It was nice while it lasted, but now it's time to say goodbye to the era of free news content on the web. Hit hard by the recession, newspapers and other news outlets have no choice but to start charging readers to use their websites.
All the signs are there that change is coming, and coming soon:
- News Corp. CEO Rupert Murdoch said recently his company's news websites would start charging users for access within a year. News Corp. has assembled a team of executives to devise a system to do just that.
- The New York Times is reportedly mulling different options for charging for its online content.
- MediaNews Group Inc., owner of the Denver Post and 53 other daily newspapers in 11 states, says it plans to start charging for some of its web content.
- Newsday and its parent company Cablevision Systems Corp. are planning to end free content on the paper's website.
Why Start Charging Now?
Why the switch? Newspapers simply have no choice. Their print advertising revenues have been decimated by the recession; classified ads have dried up with the advent of Craigslist; and while online ad revenue alone still isn't enough to support most news outlets, all indications are that readers are deserting print for the web.
Consider a recent study by the University of Southern California's Annenberg Center for the Digital Future.
The center found that internet users read online newspapers for an average of 53 minutes per week in 2008, the highest level recorded in the eight years the study has been done. That compares to 41 minutes per week in 2007.
The bad news? The study found that 22 percent of users said they stopped their subscription to a printed newspaper or magazine because they could access the same content online.
Those findings are borne out by the Audit Bureau of Circulations. Its figures for the six months ending March 31 show the largest metro daily papers were bleeding both daily and Sunday circulation.
For 395 newspapers reporting, daily circulation fell 7 percent compared with the same period in 2008. Sunday circulation figures, compiled from 557 newspapers, showed circulation was down 5.3 percent. In the two previous six-month periods, daily circulation had fallen 4.6 percent and 3.6 percent, respectively.
Meanwhile, the average number of unique visitors to newspaper websites grew 10 percent in the first quarter of 2009, according to a recent Nielsen Online analysis. The study found that newspaper websites attracted more than 73.3 million monthly unique users in the quarter ended March 31, a 10.5 percent hike from the first quarter of 2008.
So the question isn't why newspapers are planning to charge for their web content. The question is: Why did they ever give their content away for free to begin with?
Former NBC News anchor Tom Brokaw made that very point recently when he spoke to the Minnesota Society of Professional Journalist's Page One Awards banquet. According to CityPages.com, Brokaw said news outlets made a mistake in not charging for web content from the very start.
"The most serious mistake we made at the beginning of the IT era... is that we allowed the young pioneers in that business and the users of it to proclaim to the world... that information is free. It is not free..." Brokaw said.
The End of The Old Business Model
Brokaw's reference was to the time, at the dawn of the internet era, when newspapers nationwide started websites in which they gave away their most valuable commodity – their content.
This model worked in an age when newspaper companies had healthy profit margins of sometimes 20 percent or more.
But then once-loyal newspaper readers started to cancel their subscriptions and migrate to the web, even as the worst recession since the Great Depression gutted newspaper revenues.
In short, the business model that had supported newspapers for decades had collapsed. Now, a new model is being born, one that centers around paid web content.
"We are now in the midst of an epochal debate over the value of content and it is clear to many newspapers that the current model is malfunctioning," Murdoch said recently.
If that wasn't clear enough, Murdoch added: "The current days of the internet will soon be over."
Will News Consumers Pay?
The question news business execs are asking now is, will web surfers pay for their news online, and if so, how much?
Some say they won't pay a dime. But David Simon, creator of the acclaimed TV series "The Wire" and a former Baltimore Sun reporter, believes they will.
Simon, speaking at a recent Senate subcommittee hearing on the future of journalism, compared newspapers with TV in the pre-cable era. For the first 30 years of TV, viewers watched for free, and wouldn't have dreamed of paying.
But then along came cable, with more channels and better programming. Now people think nothing of forking out $80 or more a month for their 500 cable channels, Simon said.
Getting people to pay for online news may be a tougher sell. It's not clear yet whether paying online news consumers will get the kind of premium content that made high-end cable channels appealing, though at least one paper, The New York Times, is considering offering web subscribers gifts like baseball caps or t-shirts.
And while the transition to paid online news will no doubt be tough, at least one group sees opportunity amid the turmoil.
Jeffrey I. Cole, director of USC's s Annenberg Center for the Digital Future, said the growing popularity of news websites creates enormous opportunities.
“For the first time in 60 years, newspapers are back in the breaking news business,” said Cole, “except now their delivery method is electronic and not paper... On the Web, newspapers are live, and they can supplement their coverage with audio, video, and the invaluable resources of their vast archives. And, they already have talented teams of reporters and editors who can deliver the news."
And that, in the end, may be the key to getting consumers to pay for online news.
