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June 4, 2009, 11:47 a.m.

Alan Mutter’s plan for newspapers is an industry-owned ad venture

When newspaper executives met in Chicago last week to discuss new business models for the industry, they expected to hear from Steve Brill about his well-publicized venture to charge for online content. But the executives were surprised by a last-minute addition to their agenda: Alan Mutter, a veteran newspaper editor and entrepreneur widely known as the Newsosaur.

Mutter and his business partner, Ridgely Evers, are pitching a targeted-advertising and e-commerce system that, in an intriguing twist, would be owned by the newspaper industry. They are, essentially, seeking venture capital from publishers “who would gain a permanent, preferred share in the future profits,” according to a two-page document distributed at the Chicago meeting. We obtained that briefing and called up Mutter to see what it was all about.

Behavioral targeting

“We just introduced this idea a week ago, and nobody really knew what we were doing until we got there,” Mutter told me in a long telephone conversation yesterday from San Francisco, where he has held camp since 1995. He described the core of their venture as an online advertising solution in which newspaper companies and other publishers would share data on the demographics and reading habits of individual users to serve highly targeted ads based on that information.

If that sounds familiar, it’s because plenty of ad networks do forms of behavioral targeting, which has long been considered a holy grail of advertising. Mutter readily conceded, “It’s not like we’re inventing electricity,” but said his venture, called ViewPass, would be different for several reasons.

Perhaps most importantly, if ViewPass is able to raise capital from newspaper companies, it would be an industry-owned company with higher profit potential. He contrasted that with Yahoo’s targeted-ad system, APT, which has gained popularity among local news sites but takes, according to Mutter, a roughly 50-percent cut of revenue. (In fairness, Yahoo provides a lot of its own traffic for those targeted ads as part of the arrangement.) “The industry needs to own its own data,” he said. (In a follow-up conversation after this post went up, Mutter noted he doesn’t view Yahoo as a competitor.)

Mutter also argued that by requiring readers to register with ViewPass, the system would have more and better information with which to serve targeted ads. ViewPass would then track reading behavior across all of its affiliated sites to learn more about individual users. Ads would be auctioned, so that companies could, for example, bid to serve an ad to a 33-year-old college graduate in Cambridge, Mass., who reads a lot of articles about politics and the New Orleans Saints. (Hi, Josh!)

In theory, that should cost more per impression than untargeted ads, but there are reasons to be skeptical. For one, there may not be enough competition for most targets (sorry, Josh) to achieve the kind of value that Google has created with its auctions for search keywords. Highly targeted ads on Facebook, for example, aren’t particularly expensive.

Seeking higher CPMs

I’ll stop there, however, because targeted advertising is not at all my expertise. It does seem that a system like ViewPass could have lots of potential for news sites that currently waste page views on extremely cheap remnant advertising. The random New Yorker who lands on the Wichita Eagle’s website is currently of little value to McClatchy, the Eagle’s corporate parent, but if the company knew more about that reader through ViewPass, it might be able to serve her a higher-priced ad.

“The ad would be relevant to the individual, not necessarily the content of the page that I’m looking at,” Mutter said.

Mutter told me that he and Ridgely have already assembled a technical team that could get the system up and running in nine months, but the first stage is raising capital. “We have been invited to come to see several publishers,” he said.

Charging for content

ViewPass will also include an e-commerce system for charging for content, although Mutter is skeptical of most paid-content models, like subscriptions and micropayments. He advocates charging for narrow pieces of content that have value to select readers. “Common sense says if people start getting charged for something that they used to get for free, that’s going to repel them,” he told me. “And if they can find something awfully close to that somewhere else, they won’t come back.”

He disputed the models presented at that same Chicago meeting by Brill, who claimed that newspapers could charge for parts of their websites while maintaining 88 percent of page views and 91 percent of ad revenue. “When a guy like Steve Brill says you won’t lose customers, I simply can’t replicate that math,” Mutter said.

I’m a big fan of Mutter’s blog and have previously turned to him for expertise on newspaper-industry finances. The options he and Brill presented in Chicago aren’t mutually exclusive, but it’ll be interesting to watch what kind of interest each one draws from the executives who were in that room.

UPDATE, 1:07 p.m.: Mutter has confirmed this news and offered his own explanation of ViewPass in a post at his blog.

POSTED     June 4, 2009, 11:47 a.m.
PART OF A SERIES     The Chicago Meeting
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