In a 31-page white paper prepared for last week’s newspaper executive’s summit in Chicago, API concludes, “newspapers can make the leap from an advertising-centered to an audience-centered enterprise” and should get on with it immediately.
The report, titled Newspaper Economic Action Plan, recommends that industry leaders follow five new “doctrines.”
- True Value. Establish that news content online has value by charging for it. Begin “massive experimentation with several of the most promising options.”
- Fair Use. Maintain the value of professionally produced and edited content by “aggressively enforcing copyright, fair use and the right to profit from original work.”
- Fair Share. Negotiate a higher price for content produced by the news industry that is aggregated and redistributed by others.
- Digital Deliverance. “Invest in technologies, platforms and systems that provide content-based e-commerce, data-sharing and other revenue generating solutions.”
- Consumer Centric. Refocus on consumers and users. Shift revenue strategies from those focused on advertisers.
Within its discussion of the basic recommendation, the report endorses micropayments, subscriptions and hybrids of the two as all having possibilities. Generally, the report suggests that a free, ad-based strategy may have made sense when online was a small, supplementary business for newspapers. But now that various digital platforms are becoming the medium of choice for so many news readers, it makes sense to charge for what is expensive to report and edit professionally.
Focus on “core loyalists,” lose “fly-by users”
Newspapers would lose some readers/unique visitors, the report argues, but they are mostly “fly-by users — who come to a Web site for a specific purpose and rarely return.” Citing research by Belden Interactive, the report says these make up one-third of unique visits per month but only 1 percent of page views.
The same Belden study identifies a second group of online readers as “core loyalists,” who visit a news site an average of 18 days a month. They contribute 85 percent of the page views and user sessions. That group, API reasons, values the content and could be induced to pay for it.
Paid content wall would protect print subscriptions
The report also suggests a paid content wall would help retain print subscribers, citing a recent USC Annenberg survey finding that 22 percent of online news readers said that they had dropped print subscriptions because they could most of the same content free online.
Pressure Google
On the hot-button Google issue, the report concedes that 25-35 percent of traffic to news Web sites comes from the search giant and its Google News. (Newspapers can run their ads opposite articles to which users link but are not otherwise compensated). The relationship need not be turned upside down, API suggests, but it advocates bringing pressure on Google from several directions to “reinstate value along the supply chain, from the creation of content, through its harvesting and presentation.”
The report has little discussion of advertising but is not outright dismissive, conceding that print advertising will be the biggest revenue source for most companies for several years to come. It does express skepticism, though, that print advertising can hold its own against competing digital formats during an economic recovery. Display advertising to news Web sites, the report adds, “continues to morph without apparent direction” and may be a minor revenue stream for all but the most heavily trafficked sites.
Kindle offers limited revenue potential, duplicates print audience
While generally positive to emerging vendors of paid content systems and new delivery technologies, the report takes several swipes at downloads to Amazon’s Kindle as a new revenue source. “Publishers are coming out on the wrong end of the partnership with Amazon, which takes 70 percent of the subscription revenue,” plus most ad revenue plus republication rights.
Besides, more than half of Kindle buyers are over 50, so usage tends to duplicate the existing print newspaper demographic rather than capturing a younger or a non-traditional audience.
The report, written by API staff, grows out of a series of summit meetings beginning last November in Reston, Va., with 50 publishers. A follow-up meeting was held in January, a third during the Newspaper Association of America annual convention in San Diego in April and the fourth in Chicago last week. API is independent of NAA but there is some overlap in their missions and NAA was the convener of the most recent of the meetings.
None of the meetings has been open to press coverage. But the agendas and working papers circulate to a large group of publishers who, in turn, share them with staff, so the contours of what is being discussed seep out.
API President Drew Davis, in a phone interview, described reaction at the meeting to the paid content proposals as “very, very positive.” The objective was not to have the action plan formally adopted, he said, and it is unclear what will happen next. One priority item, Davis added, “is getting regulatory relief so that these disussions can take place” without any anti-trust jeopardy.
