It looks the NYT’s wants to raise a pay-wall starting in 2011. Borrowing from the FT-model, the NYT will allow lite-users the ability to read a number of articles a week/month for free, and then ask for payment beyond that. As you may know, I am skeptical that this will work.

First and foremost, as many others have said before, the FT and the WSJ, the only two papers to have successful online pay models, offer a monetizable news/information service. Bloomberg, another monetizable information provider, gets the vast majority of its revenue from very expensive terminal subscriptions. The key to these services is that only a very small cadre of people care about the stories that get reported; at the WSJ they even have a saying, the smaller the audience the more valuable the information. It’s so valuable, that typically these information providers have their subscriptions paid directly by the companies on which they report, who then turn around and report the subscription cost as a business expense.

However, the NYT doesn’t provide this type of journalism. It provides general interest stories, which are also covered by countless rivals. In fact, as most bloggers point out, there is almost no story in the NYT that isn’t also covered at least by Reuters, AP, and AFP as well. Because of the overcrowded market for general interest news, Reuters has actually taken to paying large traffic-directing aggregators, like The Drudge Report, to favor linking to their stories over the competition; the diametric opposite of a pay-wall.

Yet, despite all that, it seems that Arthur ‘Pinch’ Sulzberger, Jr. is playing follow the leader, and imitating Rupert Murdock’s plung into the pay-wall.

Which brings up my second criticism, that there is no business logic behind this move, other then they need more money. Historically, subscription revenue, $600-a-year for the NYT, do not even cover the paper and delivery costs associated with their production. (Econ: Price = MC) It was the combination of classified and display ads that subsidized the entirety of the Newsroom, and helped defray the printing costs. The problem, as I have laid out in detail before, is that digital ad prices are drastically lower then print ad prices per-impression. So while the NYT, the Post, the IHT, ect have never had a larger readership in all their history, they are going broke faster than they can grow.

This economic reality is not addressed by either Murdock or Sulzberger.

For Murdock it does not matter, his papers can be subsided by the rest of the News Corp, as I understand Fox News is raking it in, and Avatar is busting the box office coffers in full 3D glory. As the FT reported when Murdock announced the pay-wall idea at the end of Q3, News Corp is a family operation:

Profits staged a double-digit rebound in the three months to September 30, with 85 per cent of operating income now coming from cable channels including Fox News and its Hollywood studio…

Group revenues fell 4 per cent, dragged down by a $300m decline in its newspaper portfolio, which stretches from the Sun in London to The Wall Street Journal in New York. Operating income from newspapers and information services fell from $134m to just $25m, or 2.4 per cent of total profits.

…

The cable networks division secured its place as News Corp’s biggest profit engine, raising operating income by 41 per cent to $495m, owing largely to Fox News.

Fox film studio profits rose 56 per cent from the box office success of Ice Age: Dawn of the Dinosaurs and DVD sales of X-Men Origins: Wolverine. (Bolds Mine)

Lucky for the WSJ, The Times, The Sun, and The Post Murdock loves newspapers, and will prize them above all else as long as he is alive. It’s just in the man’s blood.

Sulzberger, on the other hand, does not have that luxury, even if he shares Murdock’s blood-for-ink preference. No, the NYT lives and dies on it’s own. Which is why the absence of a REAL business plan and rational for this pay-wall is so troubling. It does nothing to address the advertizing decline. They have not answered how this pay-wall will be more successful than its ill-fated Times-Select, which held opinion behind the pay-wall. And yet, here we go again, and it’s the same guy making this decision as made the last pay-wall decision, that all went nowhere; and who also made the call to buy a huge chunk of Manhattan Real Estate, burdening the company with massive debt, that it can ill afford. And for these reasons, I have to agree with Michael Wolff, that Pinch has to go, if the NYT is expected to save itself. Just because your family owns the paper, does not mean you know how to run the paper.

Finding a way to drive subscription revenue from online sources is not a bad idea, I’m simply saying that borrowing the FT-model and hoping it will auto-magically work, ain’t a good plan. Adding value and charging for that, might work. Creating new ad units, or interactive advertizing, also might work. But rather then innovating, or trying something new, they are dusting off the old, calling it new, and praying that it will work…somehow.

…good luck with that.

For the record I respect Bill Keller of the NYT’s, he’s a good editor who helped the paper recover from the Jason Blair affair, and mostly navigated the Judy Miller escapade without too many unforced errors. That said: he is also a sanctimonious ass.

Recently, he was quoted as saying:

Saving the New York Times now ranks with saving Darfur as a high-minded cause.

Now of course that’s not exactly what he meant, and in fact he wrote an email to Michael Calderone to clarify his intent. Regardless, the Editor of the New York – fucking – Times, should not be shocked in any way to have his words pulled out of context. However he might have meant the comment, the fact that he made the comparison at all says something about the mindset in America’s Newsrooms.

Namely this: for all of their vaunted skills in uncovering and exposing the world’s problems, they are almost devoid of any real or innovative solutions. In fact, saving the NYT’s has at least one parallel to Darfur, neither will be solved as a result of high-minded anything.

And I admit it’s unfair to single out Keller, because like I said he’s better than he is bad. He is simply the most visible member of a news media culture.

For example, the Atlantic has a new poll of ‘industry insiders’ in which 65% said that the Internet has hurt media more than it has helped (granted that’s only 30 people). Yet, the rational that they offer shows their real concern isn’t for ‘Journalism as an ideal’, but rather a screed against the end of ‘Journalism as Practiced by Them’:

“The Internet has some plusses: It has widened the circle of those participating in the national debate. But it has mortally wounded the financial structure of the news business so that the cost of doing challenging, independent reporting has become all but prohibitive all over the world. It has blurred the line between opinion and fact and created a dynamic in which extreme thought flourishes while balanced judgment is imperiled.”

“A year ago, I would have given a different answer. The increases in audience reach and communication with the audience are incredibly gratifying. But the cost to the business model (R.I.P. Seattle P-I) and the inability of the business model to monetize the Internet means that there is a disturbing net cost to newsgathering. If you’re not covering your state delegation in D.C., or the state legislature back home, or the city council, bad things are going to happen, undiscovered.”

“News consumption depends on news production, and I don’t see anything on the Internet that produces news—that is, detailed responsible empirical journalism—the way newspapers do (or did). It is typical of Americans to get more excited about consumption than about production.”

Let’s take these as two main arguments, the business model, and the content quality.

This first point is a general trope used over and over again, and I hope to do a full post on this specifically. For now let me simply say: what the internet takes away, the internet also gives; meaning that even though the average-profit-per-impression is lower on the internet, the cost-per-impression is also extremely low. Paper, ink, printing, distribution and home delivery are damned expensive. That was THE barrier to entry for ages. Now you’ve eliminated that cost. So you don’t have to charge for papers, which only ever covered a small portion of the printing costs anyway. Rather it was the industry failure to better monetize their internet offerings that put them in this financial position (the 2^nd person at least seems to recognize this failing as partly internal).

This focus on trying to get consumers to pay more for something, which they never really paid for in the first place, is stupid. This isn’t a consumer problem (the main beneficiary of the internet), it’s an advertiser problem. And that is the fault of management, period, full stop.

Yet, it’s this second point that actively pisses me off. This idealized ‘just the facts’ journalism is unique to post-WWII America. The early forefathers of Newspapers as we know them today were the Colonial pamphleteers. People like Thomas Pain, and the Federalist , wanted to make an argument, so they paid to have their essays printed and published for dispersion. In many ways they were like bloggers, they made no money off their pamphlets, but they did inform, and got the message across. But make no mistake, political parties were the 1^st publishers, followed later by shipping companies, and later still by independent ‘publishing companies’. But all of them had a slant, and made no secret of it, imagine the British Press today, but 100 years ago.

The reason that this actively pisses me off is that I fail to see how the American way of Journalism is much better then the old way, or more appropriately the British Way. In the American tradition, reporters are supposed to ask tough questions of those in power. These select few are given the almighty ‘Access’ with which to uncover the ‘Truth’. But the reality is that ‘Access’, not information nor understanding, has become the measure of good Journalism. The efforts to protect that access, IMHO, is the underlying cause of our collective Journalistic failure over the past 20-30 some odd years. From the failure of CNBC to actually ask tough questions of over-paied/under-performing CEOs; to Judy Miller, Vaunted NYT’s reporter, who propagandized for an Administration, and even did their dirty bidding in silencing an Administration critic. This Idealized American Journalistic Standard has led to shoddy reporting, NO-analysis (God Forbid), and a stack of Newspapers that treat their readers like 5th grade children.

NO!

This is weak willed crap posing as mild-mannered reporting. It uncovers little, and is played by those whom would seek to sub-divert thinking with emotional drivel. We don’t want facts, jack. We want analysis, and as long as you are upfront about your leanings, what’s the problem? That’s how they do it in the world’s oldest democracy, and some of them even managed call-out the false conclusions made in the run up to the Iraq War.

This is all to say two things:

Number One: Publishing Management needs to take responsibility for their epic mismanagement of their enterprises. Technology changes in every industry, most people deal with it, many top reporters took advantage of it. Your failure to develope new revenue sources, is your fault, not nature’s, not the internet.

Number Two: The American Journalistic Model is not the final buttress on the cathedral of democracy, and in fact its mores have hurt the public’s understanding and knowledge of government’s inter-workings. It’s been those opinionated and targeted independent media sources that have proven to be the sustained voice of the people, and defenders of freedom. Not those with the access, but those with the unanswered question, it is those people whom need to be protected, defended, and brought safely into the new digital media.