News Publishers Entertain “Paid Content” Roadshows

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Important Details: You can mark the urgency of US news publishers’ push to find new business models by cities. First came “San Diego.” The April meeting of the Newspaper Association of America (NAA) produced headlines like, “Publishers Mad as Hell” — about content piracy and the difficulty of making the web business pay — and saw Google CEO Eric Schmidt enter the lion’s den and emerge without a scratch. Then, in May, NAA hosted a “Chicago” conclave around pay models. Now, Outsell hears, a July session, along similar lines, is in the planning.

The Chicago session featured presentations by three companies, each offering the beleagured news industry a new technology-based initiative. Each of those three companies is furiously following through, criss-crossing the country, having discussions and trying to finalize the often-elusive “letters of intent.”

It’s worth looking at the progress of each of those intiatives:

• Attributor is being offered to news publishers as a ready-for-prime-time, anti-piracy-as-new-revenue-source program. The Attributor idea (see Insights, “Attributor Brings Ad Rev Sharing to Content Piracy,” April 22, 2009) is to “work the air supply” of the web, in this case, the ad networks, upon which much commerce travels. Attributor’s “Fair Share Consortium” combines sticks and carrots. In essence, Attributor — whose basic business is tracking usage on news content on the web — will use first use its anti-piracy detection and then advise ad networks when piracy is detected. In the past, Attributor enabled publishers to get into business licensing discussions or demand that content be taken down, if “pirated” usage was found. Now the “consortium” idea intends to get ad networks — they are the ones supplying the air of revenue to websites using the pirated content — to simply make payment to the content owners, and then send the rest to the site distributing the content. It’s a constructive, after-the-fact license. The key would be automation, enabling wide-scale revenue-sharing where today there is none, with minimal publisher staffing.
  

Attributor CEO Jim Pitkow tells Outsell that “nearly every company in the [Chicago] room greenlighted participation,” and that Attributor is now working to get feeds of their news content. Then the next step, what he calls “letting it soak,” a phrase he borrowed from the wildly popular cable TV show, “Deadliest Catch.” Attributor “soaks” the content to see how much of illegal use — considerably more content usage than anyone would consider “fair use” — is occurring. The biggest issue for Attributor, however, is how well and how quickly the biggest ad networks, Google and Yahoo among them, will participate. Publishers would each set their own expected ad revenue shares in this system, with Attributor taking an “agency-like” (15% or so) fee for its participation. Pitkow says talks are underway with large ad servers and with other smaller ad players as well. He says the ad-revenue-share based initiative will be ready for operation by the fall.

• Journalism Online LLC is taking the learnings it got from Chicago, and in subsequent meetings, and tweaking its plans and its intended platform. “My biggest surprise is that after a decade my peers are more comfortable talking about the pay model,” Gordon Crovitz, one of the company’s co-founders and a former Wall Street Journal publisher, told Outsell. “We have gotten past ‘Will we charge?’ to ‘how?.'” There are, of course, a devilish number of details in that “how.” In pitching a coordinated, e-commerce platform to publishers, Journalism Online (see Insights, “Journalism Online, LLC Seeks to Re-Establish Paid News Content“, April 17, 2009) is completing its own RFP, incorporating many of the wishes it is hearing from would-be clients and then will license/build a solution. Crovitz doubts that the “paid” road ahead involves putting up one big paywall or involves substantial “micropayments.” Instead, Journalism Online’s thrust is along the lines of “hybrid” and subscription models.

Crovitz emphasizes the role of data as his company works forward with publishers, applying learnings about customer usage in ways that one publisher can learn from another, and all can learn from aggregated data. “Editors will start making decisions about how they allocate news resources that will make the web product stronger and stronger.” Journalism Online is not looking, at this point, at actually building new products — say, by combining technology coverage from several publishers into a single offering — but is looking, in Crovitz’s words at “how Brand X and Brand Y may go together.”

The company, which has not disclosed its funding, is aiming to have some elements of its platform ready for use by this fall.

• ViewPass is being pitched to news publishers as a way to re-gain some lost power on the web. Its basic pitch: Advertising will continue to be the prime digital business model and the way for publishers (first news, then others) to prosper is for them to gain better control and management of their user data. “The idea of charging for content is fraught with problems,” says Alan Mutter, an industry analyst/blogger and Silicon Valley tech veteran, who has roots in the newspaper industry. “It won’t be about controlling the audience,” he tells Outsell. “The audience is one-on-one. If you have information on me, that’s how you go forward.” In Mutter’s view, user data is capital, a resource that publishers are now squandering as they let others, like Yahoo with its Newspaper Consortium, become a central point of data collection and usage. The biggest goal, of course, is to use that data to better target ads. In ViewPass’s view, by better harnessing the data, publishers can both better target ads and keep a higher percentage of ad revenue, sharing less with middlemen.

ViewPass is nascent, more an idea than a company. Mutter, and his business partner tech veteran Ridgely Evers, offered the ViewPass vision to publishers in Chicago, suggesting it as an industry-operated coop (like the Associated Press or CareerBuilder). They estimate that it would take a minimum of $6 million and nine to 12 months to get an initial system operational. Mutter is out traveling over the next 10 days to follow up on interest expressed by publishers.

Implications: Call them co-ops, consortiums, networks or platforms, these companies all represent a next-generation attempt to get news publishers on the same page. We don’t know if it’s late — or still early — in the game for that, but we know that that news publishers have lacked scale in many areas as they have competed on the web. Exceptions, of course, include classified networks and the Yahoo Newspaper Consortium.

Outsell believes these new initiatives will rise, fall or peter out on several basic principles.

We can start with a notion shared this week by Wired Editor (and “The Long Tail” author) Chris Anderson, who enunciated four rules of paid content this week at the magazine’s “Disruptive by Design” conference:

1. The best model is a mix of free and paid
2. You can’t charge for an exclusive that will be repeated elsewhere,
3. Don’t charge for the most popular content on your site,
4. Content behind a pay wall should appeal to niches, the narrower the niche the better

Those are reasonable enough standards, though they don’t easily assuage publishers eager to find a new (non-ad-based) pot of gold.

Let’s add three more to the list:

1. Scale: Each of the initiatives is real an idea at this point, while Attributor’s is supported with an already-built platform and supporting staff. Each has merit, but none will succeed without real, industry-wide scale.
2. Interoperability: Technology and data are obviously key to each. Just as key, though, is how well any of them play well with other publisher and web technology and standards. Easy integration is a must. No publisher needs a new island of technology.
3. Web-friendly Solutions: While it’s easy to erect a pay wall, such a move is more likely to foreclose a future digital business than it is to create a game-changing amount of new revenue. Applying technology, consumer offers and scale that ride along on the promise of wide and easy digital (laptop + desktop + mobile + ereader) access is a basic.

While each of these three companies shared a stage in Chicago, each offers a different flavor of solution going forward. For publishers, the decisions of later 2009 won’t be one-offs, but a series of decisions that must be conceived whole, a strategy of how their evolving businesses can be positioned for success as an economic recovery takes off.