Eight barriers to local paid content

This is likely to be ignored by advocates of charging for access to local news websites, but I'm going to pass out some free advice anyway.

Before embarrassing yourself and imperiling your company's future, consider the following barriers to your great new idea.

They are not all insurmountable, but if you plow forward in ignorance, a lot of people are going to get hurt.

  1. The painful lessons of experience. You might want to look into the history of attempts by general news sites to get consumers to pay for access. Did you actually think we hadn't thought of it, and tried it? Your ignorance of the field and of history is one of the things that makes the online guys reject everything you say. Do you need a list? The burden of research here is on you; it's your idea, after all. But I can tell you where to start.
  2. The problem of scale (volume). It takes scale to make paid content work, and you don't have the volume you think you have. Quit making up wishful percentages based on your totally bogus monthly unique-user count ("well, if we get just 10 percent of our 85 zillion unique users to pay"). If you're going to engage in wishful thinking, base it on the cohort of individuals who visit your website more than three times a week. You will be shocked, and dismayed. I've been saying this for years: How can you get them to pay if you can't even get them to visit frequently when it's free?
  3. The problem of scale (breadth). The idea of premium paid content (to generate reader revenue) plus free commodity content (to support an ad model) is alluring, but be honest with yourself. Local sites don't have the breadth of content to simultaneously support a paid premium content model, while maintaining enough free pages to harvest the advertising benefits of the open model.
  4. Relative strength of the geotargeted advertising model. Ultimately the idea of paid content goes to war against the idea of ad-supported content. In local markets, the ad model is stronger than in global markets. There is, and always will be, a gross surplus of ad inventory on the Internet, and that drives CPMs into the sand. But actual deliverable geotargeted advertising -- and please understand that I'm talking about a reality that includes the entire sales support system, not theory -- is an entirely different matter. Local advertising sold by local sales forces is a substantial revenue stream, and if you're not tapping into that, it's your own fault.
  5. Competition. There are plenty of competitors and would-be competitors just waiting for you to strangle your own website so they can step in and steal your future. The larger the market, the more this is true. In some relatively small, isolated markets you may be able to get away with it. For awhile.
  6. Lack of unique content, coupled with a false sense of being unique. When you've had a virtual monopoly for decades, you grow arrogant and develop blind spots about your own weaknesses. From the viewpoint of the consumer, you're not nearly as unique and special as you think. And you've exacerbated this problem with your poor pay scales historically, and more recently your vicious cutting aimed at higher-salary veterans.
  7. Support costs. If somebody drops 50 cents into a newsbox and it won't open, they just go away mad. If somebody is paying for access to your website and it won't work, they're going to call and suck up 12 dollars of staff time. You have no idea what you're getting into. Computers are evil, perverse devices aimed at driving humans crazy.
  8. Your own staff. Your online staff hates the idea and they'll do everything they can to undermine it. Yeah, you can fire them. Why don't you get a table saw and cut off the fingers of your right hand while you're doing it? I've seen this happen time after time as newspapers consolidate print and online staffs, and the "formerly known as print" people conspire to expel the "formerly known as online" people. The result is a great leap backward. It's self-destructive.


Great list, Steve. I've had a similar list cooking in my head for a few weeks but you've put it much more elegantly than I could have.

your vicious cutting aimed at higher-salary veterans. Hmmmmm. Where has that happened?

I got an email from someone asking whether it would change the local situation if the big players -- NYT, WP, WSJ -- started charging for access, and whether we could have changed things by setting up pay walls from the beginning. My response:

I don't think it would make any difference at all. People aren't substituting the NYT website for their local newspaper in significant numbers. They're getting news from a huge array of other sources, including CNN.com, MSNBC.com, the BBC, and their local cable company's website, which usually have news from AP, Reuters and other sources. There's just no way to return to the environment of scarcity that we had in the 1970s.

It's also worth considering that news was never the sole, and perhaps not even the primary driver of newspaper consumption in the old world. Newspapers in their prime were bundles of entertainment and commercial information in an era when that information was at least as scarce as news.

The paid-content precedent really wasn't set by newspapers. The genie was out of the bottle before most US newspapers got online, and setting up pay walls would just have hastened the shift away from local media.

It isn't just the Internet that created this situation. Local radio and TV cracked print's hold on the evening entertainment market between 1930 and 1960. Cable and satellite is destroying the local TV business. All of this ultimately is good for the consumer and bad for the holder of the marginalized position.

'nuf said.

I don't find this list persuasive. I'd like to hear about how the Christian Science Monitor's experiment is going, or about how the Nation or the New Republic are doing with subscriptions for the premium content sections of their website. I also don't think there's a magic bullet with this idea, either, Local advertising sold by local sales forces. Er, I always knew my local hardware store was just dying to support a blog! If local business supports local papers then they are like...shoppers. You haven't cited a model where this really works, either. If you find some that are touted on Jay Rosen's website, they probably are mom and pop ops where the people don't bill their hours or have a grant from some foundation. The Soviet Union was a place with masses of newspapers and mammoth print runs -- without advertising, of course, because it was a communist state sponsoring the media with all the predictable results. When the USSR collapsed, there were even more newspapers as oligarchs bought them to hijack them for advertising their own firms or to use as resources to influence elections. Every little business wanted to support a local newspaper, and there was a lot of pent-up desire to have free expression. But gradually everybody found out that St. Petersburg couldn't sustain 10 dailies or even 5 dailes and they winnowed out. Only those with strong advertising sales and very enthusiastic subscribers survived -- and then were crushed or brought to heel by state control anyway under Putin. Despite what you say, no one has ever found a way to sustain media without ads, and if they do, it rapidly becomes not media, but propaganda.

In this time when we need to be 100 percent focused on how to move ahead, draining the focus with this throwback debate is just sad. As one who did a pay site (GoVolsXtra.com), I can say, your list is dead on and our effort was relatively successful. The issue was (and will be for most other local media organization that try it) locally focused media just cannot develop a large enough audience for reasons 2, 3, 5 and 6. And I never hear enough discussion about just how tough No. 7 is and who is going to do that CS. Is the CS going to be done by your circ phone room, your editorial staff, or your Web staff who should be doing something else?

Prokofy Neva, I have written the secret of local paid content on microfilm and left it in a flowerpot outside the Hotel Vera at Suvorovsky 25/16, where Putin will not think to look. Rest assured that the church-funded Christian Science Monitor has nothing to do with it, nor do the political journals Nation and New Republic.

Seriously, though, your local hardware store owner doesn't want to support anybody but himself, and he does that by marketing his wares. He advertises where he can get results. Local newspapers that have bothered to take the Internet seriously have been delivering great results for local businesses, and therefore getting strong revenue streams from advertising, which was my #4 point. Building a pay wall would decimate the deliverable audience for advertising.

We are in a vicious economic cycle and our advertising customers are hurting, many of them going out of business. Nevertheless, there have been a series of spectacular ad sales success stories recently as newspapers suddenly take Internet advertising seriously. It would be unwise to abandon that business on the basis of the opinion of someone in the newsroom who spent a decade and a half ignoring the Internet.

"locally focused media just cannot develop a large enough audience " That's what worries me the most about this debate. It's a sad but true fact that it is highly unlikely that newspaper sales will ever soar ever again. Apart from the few, surely sales will be in constant decline until they pack up for good. Reversal seems impossible.

The first and biggest clue that paid content won't work is that traffic isn't growing to the core news product online even when giving it away for free.

Wow, what a great statement of the basics that so many people seem to either miss or intentionally ignore. I believe that charging for content is possible for some publications and in some circumstances. But it takes a lot more knowledge of customers -- beyond inactionable demographics and the like -- than most newspapers either have or are willing to acquire. It also takes the discipline to develop and market products more like P&G and less like the Daily We-Know-What-You-Need-To-Know-And-How-You-Need-To-Know-It. So, for the overwhelming majority of newspapers in the U.S., charging for the current online offering(s) is a non-starter.

I wish I would have read this post before posting what I would pay for from my local paper: http://tinyurl.com/ctqltt

Er, why wasn't it ok to spend a decade and a half ignoring the Internet? The Internet, if we are to listen to the Internet, tells us "information wants to be free" and sponsors and endless culture of hackery and opensource Bolshevism and criminality and theft. That's not a business model. Somebody could be forgiven for not paying attention to the last decade and a half of a big heist? Like Neal Cassady said once. "It's all a big grab, from Washington to Moscow." Um, is there something wrong with church funding? Your friend Clay Shirky is for...foundations funding non-profit press or something. And the CSM still sells...and to lots of non-believers. My local hardware store is only self-interested? Gasp! The horror! That's ok, as long as he doesn't try to prevent me from investigating the news by the fact that he pays for the ads. And he won't. He wants customers. Internet advertising is only a fraction -- still -- of the paid paper ads at the New York Times -- were you aware of that? Why Shirky is wrong -- not dead yet, and when it dies, it will be slower, and what replaces it will not be according to his formula: http://secondthoughts.typepad.com/second_thoughts/2009/03/clay-shirky-and-criticizing-the-unreasonable.html

Let me just give a big amen to #7. We learned this the hard way when we tried mandatory registration for a while. Our online user base was 40+ with heavy emphasis on the +. Within two months, every senior citizen in our market had called and sucked up an hour of support time. The chorus of "I just want to read one obit!" was deafening. Customer Service started sucking up huge amounts of productive time, as online staffers tried to teach rudimentary Internet skills to people who barely understood email. Newspaper web sites are a frontier slowly attracting people who hate the Internet but need our content. They have limited technical knowledge, high expectations and plenty of time to complain. Adding a username and password requirement to a web site can be managed (barely), but add credit card numbers and a sense of paid customer entitlement to that and you've entered a whole new business. These end users may have 20 minutes a day to waste on tech support but your staff does not. Charging for content requires a huge customer service commitment to a segment of the online user base that needs a LOT of handholding. Please remember that when you're doing the math.