worlds. The Times and The Post survive because their coverage is unique and essential. But the regional dailies, too eviscerated to offer a credible local product, cannot entice enough online subscriptions to make do. They wither and die. And further, new online news ventures are stillborn because both national papers become exactly that—national.
Imagine major American cities without daily newspapers, and further imagine the Times or The Post employing just enough local journalists in regional markets to produce zoned editions—The New York Times with, say, a ten-person St. Louis bureau, giving readers two or three pages of metro, sports, and local business coverage. Or a Washington Post edition for the Baltimore region, using a dozen ex-Sun staffers to create a thin but viable product, where once a comprehensive metro daily once stood.
The joke then would be on the Justice Department lawyers as well. The longer it takes for the newspaper industry to get its act together, the more likely it is that regional dailies will be too weak and hollow to step through the online-subscription portal. Even localized Internet startups—the fledgling, digitized versions of professional newsrooms—will find themselves competing with, or bought out by, national monoliths. More monopoly, not less, for as long as we continue to fret the antitrust issues.
But all of this is, of course, academic. Because at this moment, Mr. Sulzberger and Ms. Weymouth have yet to turn that last card. Until they find the will and the courage to do so, no scenario other than the slow strangulation of paid, professional journalism applies. Meanwhile, we dare to dream of a viable, online future for American newsrooms.
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