HOME
          
LATEST STORY
Where you get your news depends on where you stand on the issues
ABOUT                    SUBSCRIBE
May 8, 2012, 3:26 p.m.
Business Models
ongo-screenshot-png

Ongo, an attempt at a pan-media paywalled aggregator, is closing

The year-old startup, backed by several newspaper industry heavy hitters, struggled to find a way to charge readers who have free alternatives.

Less than a year and a half after launch, the subscription aggregation startup Ongo — a newspaper-industry effort to create a pan-media subscription system — is shutting down. It’ll close its doors by month’s end, Ongo CEO Dan Haarmann confirmed to me, leaving about 25 people out of work.

Ongo was backed by The New York Times Co., The Washington Post Co., and Gannett (at a reported initial investment of $4 million each) and tried to combine the designed, multi-sourced reading experience of Flipboard or Zite with a paywall. It launched with about 20 publications; as it shuts down, it had deals with about 40 publishers and over 100 publications.

From the start, Ongo was hurt by a confusing pricing model. A basic Ongo subscription gave you access to content from The Washington Post and USA Today — but only “Top Stories” from Reuters, “Selected Content” from the Financial Times, and “Picks” from The New York Times. If you wanted to add more publications beyond the core offerings, those came at significantly varied prices — 99 cents a month for Slate, Salon, or Engadget; $3.99 for the Christian Science Monitor; $9.99 for the Chicago Tribune or The Miami Herald; either 99 cents or $14.99 a month for The Worcester Telegram & Gazette, depending on how much of it you wanted; and so on.

Add to that the fact that most of Ongo’s content was available for free on the web — and the fact that many of its news orgs have chosen to focus on building their own paywalls — and Ongo was an uphill struggle from the start.

Haarmann said that Ongo learned some lessons about modern news distribution the hard way. One was the importance of access to closed platforms — including the biggest of them all, Apple’s App Store.

“You have to be on a tablet platform to have success,” he said. “That’s where people are most willing to spend money, so for a paid product, you’re going to have to focus on the mobile side. Apple’s take, from a billing perspective, made it very difficult to succeed in a paid-product space from what we think the pricing should be.”

In other words, if news services want to give users the convenience of being able to buy their product on their iPhones and iPads through iTunes, they have to be willing to give Apple a 30 percent cut. Ongo’s iPad app doesn’t offer in-app purchasing — which means it doesn’t have to pay Apple’s cut, but also that it doesn’t get access to the App Store’s ease-of-payment.

Haarmann also said one thing Ongo learned, “in order to be successful at all in this business, is that social is absolutely critical.”

But it’s important to note that Ongo drew skepticism from media watchers from the start. Its business model rested on the belief that people would value an ad-free, curated experience enough to pay for it, despite both the availability of the (mostly) free web and other free apps like Flipboard. After Ongo’s January 2011 launch, GigaOm’s Matthew Ingram characterized the approach as “another Hail Mary pass aimed at trying to rewind the clock and impose scarcity on media content, and one that will likely fail just as quickly as others have.” (You can read our roundup of early response to the service here.)

In an interview with paidContent last year, Ongo founder Alex Kazim — formerly of eBay and PayPal —  said this of the approach: “We realized that users won’t pay for content — however, they will pay for a better user experience and that’s what we’re really offering.”

So did they?

Ongo tried a number of ways to optimize pricing, including free week and free month deals — even the first year for $1. The early price tag of $6.99 a month gave way to the final offering of $1.99. Haarmann says Ongo didn’t get to that price point “fast enough” to continue running. He wouldn’t immediately disclose the number of Ongo subscribers on Tuesday, but he says there was a strong enough base of supporters to make him believe in the model even after Ongo goes away — and that’s party because he wants it to exist.

“I hate advertising in my news,” Haarmann said. “I cannot stand people trying to send me a mortgage or a credit card. I’ve got two kids, so when a Dora [the Explorer] ad pops up on an article next to interest rates, it just kills me. Not only is it a waste of space but it’s a distraction. The way that interstitials and some of the advertising is pushing through reading experiences even on paid sites, I think, is egregious.”

Understandably, though, he has his doubts. Haarmann says he’d consider working for another news startup, but he might wait “a couple of years” until the industry has figured out “what the business model really is.”

“I do believe in the [Ongo] model,” he said. “Here’s where I’m losing a little faith. I think that it’s going to take a while for the industry to shift gears into the paid world. I think that in the interim they’re going to have to figure out how to balance a product that delivers revenue to help run their business, and one that satisfies a consumer’s need.”

An organization like the Financial Times, he says, is one to watch. Its abandonment of the App Store and move to an HTML5 app has saved them from Apple’s cut and attracted more than 2 million users. In Haarmann’s mind, there isn’t one way to do it that’s better than the other — but he says publishers have to “just take a path and get committed to it.”

“Just get committed to either being in the store and figuring out a business model that allows you to continue to operate, or be out of the store, and that’s not easy to do,” he said. “Apple takes up a lot of air in the room. They have a fantastic distribution platform. But the FT is having success off iTunes, and I think other people can do it, too.”

POSTED     May 8, 2012, 3:26 p.m.
SEE MORE ON Business Models
SHARE THIS STORY
   
Show comments  
Show tags
 
Join the 15,000 who get the freshest future-of-journalism news in our daily email.
Where you get your news depends on where you stand on the issues
A new study by the Pew Research Center examines how Americans’ news consumption habits correlate with where they fall on the political spectrum.
Light everywhere: The California Civic Data Coalition wants to make public datasets easier to crunch
Journalists from rival outlets are pursuing the dream of “pluggable data,” partnering to build open-source tools to analyze California campaign finance and lobbying data.
Ebola Deeply builds on the lessons of single-subject news sites: A news operation with an expiration date
Following the blueprint of Syria Deeply, the new Ebola-focused site hopes to deliver context and coherence in covering the spread and treatment of the virus.
What to read next
1020
tweets
The newsonomics of the millennial moment
The new wave of news startups is aiming at a younger audience. But do legacy media companies have a chance at earning their attention?
803A mixed bag on apps: What The New York Times learned with NYT Opinion and NYT Now
The two apps were part of the paper’s plan to increase digital subscribers through smaller, targeted offerings. Now, with staff cutbacks on the way, one app is being shuttered and the other is being adjusted.
537Watching what happens: The New York Times is making a front-page bet on real-time aggregation
A new homepage feature called “Watching” offers readers a feed of headlines, tweets, and multimedia from around the web.
These stories are our most popular on Twitter over the past 30 days.
See all our most recent pieces ➚
Encyclo is our encyclopedia of the future of news, chronicling the key players in journalism’s evolution.
Here are a few of the entries you’ll find in Encyclo.   Get the full Encyclo ➚
Hearst
New Jersey Newsroom
MinnPost
Chicago News Cooperative
Investigative Reporting Workshop
PolitiFact
Time
The Atlantic
CNN
Al Jazeera
Hechinger Report
Upworthy