Journalism Online: time to start paying for online news

The Internet is quickly destroying the need for newspapers to run printing presses, distribute papers around the city, and employ newspaper carriers, but the cost savings have come with revenue losses, too: most newspapers offer their online content without subscription fees, supported only by ads. A group of media executives has just announced Journalism Online, a new way for newspapers to start charging for online subscription fees. Will it save journalism?

"We have formed Journalism Online, because we think this is a special moment in time when there is an urgent need for a business model that allows quality journalism to be the beneficiary of the Internet's efficient delivery mechanism rather than its victim," said cofounder Steven Brill. "We believe we have developed a strategy and a set of services that will establish that model by restoring a stream of circulation revenue to supplement advertising revenue, while taking advantage of the savings to be gained from producing and delivering content electronically."

That circulation revenue will come from a new Web portal that handles payments and authentication. Journalism Online wants to sell monthly and yearly subscription packages to sets of magazines or newspapers, which may be an easier sell than convincing readers to pay separately at multiple online news sites. Money would be distributed to the newspapers based on the popularity of their content.

The new company is headed by Brill, the founder of CourtTV and Brill's Content, former Wall Street Journal publisher Gordon Crovitz, and former cable exec Leo Hindery. Discussions with newspapers have only begun, but Brill has previously spelled out what he thinks newspapers like The New York Times need to do in order to stay competitive, and the ideas are worth a closer look.

In a memo earlier this year, Brill argued that sites like the Times could better capitalize on its 20 million online readers by:

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Charging 10� to read each article
Charging 40� to read all the articles from that day
Selling a one-month subscription for $7.50
Selling a one-year subscription for $55
Offering print subscribers online access at a 50 percent discount
Charging 5� to forward a full-text article to someone else
Offering a 5 percent affiliate payout to sites like the Huffington Post when they drive paying customers to the Times

The Journalism Online model won't follow this plan identically, differing most obviously in its one-stop subscriptions to multiple news services, but it's clear that Brill has given a lot of thought to transitioning online news service away from ad-only revenue streams. He doesn't paint search engines like Google as the enemy, either. Brill wants to preserve newspapers' search results, so he advocates letting search engines show the headline and first paragraph of every article.

Shifting customers away from the "free" online news model might be difficult, but the idea is to turn a liability into a strength—billing online news as something where "you get what you pay for."

It might sound audacious, but charging more for content has worked well for some offline news outlets. Even in an era of cheap online news, The Economist (for instance) is doing well with $100+ per year subscriptions because it's offers an incredible product that people are willing to pay for. The result? Unlike almost every other magazine in the world, The Economist actually pulls in more revenue from subscriptions than it does from advertising.

Brill et al. want to move online news in this direction, and they argue that it's necessary to support quality journalism. Will people pay? With the Associated Press also making plenty of noise about charging more for content, it's possible that a big chunk on US-generated online news could go behind the pay wall in the next year or so. That will certainly drive readers to quality sites that remain ad-supported (like The Guardian's excellent UK website, which has a huge group of American readers already), but Journalism Online hopes that a substantial proportion will choose to pay up for unlimited access to online news.

"My experience with The Wall Street Journal taught me that people will pay a reasonable price to access exclusive, differentiated and essential journalism, whether delivered in print or online," said Gordon Crovitz, announcing the new venture. "News publishers, including digital-only operations, need to find ways to attract revenues from readers as well as from advertisers."