As Election Day approaches in the Maryland, a candidate for Montgomery County Executive and one for Governor of Maryland join us for the Politics Hour.
Guest Host: Marc Fisher
Newspaper ad revenue is declining as more readers are going online for their news. Many papers, large and small, are are trying to get back that cash by instituting online pay walls — making their premium content available only to readers who are willing to pay for it. But with so much free information available at the click of a mouse, what are people going to be wiling to pay for?
- Mark Jurkowitz Associate Director, Project for Excellence in Journalism; former ombudsman of The Boston Globe.
- Alan Mutter Blogger, 'Reflections of a Newsosaur'
MR. MARC FISHERFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your community with the world. I'm Marc Fisher of the Washington Post sitting in for Kojo. Coming up this hour, the old joke asks what's black and white and read all over and you know the answer we all grew up with was the newspaper. But print editions of the nation's newspapers are no longer being read all over. And 15 years after most papers put their news online for free, many are struggling to make money off their websites or even off their print editions.
MR. MARC FISHERSo more and more papers are starting to put up walls, pay walls. The question is will people who have become accustomed to getting news online for free start to pay up, especially in a world where people have shown a willingness to pay on the web only for pornography and gambling pretty much, maybe some games.
MR. MARC FISHERJoining us to discuss this is Mark Jurkowitz, Associate Director of the Pew Research Center's Project for Excellence in Journalism. He spent nearly two decades covering the news media for the Boston Globe and other publications. And by phone from California, Alan Mutter is a longtime journalist turned Silicon Valley CEO turned news media consultant. He writes about the business of news on his blog "Reflections of a Newsosaur," which is a chronicle of ever-approaching extinction. And I guess, Alan Mutter -- is it Mooter or -- Alan?
MR. ALAN MUTTERMutter.
FISHERMutter, I'm sorry. I'm sorry. Is it -- I guess eventually your blog goes extinct too, right?
MUTTERWell, it could, yeah.
FISHERI mean, if the industry goes, what will you have to write about?
MUTTEROr on the other hand, if everything becomes great once again, then we won't need the blog.
FISHERWell, there you go. Okay. Mark Jurkowitz, we've heard these predictions about the death of the newspaper business for at least 15 years, in fact, decades before that in other ways. How is the print news business doing these days?
MR. MARK JURKOWITZThe print news business is -- and the newspaper business in general, because frankly you have to now consider newspapers to be both an online digital and print entity, newsrooms are integrated -- it's sick. It's been sick for quite some time. Last year, for example, in 2010, which was actually an up year in terms of ad revenue for a lot of media platforms, the newspaper business ad revenue was down 6 percent. This year, the numbers have been bad again.
MR. MARK JURKOWITZThe fundamental problem of having an eroding old business model and a new vibrant business which is, you know, online journalism which is attracting eyeballs that has not yet been monetized continues to keep, you know, the newspaper business in critical condition. And I think the thing that frankly stuns some people in this business and is perhaps more worrisome than anything -- everybody expected there would be a transformation and a transition from basically legacy media products to online products, digital products. Everybody was ready for that.
MR. MARK JURKOWITZBelieve me, newspapers would be happy to basically fold up their print product, get rid of those union contracts and the printing presses and the gas you have to put in trucks and go online. But the fact that it's taking so long to figure out an online business model and it's been so difficult so far, I think, is cause for pessimism in the industry.
FISHERAnd, Alan Mutter, someone who's worked in newsrooms through this whole transition period, I have to tell you that I long ago reached the point where I thought, you know, if you learn the same lesson over and over and over for 15 years, even 20 years, which is that you can't make enough money on the web to support a large newsroom with editors and reporters and graphic designers and so on, then maybe you're never going to. Why do news executives continue to believe that someday something magical will happen and they'll be able to go about their business of gathering and presenting the news solely with the income from advertising online?
MUTTERWell, today, 90 percent of the revenues coming into the average newspaper company comes from the print product. It's either advertising sales or selling single copies or subscriptions. So print is continuing to sustain the newspaper business, which includes now in most cases websites and mobile sites as well. What they're hoping to be able to do is to find a magic business model in the digital realm that will begin to replace some of those revenues that are being lost on the print side.
MUTTERI should point out that print advertising dropped by 50 percent since 2005. It was $49 billion. Not it's down to about $24 billion. So this has been a catastrophic drop in revenues. Why do publishers keep doing what they're doing? Well, they keep the existing business going because that's what's paying the bills and funding whatever it is that they come up with next. The problem is that they haven't been terribly successful in developing compelling new digital products and compelling new digital revenue models in an environment where there're just tons of competition for people's time and also where a culture of free content has evolved over more than a decade-and-a-half on the web.
JURKOWITZWhile iTunes may sell the most music of anybody on the web, probably only one out of ten songs that are downloaded are actually paid for because you can get stuff for free. You can watch movies for free, TV shows for free, get news for free, get weather, sports, you name it. So it's pretty hard for people who are accustomed to charging for that content to try to find a new model when people are not willing to pay.
FISHERRight. Well, you can join our conversation about the future of news by calling us at 1-800-433-8850 or e-mail us at kojo K-O-J-O @wamu.org. Where do you get your news and has the way you consume news changed in the last years? And would you pay for news online? Is there any site that you know of online that is so valuable to you as a news source that you would actually pay for it? And let us know why or why not.
FISHERAnd, Mark Jurkowitz, there does not seem to be a great public clamor for more or better news sites that people would be willing to pay for. In fact, people seem reasonably happy with the idea that they'll just take whatever's out there for free.
JURKOWITZWell, that's obviously a very significant question. And a lot of what the experiment -- first of all, I think we should say when we talk about pay walls for example, and the idea of getting people to pay for online content, there isn't a newspaper or news organization in the world that thinks the majority of their online readers are ever going to essentially be transferred over to paid subscriptions. They wouldn't need numbers anywhere near that big. They basically would need a small percentage of their overall traffic and their overall online users to convert to paid users.
JURKOWITZOne of the things we're seeing with these pay walls that are coming up, and there are many different kinds, is experimentation to see basically where they can find the sweet spot. Where they can find a loyal core audience that is willing to pay for their content. So take the New York Times, which launched the most scrutinized pay wall in the history of the civilized world in 2010 and they put up what we call a meter pay wall.
FISHERWhich means you can see a few pages for free and then you hit a wall that says, hey pay up, buddy.
JURKOWITZBasically you got 20 free visits and that was a leaky wall. There are lots of ways you can walk in through the backdoor. But essentially it said, you know, you can get 20 free visits a month. Then you're going to have to pony 6up. What are they thinking? Anybody who's going to see it that many times is a loyal Times reader. They like the Times. They think the Times is an indispensable part of their life. They're going to be willing to pay for some content at some point.
JURKOWITZSo that's a lot of what this experimentation's about. And frankly, the success and failure of pay walls may not be on the conceptual level so much ultimately, but on the ability to tweak these price points and tweak the size of the pay wall where they can find that small but loyal audience.
FISHERAlan Mutter, the astonishing thing to me when the New York Times announced its pay wall was how small that percentage was of readers who they thought they could convert to paying customers and that would be fine. They were okay with that.
FISHERAnd what the -- doesn't -- is there something dangerous about this idea that the news could become an elite product where essentially news organizations are saying, you know what? We used to try to get as many eyeballs as we could because we were selling a mass audience to advertisers. But now that we're going to be selling our product directly to individual subscribers, we really only need a smaller number and we know that we're going to lose most of the casual readers. And we're okay with that because these are going to be the elite truly interested readers. Does that spell danger for democracy?
MUTTERIt potentially could spell danger for democracy,, but I think we have to sort of unbundle that question, which is a good question but it's complex. The digital media make it possible for all kinds of individuals -- and I'm talking about individuals, me and my dog, to be publishers on the web. And that means that the barriers to entry are basically flat. Anybody anywhere can have a voice and anybody anywhere can build an audience if they have something important to say and they know how to build an audience.
MUTTERAnd so the future of the media business has to be about assembling -- about building valuable verticals, whether it's people are passionate about gardening or gun control, and then trying to figure out how to stay in business doing that if, in fact, you want it to be a business. Lots of people are willing to publish and talk about things without ever trying to make money. They just want to speak up. They want their voice to be heard. And we see this on an individual basis on Facebook, we see it in blogging, we see it across YouTube and any number of other platforms.
MUTTERSo if you're talking about sort of being these monolithic places that publish content, be it newspapers or radio stations or magazines or TV, probably that medium, that type of publishing, that one-to-many publishing is probably going to give way to lots of niche publishing.
MUTTERSo if you think about all these various niches and all these various voices coming forward we're going to have a much richer discussion. It's messy. We can't necessarily believe everything we hear and we probably shouldn't believe everything we hear. But if you want to be well informed, when you turn on your computer or you look at your mobile phone you will literally be doused in a fire hose, a tsunami of information. So as long as those voices are speaking up, and they are, I'm not sure democracy is threatened. Democracy may be messier, but it's not threatened.
FISHERAnd, Mark Jurkowitz, the research that Pew, your organization, has put out just in recent days about where Americans now get their news indicates that people may not particularly care if a lot of these traditional news sources go away.
JURKOWITZWell, one of the findings that we had and we just released a survey yesterday actually, was that 69 percent of the people we talked to said if their local paper didn't exist it would not have their -- a major impact on their ability to get local news. I think Alan makes an interesting point. We all know that there's more information out there than there ever was. But democracy could, in theory -- or a health democracy could, in theory, be threatened if there wasn't enough credible information out there.
JURKOWITZAnd in some way, this fight, this struggle to find a new business model -- and believe me, there's plenty of problems in the legacy media and the ultra and the mainstream media -- but this battle to find a new business model that works is, in some senses, a fight to preserve the relatively large newsroom with reporting resources to send correspondence overseas, to fund investigative units, you know, that can take a month or two to do stories.
JURKOWITZNow we have a mini version of that with ProPublica, to be able to hire specialists who can train in science and in health. We know frankly that the news resources are atomizing. We're seeing a lot of startups -- and they're good -- journalistic startups essentially becoming eight to ten person regional newsrooms with a lot of former legacy employees. The question is, A, are we going to be able to sustain something like the big newsroom if we want to? And more importantly, are we going to be able to sustain the kind of expensive journalism that can't be replicated by mere information?
FISHERLet's go to Andy in Washington. It's your turn, Andy.
ANDYYeah, thank you. I guess what was just being said sounds really good to me. I mean, I worked in the print media for a while. I don’t do that anymore and maybe I'm bias toward print information. But it seems to me credible -- it seems to me that the print media, over the internet, still has a real advantage in terms of credible well thought out, well researched information that I can trust.
ANDYI'm a leftist, but I will read the Wall -- I'll pick up the Wall Street Journal to find out what in the hell is happening to the European economy right now. What does, you know, Fortune magazine have to say about that? What does Forbes have to say about it? It's sort of -- it's the sort of thing that I don't trust on the internet because there are a million different, like, little snip-its of information on the internet that I don’t find credible.
ANDYAnd it seems to me that the niche for the mainstream -- for the old line media should be probably the investigative and the in depth kind of coverage. Because I think you can do that in a way that I haven't seen the media doing it, so far, anyway.
FISHERWell, Andy is right. I mean, there's no question based on the Pew survey that came out this week that people consider the print media at newspapers the most credible source for a lot of the serious areas of news coverage, whether it's politics and government or corruption, local crime, those kinds of things that are kind of the meat and potatoes of local newspaper coverage.
FISHERAnd yet, the things that people are much more interested in actually going and reading about are things like weather and traffic and sports and they do not go to their local newspapers in nearly the same numbers as they used to for those kinds of topics. So is there, in this model that Andy describes of an emphasis on the serious and on the investigative and perhaps un-foreign correspondence, is there a business model anywhere in there, Mark Jurkowitz?
JURKOWITZWell, there's a business model. I think that, frankly, what a lot of legacy -- first of all, when we talk about the internet now, we have to recognize that a -- and we're not talking about, you know, sites, crazy sites or ideological sites or sites that don't use sources. I mean, every legacy media outlet in the world has their own website, has their own web operation. In fact, the most popular websites tend to be legacy media websites that carry the brand.
JURKOWITZSo obviously, a lot of good journalism has spilled onto the internet and people respect the brands there. What the newspaper industry, what the legacy press is in a frantic fight to do now and struggle to do now is, basically, launch a number of different initiatives that will sustain the core of good reporting so that the buzz word now is, you know, there's two buzz words out there, there's no magic bullet, there's nothing that's going to replicate display advertising model and how well that worked in the newspaper.
JURKOWITZThat's not going to happen, at least for the foreseeable future online. We're not going to get something that's going to essentially subsidize 80 percent of big newsrooms like we used to have. So not only is there no magic bullet but then the other phrase is, we're going to place a lot of small bets. So you now see news organizations -- on the one hand they're doing pay walls, on the other hand they're experimenting with all sorts of digital advertising.
JURKOWITZOn the other hand, they're doing all sorts of ancillary things. None of these are big ticket items. They're sponsoring events, they're getting to -- in many communities, sale staffs are being used as web consultants for local merchants. They are, literally, looking for multiple revenue models, some big and some small to create this new business model but it's not going to be anywhere neat -- as neat and clean as the old one.
FISHERAnd all of that doesn't add up in many news organizations to even a dime on the dollar. We'll continue our conversation about the future of the news business and we'll get into the whole question of why people would even sign up to pay for a news product that is considerably diminished from what they may have been used to, several years earlier, after a short break. You're listening to the Kojo Nnamdi Show, I'm Marc Fisher sitting in for Kojo.
FISHERWelcome back, I'm Marc Fisher of the Washington Post, sitting in on the Kojo Nnamdi show. And we are talking about newspapers and pay walls, the devices that more and more newspapers are using to get you to pay for what you've been reading for free. And we're talking with Mark Jurkowitz, associate director of the Pew Research Center's Project for Excellence in Journalism. And Alan Mutter, a long time journalist, turned CEO in Silicon Valley and writes a blog called "Reflections of a Newsosaur."
FISHERAnd Alan, we have several responses to a Facebook question we asked. When we asked people if they're willing to pay to read news online, Rachel said, "I just broke down last month and paid for New York Times access. I understand the rational for paying for content but for some reason, I don't quite understand, I'm still not comfortable doing it. Maybe you can help me figure out why."
FISHERAnd Jennifer said, "New York Times, yes, Baltimore Sun, no." And Ileana said, "I can't afford it, but wish I could. I understand the situation newspapers are in and I don't want to see them shrink any further." Alan, why are people so reluctant to pay online for something that they had no problem paying for in print?
MUTTERWell, we have a culture of free on the web. And people are accustomed to getting almost anything they want for free. And it seems counterintuitive after having gotten something for free for 15 years, which is about the average time most newspapers have been putting their stuff online for free, after 15 years of getting something for free, it feels kind of strange to pay for it. You kind of feel like a sucker.
MUTTERSo I think that newspapers and certain other publishers made a huge mistake, back in the olden days, I call it the original sin, when they didn't originally secure and try to sell their content online. I think if they had established that expectation at the outset, we wouldn't be having some of the problems that we're having today.
MUTTERBut now that we are where we are, it's pretty hard to change people's habits. The other thing, of course, is that a younger people don't necessarily resonate with newspaper type content, whether it's either in print or on the web. It's just not necessarily the kinds of things that they particularly care about.
MUTTERIf you look at Mark's survey, which is just incredibly interesting and rich although somewhat depressing if you're a newsosaur, but if you look at that, you see that there's just not that much interest in the local government or local politics among people under the age of 40. And so, why would you pay for the kind of stuff that newspapers cover when it isn't even stuff that you care about.
FISHERMark Jurkowitz, do you think that people -- younger people are genuinely less interested in those kinds of serious news topics then they once were? Or is it possible that it was always a fairly small number of people who had that kind of deep interest in those sorts of details about politics and government and they just happen to be buying the newspaper for many other possible reasons?
JURKOWITZWell, traditionally, the thought was always, and I don’t have any data on this, but the thought was always that, obviously, people became interested in their communities and taxes and policy and politics as these things became much more relevant to their lives.
FISHERAs they grew older and bought houses and had children.
JURKOWITZI -- you know, I have a career in news papering and the media and I -- the first -- I only read a newspaper to get New York Yankees scores, for the first 10 years, you know, that I was a newspaper reader. And I started to pay attention to the front pages when I realized I could be drafted and go to Vietnam and better figure out what this war was all about. So there's always been this expectation that sooner or later, you know, that you would become addicted or hooked on the rest of the paper.
JURKOWITZI'm not sure that lifestyles have changed so dramatically that that cycle has changed. What has changed is -- are the number of options you have to pursue what it is particularly that you're interested in, in that moment. You know, when I was growing up, the world was a daily paper and Walter Cronkite at 6:30. Well, it's a lot more complicated then than now.
FISHERExactly. And, so now let's move to this question of the pay wall. So with this apparent shrinkage in interest or at least an audience for this kind of serious news, is there any prayer that someone like the Baltimore Sun who's -- which just announced that it's going to move to a pay wall, that they can get enough people to subscribe and pay for their coverage to make it worthwhile for them to either continue at the size of newsroom that they're at or even expand and move back toward the kind of much more detailed coverage that they had before they started massively cutting costs a few years ago? Alan?
MUTTERAn ordinary newspaper, especially a metro paper like the Baltimore Sun, is going to sell, only a very small number of subscriptions to a very small number of passionate users or readers. In fact, with -- many of them are likely to be the people who already buy the print paper or are substituting one for the other. There have been dozens of newspapers who have conducted the experiment over and over again to see how much -- how many people they could get to pay and how much they could charge.
MUTTERAnd the percentage of people are willing to pay, is smaller then -- it's a single digit. It's somewhere around two to three percent. So...
FISHERTwo to three percent?
MUTTER...yeah. And so the amount of money that is being derived from this sort of thing is not going to be material to keeping newsrooms alive.
FISHERThen why do they do it?
MUTTERBecause they want to. They want to feel like they're doing something.
MUTTERThey've lost half of their advertising sales in the last five years. That is catastrophic. They're just trying to find something somewhere that will take -- that will help. And so one of the things newspaper publishers have been doing is raising the cost of the print product, either in subscriptions or single copy and they're trying to make that a much bigger percentage of their revenues than they used to be because advertising used to pay the fray (sp?) .
MUTTERSo they're just trying to find new revenue sources and I think as Mark said a minute ago, they're trying a number of different things, all at the same time. And also, frankly, one of the reasons publishers are doing it is there's sort of an emotional response to having feel that they've been ripped off over the years by consumers who've been taking their content for free while their revenues have been going down and their bonuses have been shrinking.
MUTTERBut, of course, it's their own fault. Because they gave away the content for free. And now, now they want to somehow claw back what's going to be, basically, pretty hard to get.
FISHERAlan, do you pay for any news content online?
MUTTERI pay for a print New York Times which gives me the ability to have the digital paper. But no, I do not subscribe to any other products online. And the reason why is, because you can get anything you want for free. And here's why print really -- why paid content really falls apart in most cases. Most of the things that are published in the typical newspaper and we'll take -- we'll pick on the Baltimore Sun here, although it's not an unusual situation.
MUTTERThe new -- the international news, national news, state news, sports, weather, business news, stock prices, all that stuff is free for the taking, entertainment news. It's free for the taking, anywhere you want on the internet. Even if the newspaper puts up a pretty interesting news story, if it's followed by the local TV or radio, it soon becomes in the public domain so people can find out about it pretty quickly.
MUTTERThe New York Times, the Wall Street Journal, papers like that can charge for their content because they have a lot of unique content that is must reading for people who are either in business or government or the academy. And they are willing to pay for that content so that they have it in real time and that they know if you're trading $20 million a bonds an hour, you want to know what the other bond trader knows. And so you definitely subscribe to the Wall Street Journal.
FISHERLet's hear from...
MUTTERBut that's a different kind of information then the typical homeowner or cop on the street needs to read and those people have been long since trained not to pay for that kind of information and only a very, very small number of people will pay.
FISHERMatthew in Westminster, Md. hasn't paid for content for a long time. Is that right, Matthew?
MATTHEWWell, I wasn't saying I didn't. I'm saying, none of us have paid for content over the past 100 years. Whether you’re talking newspapers or magazines and later radio and TV, the only -- the money you shell out is for a fraction of the cost of putting ink on paper. And the business is actually selling eyeballs to advertisers. And I think that's -- when people look at it and go "Well, people are now getting for free what they -- for what they once paid for," and the answer is, well, not really because what we paid for was 20 percent of the cost of physically the ink on the paper.
MATTHEWAnd the second issue, and I think this is one that really needs to be addressed, is part of the problem with conventional newspaper and conventional newsroom, particularly among publicly held newspapers, is that you have management that does not believe in the industry.
MATTHEWSo they see their job as taking whatever good will and resources they have and extracting and minimizing those resources, essentially you have subscribers, if you shut down the newsroom, they're going to continue to subscribe for a couple of years and that's how you make your 18 percent profit margin that you're share holders want.
FISHERMatthew, you sound like someone who works in a newsroom.
MATTHEWNo, actually, I'm someone who used to work with railroads and saw the same thing.
FISHERAh-ha, okay. Well, that's certainly ominous. Mark Jurkowitz.
JURKOWITZYou know, the knock on management and newspapers has obviously been that they've been too slow, they've been too reactive, and they -- they're the wrong people to be thinking outside the box. That this -- look, this was once an industry that had 20 percent profit margins. If you were, you know, an executive at one of those newspapers, you basically, your job was drive the car, park in your spot, you know and count the profits.
JURKOWITZIt was an easy business to run. The same people, obviously, were caught in this transition and there's a lot of argument, frankly, right now, that they're not the people who can innovate their way out of this particular crisis. In fact, in some quarters, and particularly with newspapers that are being bought by, let's say, hedge funds or financial people, the fact that somebody, an executive, there might have a resume in the business is basically seen as a liability and not an asset.
JURKOWITZTo the point about, eyeballs to advertisers. Obviously, previous caller's right. Basically, advertising subsidized about 80 percent of the newspaper business and what the consumer paid was just a small amount...
FISHER...the only purpose for charging for the newspaper deliver, in those days, was not to make money but to persuade the advertiser that these were real subscribers who are really interested in the product.
JURKOWITZ...but it was a little habituating for the consumer as well. But he made the point and he was right, mass media sold eyeballs to advertisers. The biggest single problem now in the new media universe is, what we at P.J. and others have called the decoupling of news from advertising. Advertisers no longer need the news to get to those eyeballs. And that's the fundamental crux of the problem.
FISHEROkay. Let's go to Leslie in Washington, D.C. Leslie, it's your turn.
LESLIEYeah, hi. I was about to subscribe to the New York Times but I -- because of the internet, I now look at a lot of different newspapers. And I just didn't want to encourage all of them to have a pay wall which, frankly, I could not afford after walking through the number of newspapers I look at. So if there was some kind of business model, which -- where I could subscribe to a number of different newspapers for a lower fee, I would love it, including the Wall Street Journal.
FISHERAlan Mutter, wasn't there a proposal by, I think, Steve Brill to create some sort of consortium where you would pay one fee, essentially, and have access to lots of different news sites?
MUTTERYep, that's absolutely right. Interestingly enough, they haven't quite pulled that off, the company has gone to helping newspapers put up one off websites. Interestingly, in the company -- in the country of Slovakia, which has only a population of about five million people, all the publishers got together and adopted exactly the type of common pay system that that caller has just described and it's actually working pretty well. So if you want a good deal on all the news you can read, go to Slovakia.
FISHERAnd you set up a pay wall experiment of your own at one point, is that right?
MUTTERWell, we tried to get the industry to get together to create a common pay system. And we weren't necessarily seeking cash. What we wanted to do was get people to register across all the newspapers in the country so that they would have access to the news in the way that the caller described. But what we were interested in doing more even then gathering money was gathering data about customers. Because the future of marketing is putting the right offer in front of the right person at the right time.
MUTTERSo, you know, somebody reading any article in the newspaper, you know, if she's interested in buying a baby stroller or he's interested in buying a Buick, that tells you something different about who those people are. So what we want -- we hope to do is gather data across all the papers in the country together and then be able to target the advertising -- the right advertising to the right people at the right time. But the newspaper publishers found it as impossible to get together on this and so it didn't happen.
FISHERYou can read Alan Mutter's views about the business of news on his blog "Reflections of a Newsosaur." And you can join us at 1-800-433-8850. Mark Jurkowitz, your old paper, the Boston Globe...
FISHER...didn't just put up a pay wall, they've created a two headed monster where they have essentially two different websites. How does that work and does it have any chance of actually working?
JURKOWITZWell, that's a very good -- I mean, one thing we should say about this pay wall data, I mean, it is -- it's not going to be a game changer, Alan made that clear. It may help, it may be part of a model and it's also going to take some time before we actually -- these experiments are seasoned enough and ripen enough to know whether it can work or not. The Globe is doing something unusual and albeit the interesting part is obviously the Globe is owned by the New York Times Company.
JURKOWITZIt is basically going to a two, sort of, website format. One is going to be Boston.com, which was the existing site, and it, you know, where the Globe used to be and it's a general interest site that will have some Globe content in it. But if you want the good Globe stuff, you're going to go to BostonGlobe.com and you're going to pay for it.
JURKOWITZSo essentially, they've created this bifurcated system and I've seen quotes from their own executives, basically, saying, look, we've got one website for the casual news user and we've got another website for the serious news user who's going to want our stuff. I'm not sure how they're going to make decisions about what one goes where and where the other one goes. It's a unique kind of experiment. So at this point, they're all being watched very closely. I'm sure there are plenty of skeptics in the industry. It's a -- certainly a different approach.
FISHERWell, and given the way that decisions are being made in the news business these days with more and more attention being paid to actual traffic and who reads which stories and how many people read a given story in a given amount of time, isn't there a danger that if that more serious part of the two-headed monster gets less traffic, the corporate overseers would simply say, you know, we don’t need to invest in all of that heavy duty news gathering. We can get the light stuff over on the free access site if we can get that material, basically, for free. Why not just do that?
JURKOWITZWell, you would hope not. And, you know, you would hope that this was an effort to actually save the good journalism, not to give it a, sort of, a final trial spin to see if it's viable or not. But you don't know.
FISHERAnd Alan Mutter, speaking of trial spins, the New York Times pay wall has now been in effect for some months and you mentioned earlier that some pay walls are reducing traffic by 95 plus percent. What's been the effect at the New York Times?
MUTTERI never said pay walls reduce traffic by 95 percent.
MUTTERIn fact, I don't know where...
FISHERYou said that only two or three percent of subscribers...
MUTTER...about half, sure, at some papers that have what we call a hard pay wall. The New York Times is able to completely control the amount of traffic to its website because it has what's called a metered system. They say you can have 23 views a months and that insures that they have as many page views as they need to sell advertising. They have a certain number of pages -- page views they need so that advertisers, ads will show up and they can collect the money.
MUTTERIf they find themselves short a page views in the month, they could say, you're only allowed 20, but they might give people 22 or 24 or 28. So they absolutely can control the number of page views they want, which is very wise, I give them a lot of credit for doing that. And those kind of systems actually work pretty well. They work -- they got pioneered at Financial Times in London. The New York Times is copying that. It's a good system. And so therefore, they are able to sustain whatever level of website traffic they need to fulfill their commitments to advertisers.
JURKOWITZThe other thing that -- I just want to say one thing.
JURKOWITZThe other answer worth noting in these pay walls, is that not completely, but generally speaking, if you're a print subscriber, you're going to get the digital package for free. And in some ways, that's an attempt to obviously keep your print subscriber and keep, you know, keep your print -- circulation from eroding too much. So that, as Alan said, in the part of the business that's still generating 90 percent of the money, you're going to be able to tell those print advertisers that you got enough eyeballs. So it's all interconnected.
FISHERWhen we come back, after a short break, we'll take a look at the relationship, if any, between the quality of news and the willingness of consumers to pay for it. I'm Mark Fisher of the Washington Post and you're listening to the Kojo Nnamdi show.
FISHERWelcome back, I'm Marc Fisher of the Washington Post, sitting in for Kojo Nnamdi and we are talking about the news business and its viability with Mark Jurkowitz of the Pew Research Center and Alan Mutter of the blog "Reflections of a Newsosaur." And let's go to Alan in Columbia, Md. Alan, it's your turn.
ALANYes, one of the things that I noticed starting about 20 years ago, was that there was a move in publishing toward what I call hyper profits. We had magazines laying off stringers all over the world and moving from more shorter articles to, what should I call them, self indulgently long feature articles that I presume were cheaper to produce. I am wondering if the -- part of the problem isn't that the profit model is calling for a greater level of profit that can be sustained and if a more reasonable profit level wouldn’t be something that would be part of the solution?
FISHERWell, in general, longer things take more labor and therefore cost more. But is there, Mark Jurkowitz, validity to the notion that these cutbacks are kind of the cause of the problems for the news industry?
JURKOWITZWell, I mean, there is a cycle and then people have argued that, you know, the more you cut back and response to difficult economic times or even in anticipation of them, the more you're degrading your product and the less demand you're creating for it. And that, in some ways, that's kind of a circular argument. I would say that, you know, expectations for profit margins these days are pretty greatly reduced from what they...
FISHERPretty close to zero.
JURKOWITZYou know, as I said, in the old days, the 20 percent problem. I had a friend who once covered a mob trial in Philadelphia and basically, under oath, one of the defendants was asked how much money they actually made and he said his profit margin was like 17 percent. And my friend wrote, you know, "It's true, even organized crime doesn't make as much as newspapers." But those days are long gone and I think expectations are a lot lower these days.
FISHERAnd, Alan Mutter, the -- we have an e-mail from -- in response to our Facebook question about willingness to pay for news online. Matt says "Is it time for an internet paradigm shift? This is not free content. Everybody who connects has to pay for their internet connection, just as we do with cable and satellite." And Emma says "But I do pay for my news, I'm a member of my local NPR station."
FISHERSo -- and people have these varying concepts of what they should do and what they actually do to pay for news. So somewhere in there, there is this germ of an idea that people have -- that that's something you ought to pay for. They're just not quite willing to actually do that.
MUTTERWell, you know, it's funny, we listen to the NPR pledge campaigns and, you know, the latest one is where people are outing people who've been listening to NPR for 10 years. And finally people are ashamed after 10 years of listening for free, to pay. So maybe we'll get to that point with respect to other non-NPR news media. But I think that's not likely.
MUTTERAnd the reason is because there's a valid model for publishing content for free on the web. Huffington Post is a great example of this. While it has about a 100 people, supposedly, on its news staff, their news staff is 1/10 the size of the New York Times' staff which is over a 1,000 writers and editors.
MUTTERAnd Huffington Post has built up its franchise and its audience and it's a very valuable web property by aggregating content that other people paid a lot of money to write including the New York Times, as well as, by using the free services of 9,000 bloggers who are willing to write about things for the purposes of exposure on Huffington Post.
MUTTERSo Huffington Post is never ever going to want to charge you because that's not their business model. And they can afford to put up tons and tons of content because they're not spending the money like the New York Times does on a million dollar armored Humvee for its people to drive around in Baghdad or Afghanistan.
MUTTERSo, there are a lot of ways that people can generate a lot of content for free on the web. And because the -- and then -- and use that content to sell advertising at much lower rates then newspapers or other media -- traditional media can charge but they can still make a profit doing it. As long as that's possible, then I think they'll all be people who are willing to offer content for free.
FISHERMark Jurkowitz, why do you think it is that the audience, for something like Huffington Post, is as strong and devoted as it is, given that the content, as Alan just explained, is essentially either stolen from other news sources that paid for and did the original reporting or is ginned up for free from bloggers who are just eager to some notice?
JURKOWITZWell, the first thing I'd say is, you know, the public isn't necessarily making decisions about where the information -- we know this. You know, there's plenty of survey's and data out there that suggests, the public doesn't know where their news comes from nor do they necessarily care where the news from. And they care less, generally speaking, about ethical issues about whether or not freelancers ought to be paid or not or bloggers ought to be paid, those kinds of things seem esoteric to much of the regular public.
JURKOWITZWhat Huffington Post essentially made its bones on was very solid aggregation which, look, its, you know, you go there, you look at the top of the page, you get a sense of what your worlds about. It also, initially at least, made its reputation on ideology. It was very much a liberal publication, the same way that the drudge report might appeal to conservatives, the Huffington Post was going to sort of scratch that itch for a lot of liberals.
JURKOWITZAnd they did it very well and they had very clever search engine optimization. And so the public found this to be a useful tool which indeed it is. And does it give you sense of web market values these days? When it was sold, it fetched $315 million.
JURKOWITZThe Boston Globe, my old paper with a big huge newsroom and all sorts of news gathering power, the Huffington Post doesn't have and many, many Pulitzers was on the market a couple years ago and there were people who were saying it would fetch somewhere between zero and a $100 million. So we see that value and the value of news organizations has changed dramatically in the new ecosystem.
FISHERA Wall Street analyst I spoke to recently told me that one of the nation's largest newspapers he would value at approximately $1 million. Let's talk to Nicole in Anna Rundle County. Nicole, it's your turn.
NICOLEHi there. I wanted to know how bad is it, our pay wall, truly, when you can creep around them and I do it all the time for the Wall Street Journal. I refuse to pay and here's the kicker, I am a working journalist. I'm a reporter, but I will not pay.
FISHERWhy won't you pay?
NICOLEI feel like trying to make news on the internet something you pay for at this stage in the game is like trying to make America a communist country, at this point. It's just...
JURKOWITZBut that would be capitalism.
FISHERThat would be capitalism. And Nicole, I assume, as a working journalist, you would prefer to be paid?
NICOLEI would, but I should tell you, full, you know, full disclosure, I'm leaving the industry. (unintelligible) ...
JURKOWITZBest call it a day.
FISHERWell, Alan, I don't know if we can get a better -- in one call, a better sense of just this sense that many Americans have, that this is not something they're going to pay for. Does this spell the end of news industry as a private sector industry for us?
MUTTERWell, I think there never was a news industry. It was an advertising sales industry. And the news was something that was a good way to, kind of -- in the olden days, back when newspapers were made out of hot type, we said that news was the stuff that kept the ads from falling out of the paper. And newspapers or all of mass media, all the traditional mass media, were all about aggregating the audience on a proprietary platform that you could sell for money.
MUTTERNow that it's increasingly difficult to aggregate audience because people can go anywhere they want to go, it's pretty hard to aggregate advertising dollars for those shrinking audiences. So there never was an industry that was designed to publish news. It was publishing news as a byproduct of its need to get audience and keep audience. Now that -- now -- so there was never an industry for -- about news, it was about advertising.
MUTTERUnless and until we can find a new business model to support journalism, either a for profit or a not for profit or government funded model, we're going to see ever less professional journalism, the kind that all of us grew up doing and the kind that we're talking about here today.
FISHERNicole, just out of interest, I hope you're going into a field that where you'll make enough money where you could pay for your news. What field are you going into?
NICOLEWell, I mean, I'm a writer at heart, but I'm also a long term (word?), if you will. So I'm really interested in (word?) writing. But I also like web aromatics. So my dream job would be to create websites, populate them with content, as optimized, you know, distribute and, you know...
NICOLE...I can promote them by a social media. And then look at the analytics and then figure out what we need to do. So it's kind of like, I guess, a content producer. I'm not -- people call it...
NICOLE...a lot of different things. (unintelligible) ...
FISHER...right. So you want to take the content and polish it up to make it more attractive for others. Mark Jurkowitz, somebody like Nicole is going to need content to polish. Where is that going to come from if the old business model for the news completely collapses? What will replace it?
JURKOWITZWell, if it -- it's hard to contemplate what would happen if it completely collapses. But certainly, you do see some of, you know, what we've seen in the animization (sp?) of newsrooms. You see some of the wave of the future. First of all, there's obviously -- it's now referred to, in journalism, as the pro-am model. Where, basically, you've got your staff paid, trained newspaper journalists and you're also bringing on, quote-unquote, "amateurs."
JURKOWITZCitizen bloggers, regular folks who are contributing to the content, untrained journalists. We've seen a lot of things develop already in this, sort of, new structure. One, the citizen journalist, sort of, the whole idea of citizen journalist, the passion of people in their own community starting websites, not making money, not caring about whether they're making money, becoming part of the ecosystem.
JURKOWITZThat's work to some degree, it's not a replacement. We are seeing a lot of these, as I said earlier, eight to 10 person newsrooms. San Diego, Voice of San Diego, men post, you're going to see them to continue to proliferate. You may get ProPublica has become in some ways an online investigative organization. You may also see that in things like health, sports overseas, everything.
FISHERAnd Mark Jurkowitz, one thing I forgot to ask you, what I asked Alan, which is, do you pay for any news online?
JURKOWITZYou know, the truth of the matter is, I do not.
FISHERWow. Okay, there's a statement there somewhere. My guests today have been Mark Jurkowitz, he's associate director of the Pew Research Center's Project for Excellence in Journalism. He's spent two decades covering the news media. Alan Mutter's a long time journalist turned Silicon Valley CEO. He's now a new media consultant and blogs at "Reflections of a Newsosaur."
FISHER"The Kojo Nnamdi Show" is produce by Brendan Sweeney, Michael Martinez, Ingalisa Schrobsdorff and Tayla Burney with help from Kathy Goldgeier and Elizabeth Weinstein. Diane Vogel is the managing producer. The engineer today is Andrew Chadwick and A.C. Valdez is on the phones. I'm Marc Fisher, sitting in on "The Kojo Nnamdi Show," thanks so much for listening.
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