Exclusive Content + Perks = Good Subscription Package

It’s refreshing to see a newspaper looking for online subscription revenue approach the problem creatively. Rather than building a “pay wall” around the news they’re already giving away, the Pittsburgh Post-Gazette has just this month launched PG+, a premium tier with exclusive blogs, videos and sports coverage, as well as lots of members-only contests and deals with local merchants and advertisers. It costs $3.99 a month, or less if you buy a full year at a time. (They’ve also built a very effective online tour and sales pitch for the product.)

So far, it seems to be football that’s driving the “most read” stories list on PG+, not too surprising in Pittsburgh in September. And one could make some other quibbles: Why doesn’t the site have its own URL? But this is a great experiment to watch. If publishers want to grow their online reader revenue, it’s new products, not carving up old ones, that are going to provide the real wins.

The Truth About Citizen Journalism

In the midst of an interesting roundup about how local newspaper sites might showcase local bloggers, Simon Owens has some great comments from Tony Pierce of the L.A. Times, including this one:

“For the most part, this whole citizen journalism concept is fine for about three or four people per town, but that’s about it,” he said. “And most of those people are not journalists for a reason. Either they’re crappy writers or they’re crazy, which makes for sometimes interesting blog posts, but is that something that a major newspaper would link to?”

In the abstract it sounds like a great (and cheap) idea to populate a local news site with a feed of local blogs – but unless someone is picking those “three or four” people who really know what they’re talking about, the aggregation itself isn’t much of a service.

Another Scary Online-Only News Business Plan

Earlier this week, All Things Digital at The Wall Street Journal posted an interesting spreadsheet that tried to answer the question: What would your P&L look like with a 20-person local online-only news site?

Mark Josephson of local content aggregator Outside.in, the author of the spreadsheet, concluded that with very aggressive traffic assumptions, lots of help from third-party sites, and most inventory filled as remnant space by ad networks, you could have a margin of over 40%. Not bad. However, the fact is it’s a pretty small business overall — $6 million in revenue total, and only $1.4 million of that sold locally by a sales staff.

You could argue about some of the assumptions (especially what look like optimistic traffic numbers), but the fact is, Josephson is right. If you are building a local online news business from scratch, and you are only thinking about selling traditional banner inventory as your revenue source, any spreadsheet you do will look much like his.

Here’s the question: If you had a site like the one in the spreadsheet, with 40 million monthly pageviews, that would mean you have to be in a fairly large city (Dallas maybe? the local news site there probably has about this traffic level). If you were in a city that big, with that visible a site, why would you settle for $1.4 million in local ad revenue, when the market of local ad dollars is so much larger? Why have a local sales force, if all they can sell is banners?

Local advertising spending overall is down recently, like everything else. But everyone I’ve spoken to who has tried to sell to local advertisers recently tells me that even now, they are more than willing to try new opportunities if they’re creatively packaged and affordable. They may not want to be in the local metro daily (since it’s probably declining in readership, drab, and overpriced). But they still need to generate customers. They’re willing to try everything from Web ads to local weeklies, coupon books, event sponsorships, e-mail marketing, merchant directories, SEM. If you want a chance at a serious and prosperous local media company, you’ll need more than a busy Web site — you’ll have to build up a much richer range of channels and solutions for advertisers.

The opportunity is there for a local media company to be the authority on how to target customers in that market, via whatever channels local merchants want, whether it’s print, online, event sponsorships, e-mail, or access to a deep and proprietary local marketing database. Not that it’s easy to do, but it’s the only way to get away from the “little business in a huge market” suggested by the Josephson spreadsheet.

Some Sunlight on the Local News Scene

I try to look at every new local news/information site out there – blogs, wikis, newspaper sites. First, because I once thought of starting a business in this area (I still do now and then, but then I lie down and it passes). But second, because so many local news sites are so bad, depending on repurposed, stale newspaper content, sporadic blogs, or hole-ridden databases of local information, stores and vendors. I’m always looking for someone who has taken a fresh look at the problem of creating a genuinely useful local site.

Here’s one that works: Richmond Sunlight. This site consolidates and organizes everything you might want to know about the Virginia State Legislature – not just a news blog, but a database of every single bill on the legislature’s agenda and where it stands, as well as every legislator and his or her activities. You can search for a specific bill, easily find all bills on a particular topic, or get a customized RSS alerting you to every bill a particular legislator sponsors. Of course, there are also ongoing discussions of the merits of particular bills (see this furious exchange on dog tethering). Best of all, it’s all pulled together in a simple, appealing and immediately understandable interface.

What’s the business model? It’s a nonprofit, started by a local blogger but now owned by the Virginia Interfaith Center, staffed (says the site) with volunteers. Does that mean this isn’t relevant to a for-profit local news business? Not at all. Far too many local sites are depending on producing news — as in articles. Instead, they should be trying to build local tools – on local issues, real estate, business, stores, events – that people will depend on for all sorts of business and personal reasons. What’s appealing about this site – a deep and integrated database, exceptional ease of use, and a clear focus – could be part of anyone’s local information business, maybe especially one where you’re trying to make money.

If Users Won’t Pay for News, Someone Else Might

An interesting column by Simon Dumenco at AdAge.com called “How the $0 Netbook Might Just Help Save the Media Industry.” The thesis: To make money on low-margin netbooks, computer makers might have to gin up some bundles of add-on content to sell — perhaps including news and media subscriptions. In the process, they’d help jump-start the idea that said content is actually worth paying for.

I’m a little skeptical about the hardware people getting into this successfully, but it’s a reminder that there are plenty of people who might want to build packages of content, either to sell or to use as incentives for their own marketing. There are always combatants desperately trying to gain market share (Comcast vs. FiOS, Verizon vs. Sprint, Lexis vs. Westlaw, Starbucks vs. McDonald’s) — they need some of the proverbial (and elusive) “added value” to get people to switch. Why shouldn’t premium content (music, news, video) be part of the bait? Would you try using Google Chrome, or use a Verizon wireless data plan instead of Sprint’s, if you got access to premium news and music you’d otherwise have to pay for? If the offer were compelling enough, you might.

This isn’t a new idea. Why, back in 1996 when I worked at wsj.com, we got a big check from Microsoft to give Internet Explorer 3 users free access to the otherwise subscription-only Wall Street Journal (they also got some nice things from ESPN and MTV). Back then, Microsoft was trying to grab share from the then-dominant browser, Netscape. They did. This year (when they can force you to download IE8 in a way they couldn’t in 1996) Microsoft is giving the money to charity instead. The newspapers might need it more – too bad so few of them have come up with interesting services worth charging for.

If ChicagoNow Is the Future of Newspapers, I’m Not Excited Yet

The Chicago Tribune just opened up its ChicagoNow.com site for a very early first look. Over at Recovering Journalist, Mark Potts says it’s “the future.” It’s still a work in progress, I know, but I wish I could get more excited about what’s there so far. Their promotional video says it will be the best of Huffington Post and Facebook rolled into a local package, and clearly they have high hopes that they’ve come up with a new approach to what a local news site can  be.

To me, despite some very attractive design work, so far it’s a low-tech letdown: Some interesting-looking bloggers holding forth on local topics, with a common registration system so you can register once and comment across the entire community.

But can blogs-and-comments, no matter how you package them, really make for a resource that penetrates enough of a local market to matter to advertisers? The promo video suggests there will be a lot more coming over time. I hope so, because until there is I’m not sure how they’re going to build scale.

It’s Dumb to Charge for Some Sites, But Brilliant for Others

Once again there’s active talk about some new plans to charge for NYTimes.com:  one model where only heavier users of the site pay for the privilege (as in FT.com’s system), and what is described as a “membership model,” where you’re paying for, well, various as-yet-undefined benefits of being a Times “member,” not just for news.

I am someone who has long thought it’s a little crazy for a fabulous brand like the Times not invent something they can charge for online. But plenty of observers still regard every sign that a newspaper is going to charge for content as a pathetic move that’ll never work. In some cases, that’s clearly true. But there’s an actual chance of success if publications approach the question, not as “How do I start charging for what we’re doing online?”, but instead “What do I have the skills and relationships to put together that is worth money to people?” Deliver enough utility, exclusivity or entertainment, and you’re crazy not to charge for it.

Even this idea of a “membership” isn’t as lame as it sounds. Why not try to build multiple benefits into an annual fee? Yes, there have been plenty of “affinity” programs — even the Times had some useless subscriber “benefit” card a few years ago. But these programs need to go beyond the usual 10%-off-your-second-entree-before-6PM discounts people will never use. Why can’t a local publication put together a package of genuinely valuable privileges — local music, wine tastings, networking, food events, mobile alerts, guides, handbooks — one that would make buying an annual “membership” a no-brainer? Surely there are enough advertisers everywhere right now who are desperate enough for qualified leads that they’d get on board with something innovative.

Putting a subscription wall up in front of a not-very-useful product won’t work. Designing some kind of a package of information and other benefits that delivers enough value that you’d leave it on your credit card, year after year — well, publishers are dumb not to invest in figuring out what that might be.

The Amazing Revival of (Talking About) Paid News

Wow, what a miraculous and sudden revival of talking about paying for news Web sites, mostly provoked by the severe corporate chest pains being experienced by The New York Times.

Some of the eminences (some might say dinosaurs, but we’ll leave that for a separate discussion) of the news industry have weighed in on the side of some form of subscription wall and/or micropayments, including Walter Isaacson, Steve Brill, and even the Times’s own managing editor Bill Keller. Most aren’t well versed in the realities of online consumer behavior (people hate micropayments and always will), or even of doing a P&L for an online business. Brill, for example, actually multiplies the Times’s 20 million current monthly users times $2/month each to do a revenue estimate for his subscription plan. I haven’t seen math like that since the height of dotcom craziness ten years ago.

Despite the bad subscription and micropayment ideas out there, I’m still a believer in subscriptions, and think that more publications can have it both ways, as Chris Anderson suggested in the WSJ – plenty of content for free, and a supplementary subscription business for extra revenue. WSJ.com, my old stomping ground, continues to do a great job of having its cake and eating it too – much of the news is available for free, but the mysterious quantity that’s behind the wall still generates significant subscription revenue. The Times still takes unjustified derision (from Google-worshippers and other free-content gurus) for having created, and then killed, TimesSelect – its premium tier of subscription-only content that “only” brought in $10 million in revenue. Might have been the wrong execution, but the basic idea is still worth plenty of additional experimentation.

The challenge for sites that don’t have the clout of the WSJ or the Times is to make subscribing easy, seamless, cheap and painless — and ideally, as I’ve noted here before, it’d be great to have one easy subscription payment cover a whole variety of sites. For example, I’m never going to pay to subscribe to my local paper’s awful Web site – but I wouldn’t mind (I guess) if they secretly got a piece of a more general payment I was making for access to a whole range of sites that I like more.

That’s why I like the sound of something like Kachingle (well, the concept, not the name), the subject of Steve Outing’s excellent column this week. It sounds a lot like what I’ve been hoping for: a subscription MetroCard that works seamlessly across all sort of sites. You register once, voluntarily (more on this in a second) designate a monthly Kachingle payment, and when you visit sites that display the Kachingle banner, each site receives (behind the scenes) a share of your monthly fee, based on its share of your visits during the month. The idea is that the content on participating sites remains free, but that there will be enough paying paying members out there to generate some revenue for your site. Like public radio, most people will be listening to you for free, but some listeners (readers) will decide (via Kachingle) to pay you some money. “Crowdfunding,” they call it. Cute.

This isn’t a perfect concept (frankly, even the Kachingle Web site doesn’t really work yet), and like any payment scheme, we could all critique it endlessly. For example, I’m not sure why it has to be completely voluntary — why can’t publishers designate certain content as only for paying Kachingle users? I’m also wondering if Kachingle has any customer research or experience that suggests Kachingle would actually “work” in the real world. But for the time being, I agree with Outing, it seems like a great idea that I hope some publishers try.

Subscriptions aren’t the only place newspapers can turn to help themselves out. They can invent new, more useful print products; re-think what newspeople can and should be doing these days; invent and sell more of the marketing services local businesses need (there are plenty); explore premium vertical content. But the idea of collecting revenue from some users isn’t crazy. Here’s hoping more people try it – in inventive, creative, realistic ways.

Best Article on Online Newsrooms in Ages

Don’t miss Steve Outing’s terrific piece on what newsroom life should be like in the online-only future most newspapers are facing.

I’m sure some will find Steve’s picture either threatening or impossible to imagine. But if I were writing another business plan for an online local news business, I’d use this article to plan the staffing and write the job descriptions. Great stuff.

Should We Shed Tears for Sunday Book Sections?

This week the Washington Post announced it’s eliminating the print edition of its weekly book section. There’s been lots of hand-wringing, of course, including from the former editor of the L.A. Times’s defunct books section, who moaned about what this meant for the “republic of letters.” (Frankly, what’s anyone who can say “republic of letters” with a straight face doing working for a newspaper anyway?)

I love book reviews. (I read the New York Review of Books, for crying out loud, and I couldn’t do without The Economist’s back-of-the-book section.) I even write them occasionally. But does that mean there’s still a convincing rationale for a newspaper to have a separate book section during times when there’s no book advertising? (Especially when the section in question is as dull and dated as, for example, The New York Times’s has become?)

Here’s the real question for those who want more visibility for books: Why don’t you start a self-standing, really good book-focussed Web site? All those user-generated reviews on Amazon can be very helpful, but it’s no substitute for comparative essays, author profiles, interesting debate, and lists of the best books on a variety of current topics by people whose opinion you care about. It’d be a lot more challenging pulling together a great site like that than just commissioning a dozen reviews a week, but it has a better chance to survive as a nice little business. From what’s online now, looks like the Post’s online book section has a ways to go before it gets there.