Paying For Media

- - The Future

I think we will eventually arrive at some kind of micro payment/advertising business model for online media in the not too distant future. Ideally there will be a common payment system on the device I use to access media or some kind of accepted everywhere pass. Either way it only works if the transactions are in the background.

The subscription model for Newspapers and Magazines that I’d like to see would allow me access to all the headlines and blurbs for each story but limit the number of full stories I can see/read each month/week depending on how much I’ve paid.

The cost for these subscription models is critical. I would read 1 story a month from 10 or 20 magazines and several stories a day from a couple different newspapers but not if it costs hundreds of dollars (based on current subscription prices). I think there could easily be ways to lower the subscription cost if I agree to watch and interact with special advertising or allow cookies to be set on my browser so the advertisers can follow me around and gather data. I can also envision a 2 year multiple magazine/newspaper subscription model where just like cell phone companies the media reader is free or significantly discounted.

One concept that publishers will struggle with is how efficient blogs and social networking are at distributing stories and bringing in new readers, because once you put a pay wall up that will end. The key to this is realizing that hits are worthless and loyal readers are valuable. I think there’s a way to allow your paid subscribers the ability to distribute full stories to their friends/audience along with embedded advertising and a pitch to subscribe. This kind of sideways distribution is critical for niche publications and they will need to find the balance point between content that is freely distributable and content you have to pay to see.

Of course none of this addresses the the most critical issue Magazines and Newspapers are facing right now. Most of the content is not worth paying for. Fixing that will require either a heavy investment from publishers or a changing of the guard.

There Are 28 Comments On This Article.

  1. NYT Saul Hansell reported at the Cable Show conference in early April 09: “Comcast wants both customers and (TV) networks to accept that it is normal for people to buy subscriptions to video content watched on the Internet, to head off the presumption that all news and all music is free online.” Cable industry makes as much money from monthly fees as from advertising.

    Why not add newspaper and magazine online subscription rates to cable or internet provider bills? Comcast, etc. would get a cut. NY Times had 146 million unique visitors in 2008 (compete.com study), if half of those viewers paid $5 a month for access – NYT would make $4,380,000,000. Okay, $60 per sub may be pricey. Even at $5 a year, 7.3 million sign ups would be $365,000,000. That would pay a few salaries.

    I’m a fan of newspaper/mag content right now. I think most people respond negatively to the repeat of content in print and online. Journalist are good at producing content but how to/when/where to delivery that content is the industry albatross. The Guardian platform-neutral model is cool. Over the life of a story, various bits are delivered to either online or to print. Content tends not to be copied from one platform to another. Subscribers have a reason to opt into both products.

  2. I do some work for a small paper in B-more that just revamped their site last week. It’s a subscription only site and they have had like 30 paid subscriptions over the weekend. I think the paid model will work. With the economic downturn, people will grudgingly acknowledge that they will have to pay for their content.

    • @JMG,

      Also thank the young people getting out of college with their journalism and writing degrees who are realizing that getting paid for what you create is actually a necessary thing.

      Plus, advertising supported media is watered down shite

  3. I think one of the biggest problems regarding the payments is the user interface. It has to be easy, one click and you´re done. The problem with that is that the technology seems to be flawed, at least security wise.

    Maybe more touch screens could be an answer, linking your payments to fingerprints. Downside would be people stealing your fingers instead of your credit cards.

    Very interesting subject

  4. Has there been any talk of some of the international news organizations like the AP or Reuters providing subscriptions to their content directly to consumers?

    I get the majority of my non-local news from Yahoo! News. Their content is taken from the AP, with some from Reuters and a few others. Why not cut out the middle man? I’d pay $10 a month directly to AP.

  5. The reason advertisers pay so much for advertising in magazines is because there is a qualified set of viewers. The qualification is that the people paid for the magazine one way or another. If the cost of the medium/content is too low, then the qualification is worth less. So, if online pricing for content is low, ads are worth less. I say, jack the prices up and weed out the people who weren’t going to be spending money in the first place.

    You can’t just walk into a book store and buy 30 magazines a month for $5, why would you expect the same online?

    Of course, the content has to be of interest.

  6. sounds good to me.
    won’t work though cause technology is not in place.
    But we’ll find out if somebody tries. But I dont see so much will for experimentation yet (blinking covers aside) but maybe that will come the more the business tanks.

  7. It’s hard to imagine a universal integrator will emerge which will provide one-stop shopping for all media (a mega iTunes if you will). There are too many entities already who see new media as a potential financial goldmine. I doubt they will want to share the profits with an integrator. I suspect we will have to go through a period where multiple organizations try their hand at world domination before a

    It’s also hard to imagine all media outlets will be willing to participate in a common micropayment system. If some major news outlets choose to opt out, that is a potentially huge problem. For instance why would you pay the NYT a micropayment for a news story when you could read the same basic information for free on CNN.com? And what about news service content? Will each media source try to charge an uplift for the same AP news story? Recall many of the print newspapers’ initial foray into Internet publishing involved charging a subscription fee for all, or partial, content. That model fell apart when people could get the same information for free from other sources and there were relatively few paying customers.

    The only real potential market subscription-based services is unique, value-added content — i.e., quality stuff unavailable from free sources. Newspapers and magazines have historically been able to offer better depth and insight compared to television/radio. I’m not sure added depth alone is sufficient to attract substantial subscribers in the current market. But a richer overall experience (e.g., insight plus great graphics, images, video, audio, etc.) could work. Of course quality has a tendency to be expensive. Perhaps organizations unburdened by the high costs of producing printed material might be able to invest in top-notch talent (certainly a reversal of the current trend).

    Personally I’d like to see a fee-based content system to be consumer-oriented rather than advertising-oriented. One of the big failings of many magazines is they became slaves to advertisers. The result was a general decline in the quality of editorial content. It would be nice to see a new financial system emerge that rewarded quality content and integrity.

  8. tom hyde

    I see you started by saying “online media,” and end by talking about newspapers and magazines. Do you think it a foregone conclusion that print will see a precipitous decline to the point of only specialty publications remaining in print? Will a nearly total shift to the internet provide anywhere near the revenue stream of the past? In the future, how many news outlets will be able to remain profitable AND relatively autonomous? In the new flatter world, isn’t it more likely news outlets will be more virtual cabals of editors and fact checkers than actual content creators? (Okay, that was a blatantly leading question)

    Those are certainly more broad and far reaching questions than the immediate issues of online revenue stream and content access but I believe those working on transitional phasing of the immediate media shift are continuing to miss the bigger picture and in so doing continuing to expend energy, and revenue, in the wrong direction. I’m not sure the new world will support what are essentially monopolistic media empires anymore, or for that matter, continue to pray, at least exclusively, to the “better” products of professional content creators.

    But … money, money, money.

    What business model is the most profitable online, and why? Which in turn rolls the thread back around to micropayments which are in essence aggregated payments for aggregated content, nearly none of which could make significant amounts of money on its own (this may be the modern definition of print media). Am I running in circles chasing my tail on this? Yes, and so is everyone else. I don’t think the answer is either large direct payment by either advertisers or media consumers to one entity for one product but a merging of content providers, aggregators, advertisers and consumers into a virtual micropay as you go system. Hmmm, did I just describe Google? Almost, or perhaps where it continues to head. The world may no longer be old media monopoly friendly but it may be new world monopolistic aggregator friendly. And for the largest markets, I see no alternative.

    Or is this where you were heading with your thoughts Rob?

    Next, the new world virtual currency. We can call it …

    • @tom hyde,

      What business model is most profitable online? Easy… Porn. And what is that: Subscription based (at least… that’s what I hear… I wouldn’t know personally).

      Why can pornographers make money online but magazines can’t?

      • @Jeff Singer, Hah! Yes of course, that is not what I meant but it is true and always will be I suppose.

  9. The problem, pure and simple, is that if you put up a wall, people will smuggle the information out anyway. Creative Commons and the like simple paint a legitimizing wash over the fact that social media and much of the net functions on appropriation and theft. And not just the little guys, but Big Media too.

  10. So how are these media organizations going to track down all the subscription based content that gets posted for free? Essentially if one person buys it you can almost guarantee it’s going to be duplicated over and over again. Anonymous sites will pop up that will post subscription content for free. If you shut 10 down, 20 new ones will pop up.

    iTunes hasn’t killed torrents.

    And with print? Please, it’s much easier to replicate than audio or video.

    “The only real potential market subscription-based services is unique, value-added content — i.e., quality stuff unavailable from free sources. Newspapers and magazines have historically been able to offer better depth and insight compared to television/radio.”

    This is a much better option. Or better yet, instead of saying that magazine and newspaper content has to improve, how about a greater web experience from advertisers? More interactivity. More engagement. More entertainment.

    The problem is that advertising is so horrendously awful and antiquated that nobody pays attention to it. Banner and display ads? Really? Is that the best they can come up with? Advertisers and the large media companies who depend on them have failed to adapt to the web culture (with a few exceptions of course, Zappos?). Their methods are out of sync with the way people interact with content. I have no doubt there are countless creative geniuses at these ad agencies who have some great ideas that will never see the light of day because of the conservative approach most companies have to advertising online.

    If now isn’t the time to experiment with online advertising, I don’t know when is…

    Of course, I also watch Hulu and find it perfectly acceptable to watch the same ad four times during a show. Again, idiotic, but they got me…

    • @bryanF., I sure hope that more ads isn’t the solution. Like a lot of other people, I use tools to strip away ads from content online; all the current style of advertisements make most newspaper or magazine sites completely unreadable.

      And I’d hate to know what “more interactive” ads are like, but if it involves sound or things popping up, you’ll alienate more readers; if it involves video, it’s just annoying and won’t load smoothly for everyone; if it’s some sort of game, it’ll draw readers away from the content; if it involves those weird fake links that are actually just ads, it breaks the concept of the internet. Maybe there’s some magical ad formula that’ll work, but I hope not. I think it’s telling that many early semi-paid online communities give the subscriber, in addition to a little bonus content, an ad-free version of the site.

      • @M. Scott Brauer, what you describe is the problem. I’m not talking about more ads. The advertising needs to be better, more engaging. It needs to be content you actually want to consume.

        This is especially relevant for photography. Advertising photography could certainly evolve on the web. The web allows for photographs to spread, to be blogged, tumbled, Tweeted.

        If you spend any amount of time on Tumblr you’ll quickly understand how fast images can spread in a social ecosystem. Hell, almost everyday I see ads! Except they’re classic ads that are posted more for their graphic or comedic elements and not because of any brand loyalty.

        What we might actually see are more and more brands skipping out on advertising on media channels because they can become media channels themselves. Again, take Zappos for instance. They’re popular on Twitter, they have numerous blogs and distribute their videos on Youtube.

        http://blogs.zappos.com/blogs/zappos-tv

        Now, you might detest this stuff and not participate but it’s more entertaining than a banner ad.

        What is inevitable is the further blurring of the lines between editorial, entertainment and advertising.

        How newspapers & magazines fit into this, I’m not really sure. But it might just be easier to give up on the concepts of magazines and newspapers.

  11. I have a gadget problem and I spend an embarrassing amount of money to feed the consumer electronics monkey on my back. Advertisers would love to show me their goodies but a paid subscription places a barrier between me and their advertisement. More than likely I will stumble across their product on a free blog that reviews an item I’m interested in.

    Television worked just fine with free content and paid advertising until cable muddied the waters. Ultimately it’s about how many eyes can you get in front of the advertisements. Simplest way to do that is to provide free content.

    Our local paper has both print and internet versions by subscription. 90% of the content is via wire service and I can get that quicker and free from other sources. Local advertisers don’t get to pitch me… I’m not there because of the subscription barrier.

    For my local information:
    Free blogs inform me of local events.
    Free wire service provides local,state and international news.
    Free internet weather is more timely than print.
    Why in the world would I pay a subscription for a local or regional paper?

    There are way too many sources of free information on just about every subject on the internet. Why am I going to pay a magazine today for information that is 14-30 days old.

    I’m not sure what the answer IS, but I know what it’s NOT.

  12. I disagree with the micropayment system, for pretty much all the reasons Clay Shirky outlines here: http://tr.im/kudn

    The essay is comprehensive. If anyone can refute his points then they will have found the holy grail for content distribution models.

    He ends on a note that echoes your own final comment, regarding the quality of the content. Journalists matter, creative ideas and beautiful stories are of PARAMOUNT importance. Shirky says to focus on what matters:

    “What matters at newspapers and magazines isn’t publishing, it’s reporting. We should be talking about new models for employing reporters rather than resuscitating old models for employing publishers; the more time we waste fantasizing about magic solutions for the latter problem, the less time we have to figure out real solutions to the former one.”

  13. I think that subscription is the way to go for magazines online, but I think that a limited browsing function is also very important to bring in new readers. It would work by tracking and notifying new IPs that load there site that they are only allowed X number of views before they are cut off, and limited access to cover stories. The idea being that they would pay to continue to read. Of coarse they would be given the option to subscribe along the way. This function would also have to recycle every couple of months to get another bite at the apple so to speak.

    I don’t think that this will work for newspapers.

    Adm

  14. One potential way around the ‘what platform do we use to charge customers on?’, is to have a dominant internet player offer this as a service to companies that require it (Google checkout anyone? or Amazon?). Why recreate the wheel with this?

    As for the question of ‘will people pay for it?’, well yes. I would definitely pay for content if the following points were met:

    a. it is content worth paying for

    b. it can’t be obtained for free elsewhere (but of course!)

    c. the mechanism to pay is easy.

  15. It will definitely require a changing of the guard, to that of the vanguard. It will require strong leadership and vision that is very hard to find, let alone identify. I can count on one hand only the people with the potential to meet these challenges. None of them have enough money to fund their initiatives.

  16. I dont think it will work. A select and probably small amount of people will buy, and probably those who work in the industry and feel they need to buy to keep their jobs alive, the rest will find it for free elsewhere after someone has posted it on a rip site.

    The good thing about print is people who buy mags are often buying them because they want something physical. So electronic needs to deliver something it isn’t already delivering.

    I can’t imagine people are going to be happy paying for something they are now getting for free.

    • @D,

      The kind of media operation that will become profitable will not look or behave anything like traditional print publications. Money will be made off of services rather than printed units and advertising. The advertising will still be there but it won’t be the bread and butter of the publication. Above all is the need for strong talent with the right training and strong leadership for that talent. I know just the right people too, and most of them aren’t older than thirty.

  17. on another note, I hope when the economic dust settles the value of print will overtake the economics of the net and those publications worthy of print will remain in print.

  18. Plain and simple – If you charge them, they will not come.

    Charging a yearly subscription or rack price for a magazine and it’s content is one thing. But charging for a bookmark in Safari or FireFox is another. First of all, online magazines look like crap. Second of all, unless they’re available on a Kindle, you can’ read them everywhere one likes to read magazines. And I don’t see too many people reading mags on Kindles or willing to pay for the ability to do so. Thirdly, you are what you read. And the tactile presence of a collection of magazines is just a bit more cool than a collection of websites.

    The business model didn’t kill newspapers and magazines. The internet did. Along with cable TV before that. But these forces are just representatives of the most feared word in business – competition. Newspapers have been struggling since the children of Boomers started getting their news from the TV. And now our children get their news and all other information from the internet. One medium has stolen share from another. So what to do?

    Fight back. Make the experience worth it. Movie theaters still exist. Radio stations still exist. TV networks still exist. And I really don’t buy into the notion that magazines are going anywhere. Magazines die because they suck or they are a parody product of another magazine. Again, competition. The magazines that are really in trouble are those based upon news delivery. And this is why newspapers are dying as well. They cannot compete with online or TV delivery. And that’s due to technology and the speed of information transfer. Competition. But dying editorial based magazines have a chance if they get their act together and deliver better content. Become the best of breed. Seems to me National Geographic, Travel & Leisure and the New Yorker are still selling.

    And if you’re going to offer an online version of your printed self, don’t make it the same damn thing. In other words, make the printed and online versions completely different from one another. Different content. And make them look good. Make it worth my time. The internet is just another medium for information delivery. And the content should be different so that you’re not repeating yourself. Otherwise you’re wasting your time and money.