David Simon is a talented writer and storyteller, but is he qualified to give advice to publishers about how to save their dying industry?
As qualified as anybody else, I suppose. But when he suggested in a recent piece for CJR that people like me who disagree with his position on paid content were unqualified, that got under my skin a bit. Simon wrote, “These folks (paywall opponents) don’t understand the first thing about actual journalism.” He also lumped us in with an imaginary crowd of people who supposedly think amateurs can replace professionals, though we take no such position.
To Simon’s credit, he engaged readers in comments on his CJR piece, but the conversation turned more into a quibble over the definition of ad hominem than a dialogue about the important issues facing newspapers.
I decided to step back and lay out my thoughts in a more organized fashion.
First, Simon and I agree: that journalism is important. That newspapers giving their content away for free online is a bad idea. That investigative/enterprise journalism is expensive. That the beat system plays an important role in watchdog journalism, and beat journalism requires paid professionals who are in it for the long haul.
That said, there are at least 10 arguments against paywalls.
The Times is unique. It isn’t a local paper. Even the New York news covered by the Times has more national gravitas than local flavor. The Times has a global audience, and as a truly outstanding journalistic institution it has some key advantages: Namely, it comes closer than most other outlets to producing journalism on a consistent basis that people will actually pay for; and it produces journalism that people all over the world will consistently link to. These are powerful forces for creating the kind of added value that might lead to paid subscriptions.
The Times takes advantage of these assets by keeping its paywall porous. Not only is it easily defeated, the Times rewards people who follow links from other sources by not counting those articles against the monthly quota (see comment #45 by Greg in the CJR conversation with Simon).
While Simon, near the end of the thread, notes some high-minded predictions about the potential growth of the Times paywall, he has not provided evidence that it will ever do what he claims a paywall can do: Support, on its own, New York Times journalism. By this standard, which Simon created himself, the Times paywall is an abject failure.
The Times has a newsroom budget of $200 million annually. The most optimistic estimate I could find for its paywall revenue is $100 million.
Simon believes that if his old paper, The Baltimore Sun (which once had, he says, 300,000 subscribers) went to an online-only, pay-to-play model, it would generate $3.6 million in revenue for the Sun, which he believes could sustain the Sun newsroom. In 2009, before a round of layoffs, the Sun had 148 editorial employees (elsewhere in comments Simon said the Sun once had a newsroom of 500 staffers). I can’t find payroll figures for the Sun, but total personnel costs had to be between $10 million and $15 million in 2009, so on that basis alone Simon’s math doesn’t make the grade, and that’s to maintain a newsroom that even Simon finds weak and emaciated.
A metro newsroom—the newsroom Simon is most concerned about protecting—needs between $50 million and $100 million to provide the kind of big, serious journalism Simon advocates. At $10 a month per subscription (Simon’s figure), the news site would need 416,000 subscribers to cover a $50 million editorial budget.
Mr. Owens:
I, too, am intrigued enough by the debate to be at work on a tome that will surely be of interest only to Talmudic scholars of newspaper vulnerability and the future of prose journalism -- and may not even them. So I thank you for your diligence and interest. I think more argument on this is a very good thing.
But right off the bat, can I ask you to do two things:
1) Address the fact that in all of my arguments, I am premised on the idea that the NYT and other national papers contributing the lion's share of national and international news are already behind a paywall -- that the big boys have gone first and taken much of what has long been available for free with them. Citing the attempts of isolated regional papers to go behind a paywall in an environment where much of the total news report is still available on line, means nothing, if you read the original 2009 argument. If paying to take the Baltimore Sun's metro content online only gets you only that unique content for your money and trouble, then yes, failure is assured. If such a fee were to allow you to tailor your purchase to include, say, the Baltimore Sun coverage, national and international coverage by the NYT or WP, the FT or WSJ, or even specific coverage for areas of personal interest -- i.e. if the industry as a whole was behind the paywall, and if content were no longer shared through wire services and aggregators, but only through new consortiums that operate exactly as cable providers operate, providing bundled content and then dividing revenues among provides -- then you are actually contending with my argument. Pretending to knock down what I am saying by citing the dystopic world that now exists doesn't actually achieve anything. All you are doing, is imagining one newspaper in isolation -- attempting to go its own way in a world without paywalls as industry standard. Please address paywalls as industry standard, at least.
2) A $50 million metro budget? A $100 million metro budget? My god, where are you getting these figures. Please offer attribution.
At $100,000 a position for reporters and editors that's 500 employees working the Metro Desk of the Baltimore Sun. At its height, the Baltimore Sun had 500 newsroom employees and that includes foreign bureaus, a Washington bureau, national bureaus, a national business staff, sports reporters, lifestyle reporters, a full, duplicative staff for its Evening Edition, two copys....
Your numbers are just whack. Insane. Off the charts.
At its height in the early eighties, the Baltimore Sun -- paying reporters a base salary of about $45,000 each -- had between 55 and 60 reporters. At $100,000 per position currently, such a staff could be assembled for under $6 million. And of course, the article you cite was talking about a start-up operation covering basic local news, something that could begin with about 40 reporters and editors as a baseline. Or $4 million in salary costs.
$50 million for metro coverage? 100 million for metro coverage? WTF?
Is there anyone at there with hands on an actual newspaper budget that wants to elucidate the reality? My guess is that $50 million or $100 million is the entire annual editorial budget for entire regional newspapers -- something that I was NOT intending to replicate in my discussion of an online start up.
Mr. Owens, if you shape other people's arguments to fit your story, you'll always come out a winner. But...
#1 Posted by David Simon, CJR on Tue 5 Jun 2012 at 01:51 PM
Reading back, amid other typos, let me be clear: The Sun had a METRO desk that at its height was comprised of 55 - 60 reporters. For most of my career, the number was below 50 warm bodies.
The 500-employee figure was for the The Sun and Evening Sun both, meaning two competing metro staffs, editing staffs, copy desks, feature staffs, etc.
But The Sun covered its metro region -- Baltimore, the state, and the surrounding counties with, on the average, about 50 souls. And my start-up argument was about preserving a regional newspaper's local news coverage only -- covering metro regions -- not replicating the Baltimore Sun right down to the last classical music reviewer or real estate columnist. Those days are indeed gone, and no one is arguing that point.
Work the math in that context, please. A $100 million for metro coverage and I could cover zoning board hearings so far out of Baltimore that they'd be rubbing shoulders with the Philadelphia Inquirer guys -- if, of course, the Inky had $100 million for metro coverage.
#2 Posted by David Simon, CJR on Tue 5 Jun 2012 at 02:05 PM
Aside from who's right, who's wrong, what numbers are right, what numbers are wrong ... here's my contention of the REAL point:
Generalism is dead. As Howard points out, newspapers are no longer the sole/main source of hard news for their communities. And to try to prop them up because they are going to do the "accountability journalism" AS WELL AS everything else is foolish.
Yet also contending that market-leading news organizations like Howard's (and mine, and many other upstarts around the country) are deficient because we don't do enough "accountability journalism" is also foolish.
What the Internet facilitates so wonderfully (among other things) is specialization. Accountability journalism should be a specialty. There are investigative sites already, of course, but for everyone who wants to make sure this aspect of journalism doesn't die, please find yours and support it. And also, if your market has a well-funded old-media organization that is wasting its time re-reporting some of what organizations like Howard's and mine cover - hold THEM accountable! (Example: There was a dumpster fire behind a bar in our coverage area a few weeks back. Not arson. No injuries. No serious damage. Three TV stations spent their whole morning going live. TV stations owned by major corporations, ostensibly serving a 22-county area. Why in the world were they at a dumpster fire and not doing something that mattered to their regional audience?)
Yes, there are some full-service "newspapers" that are doing a laudable all-around job. We are informal partners with The Seattle Times, which has provided Pulitzer Prize-winning coverage. I am glad they are around. But instead of trying to re-report the dumpster fire, they wisely link to us, or whichever other of their dozens of "local news partners" covered a story that's linkable but not worth them taking a reporter off accountability coverage. Will a paywall work for them? It works for a local business newspaper, the Daily Journal of Commerce, which is the SOLE source of information with which myriad local businesses can make money - bids, certain public notices, etc. (I even paid for a year's subscription because I thought it would provide research background I couldn't get any other way. Turned out that was wrong, so this year, I saved the $450+.)
The bottom line about the bottom line remains that large news organizations have to cut expenses. That doesn't mean cut reporters. It means middle management. I was a six-figure-earning middle manager before we went into business for ourselves, and I'm the first person to tell you that my job was absolutely dispensable, despite the fact I've always been a tireless, tenacious, valuable employee ... I should have been repurposed into actual content generation. Now, I am!
Glad we're all talking but let's just acknowledge ... journalism comes in many packages ... most of which are evolving. Let's support specialists, not just big organizations trying to do it all.
Tracy Record (editor/co-publisher, West Seattle Blog, and yes, a journalist - honored this year by the regional SPJ with their "Distinguished Service to Journalism" award and by a regional civic-accountability nonprofit, the Municipal League of King County, for "Government News Reporting of the Year" - neither of which was, unlike Emmys - which I've won too - an award we applied for or submitted anything for; somebody else out there somewhere thought our work matters)
#3 Posted by Tracy @ WSB, CJR on Tue 5 Jun 2012 at 02:23 PM
Agree with a good deal of what Tracy says.
The point is not to preserve newsprint, of course. Or even to preserve the great generalist, coupon-carrying, comic-section laden daily newspaper. The point is to preserve the Newsroom -- that place where careful, continuous coverage of a metro region's essential news was acquired, synthesized, analyzed, a nerve center with veteran editors who had institutional memory and ethical, professional standards, and as many good decisions are made about what not to publish as about what was worthy and important. That is worth preserving. It costs money. Not as much money as entire newspapers. But money enough so that 50 or 60 people can be edited by maybe a couple dozen others and they can hold institutions accountable as a matter of professional routine. I believe that the NYT's success with their paywall -- with Wall Street analysis now saying the paywall revenues will help make the paper profitable again by 2014 -- is the end of the beginning. True, the NYT is at the top of the food chain. But if regional papers could transition to online subscription models as industry standard, I believe that the model could add sufficient revenue to sustain the required costs of producing quality, consistent news.
No one paid for television a couple generations ago. It was free and there were three generalist channels. Now, everyone contributes to a huge, new revenue stream -- every month -- and we pay quite a bit for programming that isn't generalist at all. But then, television offered consumers more -- not less -- when they came with the cable hookup. Going to a paywall, newspapers will need to do the same, and they certainly wish their news report was still what it was fifteen years ago, when they opened the barn door to the free-internet pasture.
#4 Posted by David Simon, CJR on Tue 5 Jun 2012 at 02:39 PM
Howard Owens may not think David Simon is qualified to talk about charging for online content, but Mr. Owens reveals his own startling ignorance and/or lack of effort to do any reporting when he argues that the New York Times is not a good example because it is "unique.It is not a local paper." Well, how about the Billings Gazette or any one of the more than 350 other publishers who have launched the Press+ meter system so successfully? Most of them are local.
Mr. Owns is still writing his opinion about what will or won't work, which I guess is easier than doing any reporting. Put simply, this is no longer about opinion or predictions. It's about data. None of our papers has lost ad revenue and all have gained moderate to large amounts of new circulation revenue while not losing any of their voice in the community -- and while instantly stabilizing their print franchises by eliminating the completely free alternative. That's how a meter — as opposed to the ludicrous and anachronistic paywalls used by his model, the Arkansas Democrat-Gazette — works.
Nor do we charge a “substantial implementation fee” which he would have known had he bothered to ask.
Steven Brill
Co-founder
Press+
#5 Posted by Steven Brill, CJR on Tue 5 Jun 2012 at 03:00 PM
Thanks, Howard, for the comprehensive list and arguments.
On the budget question, $10-15 million is a pretty decent metro newsroom. I used to use $100k as a simple and generous shorthand for estimating a metro staffer + benefits when I ran The Sun's online division through mid-2008. Not that my group paid the direct salaries of any of the traditional newroom employees, but as the online division began to throw off some serious cash in '06, '07 and '08, it was a good way of estimating how many of those journalists the online division was in effect underwriting with our positive cash flow (after online staff and expenses) we returned to the company.
In 2007 the online division, with no paywalls, just advertising revenue, underwrote about 100 of those newsroom positions. That's a whole lot more than the $3.6 million in 2012 dollars David Simon projects for The Sun's paywall.
Things have changed since 2007, to be sure. CPMs have been pushed way down and the dedicated online sales team at The Sun was "reintegrated" with the print sales team where the hope was they would influence the larger, older culture (all indications are that didn't quite work). But those were real dollars that were flowing into the company without us needing to put up a wall to charge readers for access.
At the time, our fastest-growing (and largest dollar-figure) category was local sales, where actual local and regional advertisers paid us actual dollars for campaigns that incorporated, yes, traditional banner advertising but also long-form original video, database publishing, contesting, real-world promotions, chats and forums, customer seminars and other forms of revenue generation. And many of those advertisers renewed. Because they got results.
There's no reason that a creative and motivated sales and editorial team still couldn't be driving strong local revenue numbers today for a major metro news site.
Will paywalls work in local markets like Baltimore? I'd argue that we've yet to see a strong case in support of that. Even The Sun's own paywall seems ambivalent about the effort; you have to read 15 stories a month before the pay wall is invoked. At that rate, more than 80% of The Sun's monthly traffic won't have any idea that there's a wall, let alone any ways for the reader to support the paper's and site's important local reporting.
Better to give readers reasons to want to support the effort and give them the means to do so, rather than stiff-arm them at the door.
Sounds like a good next list of ten things for this space.
#6 Posted by Tim Windsor, CJR on Tue 5 Jun 2012 at 03:02 PM
Galileo was convicted of heresy for helping to prove that the Earth went around the sun, a reminder that it takes a lot to adjust beliefs based on religion.
The good news is that facts and data can eventually unseat fundamentalism, even the religion that for some reason views digital subscription models as heresies. At Press+, we now have data from more than 350 newspapers, magazines and online-only publishers using our service to create paid models. Contrary to the beliefs expressed in this article, the data shared among publishers using Press+ show the following 10 counterpoints:
The "metered" model works for publishers of all sizes, including local newspapers; digital subscription revenues represent the biggest increase this year in both revenues and Ebitda for hundreds of publishers; unlike old-fashioned paywalls, the Press+ system ensures that publishers keep their ad revenues and their online audiences; almost nobody invests the time and effort to defeat metered pay systems other than technologists trying to prove that it can be done (books are also shoplifted, but this doesn't lead publishers to make them all free); whereas print circulation revenues are hardly profitable, recurring digital subscription revenues have higher profit margins even than print advertising once did; engaged readers of strong established brands or new digital-only brands are happy to pay for full access even if there are competitors in the market; new digital subscription revenues are allowing publishers (finally) to reinvest in journalism, guided in part by the news topics subscribers most value; publishers with paid models are more attractive to investors (such as Warren Buffett) than the few publishers that still don't have paid models; justifying paid access for news is the best way for editors to make the case that quality news matters and is a big improvement on the old days of 80% of print revenues and 100% of online revenues coming from advertisers, which in retrospect took the eye off the ball of serving readers and the key customers; and the most innovative publishers these days are the ones looking to new revenue streams such as digital subscriptions to drive revenues, boost profits and, most importantly, restore quality journalism.
Publishers now being driven by facts, data and best practices are the industry's needed innovators--even if critics driven by outdated beliefs prefer to call them heretics.
#7 Posted by Gordon Crovitz, CJR on Tue 5 Jun 2012 at 03:18 PM
David, you're first point can be summed up: "All you are doing, is imagining one newspaper in isolation"
Well, the Baltimore Sun is one newspaper in isolation. So is the San Diego Union-Tribune. And the Kansas City Star. And the Emporia Gazette. The only value any metro paper offers is what it can do locally. Put every single newspaper behind a paywall and it still doens't help with the fundamental problem of ample free alternatives and what that does to the value of the package.
Also, with all of the publications you site as delivering national and international news and being behind a paywall, I still don't have any difficulty getting all of that news I want, including all of the NYT news I want, for free.
(as far as I've gotten so far)
#8 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 03:31 PM
Mr. Owens, let's slow it to a crawl so there is no semantic loss, and no rhetorical flourish that provides anyone with a backdoor.
If the local news stations in a metro region had to rely on their own content alone to generate their share of cable-contract fees, local news programming would be out of business. They are no longer seen for free through the airwaves, and if they had to rely on their own cable subscriptions, they would be gone right now. But no, when you buy bundled cable content, lo and behold, you get your local affiliates -- not to mention local public access programming -- thrown in. Everyone pays $70 ot $90 a month and Comcast or DirectTV or whoever divides their share of the revenue stream among providers. And, again, WJZ or WBAL aren't getting their viewers through free TV -- off rabbit ears -- no one is. They are part of a consortium. Just like the cooking channel, the weather channel, etc. They are one network among many -- and it is in the many that television redefined itself and its marketing in a way that prose journalism failed to redefine its marketing.
If there is the digital prose equivalent of Comcast that would allow me to purchase the metro and state coverage of the Baltimore Sun, the national coverage of the Washington Post and the New York Times, international coverage from other places including The Guardian or The Jerusalem Post, financial coverage from the FT or WSJ, or even the newspaper where my parents live, or where I am going to spend a summer, or....f all of these products could be bundled -- and because they were NOT being sent for free to wire services or news syndicates from which they can be plucked by aggregators -- I would pay a reasonable sum to access all online. Especially if their content could be improved using that fresh revenue stream. I want that stuff. Bad. I think a lot of others do too. I think a lot of people are already missing the professional journalism that has leached from the world because of the retrenchment of newspapers over the last fifteen years. Would I pay as much as I pay on my cable bill. No. Would I pay half of what I used to pay -- and half of what millions of readers used to pay -- to subscribe to my local news source. Yup. And that is a revenue stream.
That world doesn't exist now, yes. That is my premise. I am arguing for its adoption. So Mr. Owens, please for the love all that is holy and coherent, do not cite the universe as it is now -- with the industry as a whole still NOT protected as a whole; with the wire services still floating the cumulative news report to free sites, with aggregators still readily acquiring all they can through the AP or Reuters, with papers as large as the Washington Post still unwilling to do the right thing -- and say, but, I am getting everything for free so what you propose can't work.
I don't want to characterize such a response as disingenious. But I have to wonder why you are being so obtuse about what the debate really is and really needs to be. I thought the new media folks were the ones who were better at imagining alternative and unanticipated futures than the old-fart dinosaurs.
And please don't suggest insurmountable anti-trust issues. The fellows running Comcast and DirectTV are not in federal prison.
#9 Posted by David Simon, CJR on Tue 5 Jun 2012 at 03:57 PM
Onward, David ...
As for newsroom budgets, I went off your own statements for the kind of comprehensive coverage you want and used what I've seen of newsroom budgets for complete operations ... also extrapolated payroll costs beyond just salary, since, it turns out, employing people, especially ones you hope will be productive, is very expensive.
You and I agree that a metro area could be covered very well by just 40 people -- and what I know of the efficiencies of online publishing, I say even less. But that's not how I read your 2009 piece nor your recent comments. Your position has come off as returning to the glory days of metro publishing.
And as I said in the previous conversation, if what you're after is a small newsroom, that can easily be supported without subscriptions from available, known, proven revenue streams. That was a point you never addressed in the previous conversation.
(more TK)
#10 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 04:37 PM
@David I wouldn't put too much emphasis into characterizing Cable TV as immune to the same effects that have Newspaper and the Music Recording industries quaking.
If you think those silos are impenetrable, I'd take a look at another one that seemed that way not too long ago, Wireless providers. Watch the effects that iPhones and Androids have on that Industry in coming years.
These bundles are all unravelling at different rates. Heck, Cablevision bought a newspaper to protect its Cable TV subscriber rate.
#11 Posted by Matt Terenzio, CJR on Tue 5 Jun 2012 at 04:43 PM
"If the local news stations in a metro region had to rely on their own content alone to generate their share of cable-contract fees, local news programming would be out of business."
That's a premise I simply do not accept. I've worked too closely with TV newsrooms throughout my career, and especially now, to buy into that assertion. I call it what it is: false.
"So Mr. Owens, please for the love all that is holy and coherent, do not cite the universe as it is now"
That's the only universe that exists. I prefer to make business decisions based on reality not fantasy.
"But I have to wonder why you are being so obtuse about what the debate" ... I could ask you the same thing.
I listed 10 reasons, David. I did it that way for a reason: Take any one of the 10 and the paywall argument is a loser.
I like Tim's confirmation that Sun revenue could support the kind of newsroom you propose in comments here, but do it without paywalls.
The birth of The Batavian began with the realization that I had spent the past several years of my career running newspaper web sites that generated substantial amounts of income and that if I could generate that same income without the infrastructure of print I could support very good local coverage. To put it more succinctly: If I could run the Ventura County Star site again, preserve the revenue while jettisoning everything related to print, I could run a news site in Ventura County that would cover that county as well as the print product did but at a fraction of the cost. That was without paywalls.
Now, I run an under-capitalized start up and we're not nearly what I think we can be or what it to be, but we're doing pretty well, without a paywall.
#12 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 04:55 PM
There are some very good minds engaged here, but mostly they seem to be talking past one another. Let me see if I can help, just a bit:
Mr. Simon, how large a newsroom (in terms of people) do you envision for your news organization?
My guess is that a good estimate of non-personnel costs to support of a newsroom employee (travel, phones, IT, research, graphics, rent, etc.) will come in at 33-50% of salary. Does this seem fair to both Messrs. Simon and Owens? If not, what is?
Benefits are another 20-30%, assuming health care and retirement. Again OK?
Then, what seems like a fair average salary in our hypothetical newsroom?
If we can agree on these, I think the ratio of light to heat will increase.
#13 Posted by Dick Tofel, CJR on Tue 5 Jun 2012 at 05:09 PM
Steven Brill wrote: "Mr. Owens reveals his own startling ignorance and/or lack of effort to do any reporting ..."
I think that's what David Simon might call an ad hominem attack.
OK, Steven, you want original reporting? Why don't you go completely transparent. Put online (why let me have all the fun) all of your data: Each site's set up fee, subscription rev share, number number of subscribers, churn rate, cost of acquisition, before and after page views, revenue break downs before and after, retention rate, etc.
I bet you won't do it because all you and Mr. Crovitz would rather sell snake oil with blind, unsubstantiated assertions.
I provided a thoroughly research, link-filled column based on 17 years of real world experience in the online news business. Your responses are more platitudes about how great Press+. You say you have data? Prove it. Be transparent, Release it. Let me and other comb through it and draw our own conclusions.
BTW: This afternoon I received an e-mail an exceptionally reliable source who said papers he knows about paid a set up fee and provide 50 percent of the subscription revenue to Press+. He doesn't anticipate these papers keeping the paywall. He wrote, "... it's not even close to successful. You are dead on target."
More than rhetoric, please, Mr. Brill and Mr. Crovitz. Those of us who care about the news business want facts.
#14 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 05:13 PM
Random thoughts:
I want to thank CJR for publishing this and the great editing of Brent Cunningham. He took 6,100 words and whittled it down to 5,200 and did a great, great job (there was only one time where I really recognized a paragraph I had written that was missing).
Second, my metro budgets may be the weakest facts in my case. The premise I began with was that David wanted to preserve the glory of the metro he once knew. That was how I read his writing. He claims that's not the case. I'll let others decide whether my interpretation is fair. That said, even if we work from the premise of 300 newsroom staff at $50K per year (very modest from what metro reporters I've known told me they made), that's still $15 mill in annual salary (and that doesn't include employee expenses and other costs of operation), and so based on the premise I believe David was originally laying out, I don't think subscriptions gets a news operation where David said he wanted it to go (as I read him, and I stand by how I read his previous statements).
However, I would love to have an expense budget of $3.5 million in a metro market. That would be huge and you could do some great journalism digitally with that level of expense and probably generate $5 million annually -- WITHOUT a paywall.
And the end of the day, it might just be that David and I are after the same thing, but he with a paywall and me without. I just see a paywall as unnecessary, potentially destructive and a hindrance. As I said above, "No newspaper company is instituting paywalls to protect journalism. They’re doing it to protect profits, or at least slow the bleed out." I long ago lost my nostalgia over saving newspapers. I want to save journalism, especially local journalism (I think institutions like the NYT will be just fine -- I don't worry about them).
One last point for David. David, you previously argued for a news organization paid for by $10 monthly subscription fees. In comments here, you've spoken of content bundles. How much would a person have to pay for such a bundle so that each news org that the person might access would get $10 per month?
#15 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 05:44 PM
Aha, the old religion card comes out.
When, in fact, no sane person I know would eschew a paywall if they thought it would help their business.
The fact is we have no evidence that it will and we certainly aren't going to listen to the guys that are selling it.
We are using experience and knowledge of the nature of the web to make an informed decision that no paywall == better business.
When use of a paywall is obviously helpful to an online business it will be obvious, and it certainly won't be too late to adopt one.
Adopting one, even if it brings in revenue and doesn't cause traffic loss, could be detrimental to the future of a business for the reasons Howard outlines.
#16 Posted by Matt Terenzio, CJR on Tue 5 Jun 2012 at 05:57 PM
There's an argument against paywalls based purely on economic theory, from Duke economist James Hamilton. Here's an excerpt from a longer piece I wrote a couple of years ago.
=====
James "Jay" T. Hamilton's book, "All the News That's Fit to Sell“ certainly helps shed some light on it.
One of the first observations that Hamilton made at the working group meeting was this, though he did not phrase it exactly this way: You can sell the same news online that everyone else is selling, but only if you’re willing to set the price at zero.
Here’s why. Let’s say that companies selling news and information decide to restrict the availability of that news and information to those who pay them for it. For online publishers, this means setting up a system – a “pay wall” – that prevents readers from getting access to articles on the website unless they pay for that access. Once that system is in place, what is the cost to the company of adding one more customer?
It’s basically zero. That’s partly a function of the fact that news and information is a public good, not a private good like a glass of water. Public goods, like news and information, can be consumed by multiple people without preventing other people from consuming those goods. A private good like a glass of water is not available to others once I drink it.
So the cost of adding one more customer to an online pay-for-news system is zero – you don’t have to produce “more of” an online news article in order to accommodate additional readers. This cost of adding one more customer is what economists call the “marginal cost” of production. And that’s important, because in terms of economic theory, here’s something that economists know: In a perfectly competitive market, price will equal marginal cost. So a realistic estimate is that the price of online news and information will equal the marginal production cost … zero.
One point that Hamilton highlighted is that this conclusion is “path independent.” That is to say, the reason the price for online news and information has to be zero is not because people have over the years come to expect free access and it’s too late to change their habits. Otherwise put, it wouldn’t make any difference if we went back to the early days of the Internet and established, by convention, that all content must be protected behind a pay wall. An economic theory of online news and information suggests we’ll always get a market where price equals zero.
Conclusion: You can’t charge a price for online news and information in a competitive market.
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For the whole piece: http://annarborchronicle.com/2010/03/02/18th-monthly-milestone/
#17 Posted by Dave Askins, CJR on Tue 5 Jun 2012 at 05:59 PM
Actually, Mr. Owens,
You're still having a lot of trouble with what constitutes the rhetorical fallacy of an ad hominem attack. Right or wrong, it is legit rhetorically for Mr. Brill to say he believes you have revealed your ignorance of some factor or issue. He is after all challenging your arguments, not your standing or history or status. And by arguing that you failed to do reporting -- whether he is correct or not -- he is addressing himself to the methodology of your argument. Neither is argumentum ad hominem.
Maybe this helps:
You can be angry, snide, nasty, cynical, smug, hyperbolic or grandoise in challenging the other guy and none of that means you are engaging in an ad hominem. Ad hominem isn't about tone, or about being polite. It simply means, you are challenging the standing of the person -- and not by the content of their argument. Much as you begin your piece by complementing me for being a good storyteller, to imply that I have no credentials to discuss newspapers and their future. And then, after that, allowing that, well, I have as much right as anyone. Who asked you whether I have a right to this discussion? No one. Why even go there? Just argue the content and we're all good to go, right?
Mr. Tofel, I think that Mr. Owens has confused several different statistics and misapplied them. In 2009, I argued -- as one possible scenario -- that if newspapers failed to seize their own digital future, that it would not be impossible for an online pay-subscription site to approximate basic metro coverage -- metro coverage in a city the size of Baltimore -- with 40 or so reporters and supporting editors and copy editors. Mr. Owens, I do not regard this as enough for thorough coverage of a kind the healthy Sun achieved in its heyday, but then again, it would certainly be legitimate enough for a start-up. They could cover enough ground to demonstrate to readers, during a trial period, that they were going to cover institutional Baltimore with some consistency. But I also argued that if more online revenue was gleaned, then coverage should expand in order for the model to fully flower.
Right now, I believe the Baltimore Sun has 120 people in its newsroom as a whole -- all positions, all sections. Forty people covering metro is probably in the ballpark for what Baltimoreans are getting now. Might be less.
Another 20 and my mythical start-up would do better with the surrounding counties. Another 20, they could report and edit sports and business locally.
At other points, I did note that 500 editorial personnel worked at the Sun in all capacities. For Mr. Owens to cite this as a relevant statistic in the context of what I was imagining as a from-zero-to-sixty start up for unique metro coverage online is just, to me, surreal. That he continues to assert his figures -- remaining unapologetic for imagined metro budgets of $100 million -- is problematic. It would appear that he is determined to win an argument with himself. I like a good argument, but my purpose in trying on this site, is to get over voices to freshly address the future of prose journalism fresh. I'm less interested in winning than seeing if anyone has a better revenue plan than having the industry AS A WHOLE treat the product of journalism as product -- to stop giving it away, to sell it and see what the market will bear. So far, no.
#18 Posted by David Simon, CJR on Tue 5 Jun 2012 at 06:00 PM
to get "other" voice to freshly address the future....
sorry. first thing we pay for with online revenue is a big, careful copy desk.
#19 Posted by David Simon, CJR on Tue 5 Jun 2012 at 06:04 PM
I would think that the Columbia Journalism Review would stand for reporting first, not filing first and only asking for information later. In any case, I'm glad to see you're open to changing your mind once you have exposure to data.
Many of the 350-plus publishers using Press+ have in fact discussed their results with reporters and analysts who've been covering the topic over the years. You might review analyses by CJR's own Ryan Chittum and Nieman Journalism Lab's Ken Doctor, starting with this post by Ryan: http://www.cjr.org/the_audit/the_washington_post_cos_self-d.php?page=all and this post by Ken: http://www.niemanlab.org/2012/05/the-newsonomics-of-majority-reader-revenue/. You'll see why not one of the publishers that launched with Press+ has dropped their paid model (whatever your anonymous source claims). By the way, as has also been widely reported, our revenue share is 20%, not the 50% you claim.
Beats me why you want to criticize publishers for innovating. To me, the much more interesting journalism would be to report on the many publishers who are now focused on using shared data and best practices to make the most of this revenue and profit opportunity, which is already beginning to replenish newsrooms around the country.
#20 Posted by Gordon Crovitz, CJR on Tue 5 Jun 2012 at 06:08 PM
Gordon, you're still side stepping the the issue -- will you release all of your data? Complete transparency. I look at the links above (including linking to one of them myself and quoting from it -- it hardly helped your case).
I trust my source.
And FWIW: I'm arguing against my own self interest. If my competitor put up a paywall, it would be a huge favor to me. And as an advocate for others starting their own independent online news businesses, what you and Mr. Brill do is brilliant for helping that process along. Keep doing it, please.
Enough evading, Mr. Brill -- where's the data, actual spreadsheets with all the numbers?
#21 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 06:20 PM
And by the way,
If anyone knows Jarvis and Ingram and all the other cats who for so long predicted a brave new world of fully democratized, instantaneous reportage that didn't require the gravitas of the institutional newsroom, a beat reporting system and living-wage, career-oriented professional journalism. I'm happy to see them wade in as well.
Their brave new world gets uglier and less competently covered with every day. In my city today, the metro daily has about a quarter of its reach. And the websites that have sprouted in the background do not cover institutional Baltimore or institutional Maryland in any way that holds those in power accountable. There is more commentary, sure. There is more froth. First-generation reporting at a level to be respected? Nope. Less of that.
At what point do these fellows even acknowledge that while the internet has transformed the marketplace of ideas in some very good ways, it has not led to anything but a dimunition in classic, first-generation beat reporting. And that this kind of reporting is what keeps institutional America in check?
Do they just throw 140-characters together every now and then and declare that someone knows nothing about the internet, and move on? To where? Guys, when does it get better? When do I start knowing more what's happening at the Baltimore board of estimates, or inside the Baltimore police department's investigative division, or over at the circuit court, or inside the school system administration -- and not so much less? They offer no solution to the departure of this kind of reporting, they just keep whispering in the king's ear, telling him that paywalls can't work, that no one pays for news, that surrender and acceptance are inevitable. Or to honor Molly Ivins' words again, "slow suicide." When does the journalism that mattered start coming back, under their vision of what should and shouldn't happen?
Not to offer up an obscure "Lord of The Rings" reference, but when does Grima Wormtongue come up with a specific idea or two? Something that keeps an orc or two away from the gates. Because, damn, taking the entire internet universe of Baltimore as a whole, I know so much less about my city and state than I did in 1992.
The NYT stopped listening to these guys. They were the paper that needed to stop listening first. Without them going first, no other paper could or would sustain a paywall. And even now, unless the other big boys follow, the industry is still vulnerable vulnerable. The Post is still a gaping hole in the wall, for starters. But the NYT at least saw that the new emperors had no clothes. And now, nearly 500,000 paid subscribers and rising and the Wall Street analysts -- not me, not Howard Owens -- but the bean counters saying they're back in the black two years from now on the basis of circulation revenue.
Ask these guys, please: Should the NYT take the paywall down now? Should they give the money back? WTF?
#22 Posted by David Simon, CJR on Tue 5 Jun 2012 at 06:24 PM
Maybe pay walls will work, maybe they won't.
Meantime, I'm puzzled by the holy war this debate has become. Mr. Owens dismissively refers to the Church of Journalism, but the religious fervor can be found almost exclusively among those like him, including Jeff Jarvis and Clay Shirky, who have nothing at stake themselves but are determined to convince those of us who do have skin in the game how wrong we are. Not just once, but repeatedly, as though we are all going to hell if we don't stop with the blasphemous pay wall talk.
In the end, we'll get the journalism we deserve. Especially if we're unwilling to pay anything for it.
#23 Posted by Chuck Taylor, CJR on Tue 5 Jun 2012 at 06:33 PM
Jeff Jarvis @jeffjarvis
David Simon may get his wish--pay walls--and an unintended consequence: a digital divide of news.
Jeff Jarvis @jeffjarvis
David Simon, like too many others, is treating pay walls as a matter of religion, not economics.
Right. Jeff, my brother.
Enough with the 140-character zen-like aphorisms. How 'bout coming down to the streets of Baltimore and explaining how your vision of the digital future sustains an insititutional newsroom of professionals, or if you think such a think isn't a civic necessity in modern America, how about explaining exactly where the journalism that is going to hold institutional America accountable on a routine, consistent basis is going to come from. And if you can answer all of that cleanly, then please explain why despite the year-in, year-out marginalization of institutional newsroom, and despite the rise of the great unwashed, democratized, freethinking, freemoving, freeflowing internet......that. journalism. is. still. disappearing.
Unless you don't think anyone really needs to cover your county's zoning board, and work sources inside the zoning commission, and learn about the agendas that aren't on the printed agenda. In which case, you're right. Who needs professional journalism.
After which, you just wake up to find someone's put up a porn shop down the block, and two liquor stores just around the corner.
Come on, brother. Get in the trenches and explain to me exactly how, once the newsroom dinosaurs have all been bulldozed, the internet serves the same function and maintains the same presence without paying people to sit in the those meetings, to work those sources, to keep the files for year after year after year until nothing gets by them and no zoning commissioner changes a vote or an agenda item without someone noticing. Are newsrooms doing that now? Nope. But again, the Sun once had 500 people sustained by its revenue stream. Now, about 120. The internet has lots of unpaid personnel. But you know what? No one is telling me what I used to know about Baltimore
Enough twitter crap. Wade in, my brother. Get your hands dirty.
It'll be fun.
#24 Posted by David Simon, CJR on Tue 5 Jun 2012 at 06:44 PM
Yes, I second Howard in his quest for more transparency from Mr Brill or Mr. Corwitz.
I tried so many times to get any figures on Press+'s cost and ROI. Its parent company is so secretive about it. At one point, I received a message form an employee of R.R. Donnelley, apologizing, but, due to company "conservative policies," as he put it, he "could not openly give out the contact information" for Press+. Let alone its data.
The main issue is, if, as Ken Doctor calculated, and other sources seemed have confirmed, a paywall converts only about 1% of the monthly traffic into paying subscribers, then how it is possible for smaller publications, those with less than 1M UU/mo, to generate any meaningful revenue. Then, is the Press+ cut. What is it 50% 30%? What are the implementation costs?
You asked to be asked, Mr Brill. May I have your answers?
#25 Posted by Greg Golebiewski (@znakit), CJR on Tue 5 Jun 2012 at 06:45 PM
From here on out, I'll have to pull out of the argument, since things will now spiral out of control.
To my knowledge, and I know Jeff well and read Matthew often, they never said or implied anything of the nature of what David proposes.
The fact that it is being asserted tells the whole story. Not listening.
If you'd like to understand where Jarvis is coming from, I'd suggest you PAY to read his latest Kindle single
http://dig1.st/1r
#26 Posted by Matt Terenzio, CJR on Tue 5 Jun 2012 at 06:48 PM
Matt, actually, I'd like to see Jeff weigh in with a little more on the business side of the equation. David is right, journalism costs money, and certain kinds of journalism are expensive. I think I know how to pay for it. I don't think David believes me. What Would Jeff Do?
#27 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 07:17 PM
Mr. Owens is a tad defensive about not being a journalist. Which is understandable given his choice to write more of a religious screed than a factual report.
Our facts: We don't charge 50%. We charge a revenue share of between 20% and 25% of all new revenue (based on volume). We charge a $4,500 set up fee, but less than half that for small newspapers, and even less than that for multiple launches from the same publisher. He could have asked us. This is known as reporting.
As for the results of individual publications, that's up to them. THey are our customers, and they own their information. But so far I can report that no one has cancelled and all of the newspaper chains that started with a few publications have expanded or are in the process of expanding the number of publications that use Press+.
Put simply, your "exceptionally reliable" anonymous source, if you have one, is lying, which is probably why he or she is anonymous, which journalists know is the danger of using anonymous sources, especially when, unlike whistle blowers, they have no reason to be anonymous. This, of course, assumes the source actually exists..What on earth would be the reason for this alleged source to be anonymous?
#28 Posted by Steven Brill, CJR on Tue 5 Jun 2012 at 07:22 PM
Then help me, Matt. Please.
If the product itself can't generate revenue from it sale -- if that is a no go. And if online ad revenue on free sites simply isn't enough to pay for the institutional costs of professional journalism -- and it isn't, not even close. And if the pennies-on-the-dollar money delivered by aggregators won't sustain the originators of first-generation reporting -- and it won't -- then what is the solution to this dilemma.
Either the advocates of new media believe there isn't any dilemma, that no solution is required, that the internet is doing fine and will soon achieve for itself what professional prose journalism once did. Or they don't. Which is it?
If they do think so,please point me to the high-end reporting and analysis that is even beginning to replace the work product of a functional metro daily in say, my city of Baltimore. Because I know all the websites and while some have some merit and charm, they are by no means that.
If they don't think so, and they realize that this reporting is leaching from the world, then I would love to see them express some concern for this, because from what's going on in my city -- and what isn't being addressed by a free press -- I think there is real cause for concern.
And if they are concerned, please explain to me how the futurists envision the solution. Specifically. Not with aphorisms. Not by telling us what can't work. But by showing a better revenue stream than say, the NYT has now acquired, even with its belated, imperfect paywall. Because I've read lots and lots of what these gentleman have to say, and I don't see any specific blueprint whatsoever.
Don't run off because I've offended you already, dawg. All I did was call them out for some engagement heftier than a tweet. If they have answers and a plausible plan to accomplish professional, institutional journalism in this economic climate, in this technological construct, I'm all ears. And if there is an easier journey than paywalls, I will cheer and shut my piehole and go the hell away. Happily. Because I know the journalism that matters to any city's civic health is going to endure, and that the drain of talent from newsrooms is not going to continue, unabated.
But don't go into high dudgeon because I called 'em out. Let the men answer. Or you answer.
I'm interested.
#29 Posted by David Simon, CJR on Tue 5 Jun 2012 at 07:26 PM
Mr. Brill, thanks for the chuckle.
Your spreadsheet of facts and figures wouldn't need to reveal client names. Just the data: Newspaper X ... Newspaper 101 ... or whatever.
What are you afraid of?
It's interesting -- I've been writing about this topic longer than you've been pushing Press+ and you've always ignore what I've had to say. Now, I put a little extra effort into it and produce something that is well factual and well reasoned, and now you're defensive and quite engaged. Telling ...
Where's the data?
#30 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 07:30 PM
My last sentence maybe could have been phrased better ... basically, given the response to this post from Brill and Corvitz, something tells me I hit a nerve. That's a nice confirmation. I love it.
#31 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 07:35 PM
As someone who's had a number of arguments with Howard Owens through the years, it's refreshing to see his empty attacks called out. I, too, would like to see some specifics about what he thinks will work.
Owens and the Hats In Reverse crowd -- Jeff Jarvis and other bags of air -- have been preaching this same sermon, with reactionary versions, for a number of years now.
At this time, I don't claim to know the solution to the broken business model. But I know it won't come from people like Owens, nor will it come from outfits like the Tribune Co., which seemed to take joy in running off sensible people while throwing open the doors to every design-based pinhead who came running to take advantage. Those people, like Owens and Jarvis, were good at only one thing -- fooling newspaper managers into thinking they had any credibility.
#32 Posted by Robert Knilands, CJR on Tue 5 Jun 2012 at 07:39 PM
"And if online ad revenue on free sites simply isn't enough to pay for the institutional costs of professional journalism -- and it isn't, not even close."
You do like fiction, don't you David?
In the last thread and this one, and not just by me, you've been told this is factually wrong, but yet you persist in it.
Mr. Brill, BTW, will you buy me a bottle of scotch if some of your papers drop within the next 12 months? If it happens, that will be a confirmation as to the reliability of my source.
#33 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 07:46 PM
Ah, Wenalway returns.
http://davisullblog.blogspot.com/2010/05/why-robert-knilands-is-partly-right.html
#34 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 07:57 PM
See, Howard, even that guy admitted I was partly right. (Actually, I was more than partly right about newspapers treating their copy desks like dirt. Even I did not think they would dump them entirely, however. Can't take credit for knowing that.)
Howard, does The Batavian still run every police and fire scanner item, word for word? If that's what passes for "hyperlocal," I think I'll pass.
#35 Posted by Robert Knilands, CJR on Tue 5 Jun 2012 at 08:08 PM
Robert, it pays the bills. And I'm glad it displeases you. Nothing could make me happier.
#36 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 08:17 PM
I'm curious -- how does that, in itself, pay the bills? And it doesn't displease me -- that would happen only if I had to process that stuff day after day, as you do.
But fill me in on how a non-revenue-generating item pays the bills.
#37 Posted by Robert Knilands, CJR on Tue 5 Jun 2012 at 08:24 PM
Mr. Owen.
Yes you did hit a nerve: i kind of think a Columbia Journalism Review article should have some, uh, journalism. Try it some time.
As for results, you are welcome to call any of our 357 Affiliates, (as of today, more tomorrow), and ask any of them their results. Most will probably tell you. If they were not satisfied why would they be expanding?
Anyway, I'm done here -- unless you're willing to tell all of us your supposed source who says we charge 50% and have dissatisfied Affiliates. You just don't have that source.
Steve Brill
#38 Posted by Steven Brill, CJR on Tue 5 Jun 2012 at 08:34 PM
I'm not going to break a promise and reveal a source, Mr. Brill (and it's OwenS). Like I said, pony up with a bottle of scotch if I'm right. If I'm wrong, I owe you one.
The fact that you're more interested in deriding me personally rather than deal with the actual facts of the case I laid out tells us all that you're really not all that confident in your model.
Robert, as I long suspected, you don't know much about business, do you?
#39 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 08:41 PM
Mr. Owens,
Regarding your comment: "And if online ad revenue on free sites simply isn't enough to pay for the institutional costs of professional journalism -- and it isn't, not even close."
You do like fiction, don't you David?"
I have scanned the Batavian, your online publication. I note advertising. I have no doubt this signifies some revenue. Perhaps it is revenue sufficient to sustain the Batavian, such as it is.
I will reassert -- based on everything else I have read anywhere, from the analysis of Wall Street analysts to the bankruptcy filings in the Tribune Company casework -- that online advertising does not at this time command rates capable of sustaining high-end, comprehensive daily journalism in a major American metropolitan market. Are you really saying that your small community model -- and the limited scope of its journalism -- has discovered a dynamic that could be replicated on the scale of say, the Detroit Free Press or the The Sun or the Inky. That it could allow them to staff a newsroom that could systematically cover a major city, as well as surrounding juridisdiction, state government as a whole, and a variety of issue-based beats on a regionwide basis, to launch prolonged investigations atop the daily beat reporting, to go court when public officials routinely deny public documents, to fend off frivolous suits, among other responsibilities. This is remarkable.
Please describe such in detail. Not as it sustains the Batavian or a publication of comparable scope, but as it would a major metropolitan daily.
The fact that until the NYT began obtaining subscription revenue, every newspaper in America was in an economic free fall and all of them failed to achieve online ad rates that could make up for the massive loss of retail and classified advertising in the print editions is even more of an embarrassment, given that you had, in the quiet of your own operation, resolved the dilemma that confronts the entire industry.
Take your time, write it out. Let's have a look at how much or how little online ad revenue floats a newspaper with a $15 million annual operating budget. Or in the case of the NYT, a much larger operation than that.
All sarcasm aside, if you can be convincing here, I want you at the next ASNE convention and the bar tab is mine. No problem.
#40 Posted by David Simon, CJR on Tue 5 Jun 2012 at 08:45 PM
David,
As I mentioned before, I was once in charge of online at the Ventura County Star. I'm not sure I can reveal actual dollars, but I know what we made. I know that if that revenue could be sustained sans the print edition, then we could employ at least 20 journalists (pretty good for that market).
Read Tim Windsor's comment above.
These online newspaper experiences are not unique. They are in fact quite common. Any well run online newspaper site is right now generating enough revenue to support an online-only news staff of the scope you say you're proposing as a start up.
If you would like me to dig through newspaper company quarterly reports and pull out their online revenue numbers, I can do that, but I'm not going to do that tonight.
The way I do The Batavian isn't necessarily how I would run an online-only site in a major metro area, but I know how to make money online. I've been doing it for more than a decade.
Pretty much, beyond that, if somebody wants to know how to make money online, they're going to have to pay me. I only go so far publicly in giving free advice.* However, Brent has my e-mail address if you personally would like more details.
(FWIW: If that seems ironic to anybody, remember, I'm not proposing that people work for free; the discussion is over how to generate revenue to pay for journalist's work.)
#41 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 09:05 PM
FWIW: E.W. Scripps operates newspapers in 13 markets.
In 2010 (the most recent annual report I could find), those 13 properties generated 28,170,000 in digital revenue.
That's an average of $2.1 million per property, and I believe all of their markets are smaller than Baltimore, many substantially smaller.
I also believe -- and it's just a belief -- that the print product actually holds back revenue growth for the online editions.
#42 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 09:34 PM
Hi Howard,
No one denies that journalism costs money, but most newsrooms are about as efficient as the local governments they cover, so existing cost numbers are meaningless.
No, I doubt that Jeff Jarvis thinks he has an answer. Nor do I. I have some good ideas though, too in depth for a comment, and they require innovation. Real innovation.But not having the answer doesn't mean you can't recognize what isn't going to work.
The arguments here seem to assume that the results that traditional journalism achieved can only be accomplished by traditional journalism methods and business models.
That's just a lack of creativity.
#43 Posted by Matt Terenzio, CJR on Tue 5 Jun 2012 at 09:36 PM
Also, somebody sent me this link, relevant to the idea of bundling subscriptions http://www.niemanlab.org/2012/05/ongo-an-attempt-at-a-pan-media-paywalled-aggregator-is-closing/
#44 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 09:43 PM
Mr. Simon, I think I have something new to offer. I hope you'll read and respond.
First of all, let me say that Matt Terenzio was absolutely right to point out that the cable TV model which you hold in such high regard is not unshakable. Many people my age, and especially younger, are dumping cable the way they once dumped land lines in favor of cell phones only. I myself would gladly be rid of it if I could buy just the channels I wanted and dispense with the many I never watch. There are only several alternatives now: Netflix, AppleTV, Hulu, etc., but they are increasing. There is absolutely a demand for the unbunding of TV entertainment and where there is a demand, the marketplace will meet it.
Now, let's imagine that cable TV came unbundled this very day. Let's say all of us could suddenly buy only the channels we wanted. Some channels might fare better, some worse, but do you believe that there is a single channel that would receive zero dollars? I can't think of a one. Why is that so? Well, because each channel specializes in something. Each channel appeals to specific groups of people. The cooking channels obviously appeal to people who enjoy cooking and dining, the fishing channel appeals to fishermen and so on. So if cable was unbundled, I believe every channel would survive. If some didn't, then it's because no one was watching them while they were part of the package and they deserve to fade away.
Bringing it back to newspapers, each metro newspaper is kind of like a Comcast channel package. You've got politics, sports, real estate, etc. These are the channels. This package has already come unbundled as we know. Online especially, people consume information by niche, not by publication. So if I'm interested in sports, I will read sports content on many different websites. Yes, I may spend more time with some sources than others, but I will not constrain myself to any one source. And of course we know that some sites have overtaken niches that newspapers used to command and they do them better and cheaper (i.e. Craigslist).
Time and again, we see that people pay for niche content online, not a generalized product. This is the reason people pay for the Wall Street Journal, Financial Times and the like. This is the reason people pay for Roll Call and other political publications. People pay when it's in their professional or personal interest to do so or when they are truly passionate about the topic and want to know as much as possible about it. Need and/or passion; those are the keys. People feel that way about the cable channels they like and thus they would pay even if the bundle came undone.
The newspaper bundle has already come undone, but do you believe that in this day and age, a large enough number of people are convinced that they need the coverage their metro daily is providing? Are they passionate about that coverage? Is anyone in love with Most assuredly, there are people who feel that way. But I don't believe there are enough people who do and if you throw up a paywall, they will simply go without. It's not that hard to give up something you never cared about to begin with. This is what I believe has to be addressed before we can demand payment. How can we address it? I have lots of ideas and can share them if you ask me to.
#45 Posted by Anna Tarkov, CJR on Tue 5 Jun 2012 at 09:47 PM
Way to avoid answering the question, Howard. I actually suspect I know the answer, but as with anyone trying to verify something, I am asking you. I guess you choose to be evasive.
I'm really not too worried if you think I don't know business. My degree and subsequent experience would indicate you are wrong, but you are entitled to your opinion, I guess. Not sure what you are basing it on, other than the fact I think (actually, know) you claim to have knowledge that you have never backed up, including in this discussion. I am actually glad to have stumbled upon this discussion.
Also, I should point out that just in casual Web surfing, I already had found and could recall most of the details mentioned by Steve Brill. It doesn't seem that you could do the same, yet here you are, battling away, with no source and no credibility. The more things change, the more they stay the same.
#46 Posted by Robert Knilands, CJR on Tue 5 Jun 2012 at 10:52 PM
"As I mentioned before, I was once in charge of online at the Ventura County Star. I'm not sure I can reveal actual dollars, but I know what we made. I know that if that revenue could be sustained sans the print edition ..."
This has to be one of the sillier statements ever made in one of these debates. It almost sounds like something out of Dilbert -- "Well, if we could just drop print but keep the revenue!"
Keep going, Howard. This is amusing.
#47 Posted by Robert Knilands, CJR on Tue 5 Jun 2012 at 11:08 PM
Robert, I don't think you figured out -- I really don't care what you have to say and I'm not going to engage a troll like you in any real conversation. You've proven yourself too often unworthy of the time.
#48 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 11:11 PM
Ms. Tarkov.
Welcome back. You are aware that HBO, where I work, has consistently refused to allow its programming to be accessed through anything other than HBO subscription or DVD sales and has not played nice with Netflix or Hulu or those guys. Oh yeah, the most lucrative division of Time Warner? Yup. By far. Subscribe to HBO and you go all in -- HBO GO gives you 2,000 hours of existing programming that you watch on your terms. If that works, it supports the programming with revenues -- and sends profits upstairs to Time Warner. if it doesn't, and if there are large holes punched in the paywall by technology or by venues unanticipated by HBO, then guess what?
There won't be $30 or $50 million to make the season of some programming, maybe even the more important programming. As with publishing, when book revenue began to dry up, the publishing houses came after the mid-list authors, not after the big ticket hits, but after a lot of meaningful non-fiction and fiction that could exist with a viable revenue stream. But that stuff was the first to be cut as the New York houses tightened.
So, too, at HBO, where large miniseries have disappeared since the Pacific, and where documentaries have become fewer and where the film division's output is half of what it was. The hits -- Game of Thrones, True Blood -- will get what they need. But the tent as a whole will shrink and the more marginal-selling productions -- Treme for example, or Luck, or Bored To Death -- are then at risk. I make shows that have terrible ratings on Sunday night -- always -- but HBO made them with some sense that the shows could be found overtime on download and on DVD and that this long tail could sustain the show and add to the brand. But if the DVD market isn't there and if people don't buy HBO subsciptions, then how can it matter? No revenue, then no production money. And it takes a lot of money to make a season of Treme or The Wire, even more to make Band of Brothers or Generation Kill.
If you disconnect the cable and you don't buy the DVDs, and if there are a lot of others like you, there will be less programming. And if no one wants to pay for journalists to do that work, yup, less journalism.
Either a product has a revenue stream or not. It can be advertising, which creates its own problems sometimes -- look at what ads did to network television, stunting it for generations in terms of the quality -- or it can be the product itself. But if you can't wrap ads around it at a decent rate, and if you allow the product to be consumed for free, without a revenue stream...
market the product...
If you want quality in anything that you buy, it helps if the factory is paying a living wage. In journalism, no. Not anymore. And in television, the cable television is at risk, sure. But don't deny that cable bundling created a revenue stream that resulted in the most varied, most comprehensive menu of television viewing we've ever seen. It grew the product tremendously over what was available in say 1975. And unless new technologies protect a revenue stream, the menu will be shorter.. You get what you pay for. And free is free.
#49 Posted by David Simon, CJR on Tue 5 Jun 2012 at 11:11 PM
Howard, that's a good way to be evasive and to avoid offering specifics. Those would probably hurt your cause, I suspect.
This is the same M.O. you displayed when you were with GateHouse and making all sorts of silly claims, and it's the same M.O. you displayed after that when you were, well, wherever you were. Like I said, people like you and Jarvis are really good at blasting the way "things used to be" but not so good at offering a better plan. I have to doubt that running an item about an overheating microwave oven brings readers and advertisers running to your site.
#50 Posted by Robert Knilands, CJR on Tue 5 Jun 2012 at 11:16 PM
Robert, I don't think you figured out -- I really don't care what you have to say and I'm not going to engage a troll like you in any real conversation. You've proven yourself too often unworthy of the time.
#51 Posted by Howard Owens, CJR on Tue 5 Jun 2012 at 11:33 PM
That's too bad, Howard. But I guess you won't mind if I share a few links, starting with this one:
http://www.niemanlab.org/2009/01/howard-owens-they-would-probably-win-on-that-one/
#52 Posted by Robert Knilands, CJR on Tue 5 Jun 2012 at 11:57 PM
Mr. Owens,
After reviewing your reply with regard to online advertising, I have to say that from my point of view, if you do find yourself at ASNE, the bar tab will be your own. That was wholly unconvincing. In fact, it had the opposite effect.
A measured against all of the reported revenue figures for online ad revenue from newspapers and newspaper chains not only in this country, but worldwide, your sense that the Ventura County paper might have been able to support 20 positions with gross online ad revenue, or that this might be true in other locales, or that you have some special tricks that you are not going to reveal, well...
Nevermind.
#53 Posted by David Simon, CJR on Tue 5 Jun 2012 at 11:58 PM
Wow, David.
You're really a piece of work. Words -- and they rarely do -- fail me.
Your final paragraph is utter babble.
And I wonder, do you even ever recall your past statements?
#54 Posted by Howard Owens, CJR on Wed 6 Jun 2012 at 12:10 AM
The only thing missing now from this conversation is a classic line from the old "SNL" parody of "60 Minutes":
"Jane, you ignorant slut ..."
The top of this page says Columbia Journalism Review. The bottom of the page begs to be called The Onion.
Perhaps newspapers will fail if they try pay walls. But they're definitely going to fail if they don't try them. CPM alone cannot support high-impact journalism at a professional big-city news operation, even a narrowly focused one. That's a fact proven in Austin, Minneapolis, San Diego, Chicago, the Bay Area and Seattle. I've personally seen it not work.
So where's the foregone tragedy in implementing pay walls? Are people going to die or something? Why is it so important to prevent this survival experiment? I really don't get it.
Like I said earlier, pay walls will either work or they won't. And we'll get the journalism we deserve.
#55 Posted by Chuck Taylor, CJR on Wed 6 Jun 2012 at 01:23 AM
On the contrary, Mr. Owen, words have failed you on numerous occasions in this dialectic. Facts as well.
Let me know if you ever find an regional daily newspaper that spends $100 million on its metro coverage. Or even $50 million. You made those figures up. Offered them without attribution, Then you set about to show my dint of your own math that I couldn't possibly raise such an astronomical sum from online subscriptions.
Do you even acknowledge what kind of awful journalism that is? Ever? Are you aware of how such journalism disqualifies an argument based on such reportage from any serious consideration?
Think about it, man. You just penned a piece for the Columbia Journalism Review that actually premised an argument on ridiculous, made-up figures. You put it out there and you put your name on it and incredibly, and now it flies around the internet and people who wouldn't know a fact-check from a fart will look at it and remark, "Simon doesn't get it. He needs $50 milliion at least, maybe even $100 million, to cover a metro region and he can't come close. He can't manage close to that from online subscriptions. The math doesn't work!"
Do you want to explore a reality? Or do you want to win an argument? Why are you here, brother? What are you doing?
And then, further, you suggest on no hard evidence and in opposition to everything that Wall Street has been telling us about online ad revenues in allpublicly-traded media companies, that you happen to know from your limited personal experience working online stuff at the Ventura County paper, that you have insight that has eluded everyone else, that you, using tricks that you can't reveal publicly, could sustain large metro dailies on this number,
And I'm a piece of work? WTF?
Howard, brother. If I used a figure as appallingly inaccurate and fraudulent as $100 million as you did, I would retract it and apologize so fast it would make my head spin. In fact, if I were at a real newspaper doing real journalism, operating in that skill set, an editor -- if he didn't catch it before publication -- would walk over to me and say, "What the hell?" And then, ashamed, I would typing the correction and ending with, "The Sun regrets the error." And I would take the moment as a hard lesson about not making up numbers and using them to construct ridiculous arguments.
You? If your response on this is indicative, then apparently we are not of the same tribe, I I tried to keep it going, and I tried for the benefit of the doubt at various points. I tried to wean you of your passion for insult, for stereotype and ad hominem. But in the end, what do you do with a guy who simply makes up his own data, gets challenged, gets caught and goes blithely onward as if the point of the exercise isn't to get it right, above all.
I know what we can't call him. A journalist.
#56 Posted by David Simon, CJR on Wed 6 Jun 2012 at 01:30 AM
"I also believe -- and it's just a belief -- that the print product actually holds back revenue growth for the online editions."
This is another blatantly silly statement from Mr. Owens.
I am sure his conclusion would be true under certain circumstances. After all, if there were no print edition -- as he suggested as a scenario earlier -- then online revenue would grow quite a bit. But I doubt it would even come close to filling in the newly created print revenue gap.
There is a finite revenue stream for any business. So I guess it's possible that one product might pull some revenue from another product. But dropping a larger source of revenue for a smaller one is probably not the best business plan.
#57 Posted by Robert Knilands, CJR on Wed 6 Jun 2012 at 02:43 AM
A few thoughts on this discussion:
1) Quite funny that Owens decries the "ad hominem" argument in one comment (which, as David correctly pointed out, wasn't ad hominem at all) and then proceeds with his own ad hominem attacks like this one re: David: "You're really a piece of work. Words -- and they rarely do -- fail me. Your final paragraph is utter babble. And I wonder, do you even ever recall your past statements?"
2) The central tenet of Owens' argument is that paywalls don't make enough revenue to support a robust newsroom, and thus that other monetization strategies like advertising are better business. David argues paywalls can support the cost of a newsroom entirely by pointing out that Owens is overestimating the cost of running a newsroom. But the problem with that entire discussion is that it's premised on the assumption that paywalls NEED to fully support the cost of a newsroom. That's a false assumption. Today successful journalism orgs like the NYT operate digitally, as they do in print, by generating digital subscriptions revenue AND ad revenue AND other digital revenues, too. Why couldn't both streams grow over time and gradually, combined with other new digital revenue streams, support a robust newsroom?
3) Owens should just issue a correction about the cost of Press Plus and admit that in writing a 5,000 word piece so quickly, he simply skipped that legwork and made an assumption that turned out to be wrong. Then we should all wait with bated breath to see whether publishers actually do start dumping Press Plus soon. If they do, then there will be no need to keep speculating about whether their strategy is working.
4) Everyone on this comment chain needs to have a glass of that scotch Owens mentioned. Relax, people!
#58 Posted by Brian Robinson, CJR on Wed 6 Jun 2012 at 03:22 AM
Mr. Simon, nowhere did I say that if cable comes unbundled, I would like to pay nothing for it and expect that my favorite channels would survive. Maybe I misread your response. Please correct me if I'm wrong. The same is true of journalism, whether online or not. I don't expect to pay zero and see public interest journalism survive and thrive. If I could get just the public interest journalism about my city (Chicago) and if it was truly excellent, I would pay for it and I believe others would as well (especially if the costs of producing said journalism were clearly communicated to them). But I can't get JUST that journalism in print without also getting tons of other stuff I don't want. Just as I can't get HBO on its own without lots of other channels I don't want.
Now online, it is extremely easy for a newspaper to give me only the stuff I want and ask me to pay for it. But no one is doing it. Well, that's not entirely true. I've read that some papers have had success with niche products online. I wish more papers would try it. Then, like I wrote in a comment on your original piece here, there could be a paid product for real estate agents, lawyers, sports addicts, etc. And that's just content. Newspaper companies can also make money from classes, events and much more. NYT does this for instance and so do others. Add all that revenue together with ad sales and suddenly you would be able to afford the deep beat journalism you are asking for. Maybe you could even give it away for free while continuing to charge for the other stuff. But again, you might not have to. Many people would donate to sustain that work. And, as I've alluded to before, if we find that few people in a metro region will pay to hold their public institutions to account, then we have much bigger problems.
#59 Posted by Anna Tarkov, CJR on Wed 6 Jun 2012 at 04:28 AM
Let me add that even though Howard has lost your offer of a bar tab, if you are ever in Chicago, please send me an email. tooter2 (at) gmail (dot) com. I'm completely serious.
#60 Posted by Anna Tarkov, CJR on Wed 6 Jun 2012 at 04:34 AM
Since the disagreement here has addressed at most three of Howard's 10 points, I suggest to the critics that you reread. If Howard's right on seven of 10, paywalls aren't going to work. I think he's right of 10 of 10, despite the math error on one of the points (and if you think someone who makes a math error isn't a journalist, you haven't worked with many journalists).
Here's a fact that is ignored or denied in the pro-paywall arguments: Digital revenue, without paywalls, can and does support a news operation. At ASNE, Greg Retsinas, digital director of the Santa Rosa Press Democrat, discussed how his operation is already making up the loss in print ad revenue with its digital growth. At Digital First Media, we call that the crossover point, as our SVP for local digital ads explained in a piece for INMA: http://www.inma.org/blogs/integrated-advertising-sales/post.cfm/mapping-out-the-crossover-point
In Jim Brady's address at a Paris conference last week, he said Digital First is making progress toward the crossover point: http://www.editorsweblog.org/2012/06/01/going-digital-first-requires-reinvention-not-merely-a-shift-or-transition
John Paton noted last fall how close the Journal Register Company was not only to replacing print dollars with digital dimes, but also to covering newsroom costs with digital dimes.
Simon argues that Howard errs by citing numbers based on current reality, rather than on Simon's imagined somehow-legal cartel of newspapers united behind a paywall. But he and others make the error of dismissing the potential for digital advertising and other non-subscripiton digital revenue by looking at the failure of traditional news organizations relying heavily on remnant.
As Tracy Record and Howard Batavian are showing, a digital-only operation can succeed on a small scale on the local level. Lots of digital-only operations are succeeding in niche areas. And Digital First is showing that metro news operations combining print and digital can replace their lost print revenues with digital revenues.
And can we all stop the references to heresy, theology, Church of Journalism and other religious terms? This is about business, not religion. I don't worship digital advertising and I don't see paywalls as a heresy. I see them as a backward-looking strategy when we need to look forward. But I hope they succeed. Many of my friends and colleagues work for newspapers joining the paywall rush. I hope the paywalls will end the job loss in those newsrooms. But Howard's reasons here explain why those newsrooms will continue cutting jobs, even if Simon's cartel fantasy were to somehow come true.
#61 Posted by Steve Buttry, CJR on Wed 6 Jun 2012 at 07:21 AM
Sorry, I meant to include the link for John Paton's discussion of the progress Journal Register Co. was making to covering newsroom costs entirely with digital ad revenue: http://jxpaton.wordpress.com/2011/09/07/digital-first-the-next-step/
#62 Posted by Steve Buttry, CJR on Wed 6 Jun 2012 at 07:38 AM
Ms. Tarkov,
I hear you. But what I am saying is that if cable comes unbundled -- and consumers can order a la carte from the programming universe, then there will be less programming created on fewer channels and, certainly, some of the more critically acclaimed or civic minded programming will be the first to go.
The Big Tent of bundled cable allows for a revenue stream that can create and maintain everything from the weather channel to the travel and food channels, to premium channels such as HBO and Showtime. And tellingly, HBO -- one of the most lucrative and distinct brands -- emphatically refuses to provide its programming outside of the cable universe, saying no to Netflix, no to Hulu. Either by the DVDs of individual programs or subscribe. That's it.
The wide spectrum of content could exist without bundling. If each channel had to seek and retain its own subscribers, niche programming such as the book channel or the food channel or CSpan would not sustain themselves and we would be crawling backwards to large, monolithic network programming. Instead, by selling the entire spectrum as a single entity -- and selling it for a set, significant monthly fee -- television achieved what newspapers did not.
Well, major regional newspapers -- unlike small community papers and the NYT, which are unique ends of the prose journalism spectrum -- are, once readers can obtain international, national and cultural news for free elsewhere -- only offering coverage of their regions as a unique entity. If this remains true, they die. All of them. Most are dying already -- an e-race to irrelevance. And people, if asked to pay for them online as single entities, unbundled from the rest of the news report, will not do so in large enough numbers. Just as people, asked to send separate bills to Food Network or the Weather Channel would never do so in large enough numbers.
But a full spectrum of news can and should exist if in paying a bill for e-access to a world of news, viewers could select a package that included online news that approximated what generalist newspapers achieved -- only moreso. If $15 a month gained you access to three overseas papers of your choice, or a choice of the NYT or WP for national coverage, and two regional papers, and your community weekly, and perhaps special interest periodicals for those with unique interests at moderate additional cost, and if the industry hewed to a paywall logic -- does that not approximate the conditions by which television grew itself geometrically and substantially over the last thirty years?
Are people disconnecting cable? Are they going to Hulu? Are they downloading programs illegally? Sure. All of which does indeed approximate the problems that newspapers faced a short time ago. Which means individual networks are making the same mistake when they offer programming to Hulu or Netflix, when they don't do everything to support the cable or satellite packages. And if this industry is as poorly led as newspapers, yes, there will be less quality programming, not more. Because it costs a lot of money to make high-end network programming, a lot of money. $100 million for Band of Brothers alone. $220 million. $50 mil or so a season for some HBO drama. If the Big Tent starts to fold, the big money disappears for every network in the tent -- the marginal, idiosyncratic networks first.
And yes, I know you want more choice. But an a la carte world supports far less programming than the Big Tent has created.
#63 Posted by David SImon, CJR on Wed 6 Jun 2012 at 10:06 AM
Second graf, first sentence: Should be "could not."
#64 Posted by David Simon, CJR on Wed 6 Jun 2012 at 10:09 AM
In the pro-paywall arguments, I see a lot of "should." As in, people "should" pay for news, or large metro newsrooms "should" continue to exist. It's a sad day for the newspaper industry when the shell shock of layoffs and decline has divorced industry leaders and supporters from reality.
"Should" is not a viable business plan. You cannot build a paywall and expect it to be successful just because people "should" pay for news or "used to" pay for news. People used to pay for albums on CD, too, but then the internet disrupted the music business and made things better for consumers by letting you buy individual songs online, instantly. Likewise, the internet has come along and made it possible for consumers to get the specific news they're interested in online, instantly, without the massive costs and inconvenience associated with newsprint.
But just like file sharing services were the "good enough" (albeit illegal) consumer answer to the music companies that initially tried to stop customers from consuming music online in the way they wanted (because it didn't fit their bloated business model), Howard is spot on when he says that there are plenty of alternatives -- from broadcasters to pureplay local news websites -- that will present a "good enough" (or even better) option for local news consumers who reject the expense and inconvenience of newspaper paywalls.
It's amazing that so many newspaper industry practitioners are buying into the same argument that paywalls are necessary because online can't generate the revenues necessary to support newspaper companies. Of course that's the case -- newspaper companies are built around print. They're largely manufacturing and trucking companies, with a bloated corporate structure and unsustainable legacy costs. And the fact that there were once 500 newsroom personnel at the Sun is, no offense to Baltimore, the result of a newspaper monopoly -- a temporary market imbalance.
There are two possible solutions here. Either newspaper companies engage in a radical restructuring that allows them to build a business based around online, or they die. Paywalls WILL slow that inevitable death by generating some short-term revenue and stemming the defection of print subscribers, but it just that: a short term solution.
Alas, time and again we have seen legacy companies get swept away by the tsunami of disruptive innovation, because management is unwilling to adapt to painful new market realities. The good news is that there will be new companies rushing in to pick up the pieces and try to make a profitable business off those digital dimes with which newspaper companies couldn't support themselves.
Howard, Tracy, myself and plenty of others have proven that you can build a popular, profitable, standalone online local news publication. It may look like small potatoes to David now -- incapable of making up for the loss of a metro newsroom -- but in time more hyperlocals and local verticals (tech, food, culture, business, etc.) will come in fill the content void. And maybe some enterprising firm will see fit to build a centralized place to link to all those disparate local news sources -- something akin to a current local newspaper website.
The market dictates what works as a business, not the hopes of those saying what "should" work. Take heart, though: consumers still want to know what's going on in their communities, and local businesses and organizations still need to advertise. The market will find a way to meet both of those needs -- it just might not happen overnight, and it certainly won't happen as a result of paywalls.
#65 Posted by Scott Brodbeck, CJR on Wed 6 Jun 2012 at 10:54 AM
"I think he's right of 10 of 10, despite the math error on one of the points (and if you think someone who makes a math error isn't a journalist, you haven't worked with many journalists)."
This classic brought to you by Steve Buttry, another member of the Hats In Reverse crowd. Steve, when do you start calling anyone who disagrees with you a curmudgeon? I'm surprised you haven't started already.
You don't specify which error, but if it's the one mentioned already, then that's not "just" a math error. (Not sure how a math error isn't significant, but ...) That was a factual error. Howard failed to get correct information that is available so easily that I could recall most of it just from a casual Web surf.
"And Digital First is showing that metro news operations combining print and digital can replace their lost print revenues with digital revenues."
If you're just replacing revenue with other revenue, then that would be "flat" growth. You know, that thing you keep bashing when it's print revenue that's flat. Maybe you view this as some sort of necessary transition, but you should be more consistent with these references.
Keep that hat in reverse, anti-curmudgeon!
#66 Posted by Robert Knilands, CJR on Wed 6 Jun 2012 at 11:02 AM
"The market dictates what works as a business, not the hopes of those saying what "should" work."
You left out the reference to the "invisible hand" that guides all economies to greatness.
But anyone arguing for a product to continue to be free, all the time, without limits, is probably not going to make a strong argument related to business.
Yes, there probably would be businesses to pick up some of those pieces. But they also would generate earth-shaking content like "Top 10 reasons to buy your hammer at one of our advertisers!" We are already seeing this at some sites -- Howard's site, for instance.
#67 Posted by Robert Knilands, CJR on Wed 6 Jun 2012 at 11:15 AM
Robert: The product is the advertising and marketing services sold to businesses. I can assure you no one is giving that away for free.
Yes, there's plenty of room for improvement and refinement in terms of content, but that will come with time, as online news startups grow. Because the barriers to entry are fairly low, competition will also improve matters. The site with the best content and the most defensible business model will rise to the top.
No new product has started out perfect. Cars, personal computers, television programming, search engines, etc. have all evolved from rudimentary to refined as technology and business models improved. Online news will follow a similar course.
#68 Posted by Scott Brodbeck, CJR on Wed 6 Jun 2012 at 11:33 AM
David, I’ve read the relevant materials, but still think you’re missing the key of costless Internet delivery. You keep referencing the bundling of cable, but the delivery mechanism is entirely different. If I want my content out on cable, I have to negotiate with cable providers–I can’t just reach the people directly. If I want my content on the Internet, I can do so with ease. This leads to disaggregation. A la carte providers of information in each subject area could always undercut you. Most consumers will save money and benefit that way (and receive much better information on almost all topics than they did in the heyday of newspapers). If bundling were a sustainable business strategy in the absence of certain conditions, why don’t we see it proliferate everywhere? I suppose Honda, for instance, could require us to buy both a motorcycle and car in order to purchase either from them, but it’s pretty clear why that would be a destructive strategy.
Further, given your concern about keeping institutions in check, why should consumers be so willing to accept coordinated, cartel-like behavior from the media industry in controlling the dissemination of information?
Finally, I’ve yet to see your answer re: copyright protection. The information, not the words are valuable. And information can’t be copyrighted. There’s nothing stopping someone from summarizing your article in their own words.
#69 Posted by Jack, CJR on Wed 6 Jun 2012 at 11:36 AM
"Robert: The product is the advertising and marketing services sold to businesses. I can assure you no one is giving that away for free. "
Well, Scott, those are called shoppers. They are 100 percent advertising and not at all the same as newspapers.
"The site with the best content and the most defensible business model will rise to the top." Maybe, but right now SEO and the crazy phrases about zombie apocalypses are winning. That needs to improve, soon.
"There’s nothing stopping someone from summarizing your article in their own words."
No, Jack, but that's not what's happening now. Aggregators are just picking up blocks of text without rewriting them or summarizing. And they see nothing wrong with that. Paywalls might slow them down.
#70 Posted by Robert Knilands, CJR on Wed 6 Jun 2012 at 11:55 AM
Mr. Simon, I hear you too. And at last we are getting to the heart of the matter which is your fear (shared by many journalists) that people would never in a million years pay for the "vegetables" reporting, the nitty gritty metro reporting you champion. The thinking is that people only want the sugar: celeb gossip and the like. With that outlook, you say that if cable were to unbundle, the idiosyncratic, important, less entertaining, less critically popular programming would disappear. That would indeed be a shame and I can completely appreciate how this is a particularly personal matter for you. However, I disagree. For example, and this deals specifically with HBO, have you seen this?
http://cordcutter.tumblr.com/post/24524577225/why-hbo-doesnt-want-my-money
The key point made there is that indeed right now there are not enough people to sustain HBO if they were to sell themselves directly to viewers without the cable middleman. However, the writer of that post quotes the Economist which says that day will come in 10 years. I think it could be even sooner. And while there are not yet enough people to directly sustain HBO, there are more than enough people to directly sustain public interest reporting online, if not directly then through other revenue streams that newspaper organizations need to develop. I've brought up those other potential revenue streams more than once now and I'm not sure why you keep glossing over them.
And as for the often hated (and also beloved) advertising that has fled newspapers and made them only pennies and dimes online, it too is in its infancy when it comes to the online version. We have had the Internet now for a long time and we're still using banner and display advertising. This would be like if cars were invented 15 years ago and we were still driving model T Fords today. But online ads are improving and they can and will make more money for publishers in the future.
But again, I come back to the vegetables vs. sugar issue. If your feeling is that people will not readily pay for public interest reporting nor important, unpopular television, then how is a paywall the solution? Public interest reporting is arguably a newspaper's most unique content, unable to be duplicated by any other entity. And online especially, that which is unique is highly prized and that which is unique receives the most attention. So if a newspaper cannot sell its most unique and valuable product, what future does it have? Perhaps your problem isn't with newspapers, but with their readers (or lack thereof, as is lately the case).
#71 Posted by Anna Tarkov, CJR on Wed 6 Jun 2012 at 11:57 AM
"The information, not the words are valuable."
I disagree with this. While obviously the substance of the information is what is most valuable about a piece of journalism, the way in which it is written is also of significant value. FOX News and Charlie Rose can take the same basic piece of information and, based upon how they spin it, how much time and intellect they put into it -- or how much political machination is going on behinds the scenes -- the quality of what the audience receives is vastly different.
Some journalists are more effective communicators than others. Surely you wouldn't disagree with this!
#72 Posted by KL, CJR on Wed 6 Jun 2012 at 12:04 PM
("BEHIND the scenes", gah. Nothing like grammatical mistakes in an Internet debate about the value of good writing.)
#73 Posted by KL, CJR on Wed 6 Jun 2012 at 12:06 PM
KL, I certainly think high quality analysis is "valuable" in that sense, but I'm not sure how "valuable" it is to newspapers for a couple of reasons.
First, it's not clear to me newspapers have a comparative advantage in analyzing, as opposed to just discovering, the news. The expertise of the Internet has exposed how bad most general and sports newspaper columnists are, for instance. And for all journalists' complaints about aggregators, newspapers, in many stories, simply profited by "aggregating" other people's opinions on things.
Second, and related, the supply of quality of analysis on the Internet is high on--plenty of people are willing to giveaway their well-thought out opinions for free. If I like economics, I can read Tyler Cowen, Scott Sumner, Mark Thoma, etc.--all professors willing to give away their "product". Newspapers provide the underlying facts, but these professors add most of the value on top of it--and charge nothing for it. Newspapers aren't going to outflank them in that business.
That leaves the newspapers with just the information. If you have no way to copyright the facts--and newspapers don't--they're not very valuable. People need only summarize what's contained within.
#74 Posted by Jack, CJR on Wed 6 Jun 2012 at 12:23 PM
Jack, while I agree with your thoughts about awful columnists, there are still some flaws in your way of thinking.
Good reporters aren't just "aggregating" the opinions of others. They talk to sources and get the relevant information that's available. There might be some writers who just ask softball questions and then dump their notes into a 15-inch article, but not everyone does that.
Aggregators simply take the work that's already been done and package it as something they offer. Maybe they aren't claiming the work as their own, but they are certainly taking credit for "finding" the information. That is not a sustainable system.
#75 Posted by Robert Knilands, CJR on Wed 6 Jun 2012 at 12:40 PM
Jack -- but what content will there be if there are no investigative journalists? In order to summarize something, someone had to, at some point, actually go out and gather information and spend their own shoe leather to do it. And who will do that if there is no salary to be made from it? That's part of the point Mr. Simon is making.
Professors are often willing to publish for free because academic publishing pays nothing (trust me, I know -- I've worked in academic publishing for ten years, and you'd make more money pumping gas than writing academic books).
And academic publishing pays nothing at least partially because in the initial days of the Internet, universities viewed all Internet material as "fair use" (many of them still do) and as a result most academic/university publishers took a very long time to get into e-publishing and have often still not found a way to deliver online content in a way that is profitable to them. Add to that the fact that as the publishing industry as a whole collapses -- a direct result of the free distribution of intellectual property -- academic publishers are growing leaner and meaner than most, publishing less, or publishing only what has higher commercial value. Many professors cannot find traditional publishing opportunities anymore, so online publishing for free is sometimes their only route to publish at all. I assure you they'd rather see it in print if they could, as it means tenure, promotions, etc.
At the same time, these professors are paid for their research already through their university salary, so it's not a great analogy overall. These aren't writers first and foremost; these are people that study and teach for a living, and publish on the side for the prestige or for the sake of getting the information out.
Where is the institution that will pay investigative journalists to do research, so that they can then publish it just for fun & love? If there was one, we'd have no problem.
#76 Posted by KL, CJR on Wed 6 Jun 2012 at 12:40 PM
I think we're talking past each other. My point is that simply saying we need to use stronger copyright protection isn't the answer--because people can easily summarize that work and add real value on top of it. These professors aren't producing academic work on their blogs--they're commenting on the daily economic news.
I wasn't attempting to make an analogy--I was stating a descriptive matter about why it will be tough to get people to pay for the news, even if you put up a paywall. The underlying information can't be copyrighted--only the way you literally worded it can. Someone is free to summarize it.
I don't disagree with your descriptive claim. In my initial post I agreed that people won't produce news if people don't pay for it, as opposed to analysis, which people will provide for free. But I'm saying no one has offered any viable solutions for getting people to pay for the underlying news, since you can't copyright it.
#77 Posted by Jack, CJR on Wed 6 Jun 2012 at 12:55 PM
I didn't think copyright protection was the question here -- I thought content protection was. Paywalls don't affect copyright, just distribution.
#78 Posted by KL, CJR on Wed 6 Jun 2012 at 01:25 PM
>>>the religious fervor can be found almost exclusively among those like him, including Jeff Jarvis and Clay Shirky, who have nothing at stake themselves but are determined to convince those of us who do have skin in the game how wrong we are.
This isn't true at all! Jarvis and Shirky both do conslutting work they promote with numerous media appearances and self-serving statements. At this point, I'd argue that both of them have a vested financial interest in the free model they've promoted - which is why they continue to promote it.
You might also note that the Knight Foundation has donated generously to CUNY where Jarvis teaches (and I taught as an adjunct)*; Google has given money to the Knight Foundation and its current head, Alberto Ibargüen, is a member of the board of AOL and thus has a vested interest in the success of its Patch venture. This is what the traditional media calls a conflict of interest.
*As I said, I taught at CUNY - one course for two semesters, but my relationship with Jarvis was cordial the entire time. I like him personally but his advice to newspapers has been terrible. I left CUNY because I moved and I bear don't bear it, or anyone there, ill will.
#79 Posted by Robert Levine, CJR on Wed 6 Jun 2012 at 01:27 PM
KL, point being? Paywalls aren't very valuable if they're not protecting valuable information. The words newspapers produce aren't necessarily valuable; the information is. And paywalls only protect the former, not the latter. They don't stop someone from--legally--just summarizing the information that's walled in.
#80 Posted by Jack, CJR on Wed 6 Jun 2012 at 01:34 PM
And now I'm back to "the way something is written is still valuable and affects the amount of information which the public actually absorbs and understands after reading it".
People pay for the NYT despite the paywall because it is an excellently written paper. They probably wouldn't pay so much for an online subscription to the NY Post b/c the Post is written on the level of bathroom graffiti/Perez Hilton dot com.
#81 Posted by KL, CJR on Wed 6 Jun 2012 at 01:39 PM
Jack (post #69) hit the nail on the head: the bundled, publisher-centric approach is the least popular, especially with the younger and/or new-media savvy population, accustomed to paying (when they decide to pay) for digital content and goods, such as music, games and apps on-demand, often as they progress/engage more with such content.
In one of the most interesting (however small) surveys on paywalls, conducted lately by DigiCareers (http://bit.ly/JKJooa), 39% of respondents stated that 'the ability to purchase individual articles, songs, service or content on demand" would encourage them to "cross paywall" or pay for content. 52% leave a site behind a paywall "immediately."
Even though the DigiCareers population was small and specific ("New Media professionals"), these results are consistent with an earlier study by Joan Shorenstein Center on the Press, Politics and Public Policy (http://hvrd.me/Kg2zD0) on how young people interact with news. According to that report, 65% of teenagers and 48% of young adults "just happen to come across" internet-based news, as opposed to the majority (55%) of adults who "seek out the news." This gap suggests that long-term, portal- or title-specific subscription models might not be sustainable. Young people prefer to access specific news, relevant to their current interests, instantly, as they surf the Net, not via subscriptions.
But there is also economic reason why bundled, cableTV-like subscriptions should be reexamined. Perhaps, you've heard about Piano Media and its "national paywall" serving now about 20 newspapers and magazines in Europe. Piano was declared a success and a proof that such "big tent" approach is working well. To me, however, the initial results of the Piano model are cautionary, at least. As reported by Piano, its system brings its publishers from 1,100EUR to 1,500 EUR ($1,380 -- $1,880) in monthly revenues for each 100,000 uniques generated by the pages behind the paywall. In other words, each unique user generates from 1.4 to 1.9 US cent a month. Is this the best way to monetize digital assets and online traffic?
Sure, even a few extra bucks count; and, I congratulate Tomas Bela, the founder of Piano, on his trying out and pushing his approach -- as he often says, Piano paywall has saved some jobs. Still, there are better methods, alternative to paywalls, with better economic results and more user-friendly.
#82 Posted by Greg Golebiewski (@znakit), CJR on Wed 6 Jun 2012 at 01:40 PM
KL, but then we get back to my point that newspapers don't have a competitive advantage in "excellent writing" and that many people are willing to provide it for free.
#83 Posted by Jack, CJR on Wed 6 Jun 2012 at 01:45 PM
What investigative journalists are willing (or able) to do quality research and provide the resulting publications for free? You brought up professors; we already established that they are paid separately for their research.
Even Julian Assange takes a salary!
#84 Posted by KL, CJR on Wed 6 Jun 2012 at 01:53 PM
KL, you're missing my point. The question is not who is willing to do investigative research for free--we don't disagree that few people will. The question is who will PAY for it. How does an organization extract value out of that work if the information can be freely disseminated, whether behind a paywall or not?
People don't need to read the NYTimes for economics news, for instance, if Tyler Cowen can read the articles, summarize them, and add his own analysis. Paywalls can't stop that. There is nothing illegal about--information can't be copyrighted.
#85 Posted by Jack, CJR on Wed 6 Jun 2012 at 02:08 PM
It is unfortunate that the debate on this important subject has devolved into a shouting match. Howard, David and the others involved here are very passionate about this subject, and sometimes passions get out of control.
When I look past all the rhetoric, there are many important points being made. There may be cases where paywalls can be made to work. But I think people underestimate how startup competitors can defeat these walls and steal their readers. They also ignore the very real problem of getting younger readers hooked on their product, as very few of them will either have a credit card to purchase a subscription, or be willing to use it for that purpose.
The costs of running a paywall is very important. Between vendor fees and costs for marketing, subscriber acquisition and retention, and other related customer service costs, you'll be lucky to see half of your subscriber revenue available to fund journalism. In addition, we don't know how many current online subscribers are just taking advantage of the print-online package deals, and how much they would really pay for online access only.
David's vision of a world where all newspapers and wire services work together to lock up content has a big problem. It's probably illegal under anti-trust laws.
As for how much money it takes to cover news in Baltimore? This part of the debate reveals a lot about what's wrong with traditional media company thinking. You don't go into business starting with that equation. You look at how much revenue you can earn, and work from there. Maybe it takes 20 reporters, or 50, or five to "cover" that area. Those are all subjective guesses. Perhaps it takes only one reporter covering a specific subject who can draw enough readers and advertisers to be profitable.
Perhaps the future metro news operation isn't one newsroom under one roof, but several independent journalists working on specific subjects.
What's missing from this debate is any discussion of why advertising isn't pulling in sufficient revenues. Part of the reason is that some people are still looking at what it takes to support the overhead of a print media company, when there are far greater efficiencies to being online only.
But what about the ads? Has anyone bothered to go talk to local businesses and find out what they actually need in terms of marketing help in this new online world?
If you break down what we do, the value we provide to advertisers is that we help them to communicate. But communication these days is more than just advertising, yet by-and-large we continue to only offer them the same old display ads we have been selling them for a hundred years.
The real danger of paywalls is that they will keep newspapers from innovating and dealing with the real issue of providing a valuable service to local businesses, whose advertising dollars were the foundation that built these giant media empires.
Someone is going to solve this problem, and when they do, the paywalls will become tombs for once-great newspapers who failed to innovate.
#86 Posted by Kirk Caraway, CJR on Wed 6 Jun 2012 at 02:15 PM
"How does an organization extract value out of that work if the information can be freely disseminated, whether behind a paywall or not?" -- Jack
I'm not sure, but it seemed to work just fine for newspapers prior to the advent of the Internet, and ideas were never copyrightable. So I would submit that that's not the issue preventing people from making profit off written journalism.
#87 Posted by KL, CJR on Wed 6 Jun 2012 at 02:21 PM
KL: Prior to the Internet, newspapers had an essential monopoly on a delivery system for providing bundles of information. In the old days, if you wanted TV listings, sports scores, weather, news, coupons, etc., you had to pay for the newspaper. The economies of scale of printing and delivery made it an efficient way of delivering this information as a bundle. Sure, information could not have been copyrighted, but it also would be very expensive and unprofitable to setup a printing and delivery system to rework that information for a different set of readers.
On the Internet, printing and delivery are free. It cost nothing for a professor to start a blog and disseminate information to readers. He can read news reports on other websites, summarize them, and add his own analysis. This would have been technologically impossible before the Internet.
#88 Posted by Jack, CJR on Wed 6 Jun 2012 at 02:32 PM
"On the Internet, printing and delivery are free." -- Jack
But they don't HAVE to be free. Putting this content online for free was a deliberate choice made by various aspects of the publishing industry at the time (mid-to-late-90s), because they did not understand that the Internet was a publishing medium, not a reference tool or an advertisement for the print work. And this decision is killing and will kill publishing in general -- not just journalism -- if it's not turned around soon, preferably yesterday.
The music and movie industries are going through the same thing, they were just quicker about accepting that they needed to create a pay model on the Internet (and they certainly weren't all that quick about it!) or cede all profits to bootleg uploaders.
The technology has changed DRASTICALLY since the Internet went into widestream usage; why hasn't our legal and financial understanding of it developed accordingly?
#89 Posted by KL, CJR on Wed 6 Jun 2012 at 02:40 PM
"Paywalls aren't very valuable if they're not protecting valuable information. "The words newspapers produce aren't necessarily valuable; the information is. And paywalls only protect the former, not the latter. They don't stop someone from--legally--just summarizing the information that's walled in." -Jack
Actually, that's not entirely true. There's a whole section of the law devoted to free-riding. If an aggregator is rewriting a newspaper's copy -- even if it is just citing facts and even if it does credit the source-- and then giving it away for free, that does not make it legal.
We are very much in uncharted waters here. And while, as a journalist, I don't believe anyone should own facts, I do have a problem with the way HuffPost, for example, over aggregates. Basically, it is free riding on the work other organizations do, which gets it into dicey legal territory.
While I also don't understand the "paywall" hatred, I would just point out to Chuck Taylor that David Simon is making the point that in order for paid content to work, pretty much everyone's got to do it.
That gets extra complicated with organizations like the BBC and, in my country, the CBC, where they are producing quality original news that is heavily subsidized by taxpayers. Just another layer of complexity.
#90 Posted by AnnB, CJR on Wed 6 Jun 2012 at 02:43 PM
KL: You're still missing the point. I'm talking about it from a supplier's perspective. Printing and delivery on the Internet are essentially costless. Newspapers and charge whatever they want, but it will be very easy for someone to undercut them. Newspapers extracted rents because they had monopolies on a delivery system. That does not exist in the Internet era--there are no barriers to entry like having to build a huge printing plant, or creating a delivery system. It cost new entrants nothing to start a website, (legally) summarize things from paywalled services, and and add analysis on top of it. Newspapers have no way of protecting the underlying information--a paywall protects words, not the news, as I've reiterated many times.
#91 Posted by Jack, CJR on Wed 6 Jun 2012 at 02:49 PM
thou doth protest too much
#92 Posted by Ed Boyle, CJR on Wed 6 Jun 2012 at 03:01 PM
Yes, it costs next to nothing (well, it costs Internet access and the use of a computer, at least) to create a website and summarize something you read in the NEW YORK TIMES. But I assure you it costs a great deal of money to staff, research, write and produce the NEW YORK TIMES, whether through an online delivery platform (the creation and maintenance of which anyone who works in any kind of e-publishing knows is just as, if not far more expensive than paper printing) or not.
And again, you're not explaining where the source of this "aggregated/summarized" material is coming from, if there are no paid journalists.
Yes, ideas are free. But if you're depending on people whose sole ability (financially or otherwise) is to rephrase other people's ideas, and you're undermining the industry's ability to pay a salary to people that actually investigate and create ideas, then you end up with no ideas.
I'm giving up because this is just going around in circles, but you're not making any sense to me.
#93 Posted by KL, CJR on Wed 6 Jun 2012 at 03:04 PM
KL: Perhaps my argument isn't making sense to you, because you've conjured in your head an argument that I'm not making. I AM NOT arguing that summarizers and aggregators will exist in the absence of newspapers*. I understand it is expensive to create news. My point is that--AS A MATTER OF PRACTICE--the ability of someone to add value on top of paywalled information and give it away because of the absence of barriers to entry on the Internet, will continually undermine an ability to profit from the news. The question is not figuring out whether people need to be paid to dig for news, the question is figuring out HOW to pay them.
Let me provide a more concrete example to show you what I'm getting at. Pretend copyright doesn't exist. If Person A writes a book that costs him $200--research, writing, printing, etc. He tries to sell it at $10/copy. Person B buys the book for $10 and makes hundreds of copies for $1.00. He then sells those books for $5/copy. I'm guessing Person A will decide ex-ante this isn't a business he even wants to pursue. I'm not trying to tell you Person A doesn't "deserve" to make money on his book, or that it doesn't cost him to do so or that Person B would make money in the absence of Person a creating the original publication. I'm merely pointing out that this is what would happen if Person A tried to enter this business--and that a paywall doesn't really do anything to stop that. The paywall only does anything if you have strong copyright protection--or a very strong misappropriate of hot news tort--on top of it.
* Although for many areas--arts criticism, sports--the quality of information on the Internet far exceeds what you ever would find in print, and can easily exist in the absence of newspapers.
#94 Posted by Jack, CJR on Wed 6 Jun 2012 at 03:29 PM
Let's forget print editions for a moment.
Can anyone show me a startup online news operation able to sustain itself on advertising — even in combination with voluntary memberships or other revenue — that isn't hyperlocal?
Are we not seeing MinnPost and the rest of the nonprofits struggle or fold without ongoing grant money? None of those operations rivals a legacy metro staff, and yet, like NPR, they can't make a go of it without sizable and conflict-ridden donations.
Pay walls will prove effective or not. The worst case, for me and others working in legacy newsrooms, is a forestalling of the bankruptcy of our employers.
But here's a demonstrable fact: High-caliber journalism is unsustainable as an online-only free product.
#95 Posted by Chuck Taylor, CJR on Wed 6 Jun 2012 at 03:33 PM
"Paywalls aren't very valuable if they're not protecting valuable information. "The words newspapers produce aren't necessarily valuable; the information is. And paywalls only protect the former, not the latter. They don't stop someone from--legally--just summarizing the information that's walled in." -Jack
Actually, that's not entirely true. There's a whole section of the law devoted to free-riding. If an aggregator is rewriting a newspaper's copy -- even if it is just citing facts and even if it does credit the source-- and then giving it away for free, that does not make it legal.
We are very much in uncharted waters here. And while, as a journalist, I don't believe anyone should own facts, I do have a problem with the way HuffPost, for example, over aggregates. Basically, it is free riding on the work other organizations do, which gets it into dicey legal territory.
While I also don't understand the "paywall" hatred, I would just point out to Chuck Taylor that David Simon is making the point that in order for paid content to work, pretty much everyone's got to do it.
That gets extra complicated with organizations like the BBC and, in my country, the CBC, where they are producing quality original news that is heavily subsidized by taxpayers. Just another layer of complexity.
#96 Posted by AnnB, CJR on Wed 6 Jun 2012 at 03:39 PM
It seems to me that all of you are missing the most important point, and that is that no one under 35 ever holds a newspaper in their hand. Ever. And some day in the not too distant future they are going to be the only ones alive. Pay-walls came into being because on-line readers were getting stories for free that print subscribers had to pay for. This makes no sense. If it's worth something then it shouldn't be given away for nothing. I have been on the board of a company that owns newspapers for 40 years and it is both interesting and alarming to see the current changes evolve in the market place. I can testify that it is harder and harder to be profitable. I submit that none of you really knows what the future of Journalism is going to look like exactly, but it is not going to be print. If you don't believe it, ask your kids and grand kids.
#97 Posted by Dave Duryee, CJR on Wed 6 Jun 2012 at 03:59 PM
Having read Mr. Owens’ “How David Simon is wrong about paywalls,” I can only suggest that while his assertions are neither intelligent nor forceful, they are certainly the declarations of yet another pseudo-journalist hoping to make a living for themselves while destroying the idea of objective journalism.
From his spurious claim that the New York Times is a poor model to his faulty math which has serious investigative journalism costing from $50 million to $100 million to his construct that the wrong people are pushing paywalls to, finally, the idea that paywalls do not address the fundamental problems facing print journalism.
To address only a few: The idea that any newspaper needs a $50 million-plus budget for serious investigative work is too ludicrous to argue. Even the smallest daily newspaper can do serious work by allocating one or more reporters on a part-time basis. Having won awards for investigative journalism while employed by newspapers with less than 20,000 circulations, I believe I can safely say that I know of what I speak.
On his point that the wrong people are pushing paywalls, I can only submit my own history of writing for paywalls back in the late 1990’s while part of Channel4000.com in Minneapolis, MN. During that time we won two awards from the National Press Club and a Sigma Delta Chi award for our work. At the time I also wrote for the need for paywalls and the danger of allowing news to be dispensed for free by both professional and amateur journalists, the former because professionalism needs to be paid, the latter because news is not a place for hobbyists.
Finally, while paywalls do not address the fundamental problems facing print journalism, it is certainly a start. Other problems such as the intrusion into professional news gathering of amateur journalists willing to give their work away for the chance to garner a few paid sponsors; news agencies dependent on outside grants, aggregators who steal the work of journalists, and corporations more concerned with obscene profit and executive bonuses than serving their communities will have to wait for another day.
#98 Posted by James Craven, CJR on Wed 6 Jun 2012 at 04:02 PM
I don't think everyone has to do it for pay walls to work. But we'll see.
As for Mr. Simon's Hamsterdam, you can't impose a universe of bundling through brute force — not in the Internet age.
#99 Posted by Chuck Taylor, CJR on Wed 6 Jun 2012 at 04:04 PM
"Having read Mr. Owens’ 'How David Simon is wrong about paywalls,' I can only suggest that while his assertions are neither intelligent nor forceful, they are certainly the declarations of yet another pseudo-journalist hoping to make a living for themselves while destroying the idea of objective journalism."
Well said! There's a reason why Jay Rosen thinks this piece is "really good." only pseudo-journalists would cheer on the inaccurate and misleading work of other pseudo-journalists.
Aside from politics, I can think of no other profession that allows those with little or no experience to shape the argument about the profession's future. Is it any wonder that the decline of journalism has coincided with the rise of the chin scratchers?
#100 Posted by Jason, CJR on Wed 6 Jun 2012 at 07:37 PM
@Chuck Taylor:
I think you'll find in the IRS 990s (http://www.guidestar.com) that MinnPost and Voice of San Diego have reached something close enough to "sustainable" to pass muster. Yes, both still pursue and take grants - but they are generally to expand (not sustain) coverage. I suspect Texas Trib is there as well; last time I checked (nearly a year ago), however, their then-current 990 covered only their startup year.
#101 Posted by Tom Davidson, CJR on Wed 6 Jun 2012 at 09:01 PM
Why are people comparing startup websites to newspapers? The financials are completely different. Who cares if some startups are becoming financially sustainable? Or did somewhere along the way those startups assign a copy desk, buy a printing press and trucks and hire the staff to support it. because last I checked, the copy coming out of those sites was pretty questionable. The Voice of San Diego, long held up as a model, got the editors name wrong in a job posting, for godsake. Who cares if the crappy Batavian is earning money? Simon was making an argument about newspapers and what they should or should not do to protect themselves. comparisons to startup websites, other media, like NPR, which one idiot suggested as an equivalent to the NYTimes, and others are irrelevant.
One last comment on Mr. Owens' math -- and perhaps another example of why we should be grateful that he wasn't a reporter. He wrote, The Star-Tribune charges "$1.99 a week (much less than Simon’s proposed $10 per month for the Sun)." So, we're talking the difference of $103.48 vs. $120 for the year and Mr. Owens describes that as "much less"?
#102 Posted by Jason, CJR on Wed 6 Jun 2012 at 09:21 PM
Jason, Howard Owens has being wrong down to a science. He makes apples-to-oranges comparisons. He doesn't understand math or business. He thinks anythings small can be extrapolated across the entire market.
If anything, he's a case study for why anything that comes from the Hats In Reverse crowd -- Owens, Jarvis, Rosen, etc. -- should automatically be looked upon as dubious, if not outright wrong.
#103 Posted by Robert Knilands, CJR on Wed 6 Jun 2012 at 09:54 PM
It's trivial that economic autonomy is a precondition of media quality in the printed or, electronic press and on the net alike. That autonomy can originate from readers' response only. The current problem is the lack of inexpensive transfer of small amounts, therefore publishers are forced to charge access rights rather than actual use of content. Later would be proportionately far less expensive and motivate competition of writers, journalists as well that of media. Such and inexpensive transfer standard will have to be born, also to facilitate direct payments outside of the media world.
#104 Posted by György Ivanyi, CJR on Thu 7 Jun 2012 at 02:53 AM
In response to Mr. Duryee,
"It seems to me that all of you are missing the most important point, and that is that no one under 35 ever holds a newspaper in their hand. Ever."
Once again this inaccurate supposition is touted as truth. I would suggest a quick look at any reputable agency that looks at such data. The Pew Research Center would be a start at www.journalism.org/node/1296.
True, the levels of all reader across all age groups shows a decline in readership, but to say that no one under 35 reads newspapers is just wrong.
#105 Posted by James Craven, CJR on Thu 7 Jun 2012 at 03:51 AM
From the time I started building my first newspaper website back in 1994 until I left the industry two years ago, I thought I had heard all of the backwards-thinking, holier-than-thou thinking about newspapers and the web that I could possibly take.
The last few comments have proven me wrong. I had to read them a few times to make sure I hadn't stumbled onto The Onion.
"Why are people comparing startup websites to newspapers? The financials are completely different."
No kidding. That's the freaking point. You can build the Great Wall of China around your newspapers, but if startup news operations can make a profit without the wall, then you are toast. It will only be a matter of time before there is a startup in every market, picking up readers locked outside the wall.
"...did somewhere along the way those startups assign a copy desk, buy a printing press and trucks and hire the staff to support it."
Wow. Is this really the case you want to make? Why would a startup waste money on a press and trucks? Don't you get it? That's the real problem here. Newspapers have this huge infrastructure built on top of a dying business model. The websites will never support that old infrastructure, walls or no walls. But it can support much leaner, meaner startup news operations, even ones with copy editors.
"The Voice of San Diego, long held up as a model, got the editors name wrong in a job posting, for godsake."
Another wow. So someone makes a mistake and that means you can discount anything they have ever done. Gee, that pretty much leaves out every newspaper in the world, doesn't it? And what does one mistake in a job posting have to do with VOSD's business model?
"If anything, he's a case study for why anything that comes from the Hats In Reverse crowd -- Owens, Jarvis, Rosen, etc. -- should automatically be looked upon as dubious, if not outright wrong."
Bring out the pitchforks! What are you going to do next, burn them at the stake? After all, you have to protect the holy world of journalism from these "pseudo-journalists" right?
Is this what it's come to? Defenders of the Old Way using empty logic to shoot down and belittle anyone who challenges the status quo? I must have missed the day they taught this in J school: Be objective and weigh all sides of an issue, except when that issue is our time-honored way of producing news.
The market will eventually determine who is right and wrong in this discussion. And when it does, I hope some of the commenters are rightfully shamed for what they have posted here.
#106 Posted by Kirk Caraway, CJR on Thu 7 Jun 2012 at 05:02 AM
That Pew Research data on readership is six years old, pre-crash, pre-smartphone, pre-tablet. The circulation of the newspaper in my town was still growing in 2006, but has shrunk by half since.
I'm sure you can find some young people who read newspapers. That's not the point. The point is they far fewer are reading print, and the trend is going over a cliff. Paywalls cut these readers out online, and thus any future for newspapers.
#107 Posted by Kirk Caraway, CJR on Thu 7 Jun 2012 at 05:12 AM
Actually, whether or not people 35 and under read newspapers was the point of the post as it was an answer to a previous assertion.
As to your points, yes the Pew information is six years old but that seems to be the end of correct assertions in your post. In fact, the first Smartphone "Simon" was presented to the public in 1993 and the first computer tablets similar to the iPad were in use in the 1990s. As to "pre-crash," that would depend on what crash you are talking about? I can cite economic crashes in the 1970s, 1980s, and 1990s.
"Paywalls cut readers out online" Since every generation prior to this one has paid the price to get information (please do not argue that people only bought newspapers for the coupons) I have little fear that the continued practice will cut anyone out of the loop.
#108 Posted by James Craven, CJR on Thu 7 Jun 2012 at 06:02 AM
Am I talking to Rip Van Winkle here?
A few experimental smartphones and tablets made in the 90s hardly compares to the tens of millions of devices in use today, with that number rapidly growing. The amount of web traffic being generated by mobile devices is approaching 20 percent, with predictions of it hitting 50 percent in the next few years. That number was close to zero back in 2006. I you don't see how that has impacted media consumption habits since that time, then the world of newspapers is in a lot more trouble than I thought.
Perhaps you also didn't notice that little economic problem we had back in 2008, the massive downturn in ad revenue and staffing cuts at newspapers, leading to sharp drops in circulation. My local paper dropped in half over this period, with most of the departing readers being under 40. That's the crash I'm talking about. Thought that was more than obvious, but I guess some people are more sheltered from reality than others.
The issue isn't so much whether people in the past paid for news, it's whether they will pay for news now, in a world where there is almost infinite choices of free alternatives begging for their attention that they can easily access from anywhere. If you add in startup news sites that can turn a profit while offering info for free, where does that leave the walled-off newspapers?
I, like many in my generation, picked up the newspaper habit in high school. How many high schoolers do you know who have their own credit cards? How many of those are going to type in that info and purchase a subscription to see what's left of the local newspaper online? Or, are they just going to go to Facebook?
Would you like to bet on the outcome of these questions?
Perhaps if some of the people in this discussion put actual money behind what they say we could cut out all this BS. People like Howard Owen have invested their time and money in developing a new business model for journalism. Meanwhile, you have people here taking cheap shots at him from the bleachers, wishing for some 1980s flashback reality that doesn't exist.
The world has changed. Get used to it, or get run over by it. Your choice.
#109 Posted by Kirk Caraway, CJR on Thu 7 Jun 2012 at 10:16 AM
“I am very cautious of people who are absolutely right, especially when they are vehemently so.”
― Michael Palin
Sincerely,
Rip
#110 Posted by James Craven, CJR on Thu 7 Jun 2012 at 10:47 AM
Kirk, Kirk, Kirk:
Very unconvincing, despite all your vitriol. I'd ask how well you know Howard Owens, but you misspelled his name, so ...
Anyway, the point here is newspapers, under the current format, can have paywalls, or they can keep throwing the content out for free while hoping online ads will pay the freight. Option No. 2 does not seem to be working.
Down the road, there may be some more options, but those are the main ones right now.
#111 Posted by Robert Knilands, CJR on Thu 7 Jun 2012 at 12:00 PM
Anyone willing to bet on the outcome of this, one way or another, is a fool. Really. We just don't know what will work, which is the whole point of trying something, whether it's a pay wall or not.
The fact that the facts of 2006 were rendered useless by 2008 supports no one in an argument over foresight.
#112 Posted by Chuck Taylor, CJR on Thu 7 Jun 2012 at 12:26 PM
Just ran into the ugly paywall at 2 newspapers when trying to do research for a story.
It used to be, in the day of the typewriter, you could go to the local library and pull all the clips, papers, periodicals, etc. you needed to research a story - for free.
Now with the Internet, you'll have to pay for it. Seems kinda crazy huh?
Paywalls will cause a lot of trouble for news aggragators but what about writers working on stories and social media users that want to share a story with their followers or friends (from Facebook, Twitter, G+, etc.)?
Doesn't that cut down on traffic to a news site and therefore fresh eyeballs to advertisers?
Will every "share" have to be paid for if someone clicks on the link?
I get the business model issue for news producers.
I don't get how a paywall fits in with what happens on social networking today where it's a free-for-all of content sharing.
Sharing "out" from a news site is very understandable. It's sharing "in" to a news site that causes a problem in my mind.
More questions than answers... What do you think?
#113 Posted by mike, CJR on Thu 7 Jun 2012 at 06:27 PM
You state the New York Times has $200 million newsroom budget. You then infer that online subscriptions will never be able to support such a budget.
You are wrong.
1,000,000* subscribers @ $120/ year (or $10**/month) = $120,000,000;
1,500,000* subscribers @ $120/year (again $10/month) = $180,000,000
With advertising revenue added in, the newsroom budget is easily covered. If you think the NYT can't reach these subscription numbers, you are wrong again. They will and in the not too distant future.
*These numbers are very reasonable given the NYT's global reach.
** $10/month; that's a lowball figure used as an example only.
#114 Posted by J101, CJR on Thu 7 Jun 2012 at 07:21 PM
You state that $3.6 million in no way could support a local newsroom. Well, let's see. If each editorial position is budgeted at $120,000, you'd have a newsroom of 30. For a mid-sized city, that's a good amount of coverage. More importantly, it's doable.
How's this for a breakdown:
Local politics - 6
Local culture - 6
Sports - 7
Financial/Business - 5
Misc. - 2
Editors - 4
Not bad.
#115 Posted by J101, CJR on Thu 7 Jun 2012 at 08:57 PM
Mike, I think you miss the point entirely. So, in your world, Internet = free.
Let us know when that's a strong business model.
#116 Posted by Robert Knilands, CJR on Thu 7 Jun 2012 at 08:58 PM
J101, you lost me with budgeting each position at $120,000. That would be fabulous, but it won't happen.
Also, you need to have someone to produce the final output -- pages, sites, etc. Four editors ain't gonna cut it.
You also have no tech support budgeted for the newsroom and no photography or art department.
#117 Posted by Robert Knilands, CJR on Thu 7 Jun 2012 at 09:57 PM
Robert, Robert, Robert,
Many people misspell my name, but I don't use that to dismiss what they say.
Look, I wish all you paywall people luck. For me, having worked for both newspapers and startups, paywalls look like ripe opportunities for disruption. I'm seeing too many sites that are putting up walls AND cutting staff at the same time. That is not an investment in the future, it's an attempt to milk every last drop out of the cash cow of print before it dies.
My focus these past few years has been on making online advertising better and more effective, and getting away from the banner ads the make up the majority of income for newspaper websites.
For instance, I developed a system that pulls posts from an advertiser's Twitter or Facebook account and formats it as an ad. This way clients can change their message anytime they want, multiple times a day if they choose. That has more value to the advertiser, as well as relieving the publisher of the expense of updating ads for clients.
These ads are then stacked up in a column and sorted so the newest tweets appear at the top. This gives advertisers the incentive to tweet more often. The more updated information in these ads, the more readers pay attention to them, the more valuable they become. Because the advertiser can control the position of the ad, you can stack more on a page. (You can see these in action here.)
This fall I'll be at Stanford as a Knight Fellow working to incorporate this into an even more advanced system for improving online advertising. Hopefully I'll get it ready to launch before all these sites see their paywalls become tombs.
#118 Posted by Kirk Caraway, CJR on Thu 7 Jun 2012 at 10:32 PM
Kirk, it was a joke, based on my original impression that you were an Owens sockpuppet.
I'm not a paywall person. But it's asinine for places to keep throwing things out for free and then expecting to make money.
That ad system sounds intriguing. I can think of a few ways it would be problematic, but it might have some appeal, too.
#119 Posted by Robert Knilands, CJR on Thu 7 Jun 2012 at 11:06 PM
Let's look at this debate from a slightly different perspective: history.
The "free" newspaper has been staple of news delivery since the advent of journalism. Printed cheaply, tossed around commercial districts and neighborhoods, the "freebie" was read by millions. Today the organ lingers on in one form or another, an example being the alternative weekly.
In Mr. Owens's analysis, however, the freebie will almost always win versus a subscriber publication which costs, i.e. the paywall. If we follow his logic, the free printed papers of the past should have trumped those which charged for subscriptions. But that didn't happen, did it? Why not? Two words: quality and substance. The freebies just didn't have it to the degree that many readers wanted. So these consumers of news and information turned elsewhere. They turned to the better papers that weren't free or that cost a bit more—two cents versus one, and so on. Soon enough enough people were willing to pay for these "quality" papers that cheap organs were relegated a lesser status. The rags never completely recovered. Oh, they were successful to a considerable extent, some wildly so, but they struggled for stature. In the end, they were unable to go head-to-head against their better funded subscription-based competitors and most slowly withered. Quality and substance triumphed.
Let's skip forward to the internet age. Mr. Owens believes advertising alone can support a free online news site. And, yes, to a certain extent it can. But there's a breaking point in which in can go no further. The advertising dollars can only stretch so far. Just as with the earlier freebie newspapers, free online websites might struggle mightily to maintain a certain degree of heft.
Eventually, and over time, there will be a shake out among online publications, those free and not free. People will seek out quality and substance. If that requires a modest monetary outlay, many will pay. As in the past, it takes time and money to develop an audience. Newspapers can succeed online through a combination of subscription-based fees and advertising, but the product must meet the needs and expectations of its intended audience. Moreover, the importance of quality and substance cannot be underestimated. Heft counts.
#120 Posted by J101, CJR on Thu 7 Jun 2012 at 11:34 PM
^^^ Robert,
The $120,000 figure used in my earlier comment was just a number tossed up to conjure what kind of newsroom a $3.6 budget might buy. To me, estimating $120,000 per editorial position, benefits included, seems reasonable.
What I was trying to point out is that a good-sized newsroom can be financed for $3.6 million, which today is not all that much money. The figure was brought up Mr. Owens as being insufficient to support a local newsroom:
"While in a city like Baltimore you could do that level of journalism, even enterprise/watchdog journalism, in an online-only way for $3.6 million, that isn’t what Simon is proposing. He wants “day-in, day-out comprehensive coverage of entire metro regions” (recent comment). In 2009, he wrote that the $3.6 million budget could provide a metro newsroom “that covers local politics, local culture, local sports, and financial news.” I don’t see how $3.6 million even begins to get that job done."
Well, $3.6 million can be stretched a good long way, if properly handled. It could potentially buy a staff of 30. That a big step to getting the job done, in terms of providing comprehensive coverage for a mid-sized metropolitan region .
#121 Posted by J101, CJR on Fri 8 Jun 2012 at 12:30 AM
I realize that it is much easier to say "I think that..." or "I predict..." and dismiss all the hard facts to the contrary. But those who are not "thinkers" like that should check out this piece on small paper financial state from Patric Smith of the Media Briefing (UK)
http://www.themediabriefing.com/article/2012-06-07/The-surprising-truth-about-local-newspapers?utm_source=newsletter&utm_medium=email&utm_campaign=finance-deals
This may be also a hint on why Buffett buys newspapers now (despite all the Clay Shirky noise and "predicting")
#122 Posted by Greg Golebiewski (@znakit), CJR on Fri 8 Jun 2012 at 04:56 AM
J101 makes several interesting points. I would agree that to a degree that advertising can support a news site, but only, as in many hyper-local sites, the staff is minimal. By minimal I mean that it is often one person. While one person might be able to produce an interesting local site, the odds are against them being able to produce insightful, challenging, investigative, and long-form news stories.
For that type of coverage staff (and payroll) are required.
As an investigative journalist, I can say with some authority that the production of such stories is cost prohibitive. That is the problem with journalism. It costs more to do it right than you will make off the story. An example would be the Watergate story of the 1970s. Woodward and Bernstein spent countless hours on the story, as did others, but the rise in circulation or advertising, would not equal the cost outlay to the paper.
To Kirk, I can see now why we disagreed. First congratulations on your Fellowship. That tells me, however, that we are debating from different points of view. I am a news person, and you are an online advertising person. Both are needed and valuable, but both are not doing journalism. It would make sense that we would disagree.
The major problem with newspapers is that no appropriate foundation has been found to replace the three legs of profit: retail advertising, single sales, and classified advertising.
I'll point out that single sales (circulation# was always the smallest and least important of the three. That does not negate it, however. I also will not that there is no such thing as a "free" news website, unless you are talking about the aggregating sites of bloggers. Any news site, even Mr. Owens' The Batavian, charges for advertising, so, it is not free to the advertiser.
During the so-called Golden Days of the newspaper industry there were those who were more than willing to print #via Xerox or off-set# their own community papers and distribute them for free. Those, I would compare to many of today's local news websites. That they seldom lasted #work versus income# should not be looked at now as looking behind, but as looking ahead.
Here again, I agree with J101. We are in a transitional time for the news industry. The new digital news age is less than 20 years old, and is only just being infiltrated by thinkers who are not bound to classical news and business practices. There will be a shake out, eventually, and with will evolve a business model that will be new, but also will be built on the old.
What will it be?
Note: Someone pointed out that television news does not charge for access to their broadcasts. I would point out that much of the reporting done by broadcast news is not original. Read your communities #buy it first# morning paper, and you will see the same story at 6 p.m. on your local news. There is a reason that a big metro newspaper has 100-plus reporters and most TV stations can get along with a tenth that many. Attend any morning news meeting at a TV station, and the first thing you will notice is the large number of newspapers also in attendance.
#123 Posted by James Craven, CJR on Fri 8 Jun 2012 at 09:26 AM
What a great article. I love David but I fear your correct. Thanks
#124 Posted by K Bonson, CJR on Fri 8 Jun 2012 at 01:20 PM
J101, while I think your plan is still lacking in some crucial areas, I understand the point you make.
This brings us to the real meat of this issue. With or without paywalls, newspapers must address quality issues -- very soon -- if they hope to keep going.
Your plan for a staff of 30 might work if all 30 could perform. That is rarely the case in too many newsrooms. Also, some built-in flaws like the design-based approach that has failed to ever attract readers for any length of time need to be scrapped. Today.
#125 Posted by Robert Knilands, CJR on Fri 8 Jun 2012 at 04:12 PM
Kirk, I'm glad you weighed in. It gave me the opportunity to check out CarsonNow, another website, much like TheBatavian, that has little to nothing to do with journalism, let alone the high-quality journalism David Simon was discussing when this whole discussion kicked off. Congratulations on DonQ''s fishing report on your home page, and the lo-res user submitted photos. Some of them are out of focus. Nice work! Come back and comment when you have some authority on the subject of quality journalism.
#126 Posted by Jason, CJR on Sun 10 Jun 2012 at 03:35 PM
Okay Jim, maybe it isn't 100% of those under 35 that never hold a newspaper. So, pick a number. 5%? 10%? If you lower the bar to those under 30 my strong belief is that it would be pretty close to 100%. The point is that the audience for news in the future will be those holding some sort of electronic device, not a printed newspaper. Those of us in this industry need to figure out what that is going to look like and how to make money at it, and the sooner the better. The problem is that advertisers are going to have to figure it out also and determine what works for them and how much they are willing to pay. That is largely out of our control.
#127 Posted by Dave Duryee, CJR on Wed 13 Jun 2012 at 12:07 PM