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March 28, 2024

Journalism Online: Part of the Web $2.0 Goldrush

Maybe we should call it Web $2.0. 

There's a goldrush underway, all of a sudden, though no one can yet pinpoint the location of the precious stuff. Will this be an El Dorado fantasy or is it say late 1847, a couple of years before modern California took shape as miners hit vein after vein of shimmery gold? 

Clearly, though, there are dollar signs in many publishers' eyes. Part-Google envy, part desolation over the busted business models newspapers are now operating on, these dollar signs are lighting up several new initiatives, some announced, some coming soon. Let's look at the latest entry.

The latest to join the would-be party is Journalism Online, LLC. Journalism Online has set out its shingle, with a website and sufficient firepower to engage in discussions with the captains of news publishing. At this point, it has neither technology nor staff. What it does have is the intention to build the next-generation platform for news e-commerce and a wide and ambitious range of potential products it is willing to take on. If it were just another Silicon Valley Web 2.0 (without the dollar sign) start-up, you'd say, haven't I seen this movie before?

Most curiously, behind its facade, we may see something of a strategy/back-up plan, a kind of "Who Do You (Anti-) Trust". More on that below, as we get to its emerging board of advisors.

Journalism Online is headed by a triumvirate of well-known execs.

Gordon Crovitz, former publisher of the Wall Street Journal. Crovitz took a nice payout in Rupert Murdoch's buyout of Dow Jones. Of the eight or nine post-Journal pursuits he's taken on, he says this new one as co-founder of Journalism Online will get a lot of attention. Crovitz, of course, brings the cred of having been in at the founding of the most successful U.S. pay news model yet birthed. 

Then there's Steve Brill, late of Contentville, an early paid content aggregation site that flickered brightly and then died in 2001. He founded Court TV and American Lawyer, and is a principal in the company that brought us Clear, a quick-pass (do we see a theme here?) through once-crowded airports. Brill got a lot of digital ink this year, in suggesting that the New York Times had blown its paid content opportunities, and offered his own prescription, to Times scion Arthur Sulzberger. 

Leo Hindery, a successful Internet private equity and pipes (cable, Yankee sports network+), rounds out the threesome.

Then there's Merrill Brown, a savvy, web (Real One, MSNBC+) veteran, who worked with Brill to start up Court TV.

Maybe most intriguing are two non-media business names: Attorneys Extraordinaire David Boies and Ted Olsen.

As in David Boies, who defended IBM in an anti-trust suit. David Boies, who defended Napster in a copyright case. David Boies, who led the federal government assault on Microsoft in, you got it, an anti-trust case.

As if Boies' name weren't enough, add in Ted Olsen, former Solicitor General. (Yes, you remember correctly. Boies represented Gore and Olsen represented Bush in the 2000 Supreme Court Case that decided the Presidency.) He's got anti-trust experience within his diverse resume as well. 

I see a theme here. No, of course, Journalism Online hasn't brought in David Boies with the notion of litigating. After all, it's a company that is in the talking stages, first with publishers, but presumably soon with search aggregators. You don't even have to mention "anti-trust" to Eric Schmidt, in setting up a meeting. You just have to say, we may bring along David Boies and Ted Olsen.

Of course, given my journalistic roots, maybe I am prone to cynicism. Still, a little 'ole news e-commerce company, "advised" by Boies and Olsen, does on the surface seem odd.

Among those products, noted in its press release:
  • Creation of a password-protected website with one easy-to-use account through which consumers will 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 charge.

  • Establishment of all-inclusive annual or monthly subscriptions for those consumers who want to pay one fee to access all of the JOI-member publishers’ content. Revenues will be shared among publishers

  • Negotiation of 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.           

  • Provision of reports to member publishers on which strategies and tactics are achieving the best results in building circulation revenue while maintaining the traffic necessary to support advertising revenue. 

That's a big list of all-encompassing strategies.

When I talked with Gordon, he was first to acknowledge that "it's easy to decide to try the subscription route. It's hard to know how best to do it." He's directionally right when he says that some of the thinking from WSJ can be useful. He cites:

  • B2B content applications that B2C publishers can adopt, a strategy that WSJ/Dow Jones and Financial Times have both plied well;
  • Blowing out "freemium" strategies, as WSJ's one million paid subscribers contribute tens of millions of dollars of revenue annually, while its 19 million non-paid uniques, entering through various web nooks and crannies, add important audience;
  • The basic web learning that the second and subsequent digital copies are essentially free, and highly profitable. That's a fundamental that Web 2.0 companies build business on  and that legacy publishers have long stumbled on, given their printing press/delivery truck legacy mindset about the cost of additional copies.

The pressing fact, though, remains that it's hard to come up with an even a handful of scalable B2C pay models for news, and that's a tough proposition to build upon. 

Even as Journalism Online finds some traction, execution won't be any picnic. With today's announcement, the clock begins to tick on the industry's fresh face. It will face familiar issues, issues that each of its founders have encountered at least several times: scale, time to market, finding a middleman role that the market finds acceptable.

Here's my beginning sense of pluses and minuses for Journalism Online:  

Pluses:

  • Being able to say, "Mr. Boies is waiting to see you." It looks like the company has a carrot-and-stick approach to the search engines. As I've written recently in my Fair Share posts on Google and the newspaper industry, the threat of anti-trust is a potent weapon to bring to the next round of negotiations, whether led by AP, Journalism Online, both or assorted other players. 
  • While there's a huge reluctance among publishers to create a new middleman, any new
    creature that appears to be on the news industry's side, and not the
    search engines', holds attraction.
     
  • The names on the office door suggest that capitalizing the company shouldn't be a problem.
  • If it's smart with technology, it can piece together vendor relationships from available technology, and lightly customize on top of it;
  • They're not another Silicon Valley start-up. They stand out from the crowd of wannabe-friends-of-the-industry.

Minuses:

  • News e-commerce has a history of quicksand appearing as an oasis. Recall QPass, Clickshare, Yaga, among others.
  • No matter how good the proposition, the reluctance to create a new middleman may be overwhelming. Hearst, MediaNews and News Corp all have their own major initiatives around paid content. Revenue sharing doesn't come easy.
  • Fitting in with the other players, partnerships. How does Journalism Online fit with AP's growing Digital Coop, which is in place,  has technology and a first product — the Mobile News Network, already on the market? Where's it fit in with the Yahoo Newspaper Consortium, friend and semi-parent to half the daily industry in the US through its ad platform deal?
  • The lack of proprietary technology. Yes, it may be better to buy/partner, but a middleman with industry-leading technology in its pocket, usually stands a better chance of getting ahead.
  • They're not another Silicon Valley start-up. They may be too
    traditional, too top-heavy and lacking the nimbleness that start-ups
    offer.

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