Friday, January 22, 2010

Who Wants to Pay for “Content”? - REPOST

Repost Friday and this time from March 9, 2009 a repost that is still somewhat topical given the NYTimes announcement that they would implement a reader toll.

Suggestions newspapers charge for content ignores deeper questions about their value proposition, the fourth estate and democracy.

Reports that the owners of Newsday plan to charge users of their web site for access have been received with equal parts hilarity and incredulity, but this is only one of many public displays of desperation on the part of newspaper owners over the past two or three months. Almost simultaneous with the deluge of bankruptcy filings and threats of closure that have run through Philadelphia, Miami, Chicago, San Francisco, Sacramento and Seattle since Christmas, newspaper owners have been openly discussing the idea of charging for online access. As most readers and users (aka customers) of online news sources know, that approach is not going to work because there is simply no value proposition presented by 99% of the incumbent newspaper businesses.

At a base level, newspapers failed to understand how their customers’ needs had changed over the past twenty years. Instead, newspaper owners chose to focus on maintaining their margins and offering dividends at historically high levels, rather than in reinvesting in the future. Like many businesses, they made a simple but tragic mistake: They thought it would go on forever. Many large publishing companies were content to pat themselves on the back for attaining economies of scale across their trans-national companies which made newspapers in Salem, Oregon and Newport News, look and read virtually the same. In these mid-market locations, while consolidation had made many cities one-newspaper towns, the genesis of what has become one of the biggest dangers to survival of the newspaper industry has emerged. Community reporting, with the diligence and aggression that supported the development and growth of newspapers all the way back to late 17th century England, has been on the wain for years. Sadly, local journalism, as we traditionally know it, is disappearing and, with it, a measure of democracy - particularly as it relates to local, county and state government.

Last week, I was discussing this topic with an acquaintance who lives in a fairly affluent part of Central New Jersey. He noted that, in a wide swath covering eight to ten townships and a number of counties, he wasn’t aware of more than one journalist assigned to that market from the larger state-wide newspapers. In Hoboken (regional HQ for PND), where mayoral and city council budget incompetence has seen our property taxes increase 50% in the past six months, there is rarely any local media coverage nor any attendance at city business meetings by traditional media. And forget investigative reporting - even in a state where you could throw a rock in any direction and hit a shady politician. The lack of journalistic attention means that one of the mainstays of democracy (the fourth estate) is eroded and this is seen starkly in Hoboken, where private citizens are forced (on their own initiative) to file freedom of information requests to gain access to basic public interest materials such as meeting minutes and financial statements.

Recently, a number of New York and New Jersey newspapers announced they would be beginning a content-sharing network that might enable each to focus more on their local news reporting. However, MediaDaily believes cost-cutting is the focus:
The latest iteration of the new content-sharing model brings together The Record of Hackensack, New Jersey, The Star-Ledger of Newark, the Times Union of Albany, the Buffalo News, and New York Daily News, which apparently organized the consortium. According to the papers, the Northeast Consortium "will enhance each publication's coverage in the region by exchanging articles, photographs and graphics." But the club would probably be better described as a cost-cutting measure, given the dire circumstances of many of America's daily newspapers.
Few of the newspapers we currently recognize will survive in the US. It is just a fact, but the irony is that significant news and community markets exist. New entrants will address this market and, in numerous cases, they are already making in-roads to address particular market segments. This brings me back to the notion of charging for “content” which many newspaper companies are debating. Newsday might succeed but only if they are able to establish community, service(s) and context around the reporting they do. The reporting will need to be far deeper and almost, by definition, becomes unique: Both in terms of its relevance to the user and the fact of its collection (after all, no one else is doing it). That’s a tall order for an organization only thinking about slapping a fee on product that looks increasingly generic. In their case (and others are thinking the same thing), asking readers to pay for “content” will fail.

About three years ago, a curious guy set up a website named Hoboken411. He started going to all the council meetings and actually reporting, visiting and reviewing local restaurants, keeping up with local happenings, generally mouthing off and adding photos. The web site, now a virtual town square, appears to be providing Perry a decent wage but its popularity is really evidenced by the number of comments each article receives. Almost every post (of substance) garners 50 comments and often many more. The ‘discussions’ are often vitriolic and opinionated, but every local politician and concerned citizen of Hoboken now visits the site to understand what’s going on. Make no mistake - this is an ‘unprofessional’ site (all due respect) by old media’s definition, but Hoboken411 is a precursor of the emerging local journalism of the near-term future.

Traditional newspaper media companies are still consumed by “the machine”. Obstacles as intransigent as union rules preclude a journalist from carrying a video camera and recording equipment and delivering multi-media presented on the newspaper’s website. Perry and those like him have no such restrictions. Whereas actual newspapers could logically be considered a ‘platform’ for the delivery of content, these old-line publishers have no online equivalent. Real success in local reporting would require an ability to templatize and automate the presentation of their news no matter how local the segment. This would allow the newspaper publishers to extend technologies including mapping, photo uploads, comments, polls, groups/community and other services similar to those offered by companies such as and craigslist. (In fact, it is hard to understand why there is no local/community news on either of those sites).

A few years ago, I predicted that the NYTimes would open their platform for other newspapers to use. In doing so, I saw the NYTimes had the potential to build a revenue stream as a service provider, as well as providing the company with a wider pool of potential product-development ideas. My thought was not that the Times license this technology to other large city newspapers but, rather, they do so to medium- and small-sized news organizations. Application of this technology would enable these local news organizations to focus on gathering hyper-local content and building community, while giving the NYTimes a much wider profile. And, obviously, the Times would benefit from important stories that surfaced up to their level from its wide variety of content partners. Last month, at an invitation-only open house for web developers, one of the attendees addressed this very issue and it seems the Times maybe thinking along these lines. How this idea develops will be interesting to watch. Regardless, the Times is something of a different beast even among large-city newspapers. In the US, the WSJ may be the only other paper that could do something similar.

In February, the Times launched two ‘hyper-local’ websites which could represent their first step in developing a more local approach and it remains to be seen how successful this will be. We know ‘viral’ is impossible to bottle and it is very likely that, when local journalism returns in some organized and coordinated way to the local communities of central New Jersey, its origins are more likely to be anarchic; however, if these ‘journalists’ (like Perry) have access to powerful tools and platforms such as those the NYTimes could offer them, we will see a revitalization of this significant cornerstone of democracy.

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