The NY Times has a wonderfully muddled piece this morning wherein various media outlets try to pretend the world is other than it is. The subject: The merits of going to a paid-subscription model.
Yes, media outlets need to make money. But news outlets still need to think seriously about whether the subscription model works online. Consider the drop-off problem:
Most newspapers believe that if they charged for the Web, the number of users would decline to such an extent that their advertising revenues would decline more than they get from charging users,” said Gary B. Pruitt, chairman and chief executive of the McClatchy Company, which publishes The Sacramento Bee, The Star Tribune in Minneapolis and other papers, which do not charge for their Web sites.
And that’s not the only issue. Not to harp on syndication and aggregation technologies, but there is now a network effect for news outlets that did not exist in the walled-garden world of offline publications. The news is more valuable, not less, now that multiple outlets are available and aggregated via Google News (and its ilk) and via newsreaders. Dropping out of that “network” is like deciding not to submit to a television interview and standing around in a room and talking to yourself instead.
Even the favored examples of paid publications online are somewhat questionable. Consider the case of the WSJ as cited in the NY Times piece:
The Wall Street Journal experiment suggests [that online subscriptions works]. About 700,000 people subscribe to its online edition, with 300,000 of them subscribing to the Web edition only and 400,000 subscribing to both the online and print editions. The print edition has 1.8 million subscribers.
“If you have strong value, people will pay for it,” said Todd H. Larsen, president of consumer electronic publishing for Dow Jones, which owns The Journal. “There is nothing so magical about the Internet that everything has to be free.”
Fair enough, the WSJ has found paid subscriber online, but at what cost? How many people would read an open Wall Street Journal, and how much more influential would a more advertiser-supported WSJ be?
Not to put too fine a point on it, but the WSJ paid almost $520 million for MarketWatch, a financial news site, most “as a way to attract advertising that it was not getting online”. How many years of WSJ Online earnings just went out the window in that purchase? One hundred?