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Jeff Israely: Don’t you call me subsidized — people are paying for news

Our startup correspondent, building Worldcrunch in Paris, says that paywalls don’t have to mean getting off the open web.
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Editor’s Note: Jeff Israely, a former Time magazine foreign correspondent in Europe, has launched a news startup called Worldcrunch. For the past three years, he’s been describing and commenting on the process here at Nieman Lab. Read his past installments here.

Three years ago, when I was taking my first baby steps from reporter to would-be newsbiz guy, the idea of making people pay for journalism online was all but dead and buried. Various experiments had failed over the years — freemium, premium, micropayments? Nada. Even as digital ad rates were already beginning to plummet, “free” was it: what the readers wanted, what the writers wanted, and even reputedly what the information itself wanted to be. News companies big and small were left to figure out how to develop their businesses accordingly.

Alongside this reality was an idea taking root that, truth be told, no one had ever really paid for news. Even back in the pre-Internet days, news had always been paid by someone else than the person actually consuming it. Whether advertisers, public funding sources, the draw of popular crossword puzzles and movie listings, or maybe just a truckload of cash from a billionaire — there was always someone or something else footing the bill for the poor slugs on the city hall beat or the over-fed foreign bureau.

News, we were told, has always been subsidized. Yes, that was (and still is) the word, the meme, the received wisdom and proverbial final nail for anyone who was still dreaming that paid models can give new life to news online.

With the help of his students and readers, NYU journalism professor and new media sage Jay Rosen compiled a running list of all the sources of news subsidies. This wasn’t just about whether or not some big news brand should or shouldn’t put up a paywall — the fact that news had always been “subsidized” was fundamental to understanding our work and our industry as we moved deeper into a disaggregated digital world of information production and consumption. Each individual piece of content could no longer rest on its laurels or flaunt its importance — the emperor was naked and the sports columnists and classifieds weren’t gonna be picking up the tab any longer.

I understood the point, I told myself, but was still puzzled by the argument — maybe even slightly offended by the word choice. After 18 years of earning what I thought had been honest paychecks, I was now being told I’d been “subsidized” all along. Hmmm…doesn’t sound so good. Like something Mitt Romney would say about welfare mothers.

But still new to the future-of-news debate, who was I to question? Looking around, virtually nobody was paying (or charging) for digital news, the old print model was dying, foreign bureaus were shuttering…and well, Jay Rosen was a pretty smart dude.

So, quietly, I accepted this foundational new media fact…embraced the meme. One late night I even sent in my own contribution to the running online list of subsidies, pointing out how a journalist about to launch a news startup might be subsidized by his wife’s good job in the public sector.

Though that last part was true, turns out the rest was not. The irony is that we needed to see people coughing up hard cash for digital content to remind ourselves that we have in fact been paying for news all along. Of course, we pay for other stuff, and every reader has his own mix of reasons for being there — but if there were no news, there’d be no there there — and ultimately, nothing to sell.

Whatever else it may offer, from wherever else the revenue may flow, The Dallas Morning News cannot exist — cannot be sold to readers or advertisers — if it doesn’t provide News about Dallas each Morning. You may declare that you “love Mario’s Place for the cannoli, but you wouldn’t go there if they didn’t also have good pasta and a nice wine list. It’s dinner, in a restaurant — not a pastry shop.

None of this is to minimize the scale of change in how we produce and distribute and consume news, or the challenge for the Dallas Morning News to reinvent both the menu and economics of the restaurant. But from where I sit in Paris, reliable daily (and hourly!) meals are still its best hope.

As always, it’s both more and less than a question of paywall or no paywall. Anyone charging for news must understand how to maximize the free digital circulation of information. BuzzFeed is not investing in top-shelf journalists because it wants to subsidize anything. Even Google, in the deal it recently struck with the French government to set up a fund for established news brands, acknowledges the value of professional journalistic enterprises. Of course, some might call that a subsidy, just as others in the newspaper industry have long accused Google of being subsidized by the news business. But both sides in this fight lose the forest for the trees.

More useful is to focus on the information ecosystem, a buzzword of its own from three years ago that I still think about all the time. Lots of people arrive at The Dallas Morning News or The New York Times or our little global startup thanks to Google. And though a relatively small portion of Google’s overall business, the traffic that comes from people who went online looking for news and journalism has the kind of value that you can neither measure, nor create any other way. Even such operations as the news services of Thomson-Reuters and Bloomberg, which in pure numbers are most surely fed (subsidized!) by the financial services arms of the parent companies, are nevertheless so “baked into” and integral to the overall operation that it is difficult to separate out the precise source of value for the brand and its various products.

And yet, even with the initial modest success of online subscriptions, the “news must always be subsidized” concept keeps popping up in influential places from smart people, often cited as the starting point for understanding where the industry is going. David Carr even used it recently to make the case for a paid model. Again, I think I know what he’s saying — but subsidy is not what we should call it. It’s the wrong word, an insidious word and a false premise. It’s also a recipe for defeat.

For those who think there’s something to be preserved in the professional production of journalism, who are betting on the evolution not annihilation of the news industry, there are some recent signs for cautious optimism. That people are paying directly for news is not just a welcome new revenue stream, but a confirmation that there is real hard value in our industry’s core product. It is by no means the end-all solution — but perhaps a new starting point.

Okay, enough pontificating — back to my day job: PLOTTING!

This post is meant to be the last in a three-part mini series on how a digital news startup addresses some of the big either-or choices. We’ve gone through B2B vs. B2C and quantity vs. quality. Here, it’s paid vs. free — and as you may have guessed, the answer for us is a resounding both!

Even after we knew we would be implementing a payment system, we never stopped obsessing over how to best live in the free space — how to make our stuff circulate, how to give it away. Needless to say, it is a learning experience…and a moving target. It’s hard to imagine a day when this won’t be amongst our top two or three priorities as a company. The open Internet is here to stay, and it will be the axis for most of the marketing and circulation, customer relations — not to mention the place where much of the actual journalistic production will happen.

There may be a few models out there — like the French current affairs site Mediapart — where a pure all-or-nothing offer can work. But right now, at least, it looks like you pass up too many opportunities in the free space when the wall is tall and thick.

Like much bigger players, we have opted for a metered model, which allows you to be both a free and paid site at the same time and to adjust the dial as you see fit. Powered by Tinypass (the same folk bringing Andrew Sullivan across the paid-for threshold), we have just recently launched our version.

Of course, a young startup’s approach to paid content will necessarily be different than both what Sullivan and the large news organizations are doing. They’re all busy calculating how many of their loyal, longtime readers will commit to a subscription. We’re still very much at the beginning of introducing ourselves to the world. Thus the meter can work for us to let people discover our product, and build our subscription base in step with a growth in overall audience. To launch, we have turned our meter on at 15 stories a month. Needless to say, we’ll monitor it closely.

But perhaps more interesting for us in the short term is that a paid system can help support other revenue streams beyond the direct paying individual. It’s useful for us as we begin a B2B business with the New York Times Syndicate. There is also the potential, as demonstrated by the Financial Times, of selling bundled access directly to institutions. Hopefully, the general news sector won’t fall into the same old trap of saying only the economic press can explore these kinds of paid content opportunities!

Walls worked in the past, and they’re showing signs of working now. They used to be fixed and impermeable and even occasionally monopolistic; now they’re retractable and porous — and forced to compete, compete, compete. Not only does The New York Times allow for 10 articles a month, it also can lift the wall when a hurricane strikes. One can imagine The Washington Post already asking itself if they will do something similar for the mid-term elections. (Side note: in these cases, news outlets usually present the temporary lifting of its paywall as a public service. Of course, it’s fundamentally a business decision — both in the immediate traffic surges, and in the long-term loyalty earned by presenting it as a public service. Ours is an industry full of wicked contradictions!)

Just as important as the cash, the walls also help rebuild lasting relationships with the readers who pay to be on the inside. If I’ve paid for something, if I’ve committed to it, I will use it more — and value it more. And that will make me more valuable as a customer. (This is why “subsidy” is also the wrong word for advertising.)

Ultimately, the real long play of paid-content strategies is that they may actually help change people’s news consumption habits. Together with lean-back tablet devices and a more general information fatigue, paywalls might help swing the pendulum back to both fewer clicks and fewer sources in a daily news diet.

Or maybe not! Part will depend on how the information is produced, filtered and distributed; can newspapers transform themselves into news portals? Will the Nate Silver free-agent “hosting” model expand? Will different sources be bundled together, à la cable TV? It will also depend on how the Facebook generation changes or doesn’t change once they have careers, kids, and homes of their own — not to mention what the Facebook/Google/Apples of the world themselves have in store for us.

It may seem like a contradiction, but a news organization must know how to simultaneously do all it can to keep people’s attention locked on its wares, while also being equipped to move in the open Internet’s constant comings and goings. For the kind of startup we are, there’s an extra potential in finding new network effects amongst both big and small outlets: It’s the ecosystem, baby! In the meantime, we’ll do our best each day to keep turning out fresh plates of pasta — and some cannoli too.

Photo by Bradley Stabler used under a Creative Commons license.

                                   
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