To Pay Or Not To Pay

Would you pay for online subscriptions?

It's complicated. I don't see a problem with it but I'm not willing to pay for articles written by writers I may not like or trust. I mean, you really need to wow me if you get my point. Maureen Dowd, for example, I wouldn't pay for. An in-depth original piece by Malcolm Gladwell? I'd consider it. I know he's going to give me something to ponder.

As more and more newspapers file for bankruptcy, one option is going digital. The problem is to figure out how to make money online. Ironically, while the internet gives a paper say, in Seattle, a chance to branch out to a wider audience that stretches beyond the state of Washington, higher readership doesn't mean more cash. That is, they gain exposure they could never dream of with a printed, localized circulation.

Here's a special report from Editor and Publisher. It's long but interesting. And it's free.

"He notes that an advertiser generally pays a cost per thousand (CPM) of around $35 for the Sunday edition. "Newspaper Web sites get less than a $1 CPM," he says. "The rates are so low for two reasons: The advertising is very ineffective ... and people don't spend very much time at newspaper Web sites."

"Hussman isn't against the Web. He'd happily "junk" the printing presses if he could get an online CPM of $35."

That's why you need a lotta, lotta, lotta hits on your site. In other words, your traffic has to make up for the $34 difference. Good luck.

"My sense is there are a lot of newspaper people who feel sorry for themselves," says Sydney Finkelstein, a professor at the Tuck School of Business at Dartmouth College and author of Think Again: Why Good Leaders Make Bad Decisions. "That is not the way the world of business works." The history of newspapers is storied, he notes, but businesses have to earn the right to exist. He adds that newspapers can start charging for content, but it's a tall order: "It has to be best in class ... and something they cannot get for free elsewhere."

Bingo. I don't want to pay for something filled with tired cliches or poorly thought out. We have enough of that. I mentioned above I would pay for Gladwell but not Dowd. If an online newspaper charged me, I would want to do it a-la carte and pick my favorite writers. None of this all or nothing package. We pay for stuff we don't want all the time with cars. Newspapers should avoid this. Give people CHOICE.

In the brutal economic downturn, newspaper executives are reaching for anything that can float. "I think it's the consequences of the times," says Ken Doctor. "People are acting out of frustration given the straits the industry is in. There is this romantic notion that 'gosh darn it, those readers should just pay.' The value of the newspapers is slipping away. Their jobs are slipping away. Charging for content seems like it could be a scheme to reverse the bad fortunes of newspapers."

We should. If we value unique information.

And there aren't a shortage of suggestions or ideas. The question is can they work. How to monetize websites? Here are more excerpts:

"Someone is always willing to pay something for content, of course. The question becomes how many someones, at what fee, and is it worth the effort to get them? When putting a price tag on select content, even pennies on some articles, what's to be gained? "

"Matt Lindsay, an economist with Mather Economics in Atlanta, believes there is a way to make revenue even by collecting very small sums of money or "micropayments" — pay per click or per article — but this approach requires small expectations from the outset. "I think there are a lot of people willing to pay," he says. "They just need a vehicle for doing it."

The model is feasible, Lindsay contends, if publishers keep the following in mind: Don't shock the system. If a Web site introduces micropayments to some or all of its content, its users should experience as as little disruption and intrusion as possible. Seeding the accounts with money at the beginning will ease users, who have the expectation of free content, into the process. "

"Rosenstiel, and the report, advocate a different approach: What about adopting a cable-content model? The companies providing Internet access to consumers could could build in a monthly fee for accessing that content — as Time Warner does for premium cable access — and give it to the news producers. "News industry executives have not seriously tested this enough to know if it could work, but these fees provide half the revenue in cable," the report says.

Another trial balloon being floated: charging aggregators such as Google. It worked for the book industry, which recently won a suit against the Web giant. No longer can Google distribute material for free with no compensation to the publishing company.

"Why aren't newspapers and news magazines demanding payment for use of their stories on Google and other search engines?" asks Peter Osnos in a column for The Century Foundation. The search engine struck licensing deals with news agencies in Europe and Osnos thinks U.S newspapers should push for the same, as well as an ad-revenue split from aggregators profiting from that content."

"Clay Shirky, a media consultant and adjunct professor in NYU's graduate Interactive Telecommunications Program, believes the problem is really much bigger. In mid-March he wrote on his blog Shirky.com: "Round and round this goes, with the people committed to saving newspapers demanding to know 'If the old model is broken, what will work in its place?' To which the answer is: Nothing. Nothing will work. There is no general model for newspapers to replace the one the Internet just broke."

Indeed, it will be interesting to see what happens.