Four Bad Ideas for Paid Newspaper Content Online

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Includes: CVC, GCI, GHC, LEE, MNI, NYT
by: Ken Doctor

Make 'Em Pay! Sounds like a old Clint Eastwood movie. Now, though, it's the theme of the newspaper industry month. We can't blame the industry for trying new tacks; that's only to be encouraged in the time of ransacked newsrooms.

Furtive cable bundling. Special e-newspaper readers. Hints of content pony walls. Tax relief and government training monies.

Let's take a quick look at the landscape, and try to score them:

1. Cablevision's Newsday/cable idea: I pooh-poohed the paid Newsday notion, when it first leaked out last week. Putting up a pay gate around a site that draws 4.5 minutes per month per average visitor just isn't a good idea. From Cablevision's furtive comments, we can now divine that it meant to say it would somehow bundle Newsday as a cable offering, details to come. As Peter Kafka over at AllThingsD haspointed out, this idea may have more appeal for its ad value than its news value. The big new idea here, though, could be an old, tweaked one. Bundling! Imagine bundling Newsday online access in with Cablevision's cable bills all over Long Island. If you've actually looked at your cable bill lately, you know it's undecipherable. Cablevision -- owner of Newsday -- could peg any amount it wanted to Newsday value, call it an information access charge or whatever, and attribute the money to ... Newsday. Sound familiar, maybe a bit like, the early days of classified bundling (the '90s), in which newspapers attributed whatever they wanted out of a recruitment/auto/real estate print buy to online. The trick here would be for Cablevision to continue raising rates to make the "bundling operation" really profitable for the whole company, and not just a shell game.

Odds of Happening: 2-1.

Impact: Great model....if you are a cable company that owns a newspaper. Would Comcast (NASDAQ:CMCSA) like to pull Tribune out of bankruptcy?

Added Bonus: Having "The Housewives of Orange County" subsidize newspaper reporting.

2. Hearst's (HTV) e-paper idea: Hearst's Interactive Media President Ken Bronfin piqued imagination last week with news that the company has developed a "wireless e-reader with a large-format screen." As with the Cablevision word, we know little more so far. Jeff Bezos' pet Kindle and lately PlasticLogic's to-be-released-in-2010, oh-so-cool bendable screen (good informative piece by Emma Heald here at Editors Weblog) have re-lit hopes that people will want to read newspapers on this new device, paying for them of course. We know Kindle has some thousands of buyers for newspaper products, at $10 or so a month.

Odds of Happening: 2-1.

Impact: Seems niche-y, rather than mass. Wireless sounds good, if it can update newspaper content on the fly. Otherwise, we're back to today's latest technology bringing you yesterday's news. Of course, even if it is the latest news, how many people want it in the newspaper format? (As Steve Yelvington points out, this is the old Roger Fidler idea, late of Knight Ridder, updated by newer technology.) My problem with e-readers has been that by presenting news in the newspaper format metaphor, they appeal to baby boomers and up, who are habituated to the format -- but don't prefer to spend their time reading digitally. Additionally, for younger-than-baby-boomer readers, they're puzzled why you'd have a proprietary reader, when you already have a laptop or smartphone that can get you the latest on anything, and offers other usefulness.

USA TODAY CARRYING ELECTRONIC GARBAGE!Still, the device does offer the promise of a Chiropractic Full-Employment Act, as we (to use a USA Today-ism) all pack around so much digital garbage that our backs are permanently swayed. Here is one of those great USA Today snapshots, published fortuitously last week, showing the e-burdens Americans tote around these days.

My sense is that the way Hearst may intend to make this work is as follows:

  • Give away the e-reader to subscribers, or discount it substantially, figuring that the money saved from printing and distributing a daily paper (or Hearst magazines) -- more than a quarter of the cost of producing it -- will be saved if Hearst can hold on to the subscriber.
  • Offer a have-it-your-way approach: 1) E-reader, "free" with upfront payment or guaranteed contract, a la cell phone contracts. 2) Print, which is priced higher.
  • So it would be an attempt to both reduce costs immediately and offer an alternative to more tech-savvy younger readers.

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Added Bonus: A new device to add to the Graveyard of Proprietary Devices, sure to be on one of the popular stops on the Silicon Valley 2020 Tour.

3. Hearst paid content idea: New Hearst News head Steve Swartz' leaked memo talks about charging for access to some online content, to be determined. Hearst execs have been told, since the announcement, not to erect any paywalls yet. In fact, they've been told to reach out and lasso more community content, another (better) idea newly regaining attention all around the country.

Odds of Happening: 4-1. It sounds good, but Hearst newspapers have little proprietary content that readers are going to be willing to pay for. Business content still merits, and rewards, walls, witness the WSJ.com and FT.com successes. But business content doesn't drive Hearst newspaper sites. Where they are strong is in staff and community blogging, in fact, led by strong editors, ahead of the industry as a whole.

Impact: We get to reprise all the old Times Select arguments, pro and con, which kept the sails aloft in the news blogosphere for many a month.

4. Tax cuts and government grants for newspapers: Seattle Times owner Frank Blethen has already pitched his state legislature on cutting business taxes for newspapers. In Minnesota, the state government is paying both the Saint Paul Pioneer Press, my alma mater, and the Duluth News-Tribune to do what they have apparently been unsuccessful in doing: adequately training their staffs for the new world of the .... Internet. Blethen's point drew jeers, but he's right that newspapers have long enjoyed government exceptions, from Post Office special mailing rates to sales tax exemptions to placement of coinboxes in public areas to legal ads (and what's up with those in the digital age anyhow, but that's another story). So his point isn't really all that new. Further, this phenomenon is gaining currency in UK as well as a new Local Media Association has formed (at the Claridge!), seeking government support for the failing local press.

Odds of Happening: 3-1.We'll see lots more money flowing to new entities from unlikely sources, as the community journalism gap widens. One source: community foundations, which in turn get government funding. So maybe some direct government assistance, and probably more government assistance by proxy.

Impact: Government funding gives Rush Limbaugh a new target -- "sucking up" to the government teat" -- so that he can lay off embattled Michael Steele for awhile.

Stock position: None.