Yesterday PaidContent.org carried remarks from The New York Times editor Bill Keller suggesting that the Times may resume charging consumers for at least some access to the Times site. He mentioned no particulars, but Keller seemed pretty firm in his conviction that consumers are willing to pay for world class journalism. Keller's point came down to this: 'A lot of people in the news business, myself included, don’t buy as a matter of theology that information “wants to be free."'
Good. It's about time this debate gets renewed. Display advertising online is tumbling for a variety of reasons, and the core print business at both magazines and newspapers faces crushing reversals. Our astonishing economic catastrophe is the accelerant, but when it comes to online, not necessarily the cause of this conflagration. That's harder to get at, but some of the elements include:
The costly complexities of the online display advertising business. Is it a branding medium, or a direct response medium? Is it best targeted against contexts or user data or user behavior? The Web is a medium that can do it all, and the wants and needs of agencies and clients are all over the map, as are the capabilities of publishers. It's a very tough marketplace.
The "unsolds" problem. In 2008, many publishers were selling a signficant percentage of their display inventory to ad networks for a fraction of the price they received in "premium" deals. No one quite knows how to solve this problem and it has led to a lot of handwringing about the real value of online inventory. As inventory expands, will publishers' pricing power increase or decrease?
The headlong race to scale. If there was one axiom in the online media industry in recent years, it was the centrality of scale. If your site was in your category's top three in terms of audience size, you were golden. The big agencies would call to talk about their big clients and big buys. Agencies wanted efficiency. Online buys are notoriously time-consuming to manage. Fewer buys means less work. So buy the biggest audiences. Hence the race to scale.
The Google factor. Getting huge has many dimensions, but performing well in Google search results is universal. Everyone wants top results in Google, and one key attribute to success in Google is the importance of "free." If Google's algorithm understands that content is behind a paid or registration subscriber wall, then it's likely to be poorly ranked or excluded. It's been a core belief at Google that information should be free online, and that sensibility is embedded in Google's search technology. (As a practical matter, publishers with paid content can mitigate this problem by following Google's sensible "First Click Free" policy, which says Google will index subscription or "paid" content if the Google users can click to what they see in results for free -- even if any subsequent clicks hit the pay wall. The Wall Street Journal online, for example, follows this practice.)
So in recent years, the free, ad-supported model ruled because of this simple proposition: Scale was the #1 issue for sales; Google was a key ingredient to get big scale; and paid content didn't play well in Google. So keep it free. Keller recognized that in his remarks: "But if Web advertising takes a long dive — or if some clever
engineer figures out how to decouple a paid Web site from the search
function — a subscription model might be worth a closer look.”
Where does this leave publishers who are watching their businesses burn to the ground?
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