Paying for News: A Mega-Merger Thought Experiment

Dan Gillmor is a BoingBoing guest-blogger.

Time for some radical thinking in journalism business models, right? OK, try this thought experiment (wait a second while I put on a flame-retardant suit):

What would happen if some top English language journalism organizations simply merged and started charging for their breaking news and commentary about policy, economics and and other national/international topics. That is, what if they were to combine for critical mass and keep most of their journalism off the public Internet for a few days after publication but then make the archives freely available?

Before you spit out your coffee (or whatever) in rage and/or laughter and/or derision, let me happily concede that this approach would raise all kinds of questions -- about elitism, fundamental business issues, the Internet’s linking culture and more. But it's already sparked a great offline conversation. And who knows, it might even work (though as you'll see below, some colleagues have pointed out good reasons why it might not).

The word “might” is the key one. We’re in the midst of an important discussion of how we’re going to pay for quality journalism as the 20th Century business models unravel. Unfortunately, people keep looking for magic potions that will solve the entire problem, failing to recognize that this is not a binary issue but rather a nuanced collection of changes.

No single business model will emerge – or so we should hope, because if that happens we’ll be racing back to new kinds of market inefficiencies that stem from non-diverse ecosystems. We need a thousand experiments, most of which will fail but, we hope, more than a few that will work.

That’s why even though I find the recent revival of a discredited idea -- see Time Magazine’s recent piece on micro-payments for news -- more than a bit tedious, I’m not sorry we’re having it. Note that I share the skeptics’ views of this approach, though I think at least one related project/idea deserves a much closer look: Doc Searls’ VRM/PayChoice , which is all about a new kind of payment system that has genuine possibilities (more below from Doc on this).

UPDATE: Several folks have asserted that I'm calling this the last, best hope for saving good journalism. Not so. I see this as one possible way to have some good journalism going forward.

Anyway, in a semi-over-the-top mode, let’s sign up the following organizations:

Call the new company, oh, NewJournCo. Then set a price for the journalism. (Note: I own a small amount of NYT stock, which is nearly worthless at this point.)

I don’t know the combined annual newsroom cost of these organizations, but I’d be surprised if it was even $750 million. Let’s go wild and call it $1 billion, so we can pay for lawyers, Web developers, accountants and a bunch of other folks who’d need to be part of the operation.

I'll now switch into the combined mode of devil's advocate and defender of this thought experiment. Several of the questions that follow came from Jay Rosen, whose excellent brain I picked on this notion:

Q: How did you come up with your membership list? What rules did you use for who gets included and who does not?

A: No rules except their ability to do excellent journalism – it’s a first cut. I’m sure there are some organizations that don’t belong on the list, and others that do. I'd add National Public Radio and the Guardian if the ownership/nonprofit issues could be resolved, for example. And maybe the McClatchy Washington Bureau.

Q: Why should I pay for what I am getting now for free?

A: Because it wouldn’t be immediately available anymore except for pay, and – assuming these organizations take their online operations into the much more conversational world that is central to the future of journalism -- the overall cost might be worth what you we in return. If not, then not.

Q: What kind of money are you talking about?

A: Well, 2 million subscribers at $10 a week ($520 a year) would do it would bring in a bit over $1 billion a year. The New York Times and Wall Street Journal together have almost that many subscribers by themselves, paying nearly that much already in the case of the Journal’s paper edition (though significantly less for the online-only subscription) and a significant percentage of that amount for the Times.

Q: Would these Web editions have advertising?

A: Hopefully not for the pay-wall news coverage, if the customers were going to be spending this kind of money. Ads would be counterproductive, to the extent that they were annoying. Advertising would surely be a key source of revenue for the archives, however. And ad revenue in the publications' print editions, while all but certain to disappear eventually, i serious money in at least the near future.

Q: Cartel, anyone? Has anyone asked the Justice Department Antitrust Division what it thinks of this?

A: Who knows? According to Reuters, the attorney general said today that he was "open to adjusting antitrust policy" for newspapers. And former lawyer for the Antitrust Division indicated that a merger of this kind might have a chance of passing muster.

Q: Wouldn’t this arrangement tempt these combined organizations to cut back on their spending for journalism so they could make more money?

A: As if this isn't the current condition of the industry? Investors are greedy and consider a lot of actual journalism to be a waste of money, especially when ad revenues are heading south. But if NewJournCo did lousy journalism it wouldn’t get people to pay. This model would require them to do better journalism than they're doing now, I would wager. And I'd hope that a precondition of any antitrust approval would be assurances of more, not less, journalism.

Q: Wouldn’t this be bad for everyone else who does journalism? Are you calling for a single dominant news organization and nothing else?

A: Absolutely not. This merger wouldn’t necessarily be great for competitors in the arenas where these folks specialize. But competing journalists, singly or in groups, could offer ad-supported and paid alternatives of their own. I can think of dozens of other organizations and individuals whose work I’d continue to follow in general political and business news. The Associated Press is owned by the newspaper industry. Isn’t that more of a cartel than this?

Q: What about local newspapers and local news in general? How does this help local coverage?

A: It doesn’t. They’re pretty much screwed if they don’t make other, bigger changes, and soon.

Q: What about indexing and display by search engines?

A: This could be complicated. I’d suggest that, as now, some individual articles, picked by editors, would be freely available via Google News and other search methods from the moment they were published. Most would not be available immediately.

Q: So the articles would never be seen by Google et al?

A: To the contrary: NewJournCo would would do what the New York Times and Guardian are already doing: putting the archives online with perma-links on every article, because there’s enormous long-term value in being a high-ranking link when someone does a search on a specific topic. As Doc Searls and others (including me) have argued (see below), “Sell the news and give away the olds.” (It’s not really a giveaway if you can monetize it, by the way.)

Q: You’ve named ultra-traditional media companies that have betrayed all kinds of journalistic flaws over the years, and at least some of which plainly don’t understand the digital future at all. Why are they the ones you want to save?

A: Yes, they have tremendous flaws. But they also boast some of the best reporting around. If this worked, they could focus on improving their journalism -- widening their scope of coverage, in fact -- and participating more fully in the digital world. Which is ultimately the point: to preserve and, hopefully, expand some of the journalism that at least some of us believe is important, and create journalism for this century that takes proper advantage of the available tools.

Q: What happens to blogging about and linking to their articles in this scenario?

A: Iin the short run, linking to these organizations’ work would drop except for the few things they posted each day for free. In the long run, with open archives, NewJournCo would accrue a huge amount of “Google Juice” and other search engine notice, because the quality of the work would deserve it. But if the option is less of their journalism (the kind they do well), then I’ll accept this tradeoff.

Q: Does this entity continue its members’ current policy of reducing outbound links out and making a huge percentage of their links internal to their own content?

A: No, I’d hope we could get some kind of quid pro quo (antitrust bargain?) that included, at the very least: a) vastly more transparency in how they do their journalism; b) a commitment to the Web’s linking culture, ensuring that they point to the material that they use to do their own reporting, not to mention the reporting they didn’t do; c) in general, a more conversational approach with the people who read, watch and listen to what they produce. If NewJournCo's managers didn't understand that they should do this, no matter what, then I think the enterprise would ultimately fail anyway.

Q: Again, why should we even support this crowd, most of which consistently failed us and plainly has little concern for what we think? Their idea of public service seems like David Broder urging bi-partisanship. Is this what we need to sustain?

A: What we need to sustain is, to cite just several examples, the relentless questioning of the government propaganda that McClatchy did in the run-up to the Iraq War; the New York Times’ exposure of the Bush administration’s flouting of the law (and Congress’ bended-knee acceptance of that illegality) in warrantless surveillance of the American people; NPR’s brilliant explainer of the housing bubble; and so much more.

Q: Why wouldn’t we see that kind of journalism even if they all went out of business?

A: We would, to some degree. But it’s more difficult than you may think to assemble these kinds of organizations, and to apply the kinds of resources it takes to produce reports of breadth and often depth. There’s no assurance that this system would work, but maybe it’s worth a try.

Q: What guarantees that this could never work?

A: Ego and fear. The CEOs and boards of these enterprises almost certainly wouldn't do anything like this, no matter how logical it might be. All industries are populated with bosses who wouldn't want to lose their jobs and/or power, and this goes triple for declining or failing industries.

Naturally, when I circulated an early version of this to some Berkman Center colleagues, they pushed back, hard. Here are some (lightly edited) comments:

Ethan Zuckerman said:

I think two major outcomes would result:

- A small but fairly successful movement would pirate content successfully and make it accessible to the truly determined.
- The vast majority of readers wouldn’t care and would read more free media.

I suspect the first is true because it’s been virtually impossible to prevent digital content from being redistributed without putting massive DRM on it. If copying and pasting is permissable, I’d expect to see blogs spring up that do little more than repurpose new content from the cabal and add ads to it. This happens all the time with RSS syndication - obviously, it’s possible to send cease and desist letters, but it’s a temporary solution at best. Those blogs don’t get very much traffic now, making it somewhat unsatisfying to send those C&Ds, but if the NYTimes is no longer accessible online, some small group of people is likely to seek out that content via less expensive means.

(I can imagine people doing this for less-than-offensive reasons, BTW. If I subscribe to a cartel paper and blog about its Africa coverage - as I do - and I can no longer point the majority of my readers to the source material so they can read my analysis, I’m likely to link to an unlocked copy. Dave Winer built a tool that allowed people to link to the unlocked NYTimes back in paywall days for the reasons I’m citing here. I can imagine this situation changing somewhat if bloggers are paid a referral for sending new subscribers, but I doubt it will stop the problem of people trying to create a parallel newsfeed…)

The second problem is a larger one, in my opinion. I’m not convinced that there’s as much demand for smart, well-reasoned, serious reporting as we’d hope. I think it’s worth entertaining the possibility that there’s a small, elite group that already subscribes to the Economist, focuses on international and serious political issues, discusses and blogs about these things, that would be sure to pay for the content… if libertarian, free content sensibilities don’t get in the way.

There’s a larger group of people who read the NYTimes now because they can, because it’s free and because other people link to it. If it ceased to be accessible, they’re likely to get their news via Google or Yahoo, which will now be aggregating wire stories published in smaller newspapers. Their information environment will be much poorer, but I’m not convinced that they’ll be willing to address that situation.

The worry for me is this - I fear that an elite, Economist-style media may be the only way to finance media as ad and subscription models fall apart. But we run the risk that we end up with a badly bifurcated discussion, with a small group arguing about one set of issues with one set of data and a larger group talking about what they’re able to get via free means. This obviously happens right now, but at least it’s possible to cross the camps and check what the other side is saying. What happens when Rush Limbaugh tells his listeners that the NYTimes is saying something, and few if any listeners are willing to pay to see whether he’s even reporting correctly on what the Times said?

I understand the forces that are leading newspapers to consider models like this. But I think we’d be vastly better off with media financed either through some form of taxation ala BBC or via philanthropic largess - both of which are guaranteed to introduce biases and conflicts - than to accept a model in which most people won’t have access to the best media. I’m not convinced that there’s enough demand for people to scale the paywall, and I worry that the techniques to let media filter from behind the paywall into mainstream conversation are poorly developed and ineffective.

As usual, Ethan raises critical issues, though his Likely Outcome 1 troubles me less than Outcome 2. Some thoughts:

The workarounds would undoubtedly spring up, and they'd carve away a certain amount of traffic from the "official" site. But the kinds of people who would pay $10 a month for this aggregation are probably the kinds of people who'd pay anyway even if they could get some individual stories free, because 32 or 33 cents a day is trivial compared to the convenience they'd get.

If NewJournCo was smart about it, the entity would have just enough tolerance of workarounds to see them as promotion, at least to some degree. They might bring about more paying customers.

Ethan's second issue, as he notes, is the bigger one. I don't agree with him that there's not a sufficient market for "smart, well-reasoned, serious reporting" to support this entity.

I do agree that the elitism issue, the risk of a bifurcated conversation, is worrisome. But I'd ask two questions of my own. First, what if the economic crunch causes these organizations individually to cut back on their journalism, as it's already done to some degree (though not to the same degree as less prominent news orgs)?

Second, why would this necessarily lead to a situation in which the bulk of the population didn't know the truth of what Rush Limbaugh was alleging? For one thing, the NY Times (in his example) could easily post what it had actually said as a response, assuming his assertion took place during the three-day (or however long) paywall period. And after that time, the full story would be available for anyone to see. I don't see how the discussion remains all that bifurcated.

I'm not talking about a model where "most people don't have access to the best media," but rather one where they have second-hand access for a brief period and first-hand access thereafter. To me this is far preferable to government financing, which raises enormous risks of different kinds that I'm not willing to take.

Doc Searls thinks my semi-modest proposal is coming at a real problem from an inapt direction:

I pay to get the Wall Street Journal’s paper edition, and more on top of that for their online edition. I am also a non-paying “member” of many papers’ websites. Based on loads of icky experience, I believe that both the paywall and the subwall (the subscriber wall) are huge value-subtracts for the papers and their readers. I hate both walls, and I’m the kind of guy who *likes* to support these institutions.

I see nothing, in all of mainstream journalism, that tells me that any major publication wants to make it easy for me to read their work. The current fashion is to run every story in tiny type (a default with blogs now too), to clutter the crap out of the index page, and to split every article into many pieces to make sure the reader’s eyes get dragged across as much advertising as possible.

I know one journalist, a reporter for a large old paper, who has sent me many emails of woe recounting fights with “designers” of awful websites and CMSes (content management systems) straight from the lowest rings of hell. It’s gonna be hard to get these leopards to change their spots. In fact, I think the only way to get them to change is by showing them the money they’re leaving on the table.

I think you’re trying to herd horses escaped from many barns back into one big one. Or, to leverage the agricultural metaphor, into one big silo. I don’t think it would work. In fact, I don’t think *any* scarcity play will work. I also agree with the other stuff Ethan said along those same lines in his response.

You’re still coming from the right place with this, which is recognizing that journalistic goods are worth more than nothing, even though that’s what publishers and broadcasters are currently charging for them (at least online), and what people are paying as well.

I don’t think the answer to this problem can come from inside the industry. I think it has to come from the outside – from the customers’ side. That’s the angle we’re taking with ProjectVRM, in particular with PayChoice, currently described as a buy-side system “by which readers, listeners and viewers can quickly and easily pay for the goods they use - on their own terms, and not just those of suppliers’ arcane systems.”

Take a look at what we’re doing with PayChoice, Media logging, r-button and Listen Log. Links:

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http://cyber.law.harvard.edu/projectvrm/PayChoice>

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http://cyber.law.harvard.edu/projectvrm/Media_Logging>

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http://cyber.law.harvard.edu/projectvrm/R-button>

<
http://cyber.law.harvard.edu/projectvrm/Listen_Log>

The first Listen Log is called ListenLog, and it is being developed right now for the Public Radio Tuner, a product of PRX and friends:

<
http://cyber.law.harvard.edu/projectvrm/ListenLog>

Here’s the tuner:

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http://www.publicradiotuner.com/>

More than 700,000 of these things have been downloaded from iTunes so far. It’s usually among the top free downloads (it was #2 most of last week). Among actually useful third party applications for the iPhone, it may already be #1 overall. And it’s only been around since January.

The ListenLog will be open source, like much of the other work with the tuner. Some of its methods, features and technology pieces should be applicable to newspapers, magazines, podcasts and other journalistic products (at least in the forms that appear online). Why not log, and then pay for, what we read on our hand-helds as well as what we listen to or watch? In fact I expect to see development moving in that direction, because we have an active and growing community of programmers and technologists, most of them volunteers, working on this thing already.

I highly recommend that everybody read Kevin Kelly’s “Better than Free.”
He begins by saying “The internet is a copy machine,” and unpacks a number of points implied by that claim. He even takes JZ’s adjective, “generative,” and treats it as a noun, listing eight “generatives.”

About one of those, “patronage,” Kevin writes, “It is my belief that audiences WANT to pay creators. Fans like to reward artists, musicians, authors and the like with the tokens of their appreciation, because it allows them to connect. But they will only pay if it is very easy to do, a reasonable amount, and they feel certain the money will directly benefit the creators.” This desire to reward creators is what we call MLOTT: Money Left On The Table. And it’s what we’re addressing specifically with PayChoice and the rest of the stuff I described above.

Forgive me if I seem to be getting carried away, but I’m excited about what we’re doing, and its prospects for journalism. It’s a snowball that’s starting to roll downhill. I’d rather bet on that than on any big rock an old industry has to push uphill.

As noted above, I love what Doc is doing. It's pathbreaking, important work that I hope has a prominent place in our future.

I hope, as well, that it's one of many models we try. We need as many experiments in business models as in journalism-creation models.

OK, enough from us, if you've gotten this far. Your turn now...

(Photo by Dan4th via Flickr)