Tony Haile thinks now might be the moment readers decide digital journalism is worth paying for.
With the election concluded and dollars flowing to organizations like The New York Times, ProPublica and The Wall Street Journal, people who care about quality information are coming to grips with the idea that they have to support it, said Haile, a digital media entrepreneur.
"Especially over the last few months of this election — and you can see this in what's happening right now — people have realized that they have to step up," he said. "That journalism is important and you can't have journalism acting as a check against tyranny if you can't keep the lights on."
Haile's betting that the goodwill toward news organizations isn't drying up anytime soon. He says readers will keep their wallets open for journalism, and he's building a company around that idea.
Earlier this week, Haile announced the forthcoming launch of Scroll, a subscription service backed by The New York Times, NewsCorp and Axel Springer. Although the details are still being hammered out, Scroll is broadly aimed at providing clutter-free news to readers in return for a monthly subscription fee.
Haile isn't the first entrepreneur who's tried to make money from digital news. But his resume — along with his list of backers — is an indicator that Scroll shouldn't be dismissed out-of-hand. Haile is the former CEO of Chartbeat, the online metrics company behind the dashboard that editors obsessively check.
So, is he right? Here's a question-and-answer session with Haile.
It sounds like Scroll's main selling point to readers is a better reading experience. Is that right?
If we look at the world, pretty much any industry, the things that people have tended to pay for in terms of a premium would be anything that either removes pain and frustration from their lives or improves the user experience in some meaningful way beyond that level. And I'm really interested to see what's possible there.
The New York Times, NewsCorp and Axel Springer are backing this project. What problem do you think this could solve for them?
I think the challenge we have now — especially where it comes to monetization and audience control — is that most people are fine with the experience as it is. Just as most people are fine flying economy versus comfort plus on the plane. But for an increasing percentage of people, they feel like the experience they're getting on news sites is not all that they would want.
And what happens is, you end up having two things: On one side, you have the rise of the ad-blockers, which is directly affecting publisher revenue. And on the other side, you have platforms coming on saying, 'hey, we can deliver that experience. And all you have to do is have your content hosted on our site and we'll control that consumer relationship.'
And the thing that I'm interested in is how to solve the problem that we're seeing here, which is satisfying an increasing group of people wanting different experiences than what publishers have traditionally offered.
But we have to do this without losing revenue for publishers and keeping the publishers' relationship with audiences intact. So they're not having to give up the relationship to a platform, they don't have to deal with ad-blockers, they still get to deliver a great premium experience to users and stay in control.
Companies such as Facebook and Google are already providing their users with seamless experiences on their own platforms. Do you see Scroll competing with them?
I would always pause before trying to compete with Google and Facebook. What I really want to do is give publishers the tools so that if they want to deliver a fast, clean, beautiful experience, they can do it on their own site versus having to say: "The only way to do this is to have our content live on Facebook within Instant Articles and play by their rules."
If I can make it possible for publishers to say, "You know what? You guys want fast, clean, content? I can deliver that." Then it gives them much more flexibility and choice. They may still want to go with Instant Articles, it may still turn into a good monetization option for them. But we want them to have choice.
How does this differ from companies like Blendle, which allow users to pay a small amount for content that they can then enjoy on a well-designed news reader?
Blendle has done a fabulous job bringing new monetization to feature articles and magazine articles, particularly in Europe. (Blendle founder Alexander Klopping) and I have discussed at length the differences between micropayment models and subscription models and the challenges to each approach. As I'm looking to a model, one thing that I want to do is make sure that we can build a model that doesn't just work for feature stories but works for all content.
This is important for me, because one of the key things is there can be an important news story that appears on The New York Times or The Washington Post or wherever, but it is still fungible. You can read that story on The Washington Post or The New York Times or the Chicago Tribune or something like that.
And the challenge for me is, how to make sure we can fund journalism, which by necessity is in some ways fungible but still important. And that is a kind of monetization challenge which I don't think has really been solved yet by any of these services.
There's also, by the way, a tremendous number of corpses in this particular graveyard, as well. There's been a lot of lessons learned because we've spent a lot of time talking to them.
One of the things that really gave me hope on this is my co-founder spent the last five years as the EP of content at Spotify. He's been working with the music labels, looking through every single possible model of how to make sure this can work in a way people are happy with.
And it was only when the two of us spent a long time trying to work through that model that we thought, OK, now we feel that we have something differentiated and good.
What will Scroll be? Will it be a social network? An app? A website? Where will this content live?
We're trying to be a little cagey about that. What I would say is we have three goals. The first one is for the consumer to get the experience that they want in a way that doesn't make them change how they discover content, in a way that doesn't make them change their behavior in some false way. We want to be seamless with their current discovery experience.
The second thing is, we want to make sure that, if you're looking to try and do this, that you've got to be able to beat existing ad revenues on existing monetization sources. If you can't beat the status quo, then the publisher won't play. So you've got to be able to do that.
And the third thing that's important to us — because I'm a big believer in vibrant, independent journalism — is to make sure that the publisher's brand and relationship with the audience stays intact.
Right now, we're trying to build with those three goals in mind.
You say that there's a few corpses in this graveyard. Who's attempted this before and why do you think you'll be successful where they weren't?
There's a ton of different people who've tried different things in the past. But as soon as you pick out a couple of examples, people say, "Ah! You're doing this, exactly this," and so forth. So I'm quite keen to avoid those comparisons. What I would say is — and I've learned this from previous startups — sometimes it's about the idea and sometimes it's about the moment. And what I think you've been seeing over the last year in particular is a few things happening. On the one side, you've seen an increasingly large constituency of people putting their hands up and saying they want a better experience.
Especially over the last few months of this election, and you can see this in what's happening right now — people have realized that they have to step up. That journalism is important and you can't have journalism acting as a check against tyranny if you can't keep the lights on. So there's that, which I think has been really brought home over the last year on both sides from the consumer perspective.
And then there's the publisher perspective. A few years ago, publishers used to think that their main competitors were each other. The Washington Post was competing with The New York Times and so forth. And what I think is happening now is two things. One is that every single publisher has realized it won't be another publisher that disrupts their business. It'll be the platforms.
We've seen in the last quarter is up to 90 percent of new ad revenue is going just to two platforms. The rest of the digital ad market is contracting. If you look at the top 75 publishers or so, the average revenue per user per month is around $2.60. That's scary.
And so if we have on the one side this moment in time where people are putting up their hands and saying they want a better experience, saying they want to step up and support great journalism and on the other side you have a clear challenge from the platforms and an increasingly difficult monetization environment with traditional models, I think there may be a moment in time where we can do this.
And the key thing for me, and the reason why we got so many great publishers together in the very beginning is this is just not something you can solve on your own.
This is not something we're going to solve by running away and saying, "wow, look at our amazing app," or whatever. It's gotta be something where we try to bring this industry together to say, is there a way we can solve these problems together? Because it affects all of us and it needs all of us.