Beyond Journalism, Beyond Press, Journalism Online Moves into the B2B World

How do newsies read the news about Journalism Online selling itself to RR Donnelley this morning?

Well, maybe myopically.

The deal, price unannounced, tells us a number of things about the newspaper industry and more about the widening world of digital information commerce.

We remember the high profile of the launch two years ago. As is the usual case, on the one end, we asked the question: Is it the savior of journalism? On the other, we dismissed the lameness of the idea. It makes for good web debate.

In this case, as in many others, the truth is somewhere in between. But, first, the personalities here, which are lively, and needed, ones.

Yes, co-founder Steve Brill is a promoter. He’s got the barker’s touch, and we usually have to dial back his outsized visions. And still, he’s been right that we need to find dramatically new business models to fund high-capacity journalism, before it’s too late, and it’s getting later every day.

This week, the New York Times borrows much from Brill’s vision, though it’s not using his Journalism Online Press+ product.

Brill’s a bit of bomb-thrower, but there’s a lot of thought in those missiles. It’s been fun to watch his partnership with co-founder Gordon Crovitz, freed from his Wall Street Journal responsibilities with a handsome payout by Rupert Murdoch. I think of them as the Abbott and Costello of the paid content business, Crovitz’s fact-based, cerebral approach is a great foil for Brill’s expansiveness; he’s a sensible guy.

Both care greatly about the future of journalism, of what we know and get to read. Yet, inevitably, they ran into familiar barriers.

They ran into these realities of the newspaper business:

• You can have the best technology in the world, and it’ll be a slow sell to publishers. Some are now moving faster, but their rates of technology adoption have been remarkably slow, given how quickly their businesses — largely half-sized — have gone south. I often advise technology companies who ask me how best to sell their wares to publishers to triple whatever sales cycle they expect — and to seek customers outside the news industry as well. Press+ tech was good, and getting better, according to customers with whom I’ve talked.
• The news industry is small, and getting smaller. Worldwide, the market sizing I do in my work with Outsell, shows that the print news industry is down to about $93.8 billion in revenue in 2010, down from $99 billion in 2009, which was down from $123 billion in 2008. A lot of money, but it’s a sector that keeps getting smaller compared to the rest of the information world.
• The revenue streams are smaller, and JO’s share of them is smaller. A number of companies have begun to test Press+, including Gatehouse, Morris, MediaNews and McClatchy. In total, there are about two dozen sites now in operation. Yet, most of the companies are rolling out slowly, and usually at smaller properties. That makes sense strategically — smaller newspapers have more proprietary content and less competition. Yet, it also means that the revenue streams generated, for the papers and for Journalism Online is small. The early tests showed that digital advertising revenue can be maintained with the JO-recommended metering system, but the numbers of subscribers is in the hundreds and low thousands.  Readers are paying up to $9.95 a month and JO is getting as much as 25% of that stream, but it is still small potatoes for now. The company needs greater scale, badly.
• Nothing — meaning no one thing — is going to “save journalism.” This is a long-term struggle, and the Press+ notion — a good test of the market in my view — is simply a piece of the puzzle. We’re all like kids with blocks, and we’ve got to endlessly figure out how to reconstruct the hollowed-out cities of journalism.

So, Journalism Online selling to RR Donnelley makes some sense. Donnelley is an old-fashioned printer — another kind of ink-stained wretch — in the process of transforming itself into a modern marketing company. The buzzword here is “integrated marketing.” It’s the big idea of bringing an array of digital marketing services to eight million merchants, and it’s a huge booming industry. Some newspaper companies — think Gannett, Tribune, Advance, Hearst — are rapidly moving into marketing services, locally. Re-selling Yahoo advertising inventory was the first, big step there, and it’s being followed by mobile products, deals of the day, social products and lots more. (“The Newsonomics of Eight Per Cent Reach.”)

For Donnelley, with its 60,000 customers stretched from health care to financial services to real estate to telecom, the Press+ digital pay system adds another buckle to its value chain. B2B publishing is going through its own throes of bankruptcy and reorganization, and is as ripe for reinvention as news.

Donnelley’s chain now reaches from pre-press creative and content conversion to production of everything from directories to catalogs to magazines to delivery options and then custom services of various kinds.

Donnelley’s CEO Thomas J. Quinlan III makes the familiar case for the multi-platform, multi-device strategy commonly being grasped by forward-seeking companies:

“Our publishing customers continue to develop multi-channel advertising and editorial strategies and Press+ provides a valuable tool for monetizing content. We provide solutions across the entire breadth of the publishing supply chain, from content creation and digital asset management through subscription solicitations, processing and renewals. Press+ enhances our offering and opens new avenues for publishers to generate incremental subscription and advertising revenue.”

Now, as information publishers find that the new mobile media have opened up a new world of paid content possibilities, Press+ adds a smart option. We’re just starting to see the dawning realization that old products can be desconstructed and reconstructed, and sold in myriad different units, per piece and by subscription.

So Journalism Online,  finding that its play in “journalism” is a harder slog than hoped and the “+” in Press+ is going to be more important than the “Press” in its revenue future, becomes something else — a pay system with an opportunity to get more scale more quickly. And if Google Checkout gets more traction in news and information publishing, the Donnelly ownership provides a better chance to compete.

1. 

   Aaric Eisenstein says:

   March 24, 2011 at 1:45 pm

   A (typically) very good analysis from Doctor. The payment piece is really a feature rather than a product, especially in a small market. When the 800-lb gorillas roll out their own payment platforms, it’s tough to make a business off of the remaining small buyers.
2. 

   Dave says:

   March 28, 2011 at 7:11 pm

   People want convenience and instant gratification. And they are willing to pay a reasonable amount for both. But they also are adverse to commitment…and subscription plans unless they are convinced they are saving money with a subscription, which is why NetFlix caught on quickly with people who were already paying $20 or more per month in rental fees.

   The problem with online content is that it is non-tangible and has perceived low value. It has value, of course, but most people will balk at paying $4.95, or even $1.95 for a magazine or newspaper article. But if you could price the same article for twenty cents, much less ten cents or a nickel, now you no longer have a disconnect between price and value…you have a sale…if you can make the transaction convenient.

   And this points to the problem of credit cards…which not only prevent such small transactions because of high per transaction fees, but which are just too inconvenient.

   Which brings us to why a cross-site, universal micropay solutions have failed to catch hold. Such a solution is desperately needed, but previous efforts have all failed to gain critical mass because they all required users to prefund their accounts with $10 or $20, which hardly feels like a micropayment. Which brings us back to consumer resistance to subscriptions. If you are not sure you will get your money’s worth (in other words, there are not enough quality vendors out there using the micropay platform) why would you tie up your money in a micropay account?

   We believe a 2-Way payment system allows users to not only make micropayments, but also to receive micropayments, either through payout hyperlinks or through our micropay limited email.

   This means that when users create an account, no pre-funding is required. Instead, users can immediately receive a steady stream of “free money” every time they see an ad through the 2-Way Micropay ad network. These “free” ad dollars (along with any user deposited funds), can then be used to buy paid content, with just one or two clicks, using a single sign-on solution that is easily deployed at blogs, newspapers, music or gaming sites.

   This solves the prefunding obstacle. It also gives advertisers extra value. Because consumers get paid every time they see an ad or receive a follow-up offer from advertisers or content providers, they are accepting a payment to share marketing data about these transactions. This provides for better targeting of ads, which means advertisers can pay more to consumers for their time and attention, which means consumers can then use those free ad dollars to buy the content they really want.

   Now, if advertisers and content providers do their jobs right, users will eventually start to add their own funds to their accounts because they will begin to spend more than they are earning in ad revenue. But even then, consumers will still feel that all their micropayment purchases are “practically” free…because they will always be at least in part subsidized by the “free” ad money they receive.

   In other words, we have solved the privacy issue surrounding what people buy and which ads they respond to by bringing consumers into the payment cycle. Their data can be used only when the consumer gets paid each time they see an offer or receive a follow up. In this way, users can either opt out (by setting their rates too high) or they can opt-in and earn “their fair share” of ad dollars.

   I can’t guarantee that this technology will save the newspaper industry, but I am confident that it provides a novel way to reduce or eliminate the barriers which prevented previous micropay solutions from succeeding.

   Indeed, one of the features in our WordPress plugin that we are most pleased with will allow newspapers and blogs to monetize their comment sections. Many people would gladly pay to have their comments to a controversial story placed above all the “free” comments. But that market is only feasible with an “instant” micropay platform.