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Journalism Online LLC: saving newspapers with an iTunes-inspired model for paid online content

Journalism Online LLC: saving newspapers with an iTunes-inspired model for paid online content

New start-up company Journalism Online LLC has caused a significant stir in the media industry, and probably more behind the scenes. Founders Steven Brill, Gordon Crovitz and Leo Hindery have put together a proposal including promises to facilitate payment for online news, making it simple for publications to offer joint subscriptions as well as articles on a single basis using micropayment. They are also offering to negotiate on behalf of its members for licensing fees from search engines and other websites, and to provide member publishers with information on what tactics are working best in terms of building circulation and revenue.

In conversation with the start-up's consultant Merrill Brown, what stands out is that despite its distinguished founders, this company really is a new start-up, and although its members are in discussion with many big publishers and technology firms, details about how the business will actually operate are not yet clear. Brown stressed that Journalism Online is talking to publishers about "precisely what they want to see in this system, so that we get the specs right first:" it wants, sensibly, to have a good idea of the direction in which it is heading before proceeding. Details of which publishers the company has talked to have not yet been released, but Brown said "there's nobody on the list that you would be surprised at." It is clear that they are aiming high: "we all believe that getting some globally significant, influential publications or TV outlets or anybody who's in web publishing to come on board and embrace new strategy initiatives is going to be very important to our long term success."

Paid online content: all you can read

The decision to push paid online content is arguably the most ground-breaking element of the company's proposals. Journalism Online will create a system whereby consumers will be able to purchase "annual or monthly subscriptions, day passes, and single articles from multiple publishers" all through one website. Brill told PaidContent that the site will have "a fair amount of complexity, including, for example, publishers who want to make sure their print subscribers get a discount or don't pay for the online subscription."

"We argue that very few high quality products have ever been delivered for free, and neither should news"

Pushing joint subscriptions would seem to be more effective than single paper offers, which have not had much success in the past for general interest papers such as the New York Times. Brill in fact proposed that the New York Times single handedly start charging for content in a memo to the paper written in October 2008, leaked to the press early this year, but it seems that the Times did not take this advice on board. Brown said he believes that it was a "natural evolution of Brill's thinking to try to create a larger solution involving more people." In fact, "we argue that very few high quality products have ever been delivered for free, and neither should this," Brown explained. And even if the income brought in from charging consumers is not vast, he added that "we think that over time, page circulation will bump up CPM and make advertising more valuable so that people will be a position to win on both sides of the coin." It is not just a US-based plan, Brown confirmed that they would like to have English language publishers from outside the US relatively early.

Publishers decide pricing

Pricing would be decided by the publishers, Brown explained. Steve Brill has suggested a figure of $15 a month for an all-you-can-read subscription, but Brown was clear that this was just something that Brill was "throwing out there." In reality, he continued, such a price would have to be decided on by the consortium of publishers. Equally, it will be up to the different publishers to decide exactly what content they want to charge for or not. They could, Brown suggested, create "web premium products," or "some may choose to have certain vertical categories such as sports behind a wall." In fact, he commented, "that's not really up to us." Others have suggested that it is far easier to charge for new content than that which is already free. And a part free, part paid model has been widely advocated, for example, maybe unsurprisingly, by Wall Street Journal Online executive editor Alan Murray.

Investigating what works and what doesn't

A crucial part of the project that has been given less attention is the company's plan to aggregate knowledge and gather data about "what works and what doesn't" with the aim of providing consulting services to struggling publishers. With this in mind, Brown said that "we are trying to encourage our partners to try lots of different things in an effort to build data." He hopes that within a year, Journalism Online will have "the collective experience of many different publishers which offer many different kinds of products." He expressed surprise at the current lack of this kind of data: "not much has been done."

Negotiating with search engines

The company will also be pursuing a copyright initiative to "negotiate wholesale licensing and royalty fees with intermediaries such as search engines and other websites that currently base much of their business models on referrals of readers to the original content on newspaper, magazine and online news websites." Brown was clear that set decisions of what this will entail have not yet been made, but explained that the goal was to "bring the industry together under appropriate pricing schemes and distribution schemes. We think there is strength in numbers in negotiations with search engines aggregators and others." Incidentally, another organisation planning to offer a similar service based on sharing ad revenue, the Fair Syndication Consortium, has just come into existence and the Associated Press recently announced plans to track its content more thoroughly and address offences more aggressively.

"We think there is strength in numbers in negotiations with search engines aggregators and others"

The project should be off the ground in the autumn, with "some partners in place," specified Brown. "The magnitude of the experiment that we will put in place is not entirely mapped out," he added, but "we will be running a piece of our programme." Seed funding is being provided by one of the founders, Leo Hindery, and his private equity firm InterMedia Advisors. A call for a first round of funding will be a natural progression, commented Brown, "this will look like a real company before too long!" He also added that once the company has more funding, it plans to do "a lot of marketing on behalf of the publisher participants."

Inspired by iTunes?

Steve Brill suggested in the interview with PaidContent that he was inspired by the iTunes model, and indeed the parallels between the initiatives are striking: both involving the intervention of an unrelated third party into an industry struggling to make consumers pay for their work. Brown explained that "we are taking broad strategic solace" from the iTunes model and learning what they can: "there are a lot of things about it that are encouraging and instructive." One of the main ways in which iTunes is instructive, he pointed out, is for "ease of use, which is something we always have to keep our eye on." And indeed with this kind of venture, making it as easy as possible for the consumer is crucial, as many people have little patience with complex payment procedures. Another encouraging point is that iTunes managed to bring together many different contributing producers of music and entertainment: just as Journalism Online hopes to do with publishers.

Steve Jobs succeeded, overwhelmingly. Will Brill and co?

The project sounds like quite an undertaking, and media coverage has been mixed over its chances of success. It will involve an unprecedented amount of collaboration between publishers to decide on rates and other aspects of such a system, which will be a considerable challenge. Previous micropayment schemes, including one started by Brill himself in 2000, have failed, but Brown believes that the time is right, due to the "predicament" in which publishers find themselves today: "I think that there's a very clear consensus that projects like this are extremely timely right now." And indeed, many different ideas about whether to and how to charge for content have been proposed in recent months, although this has been coupled with significant opposition from those who continue to favour an ad-based model and much reticence to put content behind a pay wall.

"I think the publishing industry gets how important this is. We're really inspired by the enthusiasm"

However, the response from publishers has been positive, according to Brown. "I think the publishing industry gets how important this is. We're really inspired by the enthusiasm from lots of important publishers across different sectors who have welcomed this." One major factor in Journalism Online's favour is its founders' experience and reputation. To embark on this sort of venture with any hope of succeeding requires good contacts and much influence, as well as in-depth knowledge of the industry: all of which these men have. It seems essential that a third party should step in to organise and implement this kind of scheme, hopefully uniting publishers, and this effort has as good a chance as any. It is impossible to say whether such a project could save newspapers, but without doubt, any additional income would be more than welcome, and establishing a firm precedent for paying for news could be highly beneficial in the future.



Emma Goodman


2009-04-23 17:54

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