Newspapers Can Make Money Online

You can’t eat page views for dinner.
American newspapers are finding that out the hard way as their disastrous decision based on the “information should be free” mantra to give their content away on their web sites has led to failure. While this has probably been only a minor factor in the demise recently of the Rocky Mountain News, Seattle Post-Intelligencer and Tucson Citizen and the comatose financial state of many other papers, it has become a great motivator.
Now, momentum is building the other way … instead of sitting back and wistfully hoping that a high number of pageviews would generate a demand for advertising, which hasn’t happened, publishers are actively looking at a variety of methods to make money online.
“For many years, I have been concerned that so many newspapers tried to charge for access to their brands and content in one medium … print … while giving it away in another medium, online,” says former Wall Street Journal publisher Gordon Crovitz.
“This had the unintended consequence of signaling to readers that the value was less online. Newspaper publishers hoped that online advertising would be enough to support their digital operations and indeed hoped that it would be the growth engine for the entire news franchise, print and online. Alas, online advertising only grew to the trees, not to the sky.
“Now, with online advertising in cyclical decline, news publishers of all kinds … newspapers and magazines but also online-only news organizations … see that it’s hard to support a news department with only the advertising revenue stream.”
Of the various pay possibilities, the most likely to gain widespread use in the future of journalism is …
SUBSCRIPTIONS. The Arkansas Democrat-Gazette, which long has been the only sizable metro paper to charge for its web site, makes readers pay $4.95 a month. Since that’s about 16 cents a day, we’d say it’s far too low. We’d make it a nice round number, easy to remember … $20 a month. That hopefully would bring in a substantial amount of revenue.
But charge what you need to charge to survive … in this sense, a newspaper will become more like a newsletter with a narrow scope but an audience willing to support it. Aren’t many newsletters profitable?
Subscription has the advantage of being familiar … just as you subscribe to receive newspapers and magazines, you would subscribe to gain access to online news.
Crovitz … who is known for turning the Journal around financially and building its pay site to more than one million subscribers, the most successful such effort in the world … expects the subscription method to work the best: “People want full access to their favorite brands without being challenged continuously to make buying decisions.”
In doing so, he had the last laugh over his critics.
“Over the years, there were times when people predicted that readers would never pay to access news online,” he says. “By the time the Wall Street Journal Online crossed the one million paying subscriber mark, the critics quieted down.”
He makes the important point that while it costs a newspaper money to add a print subscriber, it costs little or nothing to add an online subscriber.
“The profitability of online subscription revenue is very, very attractive. Remember that unlike with print subscriptions, which require buying more newsprint, adding press capacity and using trucks and trains to deliver the newspaper, in the case of digital products the incremental cost is almost $0, making the profitability high.”
A very significant event in the move toward a subscription model online occurred with the entry of Steve Brill … the innovative founder of American Lawyer magazine and CourtTV … and his launch of a venture called Journalism Online, set to begin this fall.
Brill wants to build a national site in which newspaper, magazine and online publishers would place their content. Readers would buy “annual or monthly subscriptions, day passes and single articles from multiple publications.”
His partners include Crovitz and cable executive Leo Hindery, so it’s a pretty high-powered effort that may force a breakthrough and create the answer everyone’s been waiting for.
Another way being widely discussed is …
MICROPAYMENTS. Readers would establish a credit account and be charged a token amount, perhaps a few pennies, for each article they click on. That amount would have to be tinkered with to make sure enough revenue comes in. Then there’s …
THE METER. Readers presumably would “park” on the news site and feed the meter to stay on it. The New York Times is considering this one … readers would get some free time to look at a certain number of word counts or pageviews, then click! the meter would start running and they’d start paying. The NYT also is pondering …
THE PBS WAY. Maybe there wouldn’t be those dreadful pledge drives, but readers could buy various membership levels and instead of a Times tote bag, they’d get certain privileges on the paper’s web site. Or maybe they’d get a tote bag, too. And while you’re on this or another paper’s site, why not play …
BINGO. That’s what the British papers do. Nigel Eccles, co-founder and CEO of a British web site where people trade predictions on current and future news events, says “the majority of UK newspapers now offer online bingo.” Readers pay “via debit or credit card” and “most of the games are for small stakes.”
Nonetheless, this represents a significant revenue source for the papers: “At a guess I would say between 25 – 50 percent of UK newspaper online revenues comes from non-advertising sources. Of that a big chunk is online gaming.”
Bingo is just the beginning. Eccles says other popular and lucrative attractions on British paper web sites are “sports betting and also fantasy football (soccer) and cricket. The Sun has a Bingo site which I believe is a big revenue generator for them. They also have white labels with a sports book and online casino. The Telegraph runs a number of very profitable businesses, including a puzzle center and premium fantasy league. Also the Telegraph’s puzzle centre is popular.”
Incidentally, white label means a product or service developed by one company that other companies rebrand to make it appear they made it … as U.S. papers could easily do in reusing these game forms to make some online money.
And what about their effort so far? “It actually surprises me that U.S. newspapers do not offer premium fantasy sports games,” Nigel says. “We are currently developing one for the U.S. market (baseball and NFL) and it has surprised me how few of them have an offering.”
Another technique would be to use …
VIDEO ADS. These would stem from video being blended into reporters’ content on the web.
“The one small piece of good news out of Internet monetization is that web users consider a 10- or 15-second ad that precedes watching a video to be a fair price to pay for free content,” says Paul Conti, instructor in communications at The College of Saint Rose and former news director of NBC affiliate WNYT.
“They ignore most banner ads. They ignore the fly outs on web sites. They click away from ‘cover over’ ads. They will sit and watch the 10- or 15-second ads that precede video.
“If I were newspaper companies, I’d be looking at ways to hire some of the TV reporters and producers who have been laid off. That’s their expertise and many of the victims were very experienced. I realize many newspapers are in no financial condition to do it. Frankly, they should have been moving in this direction three years ago.”
Now we come to the most successful online newspaper revenue method ever devised in this country … it’s what the Wall Street Journal does … put up a wall and make part of the site free and call the other part …
PREMIUM. The Journal charges to look at the premium side … you pay a subscription … and makes it special.
The strategy seems simple enough: Give some popular content away for no charge … political, arts and opinion pieces, blogs, some breaking news stories … to build traffic. And then, behind the pay wall, offer niche content not available elsewhere. In the WSJ’s case, this is its narrow-focus and extensive business and financial coverage.
Does it work? Well, the Journal makes money off it, and the staffers use the money to buy food so they can have dinner. Those page views aren’t very appetizing.