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June 2, 2009, 8:48 a.m.

How Steve Brill pitched newspaper executives on charging for online content — and why they’re buying it

Here comes the summer of paid content: Steve Brill tells me that his pay-for-news startup, Journalism Online, will soon announce deals with several newspapers to — in many cases, for the first time — charge readers for some of their digital content.

“We’ve signed a couple, we’re going to sign some more, but we’re sort of holding off on making any public announcements about that, probably for three or four weeks,” he said in a phone conversation from his New York office yesterday afternoon.

Brill’s firm, which he launched in April with media magnates Gordon Crovitz and Leo Hindrey, is pushing a “common platform” for news websites to charge annual, monthly, and per-article fees. They believe publishers, by offering a mix of paid and free content, can wring subscription revenue out of 5-10 percent of their existing monthly visitors while maintaining 88 percent of page views and 91 percent of ad revenue. That, at least, is the pitch Brill made to leading newspaper executives who gathered in Chicago on Wednesday at the O’Hare Hilton.

We’ve obtained the slides from that presentation, and you can follow along right here:

The most intriguing slides, toward the end of the presentation, run some figures for hypothetical Newspapers X, Y, and Z — which appear to be roughly the size of The Los Angeles Times, Newsday, and The Austin American-Statesman, though those are just my own guesses. In our chat, Brill explained a few assumptions that aren’t on the slides but figure into his math, including: that 5-10 percent of current monthly unique visitors will be willing to pay for content; that 95 percent of those paying customers will choose subscriptions over micropayments; and that after subscribing, those readers will view 30-40 percent more pages than non-paying readers.

The price point of $50-$60 for an annual subscription was an arbitrary choice, Brill said, and would depend on how much and what kind of content was put behind a pay wall. Journalism Online is also arguing that newspapers can reduce the cost of acquiring new subscribers by offering bundled subscriptions to their print editions and websites, just like The Wall Street Journal, where Crovitz was formerly publisher. (In fact, there are a lot of similarities between their plan and the Journal’s current model.)

Some of their estimates seem awfully optimistic, and the bottom-line benefits cited in the slides wouldn’t be enough to, say, reverse the losses at a paper like The Boston Globe, which is said to be losing $85 million this year. Still, these figures offer a window into what some newspaper executives are weighing as they debate whether to take the plunge into paid content. Brill wouldn’t say which publishers have already signed letters of intent with his firm, but we’ll find out in a few weeks. He told me:

By the time I was in that room [in Chicago last week], we had met with at least half of the people one-on-one who were in that room, and you know, I didn’t feel that kind of skepticism. I think they’re just trying to decide what to do. I just don’t think they should be deciding it as a group.

In fact, Brill explicitly criticized the Newspaper Association of America, which organized the Chicago meeting: “I’m just not comfortable with the idea that there’s going to be any kind of a group decision, and I think the staff of that association is trying to steer them that way. And I’m not sure that’s a very good idea.”

We’ll have more on all this, including the full audio and transcript of my conversation with Brill, later today and this week. Until then, a final tidbit: Brill said his friends David Boies and Ted Olson have been retained by Journalism Online as antitrust counsel and “to formulate negotiating strategies” with search engines and aggregation sites. Boies led the Justice Department’s antitrust suit against Microsoft, and the somewhat unlikely pair recently teamed-up to fight Proposition 8 in California.

POSTED     June 2, 2009, 8:48 a.m.
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