Muddled Media Mull Money

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?


  1. Deflation is coming in a major to these online news sites, and bloggers and adsense are the vectors.
    Citizen journalists are creating real content that is not biased by corporate ownership and ad contracts. AdSense ads on these sites are not a problem since the advertiser does not know ahead of time what sites will list his ads, so there is no coloring of content to suit and advertiser.
    These sites are surviving and thriving on the penny-ad market created by AdSense. These people are jazzed that they get $100 in the mail for engaging in their hobby. Big advertisers see the writing on the wall – the network of news sources is big and diverse, no one is going to get into big money campaigns with one site when they can be in a network of hundreds of sites. Then along came networks to compete with AdSense, dropping ad rates even more. Add it all up and the deflation in online ads for news sites is inevitable.
    The conclusion of course is always the same – sites like the NYT and WSJ cannot survive, they cannot compete with microsites that survive on AdSense pennies.

  2. I respectfully disagree with b7j0c. I would start by stating my opinion, that in 20 years, the subscription statistics for the WSJ could be inversed; that is, the internet edition could have 1.8m subscribers and the print edition “only” 300,000 subs. People are migrating to the net for news, and people (perhaps professionals mostly, but people nonetheless) will pay for a large, diversified news organization schooled in journalism.
    Not that I think the blogs don’t have an important function to play. Down the line, I envision subscription sites like WSJ, Barron’s, NYT, etc… will choose verious blogs (and compensate them) to participate on a type of interactive “op/ed” portal where it steers their users to relevant blogs on certain issues. So when one looks at NYT business stories on its pay-site, readers will see possible blogs to go to for more information.