the audit

To Sell Or Not to Sell

Carr and Jarvis on newspaper business models
January 13, 2009

David Carr makes a point that’s so obvious but so anti-conventional wisdom that I think it bears a closer look: Newspapers (and magazines and other sources of reporting and editing) need to charge for their work.

The online-ad model doesn’t work, won’t work for at least several years, and may not ever work well enough to support the level of reporting we have now (not to mention that of a decade ago). Print-ad revenues are tumbling at somewhere near a 20 percent year-over-year clip, and online ad revenues are now flat or even declining.

Carr points out that Apple had to step in to save the music industry from itself and illegal downloading, showing that a micropayment system was possible—in its case, at 99 cents a song on iTunes. His message is that consumers will pay for content, despite all the “information wants to be free” blather.

Remember that when iTunes began, the music industry was being decimated by file sharing. By coming up with an easy user interface and obtaining the cooperation of a broad swath of music companies, Mr. Jobs helped pull the business off the brink. He has been accused of running roughshod over the music labels, which are a fraction of their former size. But they are still in business.

Those of us who are in the newspaper business could not be blamed for hoping that someone like him comes along and ruins our business as well by pulling the same trick: convincing the millions of interested readers who get their news every day free on newspapers sites that it’s time to pay up.

They’ll even pay for content that’s not “art” (I’m looking at you, Jeff Jarvis). They have been since the printing press was invented, and they still do online. Carr uses Cook’s Illustrated as an example.

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Cook’s Illustrated takes no ads and charges for access to the databank of recipes. Apart from its 900,000 print subscribers, in addition to 100,000 or so newsstand buyers, the company has 260,000 digital subscribers at a cost of $35 a year, and that group grew by 30 percent in 2008.

And he touts my favorite example of how newspapers can makes tons of money from subscriptions online, The Wall Street Journal. It now has 1.06 million paying subscribers and manages to juggle a significant free component that has helped grow its total visitors by 137 percent from a year ago to about 17 million.

Now the base rate for a Wall Street Journal Online subscription is about $100 a year. But lots of print subscribers have online accounts and get a discount. Dow Jones and News Corporation don’t break down these numbers and wouldn’t release them to me, but lets assume the average subscription brings in about $60 a year. That’s $64 million a year in revenue—on top of the ad revenue generated by 17 million visitors a month.

But Jeff Jarvis, of course, disagrees that customers should or would pay for news. He lobs a poison dart Carr’s way for “wishing for, praying for, fantasizing about” readers who pay. And he disingenuously suggests that Carr talk to NYT execs about the failure of TimesSelect.

TimesSelect was indeed a mistake, and one that was predictable the day it was announced. The Times’s opinion content has value, but any blogger can spout off opinions and many, many can be less annoying than Thomas L. Friedman. The Times’s mistake was to keep the news content free. The paper’s reporting is what is expensive, unique (that’s right, Jarvis), and valuable. It spends $200 million a year on it. More than a million people pay $300 or so a year for it to land on their front stoops. Why wouldn’t most of them—plus a lot of the tens of millions of online-only readers—pay a third of that, say, for it online? I have a lot of friends who pay nothing right now who would.

Jarvis says that if readers don’t want to pay for Carr’s column they can go find “plenty more columns and blog posts just like it”. I think that’s facile, but again, it’s the news and investigative reporting, not the opinion columns, that have the real value.

Jack Shafer agrees with Carr over at Slate, and makes the point that something like what he’s calling for already exists in the form of Amazon’s Kindle, which charges anywhere from $6 to $14 a month for newspaper subscriptions and the NYT’s Times Reader which costs $15 a month. He loves Times Reader, hates the Kindle and calls for a collaboration by newspaper companies to create a new platform more like the Times Reader, which he says, like iTunes, sends the message: “This isn’t the Web, dude. This isn’t free. You’re going to have to pay.”

Somebody’s going to have to.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.