Ok, So Now That It’s Agreed That Newspapers Need To Charge For Online Content How To Go About Doing It? Obvious Answer: Hold A Meeting

Philip M. Stone June 4, 2009 Follow on Twitter

For an industry that prides itself on breaking the secrecy of government, newspapers don’t seem very good at keeping secrets of their own, so it quickly became common knowledge when publishers held a “secret” meeting in a Chicago suburb last week to discuss the “hows” of charging for their digital content.

That it has taken publishers this long to recognize the obvious is amazing in itself, but the slew of statistics that came out of the Newspaper Association of America (NAA) last week gave that Chicago meeting even greater importance, for not only in Q1 did print advertising revenues drop by 28.3%, but Internet revenues dove, too, by 13.4%.

So, since the NAA was holding its annual meeting last week anyway, why not have a meeting about ways to charge – it’s probably the number one item on most publishers’ agenda. The problem is that meetings like that can very easily violate US antitrust law that not only prohibits industry executives getting together to discuss pricing policies but also it forbids agreeing on terms for offering services. In other words collusion is a dirty antitrust word.

That’s why the lawyers were in the room – their job was to ensure there were no discussions about pricing, profit margins or even business strategy. But were the lawyers also standing next to the water fountain?

The Chicago meeting followed on from one in San Diego in April – also supposedly secret – so publishers are earnestly trying to come to grips on how to earn money from online now that the advertising model has gone absolutely bust.

A word to the wise, however they choose to do it, strictly adhere to the KISS principle – Keep It Simple Stupid.

Newspaper publishers have asked to have some leeway from antitrust law so they can get into the nitty-gritty of what to do, how to do it, and let’s all do it together, but the Obama Administration in the form of Carl Shapiro, deputy attorney general in the antitrust division, has testified before a Senate subcommittee that the Justice Department saw no reason to relax current rules. “We do not believe any new exemptions for newspapers are necessary,” he said.

All of this comes under the background that there are fears that given the current economics, media declines in the second half of the year could well exceed the 20 – 30% declines forecast by many analysts.  Newspapers are desperate to bring in new money right now – they acted pretty much as a herd to give news away online and now they want to act as a herd to start charging, if only they could figure out how.

A common assumption making the rounds is that only about 5-10% of a newspaper’s unique visitors will consider paying for content, and that the vast majority of those will prefer a subscription service rather than micropayments. And, the thinking goes, if someone is paying for the privilege of reading a web site then that person will spend a whole lot more time on that site and read more pages than if the site were free.

ftm’s own experience shows that thinking is pretty much on target although newspapers shouldn’t be surprised if they don’t even get the 5-10% of unique subscribers willing to pay.  ftm used to have a micro pay system for stories two weeks old or more – meaning that stories that were less than two weeks old were available for free, but we changed that to stories being free for just the first 24 hours  and that policy decision saw our rate of subscription revenue grow like never before.  We had, incidentally also gone the display advertising route but we soon learned the real money was in subscriptions, and no doubt that is what newspaper publishers will learn, too. 

In our case, of course, our readership is limited to those interested in media events, particularly our take on those events, so the unique visitor world is far more restricted  than it would be for a general news or local news site (mind you, when we published a few years back the picture of Janet Jackson’s bare boob to illustrate our story on the FCC’s fine on CBS for the Super Bowl wardrobe malfunction issue, our unique visitors numbers went out of sight and continued to do so for many days, just people wanting to see and download that picture, which had the ftm partners saying to themselves they were really in the wrong business!)  For all of that, our longevity means that people are willing to pay for information on the Internet if it is information they really want.

Pricing is always an issue but newspapers could probably get away with charging about the same for a web site subscription as it does for print -- $5-9 a month but the natural way forward would be to offer a bundled package of print and web – the two probably at just a 10-20% premium over subscribing to just one.

Now that the cat is out of the bag on these newspaper management meetings discussing Internet possibilities, the industry must be careful. Antitrust is no joke – when ftm is invited to speak at various events there’s usually a note from the antitrust lawyers telling what can and cannot be discussed and they really want to see the speech ahead of time just to make sure there’s nothing in there that even gets close to anti-trust matters.

At one industry meeting the CEO of a major company had a slide showing profit and loss and how pricing had been affected over a period of several months and the anti-trust lawyer quickly chirped in to say bypass that slide!

The Chicago meeting was given the title, “Models to Lawfully Monetize Content” with general presentations on possible ways forward. But the vendors could not discuss pricing within the meeting although what they may have said at the water cooler individually later is another matter.

The problem publishers face, however, is that they should have held these meetings months, maybe years ago. They need to be taking action now, not holding meetings. And while a few media groups like the Philadelphia Newspapers and MediaNews say they are going to charge for their Internet content their implementation is not there yet.

It’s priority 1!