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Friday, April 10, 2009

BOB GARFIELD: This is On the Media. I'm Bob Garfield. And now the latest on present and future business models for monetizing the newspaper industry.

GROUP SINGING: Present and future business models for monetizing the newspaper industry.

BOB GARFIELD: The past couple of weeks have been very bad for those who believe that all content wants to be free. With a glut of online advertising inventory depressing not only online ad rates but ad rates across all media, the titans who had long traded content for eyeballs were rethinking their calculus. News Corp CEO Rupert Murdoch said, quote, “People are used to reading everything on the Net for free, and that’s going to have to change.” Jeff Bewkes, CEO of Time Warner, unveiled a plan that would let people see cable programming free online, but only if they're cable subscribers in the first place. And the Associated Press, apparently disgusted with news sites like Google for selling ads adjacent to Google News aggregated from the AP and others, said, no more free lunch. If you want AP content, you need permission and you need to pay for it. Jon Fine, media columnist for Business Week, says this had something to do with the freefall of media revenue and something to do with negotiating tactics.

JON FINE: Google and the AP have a licensing agreement. Coincidentally enough, that licensing deal is up at the end of this year. And the thing that’s starting to rankle the Associated Press, and, indeed, newspapers and content providers, broadly, is that a lot of users are perfectly happy just to go to Google News, look at the headline and the first two sentences and decide they've basically had enough; they've gotten what they need out of it. That is not – bad word alert - monetized for the people who are making these stories.

BOB GARFIELD: You know, back in January, on this very show, the owner of Philadelphia Media Holdings, The Philadelphia Inquirer and The Daily News, complained that he wasn't able to monetize his Web operation and said that papers have to start charging for content. Three weeks later his company was in Chapter 11 bankruptcy. And other voices have since come out to say, we have to charge, we have to charge, we have to charge. But - but just how? Is anyone doing that?

JON FINE: Some people are doing that. The Wall Street Journal is doing it. There are a couple of smaller examples elsewhere. There’s a website, I believe, called Packers Insider. If you’re an absolute, diehard, screaming, insane fan of the Green Bay Packers you pay five bucks a month and get every data point you could possibly want on them. There’s a newspaper in Little Rock called The Arkansas Democrat-Gazette. Their site is primarily paid. The problem with that is that it’s kind of hard to extrapolate that to The San Francisco Chronicle, The Boston Globe, you know, the local newspaper in Dubuque. I think that what we're going to see a lot of is all newspapers are going to try like sort of subsites that there’s a pay wall around. It’s not like all of a sudden you won't be able to access anything on The Denver Post. It’s rather that The Denver Post or, you know, The Salt Lake City Tribune are going to try to find little areas where they can, you know, get some money out of users. The problem is, is that it’s kind of hard to see a way where that makes a heck of a lot of money. The newspaper in Little Rock is often pointed to as kind of a success here, but I think they maybe have, gosh, you know, 5,000, 10,000 paid users. That comes to a couple of hundred thousand dollars a year, and if you are a big city newspaper that’s just not going to get you anywhere, especially when they're facing ad losses and, indeed, just losses, period.

BOB GARFIELD: The New York Times did try at one point to wall off some of its premium content with a program it called TimesSelect, changing people extra to see certain columns and so forth, finally abandoned TimesSelect because it was depressing online traffic and they needed online traffic to generate more advertising revenue.

JON FINE: I think the problem with TimesSelect was that it was kind of a half measure. Their political columnists and their foreign policy columnists aren't necessarily content areas where advertisers were dying to get next to them. Advertisers don't love hard political content, which is a problem that someone like Arianna Huffington’s Huffington Post is going to run into. But they thought by doing it in a small way it could work out for them. I'm not sure it was as enormous a failure as it was. I mean, they did get a substantial number of subscribers. They just decided they could get more the other way.

BOB GARFIELD: In the meantime, people like us have been trained that everything is for free. Can we be untrained to pay subscriptions for online content or, you know, some sort of micro-payments to buy content a la carte?

JON FINE: The problem is free is very hard to beat. If you go to an awful lot of newspaper classified websites, you can click through, they're easily searchable, they look pretty decent, whereas Craigslist, as we all know, is just this kind of like online bazaar that’s like, you know, the wall at your college where you used to tack up various garish flyers – but it’s free.

BOB GARFIELD: It’s a great price point.

JON FINE: And I think, you know, the danger is if, say, someone like The Minneapolis Star Tribune, another newspaper that’s in bankruptcy, decides to put all of their site behind a pay wall, well, there happens to be a local online news start-up called, MinPost.com - they'd be ecstatic with that. And, you know, they have reporters and they're doing similar kinds of stories, and you’re going to have that kind of free/paid dichotomy. It’s really tricky. If it was easy to figure out, someone would have figured it out by now. I mean, did these guys make a mistake in making it free at the very beginning? You know, maybe. Maybe. Can that genie be gotten back in the bottle? Maybe, but I wouldn't want to have to bet on it. The problem is there’s not much else for these guys to bet on right now.

BOB GARFIELD: Jon, thank you so much.

JON FINE: Thanks, Bob.

BOB GARFIELD: Jon Fine is contributor to CNBC and the media columnist for Business Week.