Newspapers Consider Charging for Online Content

The New York Times has a piece today lamenting the fact that, although people are willing to spend money for all manner of frivolities online, they are reluctant to pay for news. Many major papers, including the Times, are once again reconsider “giving away” their product.

Can Papers End the Free Ride Online?

Consumers are willing to spend millions of dollars on the Web when it comes to music services like iTunes and gaming sites like Xbox Live. But when it comes to online news, they are happy to read it but loath to pay for it. Newspaper Web sites have been so popular that at some newspapers, including The New York Times, the number of people who read the paper online now surpasses the number who buy the print edition.

This migration of readers is beginning to transform the newspaper industry. Advertising revenue from online sites is booming and, while it accounts for only 2 percent or 3 percent of most newspapers’ overall revenues, it is the fastest-growing source of revenue. And newspaper executives are watching anxiously as the number of online readers grows while the number of print readers declines. “For some publishers, it really sticks in the craw that they are giving away their content for free,” said Colby Atwood, vice president of Borrell Associates Inc., a media research firm. The giveaway means less support for expensive news-gathering operations and the potential erosion of advertising revenue from the print side, which is much more profitable. “Newspapers are cannibalizing themselves,” said Frederick W. Searby, an advertising and publishing analyst at J. P. Morgan.

As a result, nearly a decade after newspapers began building and showcasing their Web sites, one of the most vexing questions in newspaper economics endures: should publishers charge for Web news, knowing that they may drive readers away and into the arms of the competition? Of the nation’s 1,456 daily newspapers, only one national paper, The Wall Street Journal, which is published by Dow Jones & Company, and about 40 small dailies charge readers to use their Web sites. Other papers charge for either online access to portions of their content or offer online subscribers additional features.

The New York Times on the Web, which is owned by The New York Times Company, has been considering charging for years and is expected to make an announcement soon about its plans. In January, The Times’s Web site had 1.4 million unique daily visitors. Its daily print circulation averaged 1,124,000 in 2004, down from its peak daily circulation of 1,176,000 in 1993.

The WSJ is unique because the business content they provide is critical to those who make their money in the stock market, who can often write off the cost of their subscriptions as a business expense. It’s unclear how other papers would manage the same trick, unless they banded together and did it on their own. The proliferation of blogs and news aggregators like GoogleNews and YahooNews make it even easier to find papers who put their content up for “free.”

I still pay for Sunday delivery of the Washington Post, but only for the ad circulars and coupons and such. Most of the time, the paper itself goes straight to the recycle bin. Indeed, I have occasionally had daily subscriptions to WaPo through free promotion offers and seldom read it, finding the online edition much more useful.

The papers are going to have to figure out how to make money from their online content to justify staying in business. It’s unclear to me, though, why they can’t do so from advertising. Putting advertisements on each of their stories–whether in the form of traditional paid spots, something like Google Adsense, or BlogAds–should provide attractive placement for advertisers. If blogs can do it, there’s no reason major newspapers can’t.

FILED UNDER: Economics and Business, Media
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. John Anderson says:

    Well…

    I can see some sort of payment and/or adverts, just as with the physical paper.

    But a while back, some did indeed start charging for today’s news. The ones that I have not been to since are in the UK, and charge the same as for print. Unless you are a print subscriber, in which case it is free (Huh? If I get the print version, the main reason to go to the web version is to get links I can give out – but which won’t work unless you get the print version too?). I wrote explaining that while I might read one or two stories a week, I was not going to shell out for an entire daily dead-tree publication unless they flew it over and had it delivered no more than six hours from press run, at no extra cost.

    It would have to be micro-payments (say, 1 cent per hundred words), which is often mentioned but not with a practical methodology.