“Can I have some money now?”
Posted by Jeremy on April 7, 2009 · 15 Comments
I’m a huge fan of The Simpsons, there’s no secret about that. One of my favorite clips, which unfortunately I can’t find on YouTube in English, comes from an episode a few years back when Homer decides to start an Internet business because he hears everyone’s making money.
The scene starts with Comic Book Guy surfing the Web for, um, adult photographs and finds the images loading too slow. He spies Homer’s “Internet King” banner ad and wonders if it’s time for an upgrade in Internet connection speed.
Cut to the next scene, with CBG visiting Homer at Homer’s “office” (his house, because, why not?):
Homer: Welcome to the internet my friend, how can I help you?
CBG: I’m interested in upgrading my 28.8 kilobaud internet connection to a one point five megabit fiber-optic T-1 line. Will you be able to provide an IP router that’s compatible with my token ring ethernet LAN configuration?
Homer: (long pause) Can I have some money now?
As Homer also might say, it’s funny because it’s true. The bit satirizes the get-rich quick era of the Internet (which seems like so long ago), when the business plan came long after the server purchase and Internet connection was set up.
I’ve been thinking about this bit a lot in the past day after reading Dean Singleton’s charged comments about the Associated Press going after aggregators and link-makers like Google for a cut of their ad revenue. They’re mad as hell and aren’t going to take it anymore (Singleton actually said this) when it comes to aggregators making money providing indexes full of links to the day’s news. This is an old argument, of course, which says that making money off of headline links is tantamount to stealing.
(facepalm)
Quick full disclosure: I worked for Singleton at two newspapers he has since destroyed, including the once-proud Los Angeles Daily News. He has a reputation for gutting the soul out of newspapers, and his workers don’t call him “Lean Dean” for nothing. Needless to say, I don’t think much of his business acumen.
Anyhow, the journalistic pitchforks have come out, and they’re coming for …. Google? The same Google that drives so much traffic to AP member sites through its Google News search engine, traffic that these publications probably couldn’t get on their own? Some accounts are saying Google delivers 30% of a site’s traffic, sometimes more.
Some pretty smart responses have emerged in the past 24 hours. I loved Jeff Jarvis’ take, which basically says this is a spiteful move for an industry that “blew it” a long time ago. NYU’s Jay Rosen has amassed a lot of other responses to go with his own and it’s worth a read (Updated: I misunderstood the context when I read Rosen’s piece, apparently it was an older reaction to a similar happening. It’s what I get for reading the post and not clicking the links, which would’ve given me more context. What’s amazing is I read it now and it still reads current). And make sure to check out the response from Google CEO Eric Schmidt. Lastly, it bears noting that some of this was predicted back in 2005 by Matt Thompson’s excellent EPIC 2015.
How does this all relate to Homer’s fictional business? Most of what I’m seeing in the blogs makes the valid point that newspaper companies have had a flawed business model that misunderstands the Internet. Here at MU on the MyMissourian team, we called it the “Field Of Dreams Delusion,” which says that if we build web sites the people will come.
And build we did. We built Web structures that mirrored our print product so well that it was an online-and-free duplicate. We ignored the emerging social aspect of Web use and focused on content. We destroyed the notion of paying for content by making it free. We focused on short-term profits and trivialized the news with fluff and stuff at the expense of the red-meat journalism such as investigative reporting, then had the gall to suggest we should charge for this watered-down version of the news.
And now the newspaper industry’s last gasp is to sue Google for driving traffic to their news sites. In other words, the industry doesn’t know how to offer a product people will use or meet the consumer’s needs, but “Can I have some money now?”
No, no. A thousand times no.
There have been suggestions that newspapers revert en masse to a pay model. I think this is a terrible idea. Most of the content they produce is either not worth reading or found elsewhere on the Web. People won’t miss your gardening tips or feature stories on the local pastor enough to pay for it. I’m sorry, they just won’t (as much as I’d like them to).
I get the desire to go after aggregators who are pulling content and making money off of it that goes far beyond fair use. But I don’t get the notion of going after revenue from sites that drive traffic. Google isn’t republishing content from sites like the Kansas City Star, but rather creating index pages with searched content that point to stories about desired topics. They’re making money off of search (i.e. the cost involved with driving traffic to news sites), not the content itself.
These newspapers do not own indexes of information any more than they own the rights to conversations between people that tell others about interesting articles they read. These papers seem to be arguing essentially that they own the rights to their own promotion.
I say good luck with that. The thing about the Web is it has changed the market model of media. Whereas once a newspaper such as the Star competed against local and state competitors, in the online realm you are competing with everyone. The problem is one of visibility, and hiding behind paid content walls or biting the hand that feeds your traffic is not going to solve it.
Schmidt’s advice was worth heeding. Focus on what consumers want and on customization. Innovate. Stop blaming Google for your own mistakes. But the best way, the way out, is also the most painful one. The problem with the market model is that it requires that these companies need to innovate in three months, not one year or three years. Quarterly margins and stockholders demand profits, and innovation takes investment. This is a big reason why Jarvis’ take was so right-on: The time to innovate was 5-10 years ago, when publications could do it incrementally. You can’t do it in three months without a mass selloff on Wall Street.
It seems all sort of basic and quaint, having a business plan before the implementation, but for Singleton and the AP perhaps it’s time to state the obvious. You’re fighting the wrong war.
Good stuff. I’ve been saying this for a long time: if newspapers want people to pay for content, they have to make content that people will pay for. It’s not that hard of a proposition to understand.
That said, though, all too many newspaper executives came up through newsrooms (hold the cries of “heresy” for a sec). They don’t understand that people bought newspapers for a lot of utility reasons that had nothing to do with the news content — things like advertising (gasp) or columnists or horoscopes or comics or recipes or whatever. Or, to be precise, not for any individual one of those things, but for the whole package. Online papers broke the model down into news and some banner ads, so it’s not surprising that the online offering wasn’t that compelling to print readers.
Hi Jeremy:
So if I said as of tomorrow, you can’t read the New York Times anywhere without paying for it and if I said you can’t listen to the NPR without paying for it, what would you do?
Great post. I think one way of surviveing is along with good content from news papers we also need a synergy of ad revenue share from News aggregators and the actual news publishers which would intrun encourage publishing better content from News publishers
Reff: http://highmontain.wordpress.com/2009/04/08/news-business-and-news-using-business/
Thank you.
@Len: I’m not sure. I don’t consume the NYT the traditional way, as I don’t read the print edition much and the stories I run into online I tend to see through my social media network rather than through their front page. Also, I tend to use CNN.com for my national news roundup. So I am quite tempted to say that if it went behind a wall, I wouldn’t miss it because it’s not a product I was using directly anyway. But I’m not sure.
But that’s kind of my point. The type of NYT stories I read are the unique ones or investigative work. But that’s such a small percentage of what the NYT produces, and most of that other stuff I don’t care about. I just wonder about any business model that says you have to buy a whole lot of things you don’t want to get what you do want. That kind of model is made for people who use it the way we use newspapers, and that isn’t how I use Web news at all. And I’d bet that’s similar for a lot of folks.
Of course there are huge journalism/democracy problems attached to this. But I’m not worried about the NYT or WaPosts of the world, I think they have the brand power to reformat in this transition. It’s the state and regional news sources I’m worried about.
So, Jeremy, stop by Starbucks on your way to work today and tell them their coffee wants to be free. Then report to your boss, if you have a job, and tell him you’ve decided the free model applies to you, and you’ll be doing your eight hours without pay from now on.
How’s that suit ya?
Or how about if I borrow your car, put advertising on it people have paid me to show around town, and take it for a spin. I’ll pay you in marbles. That better? After all, you weren’t using your car and you have a lousy business model. Think how many people will have seen your car. Isn’t that great?
This “information wants to be free” is the mindset of a spoiled brat who’s been playing with someone else’s toys. Time to join the grown-up world.
To start, I never said anything close to “information wants to be free.” I’m pretty skeptical of that crowd, actually, as I’ve found it tends to serve as justification for current habits rather than a philosophical stance.
I do think your analogies are flawed though because they misunderstand my point. Let’s take your Starbucks example. The problem isn’t that they charge for coffee, but imagine if I went in today to order a tall Sumatra and they said, “Oh, you’ll have to also buy a scone and one of our CDs. We bundle purchases here and call it a ’subscription’ to your coffee drinking.”
That’s pretty much what newspapers would have to do since they have been loathe to have a pay-per-story model. I read about 1/1000 of what the NYT has on its site on a typical day. You can’t tell people they have to pay a monthly subscription to read that little content. There’s no value there. It has been that way with me for newspapers for a long time. They’re filled with content I don’t care about, and I know I’m not alone there.
As for Singleton’s comments: To use your Starbucks example, what he’s saying basically is that the coffee will be free but we are going to charge anyone who recommends that a person get their coffee at Starbucks. This feels to me like the other extreme to charging subscriptions.
If I take Len’s comment earlier to mean what I think it does, will people pay when we go from information overload to information scarcity? I don’t know. But I do know that if you’re going to charge me, the value better be there. That is, you better be offering something of great tangible value that I can’t get anywhere else for free.
@Leonard: Let’s be clear here: Jeremy’s not one of these wild-eyed “all information needs to be free all the time” types. But I think your analogy is flawed. I pay for the New York Times *by reading it*. Whether I subscribe to it or not, my eyeballs on their site drive their ad revenue.
There’s a large misconception that subscriptions are the only way to “pay” for news. I wrote more about this here, but the condensed version is this: Subscription revenue has always been a break-even proposition. Ad sales are where the real dollars are. And news organizations need to realize that their core business model is selling eyeballs to advertisers.
If you look at it that way, I’m not getting news “for free” on the NYT Web site. I’m subsidizing their business by reading news. They sell my clicks to advertisers. This is no different than the old broadcast TV model — I watch Hee Haw for free, but it’s subsidized by corporate sponsors.
It’s a mistake to apply the pay-for-content concept to everything termed “newspaper.” I agree that much of the national content is readily available elsewhere. But local? That’s a different matter. And as much as I love citizen journalism, I don’t want to paw through a dozen blogs each morning to find out what is happening in my town. I’ll pay to go to a credible site that not only puts it all together, but adds in its own reporting.
I think the earlier pay-site efforts by newspapers were doomed by the greed to which you allude. My price break for information is fairly low. As is my price break for recorded music (I’m tone deaf). The iTune concept works for me, but the Skype unlimited subscription concept works even better. I would gladly pay an inexpensive subscription — $1 a month or so — to get my hometown news.
That would not raise much cash for the newspaper, but it does pull the full content of stories out of Google. It then becomes like many of the academic literature sites where you get the headline and abstract through Google, but have to ante up for the full content. I think that is fair to everyone. Probably from at least three “hometowns.”
A paid site, by the way, also offers more value to local advertisers. The payment stats and limited scope make it much easier to convince advertisers that you are delivering real local customers to them.
Clyde
@Rob: Excellent points, and reminds me that the idea of “paying for news” looks much different online than how we sometimes think of it offline.
@Clyde: A low-cost subscription seems to be the best course (especially for the ad reasons you state), but I’ve been reading a lot of things that make me wonder if it’s feasible given that a lot of pubs aren’t in a position to let it develop over time. It would seem that a model like this would need some time to take hold. Do online newspapers have time?
On your larger point, in the first paragraph, you’re talking about a reconception of what it means to be a news source. It means organizing content that is customized to users in the way they want to read it. I can get election results and analysis by looking on the SoS web site and a few blogs, but there is value to me in organizing it. This doesn’t mean you have to produce it, just do the hunting for me in a fashion that throws out the worthless material. This sounds a lot like aggregation, but some purists still want to think the value is in solely the content.
Many valid points here except:
“These newspapers do not own indexes of information any more than they own the rights to conversations between people that tell others about interesting articles they read”
I don’t profit when I tell someone to go read an NYT article. Google does. If this is the wrong war, what is the right one? Sitting around waiting for online advertising to become profitable? That’s not likely to happen in time to save the newspaper industry. Certainly you’re right that it would help to improve the product–and educate media consumers to appreciate it and maybe even pay for it. A pay model seems like a good idea especially for local sites, as Clyde suggests. But plenty of other media content gets protected from aggregators (ie–music on the radio and in public performance, Viacom on YouTube so far). Why not news? Sure, newspapers missed the boat, beginning not just 5 or 10 but 30 years ago. So now we’re going to need a lot of different solutions. Why not try everything we can possibly think of?
@Len: Well for one I can always just read CNN.com or MSNBC.com, both of which are free and largely contain the same AP stories that the Times is running. The rest of the NYT content I don’t care about; anything in the Arts (or other) section that is big news will filter down through other channels online. Or I could just wait 25-30 minutes until someone who had a subscription to the site copy+pasted all their stories into a word file and posted it somewhere online — illegal, certainly, but that’s never stopped people before.
Plus, once you put up those pay barriers you hurt your brand by becoming the “money grubbers” while other major news services are still giving the content for free. Now let’s say everyone did what you suggest tomorrow, not just NYT and NPR (which may be more toward your point), I think it would only bump revenue slightly while people started discovering more underground Web sites that offer the news; heck, it might even be a site that is simply writing down what Fox News, CNN, MSNBC and others are saying on television!
The problem here, I think, is akin to what Rob is saying; many newspapermen are under the impression that people are used to (or expect to) paying for news, which isn’t true. News was, first and foremost, free hundreds of years ago. Town criers, decrees from the king, things like these were not charged for. Newspapers only started to gain traction as paid new sources because of what they offered people besides news; a forum to buy and sell news, services, and ideas.
Now, papers are too bloated; they have 15 sections that only a tiny fraction of their readers ever even look at (seriously, every time I pick up the NYT I end up pre-recycling half the paper), which of course has increased overhead tenfold. They have hundreds of employees and large printing plants to roll off these huge newspapers so ad revenue can’t cut it. And let’s face it, putting ads in the paper now is already ridiculously expensive for the non-targeted audience advertisers receive from it.
What’s the answer? I honestly don’t know.
Seth, your comment makes me think we have this wrong. Maybe Google should be charging newspapers, not the other way around. Google is making money off ads on index pages, but it costs them to do the searching and indexing, not to mention web space. They’re providing a service, shouldn’t they be compensated for their efforts?
I’m halfway kidding, of course. But while you make some good points about other content being protected, bear in mind Google’s not publishing much more than a link and a teaser paragraph (if that). The link points back to the content holder’s site. The analogy would be yahoo having a list of links to radio station feeds on the web. They’re doing a service to the radio station and using ads to pay for it. I see this as nothing different. Online news sites might think they’re entitled to a cut given they’re the content originator, but they’re only hurting the site delivering traffic to them. It’s the wrong war, and just because they don’t have the sense of the right one means it’s a good idea to lash out when they’re cornered.
Also, if newspapers are convinced that aggregators are costing them real dollars (and I’m not convinced this represents a huge amount of money, but I’ll play along), why don’t they just aggregate in addition to their other services and steal some of those dollars back? Out-aggregate the aggregator?
Worth a read: Neil Budde’s “Build it like you expect them to pay,” in which he talks about the background of developing the Wall Street Journal’s subscription-based service.
And in response to Len’s question: I’d go read something else.
Shockingly, I go for days without reading nytimes.com. While I like the New York Times, it’s hardly the only quality news option on the Internet. And while I also like “All Things Considered” very much, my eight-year-old “new” Saab’s fancy Harman Kardon radio won’t pick up either of our NPR stations (some sort of antenna connection issue). Somehow, I’m surviving. Yesterday I listened to Leonard Bernstein; today it was the Baltimore Consort. It was good.
We live in a very, very big world of options.
Nobody is going to solve the “problem” of financing quality journalism by making vague threats or trying to organize a journalism strike. Keep in mind that the current crisis is entirely about poorly timed high-stakes financial gambling and not caused by the Internet-driven transformation of the media landscape. The latter is much more manageable than is being suggested.
Steve, thanks for that link. It seems to jive with my suspicion that the problem isn’t about people being unwilling to pay. The problem is that newspapers are mass audience instead of niche audience, which means any subscription model is based on me paying for things I don’t want.
For the record, the only content I have a pay subscription for is ESPN.com, but that’s because it’s niched in an area I enjoy reading about and I love the lineup of writers they have. I can’t think of a newspaper that would get my dollars online, even the NYT.
If I had to guess, providing news is more of a non-profit venture, akin to NPR or PBS. You see it already, with guys like Al Giordano, who has fund drives and things of that nature to fund his journalism projects.