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March 18, 2024

Journalism Online, LLC Seeks to Re-Establish Paid News Content

Important Details: Journalism. Online. Two simple words that speak volumes of woe for the newspaper industry. Now, a start-up Journalism Online, LLC, seeks to address the growing cry to make online readers for newsreading. It’s a company that is more an intention than an operation at this point, but it has an impressive pedigree for stating that intention.

Its principals are:

  • Gordon Crovitz, former publisher of the Wall Street Journal. Crovitz left the Journal about a year ago, after the News Corp acquisition of Dow Jones. He is now widely involved in the web and information worlds, serving as board member at ProQuest and involved in and print-on-demand book company Blurb. He also advises UpCompany, Halogen Guides, YouNoodle, Peer39, SkyGrid, ExpertCEO and Clickability. Crovitz had early and substantial responsibility for the paid Wall Street Journal site, which stands as the major online B to C news subscription success in the US, while the Financial Times parallels that model, most strongly in the UK.
  • Steven Brill is a serial enterpreneur, with the experience of having founded both Court TV and American Lawyer, and most recently Clear, a quick-pass-through airport security start-up. He took a swing at paid content aggregation with his Contentville site, which failed in the dot-com burst of 2001. More lately, he’s been a passionate advocate of reclaiming a (paid) reader relationship between news providers and their customers. In February, he detailed what he thought the New York Times should do regarding paid content, offering a prescription to Times publisher Arthur Sulzberger.
  • Leo Hindery is managing partner of InterMedia Partners, a New York-based media industry private equity fund. Until 2004 he was CEO of the New York Yankees’ YES Network, and has significant cable industry executive experience.

In short, the company’s co-founders have been making the rounds of news publishers for several weeks, talking through various paid content models, the need for a flexible, modern news-centered e-commerce platform, and such how a system might work. They’ve gone public, given the increasing sense of despair in the industry and the increasing talk of finding new sources of revenue directly from online readers.

Their initial concept envisions four potential roles for the company:

  • Creating a password-protected portal with one easy-to-use account through which consumers would be able to purchase annual or monthly subscriptions, day passes, and single articles from multiple publishers. The password-enabled payment system will be integrated into all of the member-publishers’ websites, and the publishers will have sole discretion over which content to charge for, how much to charge, and the manner of charging.
  • Establishing all-inclusive annual or monthly subscriptions for those consumers who want to pay one fee to access all of the JOI-member publishers’ content. A royalty pool would pay publishers based on usage.
  • Negotiating wholesale licensing and royalty fees with intermediaries such as search engines and other websites that currently base much of their business models on referrals of readers to the original content on newspaper, magazine and online news websites.
  • Providing reports to member publishers that identify the strategies and tactics that achieve the best results in building circulation revenue while maintaining the traffic necessary to support advertising revenue.

It’s an ambitious list, and Crovitz told Outsell in an interview that the company will choose to work on those products in a priority determined by on publisher feedback.

He makes the point that sites can be paid and free, citing his experience at the Journal. Today, the Journal earns more than $60 million a year from one million online subscribers. At the same time, its “freemium” offers pull in an additional 19 million uniques. They get to Journal content through various entry points, and are monetized through advertising. Crovitz also cites the Journal experience with niche products, some B2C, some B2B, produced within Dow Jones. That’s a concept he thinks all newspaper publishers can think about, depending on their audiences and their passions. “In Oklahoma, it might be a [paid] football site,” he notes.

Implications: Journalism Online decided to announce its intentions, given the growing interest in paid news content. That’s understandable, though in doing so, it essentially declared a mall opening without any anchor tenants. That’s one of the issues that the company faces as it pushes forward. Other issues include its lack of ready-for-market technology, the unsuccessful history of news e-commerce initiatives, and the challenge of herding the independent cows that make up the news industry.

It may well be that the third initiative on the list, acting as an agent for news publishers with the search engine aggregators, may rise to the top of the list. It doesn’t require technology (though publishers’ adding intelligence to their content through better tagging and tracking is clearly a part of a successful future) so it could be acted on sooner than later. As we’ve pointed out (Insights, Google and Newspapers: Beyond Fair Use to Fair Share, April 10, 2009), time is overdue for a reckoning of the news industry suppliers’ relationship with Google. Here, too, though, Journalism Online faces an uphill battle, making the case that it is best positioned to be the lead negotiator. AP has made that case, and many news companies have preferred to go it alone in the past.

In part, Journalism Online intends to press its value with its collected expertise; noted antitrust attorney David Boies (who sued Microsoft for the federal government, and defended IBM, both cases around antitrust) is on Journalism Online’s advisor board. The antitrust question, here, of course could potentially run two ways. Negotiating as one entity, newspaper companies could find antitrust objections. Alternatively, the newspaper industry could make the point that Google, in particular, as dominant as it is in paid search (70%+) and in directing traffic to news sites, has undue market control at this point.

Outsell is dubious that a major pay wall initiative, effectively walling over most daily newspaper-produced content unless readers pay, will work at this stage of the web. There are simply too many producers of news — what we might call good-enough news — to make such a pay wall effective. If it were to work, it would take getting the great majority of US daily publishers on board, and that seems highly difficult. Already, Hearst, News Corp and MediaNews have publicly announced their own paid content initiatives, each different from the other, and others are privately in the works.

The current, visceral reaction among publishers is “make ’em pay.” That’s understandable, given falling online ad rates and revenues; publishers have given up hope that online ad revenues could ever make up for print ad revenues that will never come back.

Yet, it’s an impractical reaction, given the nature of the web. Outsell believes that solutions that take into account the way readers like to use the web — AP’s landing page idea, which we’ll cover in more depth later, is an example of a strategy that may fit the web, its users and some of the needs of the news publishers.

More practically, Journalism Online may find lots of initiatives that could work, in part, to add back some reader revenue to the online mix. After all, US newspapers have long depended on readers for only about 20% of their revenues (with 80% coming from advertising). Shooting for a 20% goal over time, while not impeding ad growth, is a goal worth testing.

Some of these niche paid content sources may be small, but they have both revenue and relationship value. We do have a major disconnect right now in the Western world. It’s a disconnect between people who value good information and their ability to help pay for it. In print, it’s a subscription. Online, there’s no relationship, so search engines just produce sliced-and-diced news links, and the longtime news media/news reader relationships have waned.

Consequently, if such initiatives as Journalism Online’s can find some successes, they may be able to add a new leg to the online journalism stool, and we sure know it needs all the support it can get.

The co-founders have each been around the block more than a few times. They know the clock started ticking on their new enterprise yesterday and they face issues familiar to all start-ups ones of scale, time to market and of perfecting a middleman role that the market finds acceptable.

As Gordon Crovitz said, “It’s easy to decide to try the subscription route. It’s hard to know how best to do it.”