Reinventing the Newsroom

The Real Obstacles to Paying for Content

Posted in Paid Content by reinventingthenewsroom on November 6, 2009

With talk of payment plans and paywalls intensifying (see this take on Journalism Online, and Steve Outing’s question about what works as premium content), I found an interesting bit about last month’s World Media Summit in Beijing that I hadn’t encountered before.

According to TVNewsLab’s Deborah Potter, one of the speakers at the summit was Jeff Gralnick, a special consultant to NBC News for Internet and New Technology. Here’s what Mr. Gralnick had to say: “I am convinced the Web has become so democratized that its users expect that content and access to it will be free.  And when faced with charges, those users will [find] another source that is free. And if you engineer a workaround, some smart 12-year-old will find a way to work around that.”

To put Gralnick’s remarks into a larger context, his position is that it’s wiser to take a page from MSNBC, which he says has had great success with “a multi-platform push to achieve scale that turns pennies into dollars.” I have no quarrel with that, but I disagree with him — and many others — about the obstacles to charging for content.

I don’t think that the democratization of the Web has reached some tipping point beyond which charging for content is impossible. It’s really early in the evolution of the consumer Web, and we’ve seen before that consumer behavior is not immutable. I’m always reminded of the late 1990s, when it was accepted as a law of Web physics that e-commerce sites couldn’t charge for shipping — because if any of them tried it, consumers would simply jump to a competitor that still shipped for free. Because of this, e-commerce sites were doomed, shackled to impossibly low margins.

As it turned out, the insanity wasn’t to think that consumers might pay for shipping — it was to think there was a viable business model in shipping giant bags of dog food across the country for free. Consumers eventually accepted that the days of free shipping were no more, and the world kept turning. And note that this same drama has played out in recent years with assessing sales tax on online purchases: It’s gone from perceived impossibility to annoyance to accepted part of life.

The other issue I have is thinking that clever 12-year-olds getting around technological barriers dooms such safeguards, for the simple reason that not everybody online behaves like a technologically inclined 12-year-old. There’s a blind spot here common to a lot of people who think and write about digital journalism –we’re technologically inclined and like to tinker with things, and so we miss that lots and lots of people don’t act like we do. I struggle with this myself — it never fails to amaze me that people enter Web addresses and straightforward site names in search boxes, rather than using bookmarks or sticking a .com on the end. It’s backward and inefficient and frankly weird. But people do it.

Will some technically adept people evade payment mechanisms? You bet they will. But as long as the price for content is set at a level people find reasonable, many won’t even if they can. And you can see that today. You can read most everything on the Wall Street Journal Online for free if you play around with URLs, but WSJ.com’s subscription model remains solid. You can steal all the music your hard drive can hold, but Apple and Amazon and others have still built pretty good businesses selling songs for $1 or less, because to many people a buck a song seems fair and the hassle of getting something for nothing just isn’t worth it. (Note that I’m not arguing that the iTunes model works for news — the equation of songs with articles is one of the more risible arguments out there, in fact.)

I don’t think pay schemes are a slam dunk. Far from it, in fact. There are two huge problems here, as I see things. The first is that with geographic isolation no longer protecting newspapers from competition, readers are awash in a glut of commoditized news, driving the price for a lot of that content to zero. Gralnick’s Web democratization strikes me less as some kind of social truth than as sound economic judgment. The second problem is that many newspapers have been cut so deeply that they may lack the resources to produce unique, compelling content that people would pay for.

The first problem is being solved in part by the relentless downsizing of the industry — journalists are being laid off by the tens of thousands, and the ocean of commoditized news will slowly dry up as papers replace me-too coverage with aggregation, the repurposing arm of the AP withers, and more papers go under. I wish there were a less brutal way of solving the problem (I was one of the tens of thousands of journalists sent packing), but wishing won’t make it so.

As for the second problem, frankly it keeps me lying awake at night.

These are the real obstacles to paid content, not social attitudes or smart preteens. Unfortunately, they’re harder to solve. And until they’re solved, I fear payment schemes will do little or nothing to help news organizations.

4 Responses

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  1. […] says he’s skeptical about how many publishers have the guts to go through with a paywall. And Jason Fry has a strong argument that the reasons that paywalls are a shaky idea are not technical ones, but […]

  2. Andrew Gordon said, on November 25, 2009 at 9:35 pm

    I’d just like to say I very much enjoyed this post.

  3. […] in crying woe and trying to extract something from Google. This is the same misconception I objected to when NBC consultant Jeff Gralnick recently raised the specter of “some smart […]

  4. […] through those issues will involve a lot more pain than what we’ve already experienced. But I don’t believe that it’s impossible for us to get paid for content that works for our readers, or to be […]


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