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Quis custodiet ipsos consultants?

I know I promised a post on global copyright laws, but this is much more fun: The New York Times recently announced that it is attracting more readers, despite putting up a paywall. Surprise!

Everyone who’s anyone in new media punditry agreed that the Times paywall was an awful idea. Michael Wolff ridiculed it. Jeff Jarvis saw it as a sign of failure. And Cory Doctorow, who manages to be taken seriously as a business pundit even though he doesn’t seem to believe anything can be sold online, questioned whether it was “wishful thinking or just crazy?” Doctorow even thought the Times might restore to “planting secret permacookies;” if it did, he predicted, “the FTC will probably be unamused to learn that the Grey Lady is actively exploiting browser vulnerabilities (or, as the federal Computer Fraud and Abuse statute puts it, “exceeding authorized access” on a remote system — which carries a 20 year prison sentence, incidentally).”

Not only have New York Times business staffers avoided jail, the paywall strategy sure seems to be working. (Disclosure: I used to write for the Times as a freelancer and I probably will again; I’m also happy to see the paper do well because I like reading it.) As Journalism.co.uk reports, unique users are up – by just 2.3 percent, but that’s pretty good considering that some of those users are now paying to read the paper online. And while the number of page views is shrinking, most of that decline is overseas, where the Times isn’t as effective at selling ads. So most of the page views the paper lost probably weren’t worth very much in the first place. In their place, the Times gained 224,000 digital subscribers who are worth real money – not only for the fees they pay but for the premium advertising that can be sold once more is known about them.

Even Times executives sound surprised at their success. “I really worried that we’d lose a lot of our younger readers who we had really aggressively courted with a bunch of innovative ideas, social media use etc,” says Jim Roberts, the paper’s assistant managing editor for digital.” But that didn’t happen. And, quite frankly, the paywall is far more important to the paper’s financial future than any of its other innovations. The problem with the journalism business isn’t attracting readers – the Times always has, and it continues to do so online. The problem is making those readers pay – figuratively or literally. And since no one has figured out the first – online ads are usually worth less than a tenth of what they would be in print – the Times will need to depend on the second.

What’s even more interesting is how wrong the conventional wisdom was – yet again. Advertising just isn’t worth much online, and that won’t change anytime soon. It’s easy enough to show this. In the U.S., the percentage of GDP spent on advertising hasn’t changed much since the fifties; in colloquial terms, the pie isn’t growing. As media moves online, more ad spending will go to ads based on search and social networks that newspapers can’t duplicate. That means less money for everyone else. And while there’s almost certainly enough pie to go around for low-cost rewrite businesses like the Huffington Post, it’s hard to imagine there’s enough to fund serious investigative journalism.

Pundits like Wolff, Jarvis, and Doctorow don’t see this. They feel that free is THE FUTURE and that newspapers need to REMAIN RELEVANT. (The second point is fair enough, but relevance doesn’t pay the bills; for that matter, papers forced to undertake mass layoffs lose some of their relevance as well.) The question is why they so rarely acknowledge they’re wrong. Wolff, at least is an excellent writer who offers nuanced arguments. Jarvis and Doctorow seem to believe in open business models with unquestioning, almost religious fervor.

And their Holy War has consequences. Jarvis advised the Ann Arbor News, which closed its print product and became a Web site (as well as, technically, a new company.) Some months later, the new web site laid off reporters and announced it would reduce its journalistic ambitions yet again. Doctorow champions Creative Commons licenses, which let artists sign away their rights without receiving anything in return. (The organization’s board consists of anti-copyright advocates and a single artist.) Some of his business ideas work, such as selling deluxe physical products; but creators who pursue them don’t need to give up their rights in order to do so.

How long can these guys like this keep being wrong? And when will journalists start calling them on it?

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Discussion

3 thoughts on “Quis custodiet ipsos consultants?

  1. Robert,
    If anyone can pull off a paywall, it is The New York Times. Rather like Steve Jobs …. How can they violate others’ rules? Because they’re just that good. They’re worth it. I’ve said that I’m rooting for the Times to succeed with this and I’m relieved that it hasn’t shrunken the audience and hope it won’t too much affect ad growth (that’s their real concern).
    All that said, my fear is that other, lesser newspapers will think they can do what The Times is done and I will still bet that they won’t be able to, because they’re not that good and because they don’t have the premium branding advertising The Times has. I’ve had conversations with Times executives who share that fear. We shall see.
    I’m not against charging for and paying for content. I will happily sell you my book(s). My argument here is that just saying we need to charge for content may not be the only or best alternative to make the most money and give the best support to the content we both want to see survive and prosper. Like it or not, we have to deal with a new media reality that includes abundant sources of competition in both content and, as you point out, advertising.

    Posted by Jeff Jarvis | October 19, 2011, 12:58 pm
    • Jeff,
      I very much appreciate your thoughtful response. But it will not surprise you to hear that I disagree – mostly on the best course of action. Small papers _already_ succeed with paywalls – look at the Arkansas Democrat-Gazette. (Details – http://paidcontent.org/article/419-newspapers-and-the-paywall-maybe-the-arkansas-democrat-gazette-isnt-the.)
      To the extent that others have not succeeded, it’s hard to say if it’s just hard to do or if the product they were selling just wasn’t good enough. Or, I guess, if it’s the latter, what to do. To me, the course of action is to invest in journalism, build a product worth paying for, and charge for it. I think you would advise making it free – which requires cuts. The problem is where those cuts end. Facebook will always serve better, cheaper ads; if newspapers can’t win that competition, I’d advise them not to enter it.
      Instead, they should play a game they CAN win. If they are facing more competition online – which is both inevitable and, to me, desirable, they should press the advantage they have. If they go free and make cuts, what advantage do they have over AOL’s Patch? (And Patch has advantages of its own.) If they invest and charge, they’re playing a smaller game, but it’s one they can win.

      Posted by roblevine1 | October 19, 2011, 2:12 pm
  2. The problem with the shrinking newspaper budget, and the direct [negative] impact that has on the public at large can be summed up with two words:
    Investigative Journalism

    I.J. costs money, and it’s one of the first things to go.
    I can think of countless benifits to society that investigative journalism has brought.
    Close to home, off the top of my head, the Detroit Free Press uncovered the corruption of the Detriot Mayor (Kwame Kilpatrick) millions of dollars of currupt payouts, MURDER, and other scandals… without investigative journalism, he might still be mayor (and not in prison). There’s countless other stories and examples of this. Big Buisness and corrupt officials are the direct benificiaries of the death of I.J. The public at large are the losers.

    Posted by James_J | October 21, 2011, 8:17 pm

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