Online newspapers should un-bundle content and bundle business

Unbundling content: It is well known that traditional newspaper subscription models are proving difficult to implement online. Various plans have been tested but nothing seems to be working as well as newspaper publishers would like.

It has been said that the wide array of choice that a reader has on the Internet nullifies a packaged subscription model because much of what traditionally comes in those models does not interest the reader.

The example of iTunes is often evoked. iTunes allows users to purchase individual songs but also complete albums if the user is a huge fan of the artist. It does the same with television programs; one episode or the complete season. Users are so happy with their freedom of choice that more than 1 billion songs have been downloaded and in their short existence (since October 2005), television program downloads are well into the millions.

Another example of unbundling is Mochila, which is to be officially presented on April 1. Mochila is a news market place created for content providers to easily search and purchase individual articles essentially working as a substitute for agreements with wire services. In this way, content providers can purchase only the articles they feel will interest their readers instead of paying a large sum to subscribe to a wide array of content, most of which is not interesting to their readers.

Bundling business: At the same time that iTunes and Mochila are unbundling content, they are bundling business.

Look at the iTunes video library. The offerings not only continue to increase, but they are coming from more and more outlets with no direct business relation apart from competition. Disney, Comedy Central, NBC, CBS, etc. are not only competing for eyes as they do on television, they are now competing directly for viewer money and they are doing it in one virtual ring of competition which is reaping the majority of the benefit.

Mochila appears to be a promising start for the future of newspaper revenue. But it is not complete.

For print papers, especially those looking to shave spending, Mochila is borderline genius. If it attracts quality content producers, newspapers could feasibly rid themselves of their dependency on costly agreements with news agencies by buying only the articles and images, along with the necessary licensing agreements, they need.

Online, however, this changes and Mochila realized this. Because most content online is presently free, purchasing articles does not work. So Mochila created an “advertising revenue-sharing model” where the buyer agrees to accept online advertising pegged to the content, the revenue of which it then shares with the content producer and Mochila.  

Such a system could solve the problem that some publishers have with GoogleNews and other news aggregators. Instead of simply scanning the Web and posting headlines, abstracts and images with no contractual agreement with the content producer, GoogleNews could strike a deal with Mochila to have its bots scan Mochila’s database through which it would post content accompanied by advertising revenue-sharing. This sharing method could appease these publishers and would solve the conundrum of Google earning money off of other people’s content.

But what about the reader? The reader is still getting all of this news for free, unlike the iTunes model. This is where Mochila falls short and where an opportunity arises for the newspaper industry as a whole.  

In a posting on his blog Media Café, newspaper designer and consultant Jeff Mignon recounts a conversation he had with a friend who began, ““Without a doubt, I will never again subscribe to a newspaper, be it on paper or online.” His friend cited the fact that she only reads about 30% of a magazine she buys and asked why she should be paying for the rest.

Mignon then asked her what she thought about paying per click, a system of micropayments. After thinking about it she responded, “Yes, if it’s not expensive. If I can control my spending. And if I don’t have to take out my credit card every two minutes.”

Herein lies the problem with a system of micropayments. Newspapers can’t go it alone or they risk seriously annoying their readers. Even now when they don’t have to pay, readers detest filling out a registration form for each paper they would like to read. We’ve certainly all turned away from reading one desired article from a relatively obscure paper that requires personal information. We feel like it is limiting the freedom of choice on which Internet users thrive.

If newspapers want to earn revenue from their online readers by keeping online content unbundled, they need to bundle their businesses. They need to agree to adhere to one registration developed in a way that the reader subscribes for free, leaves a credit card number on a secure site and is allowed to browse the Internet as she wishes without the worry of running into inhibiting paid walls while simultaneously contributing a small amount for each article she reads, photo slideshow she views or multimedia feature she watches. The total of those miniscule sums should be tacked on to the reader’s Internet bill and be automatically distributed between service provider and content producer.

This is a monumental task. But if it is not undertaken soon, the newspaper industry could risk losing paying readers forever.

Ps. Of course such a model has effects on newspaper content and the newsroom. Stay tuned…

Pps. Also check out Simon Waldman’s “thinking out aloud” theories on a “decentralised publishing model.”

Source: Variety (through PaidContent), Media Café