New Business Models for Newspapers: Tilting at Windmills?

Hope springs eternal in the newspaper world, despite the fact that the business has been unremittingly bleak for … it seems like ages.

And yet, new business models are being trotted out. In addition to publisher Rupert Murdoch announcing that he intends to begin charging for viewing online content of his various papers beginning next year, Journalism Online announced in August that it has signed up nearly 180 dailies as affiliate partners.

Journalism Online is author and lawyer Steven Brill’s venture which is offering a variety of “pay models” that allow for micro-payments, subscriptions, sampling, and versatile flexibility in what news content is offered free or for a charge. Reportedly, more than 500 newspapers, magazines and other media properties have now agreed to sign up.

According to Brill, “By creating a platform of flexible hybrid models for paid content that maximizes online advertising revenue while creating a new revenue stream from readers, Journalism Online has helped shift the debate over charging for online news from ‘if’ to ‘when and how.’”

Just how is this supposed to work in a practical sense? The idea is for newspapers to focus attention on the top 10% of their most avid online readers, which would result in preserving approximately 90% of page views as well as ad revenues, even while migrating to a paid-content structure.

Oh, really?

This forecast pans out only if all of those “avid readers” continue to visit the site after a fee or subscription program is introduced. But what’s to ensure that will actually happen?

The marketing world is littered with examples of rosy projections and expectations that flamed out – despite a bevy of opinion research and focus group interviews predicting otherwise. That’s because talk is cheap.

But most online news is even cheaper – as in free. Nevertheless … hope springs eternal.

Rupert Murdoch’s “Paid Content” Gamble

Rupert MurdochMedia mogul Rupert Murdoch’s pronouncement last week that beginning in July 2010, online content for all of his news media properties will be available for a fee – not for free – has surprised many in the industry.

“Quality journalism is not cheap,” Murdoch declared. His announcement comes hard on the heels of his massive media conglomerate News Corporation reporting a ~$3.4 billion loss for the last fiscal year.

While admiring Mr. Murdoch’s brave stance and willingness to get out in front of an issue that has bedeviled the newspaper industry for the past four or five years, one is left wondering if he’s playing the role of Don Quixote rather than Richard the Lionheart in this drama.

For sure, the pay-per-view business model looks great to any publishing company that has seen the advertising-driven business model come under so much stress and strain in recent years. And The Wall Street Journal, one of Murdoch’s properties, has been able to charge a fee for online access in a practice that dates back prior to that publication’s acquisition by News Corporation.

So what will happen in this glorious experiment? Will legions of newshounds flock to the various Murdoch sites – The Wall Street Journal, Times of London, Australian, New York Post – and plunk down pay-per-view dollars or a monthly access fee for the privilege of reading the latest news bits?

Or will people rely on the many other (free) outlets for news, while also receiving and passing along “copy-and-paste” materials over the web — an effortless task that can be completed in mere seconds?

[And good luck trying to use legal means to prevent the dissemination of copyrighted material; the litigation costs could well outstrip any compensation dollars awarded, while being a major distraction inside the company and causing a PR kerfuffle outside.]

That giant sucking sound you hear could be the hordes of cyber-visitors heading on over to CNN, USA Today and other free news sites, whose traffic volume will spike and perhaps even bring in additional advertising revenues off the extra hits. Would these and other free, advertising-driven media properties like to find ways to increase revenues? Sure. But most of them would prefer to be #3 or #4 to take the leap on paid content – not a high-risk first or second.

There will always be some people willing to pay for premium content. But let’s face it; most news isn’t “premium.” It’s a commodity – and its dissemination is helped along by hundreds or thousands of people copying and forwarding articles and and/or links via e-mail, Twitter, LinkedIn, Facebook … you name it.

Rupert Murdoch has a history of being pretty savvy when it comes to the news business. And certainly he has the power and the resources to undertake this new effort.

But his naiveté may be showing on this one. He is, after all, nearly 80 years old and notoriously online-illiterate himself. And while the saying goes that “knowledge is power” … “power without knowledge” isn’t usually a good recipe for success.